SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant
[X] Filed by a Party other than the Registrant
[ ] Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Comair Holdings, 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:
[ ] 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 identity 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:
<PAGE>
COMAIR HOLDINGS, INC.
P.O. Box 75021
Cincinnati, Ohio 45275
606/767-2550
July 2, 1998
Dear Shareholder:
The Annual Meeting of Shareholders will be held at 10:00 a.m., Eastern
Daylight Time, on Tuesday, August 11, 1998 at the Radisson Inn,
Cincinnati/Northern Kentucky International Airport, Hebron, Kentucky 41048. The
formal Notice of Annual Meeting of Shareholders and Proxy Statement are
attached. I hope that you will be able to attend and participate in the meeting,
at which time I will have the opportunity to review the business and operations
of Comair Holdings, Inc. Company officers and directors will also be available
to discuss our business with you.
The matters to be acted upon by our shareholders are set forth in the
Notice of Annual Meeting of Shareholders. It is important that your shares be
represented and voted at the meeting. Accordingly, after reading the attached
Proxy Statement, please sign, date and return the enclosed proxy card. Your vote
is important regardless of the number of shares you own.
Sincerely yours,
David R. Mueller
Chairman of the Board
Chief Executive Officer
<PAGE>
Comair Holdings, Inc.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
August 11, 1998
July 2, 1998
To The Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Comair
Holdings, Inc., a Kentucky corporation, will be held at the Radisson Inn,
Cincinnati/Northern Kentucky International Airport, Hebron, Kentucky 41048 on
August 11, 1998 at 10:00 a.m., Eastern Daylight Time, for the following
purposes:
(1) To elect three Class B directors to serve for a term of three years.
(2) To amend the Company's Articles of Incorporation to increase the
authorized number of shares of Common Stock to 200 million.
(3) To approve the 1998 Comair Holdings, Inc. Stock Option Plan as
described in the attached proxy statement.
(4) To ratify the selection of Arthur Andersen LLP as independent public
accountants for fiscal year 1999.
(5) To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
By Order of the Board of Directors
David R. Mueller
Chairman of the Board
Chief Executive Officer
PLEASE FILL IN, DATE, AND SIGN THE ENCLOSED PROXY BALLOT CARD. RETURN IN THE
ENVELOPE PROVIDED AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE
ANNUAL MEETING. IF YOU LATER DESIRE TO REVOKE YOUR PROXY FOR ANY REASON, YOU MAY
DO SO IN THE MANNER DESCRIBED IN THE ENCLOSED PROXY STATEMENT.
<PAGE>
Comair Holdings, Inc.
P.O. Box 75021
Cincinnati, Ohio 45275
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
August 11, 1998
The accompanying proxy is solicited by the Board of Directors of Comair
Holdings, Inc. to be voted at the Annual Meeting of Shareholders to be held
August 11, 1998, and any adjournment or adjournments thereof. The Company will
pay the cost of soliciting proxies. When such proxy is properly executed and
returned, the shares it represents will be voted at the meeting as directed. If
no specification is indicated, the shares will be voted as recommended by the
Board of Directors. Any shareholder given a proxy has the power to revoke it
prior to its exercise by notice of revocation to the Company in writing, by
voting in person at the Annual Meeting, or by execution of a proxy bearing a
later date.
Except as otherwise stated herein, the vote required on all matters to be
voted upon is a majority of shares actually voted, and therefore, abstentions
and broker non-votes will have no effect.
The shares entitled to vote at the meeting consist of shares of Common
Stock of the Company. Each share entitles the holder of record to one vote. The
record date for determining the shares entitled to vote at the meeting is June
24, 1998. As of May 29, 1998, there were 66,554,944 outstanding shares of Common
Stock. This Proxy Statement and the accompanying form of proxy are first being
sent to the shareholders on or about July 2, 1998.
ISSUE ONE
ELECTION OF DIRECTORS
Nominees and Directors
- ----------------------
At the Annual Meeting, unless a contrary direction is indicated, a properly
executed proxy card will be voted for the election of nominees named below as
directors of the Company for terms continuing until the Annual Meeting of
Shareholders in 2001, or until their successors have been elected. If any of the
nominees are unable or unwilling to serve as a director, the proxies will be
voted for the election of such person as shall be designated by the persons
named in the proxy. The Company has no reason to believe that any nominee to the
Board of Directors will be unable to serve as a director if elected.
<PAGE>
In voting to elect directors, shareholders are entitled to cumulate their
votes. Shareholders are entitled to cast the number of votes equal to the number
of directors to be elected multiplied by the number of shares held and to
distribute such votes among as many candidates as the shareholder sees fit. The
proxy being solicited by the Board of Directors includes the right to vote
cumulatively on the election of directors. Any shareholder invoking cumulative
voting must be present in person or represented by a proxy other than the proxy
being solicited by the Board of Directors.
The three nominees receiving the highest number of votes cast for the
positions to be filled will be elected.
Set forth below is certain information about the Company's nominees to the
Board of Directors, the directors whose term of office continues and executive
officers who are not directors.
Amount and Nature of
Beneficial Ownership as of
May 29, 1998 (a)
--------------------------
Shares of Common Stock
----------------------
Name, Position with the Company Term Number Percent
or Principal Occupation, and Age Expires of Shares of Class
- -------------------------------- ------- --------- --------
Nominees For Election
Robert H. Castellini (b) 2001 561,126 *
Chairman
Castellini Company, 56
Christopher J. Murphy III (c) 2001 58,308 *
Chairman
President and Chief Executive Officer
1st Source Corporation
Chairman and Chief Executive Officer
1st Source Bank, 52
Gerald L. Wolken (d) 2001 38,732 *
Managing Partner
MLE Enterprises Inc., 62
<PAGE>
Amount and Nature of
Beneficial Ownership as of
May 29, 1998 (a)
--------------------------
Shares of Common Stock
----------------------
Name, Position with the Company Term Number Percent
or Principal Occupation, and Age Expires of Shares of Class
- -------------------------------- ------- --------- --------
Directors Whose Term of Office Continues
Peter H. Forster (c) 1999 53,163 *
Chairman of the Board
DPL Inc., 56
John A. Haas (c) 1999 50,632 *
Retired President and
Chief Executive Officer
Ball Glass Container Corporation, 61
David R. Mueller (e) 2000 594,881 *
Chairman of the Board
Chief Executive Officer
Comair Holdings, Inc., 45
David A. Siebenburgen (f) 2000 232,861 *
President
Chief Operating Officer
Comair Holdings, Inc., 50
Raymond A. Mueller (g) 2000 240,974 *
Retired Chairman of the Board
Comair Holdings, Inc., 76
<PAGE>
Amount and Nature of
Beneficial Ownership
as of May 29, 1998 (a)
-----------------------
Shares of Common Stock
----------------------
Number Percent
Name, Age and Position with Company of Shares of Class
- ----------------------------------- --------- --------
Executive Officers Who Are Not Directors
K. Michael Stuart, 46 (h) 98,539 *
Sr. Vice President
Aircraft Operations, COMAIR, Inc.
