<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
</TABLE>
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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
<PAGE> 2
Comair Holdings, Inc.
P.O. Box 75021
Cincinnati, Ohio 45202
NOTICE OF ANNUAL MEETING
AND PROXY STATEMENT July 2, 1999
Dear Shareholder:
We invite you to attend our annual meeting of shareholders on Tuesday, August
10, 1999, at the Radisson Inn, Cincinnati-Northern Kentucky International
Airport. At the meeting, you will hear a report on our operations and have a
chance to meet your directors and executives.
This booklet includes the formal notice of the meeting and the proxy statement.
The proxy statement tells you more about the agenda and procedures for the
meeting. It also describes how the Board operated and gives personal information
about our director candidates.
Our proxy statement has a new look this year. We hope you find it easy to read
and understand.
Even if you only own a few shares, we want your shares to be represented at the
meeting. I urge you to complete, sign, date and return your proxy card promptly
in the enclosed envelope.
Sincerely yours,
/s/ David R. Mueller
_______________________
David R. Mueller
Chairman of the Board
Chief Executive Officer
<PAGE> 3
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
COMAIR HOLDINGS, INC.
TIME:
10:00 a.m., Eastern Time
DATE:
Tuesday, August 10, 1999
PLACE:
Radisson Inn
Cincinnati-Northern Kentucky International Airport
Hebron, Kentucky 41048
PURPOSE:
o Elect Directors
o Vote on shareholder proposal as described herein
o Ratify appointment of Arthur Andersen, LLP as the Company's independent
public accountants for fiscal year 2000
o Conduct other business if properly raised
Only shareholders of record on June 25, 1999 may vote at the meeting. The
approximate mailing date of the Proxy Statement and accompanying Proxy Card is
July 2, 1999.
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE, AND RETURN YOUR PROXY CARD
PROMPTLY IN THE ENCLOSED ENVELOPE.
/s/ David R. Mueller
__________________________
David R. Mueller
Chairman of the Board
Chief Executive Officer
<PAGE> 4
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
- ----------------- ----
<S> <C>
GENERAL INFORMATION....................................................................................1
ELECTION OF DIRECTORS..................................................................................2
SHAREHOLDER PROPOSAL...................................................................................4
RATIFICATION OF ACCOUNTANTS............................................................................5
DIRECTOR COMPENSATION..................................................................................5
BOARD COMMITTEES.......................................................................................5
PRINCIPAL SHAREHOLDERS.................................................................................6
DIRECTOR AND EXECUTIVE OFFICER STOCK OWNERSHIP.........................................................7
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..............................................................8
PERFORMANCE GRAPH......................................................................................9
COMPENSATION COMMITTEE REPORT.........................................................................10
SUMMARY COMPENSATION TABLE............................................................................11
OPTION GRANTS IN LAST FISCAL YEAR.....................................................................12
FISCAL YEAR-END OPTION VALUES.........................................................................12
RELATIONSHIPS AND RELATED TRANSACTIONS................................................................13
SHAREHOLDER PROPOSALS FOR NEXT YEAR...................................................................13
QUESTIONS.............................................................................................13
</TABLE>
<PAGE> 5
1
GENERAL INFORMATION
WHO MAY VOTE
Shareholders of Comair Holdings, Inc. as recorded in our stock register on June
25, 1999, may vote at the meeting. As of May 31, 1999, Comair Holdings, Inc. had
96,567,688 shares of Common Stock outstanding.
HOW TO VOTE
You may vote in person at the meeting or by proxy. We recommend you vote by
proxy even if you plan to attend the meeting. You can always change your vote at
the meeting.
HOW PROXIES WORK
The Company's Board of Directors is asking for your proxy. Giving us your proxy
means you authorize us to vote your shares at the meeting in the manner you
direct. You may vote for all, some, or none of our director candidates. You may
also vote for or against the other proposals or abstain from voting.
If you sign and return the enclosed proxy card but do not specify how to vote,
we will vote your shares in favor of our director candidates, against the
shareholder proposal, and in favor of the ratification of Arthur Andersen LLP as
the Company's independent public accountants for fiscal year 2000.
You may receive more than one proxy or voting card depending on how you hold
your shares. Shares registered in your name are covered by one card. If you hold
shares through someone else, such as a stockbroker, you may get material from
them asking how you want to vote.
REVOKING A PROXY
You may revoke your proxy before it is voted by submitting a new proxy with a
later date, by voting in person at the meeting, or by notifying the Company's
Secretary in writing at the address under "Questions?" on page 13.
QUORUM
In order to carry on the business of the meeting, we must have a quorum. This
means at least a majority of the outstanding shares eligible to vote must be
represented at the meeting, either by proxy or in person.
VOTES NEEDED
The director candidates receiving the most votes will be elected to fill the
seats on the Board. Approval of each of the other proposals requires the
favorable vote of a majority of the votes cast. Only votes for or against a
proposal count. Abstentions and broker non-votes count for quorum purposes but
not for voting purposes. Broker non-votes occur when a broker returns a proxy
but does not have authority to vote on a particular proposal.
ATTENDING IN PERSON
Only shareholders, their proxy holders, and the Company's guests may attend the
meeting.
OTHER MATTERS
Any other matters considered at the meeting including adjournment will require
the affirmative vote of a majority of shares voting.
VOTING BY PROXY
All proxies properly signed will, unless a different choice is indicated, be
voted "FOR" the election of all nominees for directors proposed by the Board of
Directors, "AGAINST" the shareholder proposal, and "FOR" ratification of the
selection of independent public accountants.
If any other matters come before the meeting or any adjournment, each proxy will
be voted at the discretion of the individuals named as proxies on the card.
<PAGE> 6
2
ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY CARD)
The Board has nominated the director candidates named below.
The Board of Directors oversees the management of the Company on your behalf.
The Board reviews Comair Holdings' long-term strategic plans and exercises
direct decision-making authority in key areas, such as declaring dividends. Just
as important, the Board chooses the CEO, sets the scope of his authority to
manage the Company's business day to day, and evaluates his performance. The
Board also reviews development and succession plans for the Company's top
executives.
The Company's Articles of Incorporation provide for a Board of Directors with
three classes of three members in each class. Directors whose term expires in
1999 are up for election at the annual meeting. This Class currently consists of
Peter H. Forster and John A. Haas whom the Company has nominated for election.
The Board is also nominating Gerald L. Wolken for election. He was a previous
member of the Class of Directors whose term expires in 2001.
Most of Comair Holdings, Inc.'s directors are not employees. Only non-employee
directors serve on the Company's Audit and Compensation Committees. All
directors are elected for three-year terms. Personal information on each of our
nominees is given on page 3.
If a director nominee becomes unavailable before the election, your proxy card
authorizes us to vote for a replacement nominee if the Board names one.
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 the 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. Nominees receiving the
highest number of votes cast for the positions to be filled will be elected.
Delta Air Lines, Inc. has the right under a 1986 agreement with Comair to
designate a nominee for election to the Company's Board of Directors. They have
not exercised that right at this time, and the Company believes it is in its
best interest at this time to retain a vacancy that could be filled by a Delta
nominee.
The Board met six times last year and took one Action in Writing.
<PAGE> 7
3
THE BOARD RECOMMENDS YOU VOTE FOR EACH OF THE FOLLOWING CANDIDATES:
PETER H. FORSTER Mr. Forster has been affiliated with the
AGE 57 Dayton Power and Light Company, an electric
DIRECTOR SINCE 1988 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 Corporation.
JOHN A. HAAS Mr. Haas was Group Vice President of Ball
AGE 62 Corporation from 1993 through 1995. He was
DIRECTOR SINCE 1990 President and Chief Executive Officer of
Ball Glass Container Corporation since 1994
and President of 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-based manufacturer, which
was acquired by Ball Corporation.
GERALD L. WOLKEN Mr. Wolken has been Managing Partner of MLE
AGE 63 Enterprises Inc., a management consulting
DIRECTOR SINCE 1989 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 Board of Directors for Service
Management Systems, Intellitecs
International and Boys Hope/Girls Hope. He
also serves on the Advisory Boards of Health
Resource Publishing Company, U.S. Technology
and Duramed Pharmaceutical Company.
<PAGE> 8
4
SHAREHOLDER PROPOSAL
(ITEM 2 ON THE PROXY CARD)
The following proposal was submitted for inclusion in this Proxy Statement by
the Trust for the International Brotherhood of Electrical Workers' Pension
Benefit Fund, 1125 Fifteenth Street, N.W., Washington, D.C., 20005. As of the
date this proposal was submitted, the fund was the beneficial owner of 8,925
shares of Common Stock.
"BE IT RESOLVED: That the shareholders of Comair Holdings, Inc. ("Company") urge
that the Board of Directors take the necessary steps, in compliance with state
law, to declassify the Board of Directors for the purpose of director elections.
The Board declassification shall be done in manner that does not affect the
unexpired terms of directors previously elected.
SUPPORTING STATEMENT
The election of corporate directors is the primary avenue in the American
corporate governance system for shareholders to influence corporate affairs and
exert accountability on management. We strongly believe that our Company's
financial performance is closely linked to its corporate governance policies and
procedures, and the level of management accountability they impose. Therefore,
as shareholders concerned about the value of our investment, we are very
disturbed by our Company's current system of electing only one-third of the
board of directors each year. We believe this staggering of director terms
prevents shareholders from annually registering their views on the performance
of the board collectively and each director individually.