Charles E. Curran, 51 (i) 87,433 *
Sr. Vice President
Marketing, COMAIR, Inc.
Randy D. Rademacher, 41 (j) 97,473 *
Sr. Vice President Finance
Chief Financial Officer
Comair Holdings, Inc.
All directors and executive officers, 2,175,062 3.2%
including nominees as a group
(12 persons) (k)
* Less than 1%
(a) Unless otherwise indicated, each named person has voting and investment
power over the listed shares and such powers are exercised solely by the
named person or shared with a spouse.
(b) Includes 257,530 shares owned by a partnership controlled by Mr.
Castellini's wife in a fiduciary capacity, 25,312 shares which are a part
of a corporate profit sharing plan of which Mr. Castellini is a
participant, 1,908 shares which are held in IRA accounts for Mr. Castellini
and his wife, 151,868 shares which are held in a trust for the benefit of
his children, plus options for 53,165 shares exercisable within 60 days of
May 29, 1998.
(c) Includes options of 45,570 shares exercisable within 60 days of May 29,
1998.
(d) Includes options of 37,975 shares exercisable within 60 days of May 29,
1998.
(e) Includes options for 226,577 shares exercisable within 60 days of May 29,
1998, 104 shares held in a Company 401(k) program and 42,887 shares owned
by his children.
(f) Includes options for 104,149 shares exercisable within 60 days of May 29,
1998, and 11,072 shares held in a Company 401(k) program.
(g) Does not include 594,881 shares held by David R. Mueller and his children
or shares held by Raymond A. Mueller's other emancipated children and
grandchildren as to which he disclaims beneficial ownership, but does
include 43,419 shares owned by his wife, 50,566 shares held in various
trusts for the benefit of his grandchildren, 34,560 shares held in a Family
Limited Partnership, and options for 45,570 shares exercisable within 60
days of May 29, 1998.
<PAGE>
(h) Includes options of 30,630 shares exercisable within 60 days of May 29,
1998, and 29,950 shares owned by Mr. Stuart's wife. Mr. Stuart has held his
current position since 1986.
(i) Includes options of 30,714 shares exercisable within 60 days of May 29,
1998. Mr. Curran has held his current position since 1985.
(j) Includes options of 71,410 shares exercisable within 60 days of May 29,
1998, and 4,535 shares held in a Company 401(k) program. Mr. Rademacher was
named Sr. Vice President Finance in 1993. He previously held the title of
Vice President Finance and Chief Financial Officer since 1990.
(k) Includes options for 782,614 shares which are exercisable within 60 days of
May 29, 1998.
Delta Air Lines, Inc. has the right under a 1986 agreement with Comair to
designate 9a nominee for election to the Company's Board of Directors. They have
not exercised that right at this time.
Business Experience
- -------------------
Nominees for Election
Robert H. Castellini, Chairman of Castellini Company, a Cincinnati,
Ohio-based food distribution, food processing and transportation services
company, has been with Castellini Company for more than five years. Mr.
Castellini has served as a director of the Company since 1989. Mr. Castellini is
also on the Ohio Advisory Board of PNC Bank, Ohio, N.A., and numerous
privately-held Cincinnati corporations and foundations.
Christopher J. Murphy III is the Chairman, President and Chief Executive
Officer of 1st Source Corporation and Chairman and Chief Executive Officer of
its subsidiary 1st Source Bank, a South Bend, Indiana-based financial
institution. He has been with 1st Source for more than five years. Mr. Murphy
has served as a director of the Company since 1989. Mr. Murphy is also a
director of Quality Dining, Inc. and several privately-held corporations.
Gerald L. Wolken has been Managing Partner of MLE Enterprises Inc., a
management consulting firm located in Ft. Myers, Florida since 1990. Previously
he served as President and Chief Executive Officer of SuperX Drug Stores, as
well as Corporate Vice President of the Kroger company. Mr. Wolken serves on the
Boards of Directors for Service Management Systems and Boys Hope/Girls Hope. He
also serves on the Advisory Boards of Health Resource Publishing Company,
Intellitecs International and Duramed Pharmaceutical Company. Mr. Wolken has
served as a director of the Company since 1989.
<PAGE>
Directors Whose Term of Office Continues
Peter H. Forster was elected as a director of the Company in 1988. Mr.
Forster has been affiliated with the Dayton Power and Light Company, an electric
and natural gas utility company headquartered in Dayton, Ohio, in various
capacities since 1973. Mr. Forster served as Chief Executive Officer of DPL Inc.
from April 1984 until December 1996. He has served as Chairman of the Board of
DPL, Inc. since 1988. Mr. Forster is also a director of Amcast Industrial Corp.
John A. Haas was Group Vice President Ball Corporation, from 1993 through
1995. Previously he was President and Chief Executive officer, Ball Glass
Container Corporation, since 1994 and President, Ball Metal Container and
Specialty Products Group, a manufacturer of metal and glass packaging products,
and Chairman of the Board, President and Chief Executive Officer since 1988 of
Heekin Can, Inc., a Cincinnati, Ohio-based manufacturer, which was acquired by
Ball Corporation. Mr. Haas has served as a director of the Company since 1990.
David R. Mueller is a founder of the Company and has served as a director
since its inception. He served as Chief Operating Officer from the Company's
inception until May 1986. Mr. Mueller was President from May 1981 through
October 1990. He has served as Chief Executive Officer since September 1983. He
was elected Chairman of the Board and has held that position since June 1990.
David A. Siebenburgen served as Executive Vice President and Chief
Operating Officer of the Company from May 1986 to October 1990. Mr. Siebenburgen
was named President of the Company in October 1990 and has been a director since
1988. Mr. Siebenburgen was named Chief Executive Officer of Comair, Inc., the
principal subsidiary of the Company in October 1997.
Raymond A. Mueller is a founder of the Company and served as Chairman of
the Board until his retirement in June 1990. Mr. Mueller has served as a
director since the Company's inception. He was President from its inception
through May 1981 when he was named Chairman of the Board and Chief Executive
Officer, and served as Chief Executive Officer until September 1983 and Chairman
of the Board until June 1990.
Raymond A. Mueller and David R. Mueller are father and son. None of the
other directors or executive officers are related. All the Company's executive
officers devote substantially all their time to the Company.
<PAGE>
Information Concerning the Board of Directors
- ---------------------------------------------
The Board of Directors met on six occasions and took one action in writing
in fiscal 1998. The Executive Committee, whose members are Messrs. Raymond
Mueller (Chairman) and David Mueller, is authorized to perform substantially all
of the functions of the Board of Directors between meetings of the Board. It had
no meetings in fiscal 1998 but took action forty times in writing.
The Audit Committee recommends the employment of independent auditors,
monitors relationships between the Company's personnel and the auditors, reviews
the quality of internal controls, reviews the scope of the independent auditor's
work and performs other functions assigned to it by the Board of Directors. The
Audit Committee met two times in fiscal 1998. The members are Messrs.
Christopher Murphy (Chairman), Gerald Wolken and Raymond Mueller.
The Compensation Committee administers the Company's Stock Option Plans and
sets compensation levels for all executives. This Committee had two meetings in
fiscal 1998 and took one action in writing. The members are Messrs. Peter
Forster (Chairman), Robert Castellini and John Haas.
The Finance Committee reviews the investment, dividend and overall capital
structure policies of the Company. This Committee had two meetings in fiscal
1998. The members are Messrs. David Mueller (Chairman), David Siebenburgen and
Christopher Murphy.
The Board of Directors has elected not to appoint a Nominating Committee.
Compensation of Directors
- -------------------------
Comair's outside directors receive $20,000 per year, as well as $1,500 per
year for each committee of which they are a member. Committee Chairmen receive
an additional $1,500 annually. Each year each non-employee director of the
Company, on the tenth business day following the end of the Company's fiscal
year, receives an option to purchase 7,595 shares of common stock at a purchase
price equal to the last sale price on that day. These options become exercisable
six months after the date of grant and expire ten years after the date of grant.
The Company has a lifetime Consulting Agreement with Raymond A. Mueller
which became effective upon his retirement from the Company in June 1990. Mr.
Mueller's consulting compensation is $150,000 per year. Mr. Mueller also
received transportation services and insurance amounting to $29,886 for fiscal
1998.
<PAGE>
ISSUE TWO
AMEMDMENT TO ARTICLES OF INCORPORATION TO
INCREASE AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors of the Company has approved, and is recommending to
the shareholders for approval at the Annual Meeting, an amendment to Article
Four of the Articles of Incorporation to increase the number of authorized
shares of Common Stock from 100 million to 200 million. As of May 29, 1998,
66,554,944 shares were issued and outstanding and the Company had 3,676,011
additional shares reserved for issuance pursuant to stock option plans.
At the current level of authorized shares, the company is unable to declare
any meaningful stock dividend or stock split or issue additional common stock
for any purpose while maintaining its currently authorized option and 401(k)
plans. While there are currently none planned, the Company has declared seven
3-for-2 stock splits and two 5% stock dividends since going public in 1981.
Except as indicated above with respect to currently reserved shares of Common
Stock pursuant to stock option plans, the Company has no present intention,
plan, understanding or agreement to issue additional shares of Common Stock. The
Board of Directors, however, believes that the proposed increase in authorized
shares of Common Stock is desirable at this time to enhance the company's
flexibility in connection with possible future actions such as stock dividends
or splits, or funding employee benefit plans.
Holders of Common Stock have no preemptive or other rights to subscribe for
additional shares. Additional shares may be issued without shareholder approval.
Further issuance of additional shares of Common Stock might dilute, under
certain circumstances, either shareholders' equity or voting rights. The
authorized but unissued shares of Common Stock could be used to discourage or
make more difficult an attempt to effect a change of control of the company.
The affirmative vote of two-thirds of the shares eligible to vote on the
proposed amendment is required for approval. Abstentions and broker non-votes
have the same effect as a vote against the proposal.
<PAGE>
ISSUE THREE
1998 COMAIR HOLDINGS, INC.
STOCK OPTION AND INCENTIVE PLAN
The Board recommends approval of the 1998 Stock Option and Incentive Plan
under which awards for 3,500,000 shares of Common Stock would be reserved for
issuance. The Plan becomes effective August 11, 1998, subject to shareholder
approval. On May 29, 1998, the last reported sales price of the Common Stock on
the Nasdaq National Market was $26.625.
The following is a summary of the Plan which appears in its entirety as
Exhibit A.
The purpose of this Plan is to attract and retain dedicated and loyal
employees of outstanding ability, to stimulate the efforts of such persons in
meeting the Company's objectives and to encourage ownership of the Company's
Common Stock by employees.
The Plan will be administered and interpreted by the Compensation Committee
which is composed of three non-employee directors. The committee will evaluate
the duties of employees and their present and potential contributions to the
company and such other factors as it deems relevant in determining key persons
to whom awards will be granted and the number of shares covered by such awards.
All employees of Comair and its subsidiaries are eligible to be considered by
the Committee for the awards.
All Options are to be granted at an exercise price of not less than 100% of
the fair market value at the time of grant. Options granted may be either
Incentive Options, designed to provide certain tax benefits under the Internal
Revenue Code, or Nonqualified Options without such benefits. However, persons
who beneficially own 10% or more of the Company's outstanding Common Stock may
not be granted incentive options for terms exceeding five years and their
exercise prices must be at least 110% of the market value at the time of grant.
Each Option shall be for a term of one to ten years and may not be
exercised during the first twelve months of the term. Commencing on the first
anniversary of the date of grant, the Option may be exercised for 25% of the
total shares covered by the Option with an additional 25% of the total shares
becoming exercisable on each succeeding anniversary until the Option is
exercisable to its full extent. The Committee is empowered to grant options with
different vesting provisions. Options may be exercised for cash, for shares of
the Company's Common Stock at its fair market value on the date of exercise, or
for both. Upon termination of employment for any reason, the Option will
terminate upon the earlier of the full exercise of the Option, the expiration of
the Option by its terms or the end of the three month period following the date
of termination.
Persons who receive options incur no federal income tax liability at the
time of grant. When exercising Nonqualified Options persons recognize taxable
income and the company has a tax deduction at the time of exercise to the extent
of the difference between market price on the date of exercise and exercise
price.
<PAGE>
Persons exercising Incentive Stock Options do not recognize taxable income
until they sell the stock. Sales within two years of the date of grant or one
year of the date of exercise result in taxable income to the holder and a
deduction for the Company, both measured by the difference between the market
price at the time of sale and the exercise price. Sales after such period are
treated as capital transactions to the holder and the Company receives no
deduction.