Concerns that the annual election of all directors would leave our Company
without experienced Board members in the event that all incumbents are voted out
is unfounded. If the owners should choose to replace the entire board, it would
be obvious that the incumbents directors' contributions were not valued.
Additionally, concerns that the annual election of all directors would expose
shareholders to takeover attempts at below full value are also unfounded. It is
our belief that the staggered Board insulates directors and senior executives
from the consequences of poor performance by denying shareholders the
opportunity to replace an entire Board, which is pursuing failed policies. We
believe that allowing shareholders to annually register their views on the
performance of the Board collectively is one of the best methods to insure that
our Company will be managed in the best interests of the shareholders.
WE URGE YOU TO VOTE FOR THIS PROPOSAL"
BOARD OF DIRECTORS
RECOMMENDATION AND STATEMENT
The Company's Board of Directors is divided into three classes, with staggered
three-year terms. The Board is confident that the current Board structure is in
the best interests of all shareholders. Comair is one of the few airlines that
has been consistently profitable each year since going public in 1981. The
Company believes that the stability provided by the staggered Board is an
integral part of its success story.
The Board also believes that a classified board helps in effectively recruiting
and retaining as board members experienced individuals familiar with the Company
and its business. This is especially important in our rapidly evolving industry
where the Board believes that specialized knowledge and judgement is critical.
Keeping a classified board helps assure that individuals who are familiar with
these unique demands will continue to serve the Company as directors over time.
<PAGE> 9
5
As current headlines indicate, no company, regardless of size, is safe from
takeover attempts that may not be in the best interest of its shareholders. In
the opinion of the Board, a classified board encourages any person who desires
to obtain control of the Company to engage in arms-length, meaningful discussion
with the Board, because the entire Board cannot be replaced in a single proxy
contest. The Board believes that a system that encourages such discussions
benefits the Company's shareholders.
Adoption of this proposal would not automatically eliminate the classified
Board. The Board would have to propose to the shareholders that an amendment to
the Articles of Incorporation be adopted to eliminate the staggered Board. The
affirmative vote of at least two-thirds of all outstanding shares is required to
amend the Articles of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
(ITEM 3 ON THE PROXY CARD)
Although not required by law, the Board is seeking shareholder ratification of
its selection of Arthur Andersen LLP as the Company's independent auditors. An
affirmative vote of a majority of shares voting 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 2000. Representatives
of Arthur Andersen LLP are expected to be present at the meeting and will be
given an opportunity to comment, if they so desire, and to respond to
appropriate questions that may be asked by shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF ARTHUR ANDERSEN
LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive $20,000 per year and
non-qualified options to purchase 11,392 shares per year. In addition, each
Director receives $1,500 per year for each committee on which they are a member.
Committee chairmen receive an additional $1,500 annually.
Directors who are employees of the Company are not separately compensated for
serving as Directors.
Raymond A. Mueller and David R. Mueller are father and son. None of the other
directors or executive officers are related.
BOARD COMMITTEES
The Board appoints committees to help carry out its duties. In particular, Board
Committees work on key issues in greater detail than would be possible at full
Board meetings. Each committee reviews the results of its meetings with the full
Board. The Board of Directors has elected not to appoint a Nominating Committee.
THE EXECUTIVE COMMITTEE is authorized to perform substantially all of the
functions of the Board of Directors between meetings of the Board.
Committee Members: David R. Mueller, Peter H. Forster, and Raymond A. Mueller
(Chairman).
Actions in Writing Last Year: twenty-seven
THE AUDIT COMMITTEE is responsible for reviewing the Company's internal
accounting operations. It also recommends the employment of independent
accountants and reviews the relationship between the Company and its outside
accountants.
Committee Members: Raymond A. Mueller, Gerald L. Wolken, and Christopher J.
Murphy (Chairman).
Meetings Last Year: two
<PAGE> 10
6
THE FINANCE COMMITTEE reviews the investment, dividend and overall capital
structure policies of the Company.
Committee Members: Christopher J. Murphy, David A. Siebenburgen, and David R.
Mueller (Chairman).
Meetings Last Year: two
THE COMPENSATION COMMITTEE is responsible for establishing compensation levels
for management and administering the Company's Stock Option Plans.
Committee Members: Robert H. Castellini, John A. Haas, and Peter H. Forster
(Chairman).
Meetings Last Year: three
Actions in Writing Last Year: one
PRINCIPAL SHAREHOLDERS
The following persons are the only shareholders known by the Company to
own beneficially 5% or more of its outstanding Common Stock as of June
25, 1999:
<TABLE>
<CAPTION>
Amount of Percent
Name of Beneficial Owner Beneficial Ownership of Class
- ------------------------ -------------------- --------
<S> <C> <C>
Delta Air Lines, Inc. 21,072,655(1) 21.9%
1030 Delta Boulevard
Hartsfield International Airport
Atlanta, GA 30320
FMR Corp. 5,711,875(2) 5.9%
82 Devonshire St.
Boston, MA 02109
</TABLE>
(1) Based on Form 5 Report filed with the Securities and Exchange Commission in
May, 1999.