Options may be transferred to the beneficiaries or heirs of the holder of
the option by will or the laws of descent and distribution, but an option may be
exercised during the lifetime of a holder only by the holder. Nonqualified
options may be transferred at the request of the grantee of the Option to trusts
established by the grantee or as to which the grantee is a grantor or to family
members of the grantee or otherwise for personal and tax planning purposes of
the grantee. Approval of this Plan requires the affirmative vote of a majority
of votes cast at the meeting.
EXECUTIVE COMPENSATION
Compensation Committee Report on Executive Compensation
- -------------------------------------------------------
Compensation for the Company's executive officers in the preceding fiscal
year was established by the Compensation Committee of the Board of Directors.
The Company's executive compensation programs have been designed to link the
level of compensation paid to senior executives with the current and long-term
level of Company performance and each executive's contribution to that
performance. These programs place a significant portion of the executive's cash
compensation at risk. As a result of the Company's overall compensation
philosophy, approximately 20% to 50% of an executive's total annual cash
compensation opportunity depends on the achievement of corporate and individual
performance goals. The amount of compensation at risk increases with the
executive's responsibilities. These programs are composed of three basic
elements, each designed to reward different aspects of each executive's
performance.
(a) Base Salary
Base salary levels and salary increases were determined by an evaluation of
the Company's performance and each individual's performance and contribution.
Furthermore, the Committee considered the recommendations of periodic reviews by
independent consultants and compensation which could be attained for comparable
positions elsewhere.
(b) Annual Performance-Based Incentives
Annual incentive opportunities establish an effective link between current
compensation and current performance to ensure that executives focus on
objectives that help to increase shareholder value. Performance is defined in
terms of financial, operating and management development goals for which each
executive is responsible, in addition to overall Company goals in these areas.
All performance goals, which include pre-tax profits, quality of passenger
service measurements, various unit revenue and cost objectives and operating
goals such as flight completion and on-time percentage, were set by the
Committee. These goals are set each year based on an operating plan the
Committee believes to be challenging in the then current operating environment.
The actual results must meet certain thresholds before any annual incentive
awards are paid. In making its awards for fiscal 1998, the Committee determined
which threshold levels had been met and then awarded specific bonuses based on
its analysis of the achievement of performance goals as established by the
Committee.
<PAGE>
(c) Long-Term Incentives
The Company's officers are entitled to participate in its 1990 Stock Option
Plan. The Option Plan is intended to provide a long-term incentive for future
performance that aligns the officers' and employees' interests with the
shareholders. The Committee evaluated the duties of officers and their present
and potential contributions to the Company and such other factors as it deemed
relevant in determining key persons to whom options were granted and the number
of shares covered by such grants.
The Deferred Incentive Compensation Plan is a non-qualified plan that is
intended to provide supplemental income for certain key employees of the Company
selected by the Committee. Under the Plan, the Committee can allocate as
deferred compensation a percentage of pre-tax profits for certain key employees
of the Company. Contributions for fiscal 1998 to the accounts of the persons
listed in the Summary Compensation Table below are included in the column headed
"All Other Compensation."
Executive officers may participate in the Comair Savings and Investment
Plan, a 401(k) Plan, which is available to all Comair employees on the same
basis. Contributions for fiscal 1998 to the accounts of the persons listed in
the Summary Compensation Table below are included in the column headed "All
Other Compensation."
The Chief Executive Officer's salary was increased from $450,000 in fiscal
1997 to $500,000 in fiscal 1998 based on the criteria discussed above. After the
end of fiscal 1998, the Committee, based on the achievement of certain financial
and operating goals as described above, approved an annual performance-based
incentive award for Mr. Mueller of $375,000.
Federal Law provides that compensation in excess of $1,000,000 per year
paid to the chief executive officer of a public company as well as the other
executive officers listed in the compensation table will no longer be deductible
unless the compensation is "performance-based" and the material terms of the
compensation and the performance base are approved by shareholders. This law was
not applicable to fiscal 1998 compensation, since the salary and bonus levels
did not exceed $1,000,000. The Committee may, in designing compensation packages
in future years, take actions designed to preserve the deductibility of such
compensation so long as such actions do not interfere with the provision of
proper compensation and incentive based pay for the Company's Chief Executive
and other executive officers.
COMPENSATION COMMITTEE
Peter H. Forster, Chairman
Robert H. Castellini
John A. Haas
<PAGE>
PERFORMANCE GRAPH
The following table compares total shareholder returns for the Company over
the last five years to the Nasdaq Transportation and the Nasdaq Composite
Indices, assuming a $100 investment made on March 31, 1993.
<TABLE>
<CAPTION>
Value of Initial $100 Investment* Mar-93 Mar-94 Mar-95 Mar-96 Mar-97 Mar-98
- --------------------------------- ------- ------ ------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
Comair Holdings, Inc. $100.00 $ 86.22 $ 70.20 $214.28 $193.66 $374.02
NASDAQ Composite Index $100.00 $107.94 $120.07 $163.03 $181.21 $275.21
(U.S. Domestic Only)
NASDAQ Transportation $100.00 $112.88 $107.21 $130.48 $129.77 $191.10
Index (U.S. Domestic Only)
</TABLE>
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table discloses compensation for services rendered by the
Company's Chief Executive Officer and four other executive officers during the
three fiscal years ended March 31, 1998, 1997 and 1996.
<TABLE>
<CAPTION>
Long Term Compensation Awards
Annual Compensation -----------------------------
--------------------- Securities All Other
Fiscal Underlying Compensation
Names and Principal Position Year Salary ($) Bonus ($) Options # ($)
- ---------------------------- ----- ---------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
David R. Mueller ...................... 1998 $500,000 $375,000 150,000 $502,462(1)
Chairman and Chief Executive Officer 1997 $450,000 $295,110 144,380 $502,432
1996 $417,000 $280,224 139,050 $502,398
David A. Siebenburgen ................. 1998 $310,000 $193,750 90,000 $402,433(2)
President and Chief Operating Officer 1997 $290,000 $158,485 58,506 $362,433
1996 $270,000 $145,152 61,088 $362,404
K. Michael Stuart ..................... 1998 $203,000 $ 88,812 45,000 $162,545(3)
Sr. Vice President, Aircraft Operations 1997 $190,000 $ 43,890 28,125 $162,476
1996 $175,000 $ 58,800 20,925 $162,258
Charles E. Curran III ................. 1998 $203,000 $ 88,812 45,000 $221,269(4)
Sr. Vice President, Marketing 1997 $190,000 $ 72,884 28,125 $221,933
1996 $178,000 $ 59,808 21,263 $222,239
Randy D. Rademacher ................... 1998 $190,000 $ 83,125 45,000 $132,533(5)
Sr. Vice President Finance and 1997 $178,000 $ 68,281 28,125 $132,468
Chief Financial Officer 1996 $155,000 $ 52,080 18,225 $132,258
<FN>
(1) Comprised of $500,000 of contributions by the Company to its Deferred
Incentive Compensation Plan and $2,462 of contributions by the Company to the
Comair Savings and Investment Plan.
(2) Comprised of $400,000 of contributions by the Company to its Deferred
Incentive Compensation Plan and $2,433 of contributions by the Company to the
Comair Savings and Investment Plan.
(3) Comprised of $160,000 of contributions by the Company to its Deferred
Incentive Compensation Plan and $2,545 of contributions by the Company to the
Comair Savings and Investment Plan.
(4) Comprised of $220,000 of contributions by the Company to its Deferred
Incentive Compensation Plan and $1,269 of contributions by the Company to the
Comair Savings and Investment Plan.
(5) Comprised of $130,000 of contributions by the Company to its Deferred
Incentive Compensation Plan and $2,533 of contributions by the Company to the
Comair Savings and Investment Plan.
</FN>
</TABLE>
<PAGE>
OPTION GRANTS IN FISCAL 1998
The following table provides information on option grants in fiscal 1998 to the
executive officers:
<TABLE>
<CAPTION>
Individual Grants
Number of
Securities Percent of Total Potential Realizable Value At
Underlying Options Granted Exercise Assumed Annual Rates of Stock
Options to Employees In Price Expiration Price Appreciation for Option Term
Granted Fiscal Year ($/Share) Date 5% 10%
----------- ----------------- ------------ ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
David R. Mueller 150,000 24% $13.833 04/14/07 $1,305,150 $3,307,050
David A. Siebenburgen 90,000 14% $13.833 04/14/07 $ 783,090 $1,984,230
K. Michael Stuart 45,000 7% $13.833 04/14/07 $ 391,545 $ 992,115
Charles E. Curran III 45,000 7% $13.833 04/14/07 $ 391,545 $ 992,115
Randy D. Rademacher 45,000 7% $13.833 04/14/07 $ 391,545 $ 992,115
</TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL 1998 AND
FISCAL 1998 YEAR-END OPTION VALUES
The following table provides information concerning exercises of stock options
during fiscal 1998 by the executive officers. The table also shows the number
and value of unexercised stock options at the end of fiscal 1998.
<TABLE>
<CAPTION>
Number of Securities Underlying Value of
Shares Unexercised Options Unexercised In-The-Money
Acquired on Value At Fiscal 1998 Year-End (#) Options at Fiscal Year-End
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David R. Mueller 158,121 $2,700,730 99,517 368,169 $1,610,814 $5,264,234
David A. Siebenburgen 69,020 $ 984,578 43,314 181,635 $ 706,675 $2,571,493
K. Michael Stuart 41,834 $ 527,143 4,922 82,970 $ 52,641 $1,129,878
Charles E. Curran III 12,656 $ 224,263 4,922 83,138 $ 52,641 $1,133,471
Randy D. Rademacher 15,341 $ 297,074 47,138 114,609 $ 945,545 $1,774,835
</TABLE>
The dollar values shown are calculated by determining the difference between the
fair market value of the Company's Common Stock at the exercise date and the
exercise price of the options. At the close of trading on March 31, 1998, the
price per share of the Company's Common Stock was $26.50.
<PAGE>
The Company has Employment Agreements with David R. Mueller and David A.
Siebenburgen. The base compensation under the Agreements is currently $525,000
for Mr. Mueller and $420,000 for Mr. Siebenburgen. These may be increased by the
Compensation Committee. The Employment Agreements for Messrs. David Mueller and
David Siebenburgen are each for a term of three years, with the term
automatically extending each year unless one of the parties to the Agreement
gives notice not to extend the term. The Agreements also provide that if an
Agreement is terminated by the Company or a change in control of the Company
occurs, the Company is required to make a lump-sum payment equal to three years
compensation for Messrs. Mueller and Siebenburgen. The Agreements also provide
that if Messrs. Mueller or Siebenburgen are terminated following a change in
control of the Company, the covenant not to compete applicable to the terminated
employee shall be null and void.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Delta Air Lines, Inc. owns approximately 21% of the Company's common stock.
COMAIR is a designated "Delta Connection" carrier, operating all flights under
the DL code. Under a marketing agreement, COMAIR is able to offer passengers
joint fares, coordinated schedules for timely connections and Delta frequent
flyer mileage. In return for set fees, Delta Air Lines, Inc. handles the
Company's reservations and handles flights at some airport locations. Costs of
these various services in fiscal 1998 were approximately $26,184,000. Accounts
payable in the Company's March 31, 1998 financial statements included
approximately $9,461,000 due Delta Air Lines, Inc. for these services.
Trade receivables in the Company's March 31, 1998 financial statements
include amounts due from Delta Air Lines, Inc. for transportation of passengers
and cargo of approximately $1,050,000. Approximately 45% of COMAIR's passengers
in fiscal 1998 connected with Delta Air Lines, Inc.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth the names of all persons who are known by
the Company to be the beneficial owners of more than 5% of the outstanding
shares of Common Stock of the Company:
Name and Address of Number of Percent
Beneficial Owner Shares of Class
- -------------------------- ----------- --------
Delta Air Lines, Inc. 14,048,437(1) 21.1%
1030 Delta Blvd.
Hartsfield Atlanta
International Airport
Atlanta, Georgia 30320
<PAGE>
FMR Corp. 5,997,715(2) 9.0%
82 Devonshire Street
Boston, MA 02109
(1) Based on Form 5 report filed with the Securities and Exchange Commission in
April 1998.
(2) Based on a 13G report filed with the SEC in February 1998.
ISSUE FOUR
RATIFICATION OF ACCOUNTANTS
Arthur Andersen LLP has served as the Company's independent public
accountants since shortly before its 1981 initial public offering. The Board has
reaffirmed that selection for fiscal year 1999. Although not required by law,
the Board is seeking shareholder ratification of its selection. An affirmative
vote of a majority of shares represented at the meeting is required for
ratification. If ratification is not obtained, the Board intends to continue the
employment of Arthur Andersen LLP at least through fiscal 1999. Representatives
of Arthur Andersen LLP are expected to be present at the meeting and have the
opportunity to comment and respond to appropriate questions.
ISSUE FIVE
OTHER MATTERS
Any other matters considered at the meeting including adjournment will
require the affirmative vote of the majority of shares voted.
SHAREHOLDER PROPOSALS
Shareholders desiring to have proposals included in the Proxy Statement for
the 1999 Shareholders' Meeting must submit their proposals to Comair Holdings,
Inc. at its offices on or before March 1, 1999.
<PAGE>
EXHIBIT A
1998 COMAIR HOLDINGS, INC. STOCK OPTION PLAN
ARTICLE 1
OBJECTIVES
Comair Holdings, Inc. (hereinafter "Comair") established this Stock Option
Plan effective August 11, 1998, as an incentive to attract and retain dedicated
and loyal employees of outstanding ability, to stimulate the efforts of such
persons in meeting the Company's objectives and to encourage ownership of its
Common Stock by employees.
ARTICLE 2
DEFINITIONS
2.1 For purposes of the Plan, the following terms shall have the definition
which is attributed to them, unless another definition is clearly indicated by a
particular usage and context.
2.1.1 "Code" means the Internal Revenue Code of 1986.
2.1.2 "Comair" means Comair Holdings, Inc. and any subsidiary of
Comair Holdings, Inc. as the term "subsidiary" is defined in Section 424(f)
of the Code.
2.1.3 "Committee" means the Compensation Committee as designated by
the Board of Directors and further defined in Article 3.1.
2.1.4 "Date of Exercise" means the date on which Comair has received a
written notice of exercise of an Option, in such form as is acceptable to
the Committee, and full payment of the purchase price or a copy of
irrevocable directions to a broker-dealer to deliver the Option Price to
Comair pursuant to Section 7.2 hereof.
2.1.5 "Date of Grant" means the date on which the Committee makes an
award of an Option.
2.1.6 "Eligible Employee" means any individual who performs services
for Comair and any subsidiary of Comair and is treated as an Employee for
federal income tax purposes.
<PAGE>
2.1.7 "Effective Date" means August 11, 1998.
2.1.8 "Fair Market Value" means the last sale price immediately prior
to the date of grant as reported on any stock exchange.
2.1.9 "Incentive Stock Option" shall have the same meaning as given to
that term by Section 422 of the Code.
2.1.10 "Nonqualified Stock Option" means any Option granted under the
Plan which is not considered an Incentive Stock Option.
2.1.11 "Option" means the right to purchase a stated number of Shares
at a specified price. The option may be granted to an Eligible Employee
subject to the terms of this Plan, and such other conditions and
restrictions as the Committee deems appropriate. Each Option shall be
designated by the Committee to be either an Incentive Stock Option or a
Nonqualified Stock Option.
2.1.12 "Option Price" means the purchase price per Share subject to an
Option and shall be fixed by the Committee, but shall not be less than 100%
of the Fair Market Value of a Share on the Date of Grant.
2.1.13 "Permanent and Total Disability": shall mean any medically
determinable physical or mental impairment rendering an individual unable
to engage in any substantial gainful activity, which disability can be
expected to result in death or which has lasted or can be expected to last
for a continuous period of not less than 12 months.
2.1.14 "Plan" means this 1998 Stock Option plan as it may be amended.
2.1.15 "Share" means one share of the Common Stock of Comair Holdings,
Inc.
ARTICLE 3
ADMINISTRATION
3.1 The Plan shall be administered by the Compensation Committee designated
by the Board of Directors of Comair unless otherwise designated by the Board of
Directors of Comair. The Committee shall be comprised of three or more directors
each of whom shall be (i) a "Non-Employee Director" as defined in Rule 16b-3 of
the Securities and Exchange Act of 1934 (the "Act") and (ii) an "outside
director" to the extent required by Section 162(m) of the Code ("Section
162(m)"), as such Rule and Section may be amended, superseded or interpreted
hereafter.
<PAGE>
3.2 Except as specifically limited by the provisions of the Plan, the
Committee in its discretion shall have the authority to:
3.2.1 Grant Options on such terms and conditions consistent with this
Plan as the Committee shall determine;
3.2.2 Interpret the provisions of the Plan and decide all questions of
fact arising in its application, and
3.2.3 Prescribe such rules and procedures for Plan administration as
from time to time it may deem advisable.
3.3 Any action, decision, interpretation or determination by the Committee
with respect to the application or administration of this Plan shall be final
and binding upon all persons, and need not be uniform with respect to its
determination of recipients, amount, timing, form, terms or provisions.
3.4 No member of the Committee shall be liable for any action or
determination taken or made in good faith with respect to the Plan and to the
extent permitted by law, all members shall be indemnified by Comair for any
liability and expenses which may occur from any claim or cause of action.
ARTICLE 4
SHARES SUBJECT TO PLAN
4.1 The number of Shares that may be issued under the Plan is 3,500,000.
Except as provided in Section 4.2, upon lapse or termination of any Option for
any reason without being completely exercised, the Shares which were subject to
such Option may again be subject to other Options.
4.2 The maximum number of Shares with respect to which options may be
granted to any employee during each fiscal year of Comair is 200,000. If an
Option is canceled, it continues to be counted against the maximum number of
Shares for which Options may be granted to an employee.
ARTICLE 5
GRANTING OF OPTIONS
The Committee may, from time to time, prior to August 11, 2008, grant
Options to Eligible Employees on such terms and conditions as the Committee may
determine. More than one Option may be granted to the same Eligible Employee.
<PAGE>
ARTICLE 6
TERMS OF OPTIONS
6.1 Subject to specific provisions relating to Incentive Stock Options set
forth in Article 9, each Option shall be for a term of from one to ten years
from the Date of Grant and may not be exercised during the first twelve months
of the term of said Option. Commencing on the first anniversary of the Date of
Grant of an Option, the Option may be exercised for 25% of the total Shares
covered by the Option with an additional 25% of the total Shares covered by the
Option becoming exercisable on each succeeding anniversary until the Option is
exercisable to its full extent. This right of exercise shall be cumulative and
shall be exercisable in whole or in part. The Committee may establish a
different exercise schedule and impose other conditions upon exercise for any
particular Option or groups of Options. The Committee in its sole discretion may
permit particular holders of Options to exercise an Option to a greater extent
than provided in such Option.
6.2 If the grantee of an Option dies or becomes subject to a Permanent and
Total Disability while employed by Comair all Options granted to such person
shall become fully vested and immediately exercisable as of the date of
termination of employment.
6.3 In the event of the dissolution or liquidation of Comair or any merger,
other than a merger for the purpose of the redomestication of Comair not
involving a change in control, consolidation, exchange or other transaction in
which Comair is not the surviving corporation or in which the outstanding Shares
of Comair are converted into cash, other securities or other property, each
outstanding Option shall terminate as of a date fixed by the Committee provided
that not less than twenty days' (20) written notice of the date of expiration
shall be given to each holder of an Option and each such holder shall have the
right during such period following notice to exercise the Option as to all or
any part of the Shares for which it is exercisable at the time of such notice.
6.4 All outstanding Options shall become fully vested and immediately
exercisable in full if a change in control of Comair occurs. For purposes of
this Agreement, a "change in control of Comair", shall be deemed to have
occurred if (a) any "person", as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, other than (i) a trustee or other
fiduciary holding securities under an employee benefit plan of Comair or any
member of either person's family, becomes the "beneficial owner," as defined in
Rule 13d-3 under such Act, directly or indirectly, of securities of Comair
representing 30% or more of the combined voting power of Comair's then
outstanding securities; or (b) during any period of one year after January 1,
1998, individuals who at the beginning of such period constitute the Board of
Directors and any new director whose election by the Board or nomination for
election by Comair's shareholders was approved by a vote of at least two-thirds
(2/3) of the Directors then still in office who either were Directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof.
However, prior to the time a "change of control of Comair" occurs the Committee
may elect that the acceleration of vesting shall not occur.
<PAGE>
6.5 Nothing contained in this Plan or in any Option granted pursuant to it
shall confer upon any employee any right to continue in the employ of Comair or
to interfere in any way with the right of Comair to terminate employment at any
time. So long as a holder of an Option shall continue to be an employee of
Comair, the Option shall not be affected by any change of the employee's duties
or position.
ARTICLE 7
EXERCISE OF OPTIONS
7.1 Any person entitled to exercise an Option in whole or in part, may do
so by delivering a written notice of exercise to Comair, Attention Chief
Financial Officer, at its principal office. The written notice shall specify the
number of Shares for which an Option is being exercised and the grant date of
the option being exercised and shall be accompanied by full payment of the
Option Price for the Shares being purchased and any withholding taxes.
7.2 An Option may also be exercised by delivering a written notice of
exercise to Comair, Attention Chief Financial Officer, accompanied by
irrevocable instructions to deliver shares to a broker-dealer and a copy of
irrevocable instructions to the broker-dealer to deliver the Option Price and
any withholding taxes to Comair.
ARTICLE 8
PAYMENT OF OPTION PRICE
8.1 In the sole discretion of the Committee, Payment of the Option Price
and any withholding taxes may be made in cash, by the tender of Shares which
have been owned for six months, or both. Shares tendered shall be valued at
their Fair Market Value.
8.2 Payment through tender of Shares may be made by instruction from the
Optionee to Comair to withhold from the Shares issuable upon exercise that
number which have a Fair Market Value equal to the exercise price for the Option
or portion thereof being exercised and any withholding taxes.
<PAGE>
ARTICLE 9
INCENTIVE STOCK OPTIONS AND NONQUALIFIED STOCK OPTIONS
9.1 The Committee in its discretion may designate whether an Option is to
be an Incentive Stock Option or a Nonqualified Stock Option. The Committee may
grant both an Incentive Stock Option and a Nonqualified Stock Option to the same
individual. However, where both an Incentive Stock Option and a Nonqualified
Stock Option are awarded at one time, such Options shall be deemed to have been
awarded in separate grants, shall be clearly identified, and in no event will
the exercise of one such Option affect the right to exercise the other such
Option.
9.2 Any option designated by the Committee as an Incentive Stock Option
will be subject to the general provisions applicable to all Options granted
under the Plan plus the following specific provisions:
9.2.1 At the time the Incentive Stock Option is granted, if the
Eligible Employee owns, directly or indirectly, stock representing more
than 10% of (i) the total combined voting power of all classes of stock of
Comair, or (ii) a corporation that owns 50% or more of the total combined
voting power of all classes of stock of Comair, then;
9.2.1.1 The Option Price must equal at least 110% of the Fair
Market Value on the Date of Grant; and
9.2.1.2 The term of the Option shall not be greater than five
years from the Date of Grant.
9.2.2 The aggregate Fair Market Value of Shares (determined at the
Date of Grant) with respect to which Incentive Stock Options are
exercisable by an Eligible Employee for the first time during any calendar
year under this Plan or any other plan maintained by Comair shall not
exceed $100,000.
9.3 If any Option is not granted, exercised, or held pursuant to the
provisions noted immediately above, it will be considered to be a Nonqualified
Stock Option to the extent that the grant is in conflict with these
restrictions.
ARTICLE 10
TRANSFERABILITY OF OPTION
During the lifetime of an Eligible Employee to whom an Option has been
granted, such Option is not transferable voluntarily or by operation of law and
may be exercised only by such individual. Upon the death of an Eligible Employee
to whom an Option has been granted, the Option may be transferred to the
beneficiaries of heirs of the holder of the Option by will or by the laws of
descent and distribution.
<PAGE>
Notwithstanding the above, the Committee may, with respect to particular
Nonqualified Options, establish or modify the terms of the Option to allow the
Option to be transferred at the request of the grantee of the Option to trusts
established by the grantee or as to which the grantee is a grantor or to family
members of the grantee or otherwise for personal and tax planning purposes of
the grantee. If the Committee allows such transfer, such Options shall not be
exercisable for a period of six months following the action of the Committee.
ARTICLE 11
TERMINATION OF OPTIONS
11.1 An Option will terminate as follows:
11.1.1 Upon exercise or expiration by its terms.
11.1.2 Immediately if employment is terminated for cause or by
voluntary action of the grantee without the consent of Comair. Cause is
defined as including, but not limited to, theft of or intentional damage to
Comair property, intentional harm to Comair's reputation, material breach
of the optionee's duty of fidelity to Comair, excessive use of alcohol, the
use of illegal drugs, the commission of a criminal act, willful violation
of Comair's policies, or trading in shares for personal gain based on
knowledge of Comair's activities or results when such information is not
available to the general public.
11.1.3 If the grantee of an Option violates any terms of any written
employment, confidentiality or noncompetition agreement between Comair and
that person, all existing Options granted to such person will terminate. In
addition, if at the time of such violation such person has exercised
Options but has not received certificates for the Shares to be issued,
Comair may void the Option and its exercise. Any such actions by Comair
shall be in addition to any other rights or remedies available to Comair in
such circumstances.
11.1.4 If the grantee of an Option dies or becomes subject to a
Permanent and Total Disability while employed by Comair, or within 60 days
after termination of employment for any reason other than cause, such
Option may be exercised at any time within one year after the date of
termination of employment. Options may be exercised by that person's estate
or guardian or by those persons to whom the Option may have been
transferred pursuant to Section 10.
<PAGE>
11.1.5 In all other cases, upon termination of employment, the
then-exercisable portion of any Option will terminate on the 90th day after
the date of termination. The portion not exercisable will terminate on the
date of termination of employment. For purposes of the Plan, a leave of
absence approved by Comair shall not be deemed to be termination of
employment.
11.2 The Committee, in its discretion, may as to any particular outstanding
Nonqualified Stock Option or upon the grant of any Nonqualified Stock Option,
establish terms and conditions which are different from those otherwise
contained in this Article 11, by, without limitation, providing that upon
termination of employment for any designated reason, vesting may occur in whole
or in part at such time and that such Option may be exercised for any period
during the remaining term of the Option, not to exceed ten years from the Date
of Grant.
11.3 Except as provided in Article 12 hereof, in no event will the
continuation of the term of an Option beyond the date of termination of
employment allow the grantee, his beneficiaries heirs or assigns, to accrue
additional rights under the Plan, or to purchase more Shares through the
exercise of an Option than could have been purchased on the day that employment
was terminated. In addition, notwithstanding anything contained herein, no
option may be exercised in any event after the expiration of ten years from the
date of grant of such option.
ARTICLE 12
ADJUSTMENTS TO SHARES AND PRICE
12 1 In the event of changes in the outstanding Common Stock of Comair as a
result of stock dividends, stock splits, reclassifications, reorganizations,
redesignations, mergers, consolidations, recapitalizations, combinations or
exchanges of Shares, or other such changes, the number and class of Shares for
all purposes covered by the Plan and number and class of Shares and price per
Share for each outstanding Option covered by the Plan shall be appropriately
adjusted by the Committee.
12.2 The Committee shall make appropriate adjustments in the Option Price
to reflect any spin-off of assets, extraordinary dividends or other
distributions to shareholders.
<PAGE>
ARTICLE 13
AGREEMENTS
13.1 All Options granted under the Plan shall be evidenced by a written
agreement in such form or forms as the Committee in its sole discretion may
determine.
13.2 By acceptance of an Option under this Plan, the recipient shall be
deemed to have consented to be bound, on the recipient's own behalf and on
behalf of the recipient's heirs, assigns and legal representatives, by all terms
and conditions of this Plan.
ARTICLE 14
AMENDMENT OR TERMINATION OF PLAN
14.1 The Board of Directors of Comair may at any time amend, suspend, or
terminate the Plan; provided, however, that no amendments by the Board of
Directors of Comair shall, without further approval of the shareholders of
Comair;
14.1.1 Change the definition of Eligible Employees;
14.1.2 Except as provided in Artless 4 and 12 hereof, increase the
number of Shares which may be subject to the Plan, or increase the maximum
number of Shares with respect to which Options may be granted to any
eligible Employee of Comair during any fiscal year;
14.1.3 Cause the Plan or any Option granted under the Plan to fail to
meet the conditions for exclusion of application of the $1 million
deduction limitation imposed by Section 162(m) of the Code; or
14.1.4 Cause any Option granted as an Incentive Stock Option to fail
to qualify as an "Incentive Stock Option" as defined by Section 422 of the
Code.
14.2 No amendment or termination of the plan shall alter or impair any
Option granted under the Plan without the consent of the holder thereof.
14.3 This Plan shall continue in effect until the expiration of all Options
granted under the Plan unless terminated earlier in accordance with this Article
14; provided, however, that it shall otherwise terminate and no Options shall be
granted ten years after the Effective Date.
<PAGE>
ARTICLE 15
EFFECTIVE DATE
This Plan shall become effective as of August 11, 1998, having been adopted
by the Board of Directors of Comair on May 19, 1998 and subject to approval by
shareholders by August 11, 1998.
ARTICLE 16
MISCELLANEOUS
16.1 Nothing contained in this Plan or in any action taken by the Board of
Directors or shareholders of Comair shall constitute the granting of an Option.
An Option shall be granted only at such time as a written option shall have been
executed and delivered to the respective employee and the employee shall have
executed an agreement in conformance with the provisions of the Plan.
16.2 Certificates for Shares purchased through exercise of Options will be
issued in regular course after exercise of the Option and payment therefor as
called for by the terms of the Option. No persons holding an Option or entitled
to exercise an Option granted under this Plan shall have any rights or
privileges of a shareholder of Comair with respect to any Shares issuable upon
exercise of such Option until certificates representing such Shares shall have
been issued and delivered. No Shares shall be issued and delivered upon exercise
unless and until Comair has complied with all applicable registration
requirements of the Securities Act of 1933 and any applicable state securities
laws and with any applicable listing requirements of any securities exchange on
which Comair securities may then be listed as well as any other requirements of
law.
<PAGE>
COMAIR HOLDINGS, INC.
Proxy For Annual Meeting
The undersigned hereby appoints RAYMOND A. MUELLER and DAVID R. MUELLER, or
either of them, proxies of the undersigned each with the power of substitution,
to vote cumulatively or otherwise all shares of Common Stock which the
undersigned would be entitled to vote at the Annual Meeting of Shareholders of
Comair Holdings, Inc. to be held August 11, 1998, at 10:00 a.m. (Eastern
Daylight Time) at the Radisson Inn, Cincinnati/Northern Kentucky International
Airport, Hebron, Kentucky and at any adjournment of such Meeting as specified on
the reverse side on the matters described in the Company's Proxy Statement and
in their discretion with respect to such other business as may properly come
before the Meeting or any adjournment thereof.
(Continued on reverse side)
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:
Please mark
your votes as
indicated in [X]
this example
1. To elect the following three persons as Class B Directors:
Robert H. Castellini,
Christopher J. Murphy III,
Gerald L. Wolken
FOR WITHHOLD To withhold authority to vote for
all nominees AUTHORITY any individual nominee, write that
listed to the right to vote for all nominee's name in the space below:
(except as marked nominees listed
to the contrary) to the right
[ ] [ ] --------------------------------
2. To amend the Company's Articles of Incorporation to increase the authorized
number of shares of Common Stock to 200 million.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To approve the 1998 Comair Holdings, Inc. Stock Option Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To ratify the selection of Arthur Andersen LLP as independent certified
public accountants for fiscal 1999
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Authority to transact such other business as may properly come before the
meeting or any adjournment thereof.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made , this proxy will be voted
for the listed nominees and for proposals 2, 3 and 4.
________________________, 1998
-----------------------------
------------------------------
Important: Please sign exactly
as name appears hereon indicating,
where proper, official position
or representative capacity. In
the case of joint holders, all
should sign.
THIS PROXY IS SOLICITED ON
BEHALF OF THE
BOARD OF DIRECTORS.