(2) Based on 13G Report filed with the Securities and Exchange Commission
in February, 1999.
<PAGE> 11
7
DIRECTOR AND EXECUTIVE OFFICER STOCK OWNERSHIP
The table below shows how much Comair Holdings, Inc.'s common stock each
executive officer and director of the Company owned on May 31, 1999.
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned (1)
----------------------
Name and Age Position Amount Percentage
- ------------ -------- ------ ----------
<S> <C> <C> <C>
Raymond A. Mueller (2) Director 409,574 (*)
Age 77
Robert H. Castellini (3) Director 853,091 (*)
Age 57
Christopher J. Murphy, III (4) Director 98,851 (*)
Age 53
Peter H. Forster (5) Director 91,133 (*)
Age 57
John A. Haas (6) Director 87,337 (*)
Age 62
Gerald L. Wolken (7) Director 58,095 (*)
Age 63
David R. Mueller (8) Chairman of the Board, CEO 1,232,164 1.3%
Age 46
David A. Siebenburgen (9) President, COO 468,845 (*)
Age 51
K. Michael Stuart (10) Sr. VP Aircraft Operations 206,044 (*)
Age 47
Charles E. Curran, III (11) Sr. VP Marketing 181,150 (*)
Age 52
Randy D. Rademacher (12) Sr. VP Finance, CFO 195,075 (*)
Age 42
Linda E. Noble (13) Sr. VP Human Resources 130,840 (*)
Age 51 and Inflight Services
All Executive Officers and Directors as a
group (Twelve Persons) 4,012,199 4.2%
</TABLE>
* Less than 1%
<PAGE> 12
8
Notes:
(1) 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.
(2) Does not include 1,232,164 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 86,038 shares
held in various trusts for the benefit of his grandchildren,
51,840 shares held in a Family Limited Partnership, 56,664
shares held by his spouse, and options for 79,744 shares
exercisable within 60 days of May 31, 1999.
(3) Includes 614,097 shares held in a Family Limited Partnership,
37,968 shares which are a part of a corporate profit sharing
plan of which Mr. Castellini is a participant, 2876 shares
which are held in IRA accounts for Mr. Castellini and his
spouse, and options for 79,744 shares exercisable within 60
days of May 31, 1999.
(4) Includes options for 79,744 shares exercisable within 60 days of May
31, 1999.
(5) Includes 3,375 shares held by his spouse and options for 79,744 shares
exercisable within 60 days of May 31, 1999.
(6) Includes options for 79,744 shares exercisable within 60 days of May
31, 1999.
(7) Includes options for 56,960 shares exercisable within 60 days of May
31, 1999.
(8) Includes 48,091 shares held in Company 401(k) Program, 53,692 shares
held by his children, and 542,412 options for shares exercisable within
60 days of May 31, 1999.
(9) Includes 19,146 shares held in a Company 401(k) Program and options for
273,239 shares exercisable within 60 days of May 31, 1999.
(10) Includes 9,256 shares held in a Company 401(k) Program, 44,925
shares held by his spouse and options for 94,925 shares
exercisable within 60 days of May 31, 1999.
(11) Includes 1,045 shares held in a Company 401(k) Program and options for
95,177 shares exercisable within 60 days of May 31, 1999.
(12) Includes 7,702 shares held in a Company 401(k) Program and options for
155,083 shares exercisable within 60 days of May 31, 1999.
(13) Includes 5,563 shares held in a Company 401(k) Program, 3000
shares held in a custodial account and options for 104,100
shares exercisable within 60 days of May 31, 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who own more than 10% of a registered
class of the Company's equity securities to file reports of ownership and
changes in ownership. Based on a review of the copies of such forms received by
it, the Company believes that during the last fiscal year, all of its executive
officers, directors and 10% stockholders complied with the Section 16 reporting
requirements.
<PAGE> 13
9
PERFORMANCE GRAPH
The performance graph below compares the Company's cumulative total shareholder
return from March 31, 1994 through March 31, 1999, to that of the NASDAQ
Transportation and the NASDAQ Composite Indices.
The graph assumes that the value of the investment in the Company's Common Stock
and each index was $100.00 on March 31, 1994 and that all dividends were
reinvested.
COMAIR HOLDINGS, INC.
COMPARATIVE STOCK ANALYSIS
VALUE OF INITIAL $100 INVESTMENT*
<TABLE>
<CAPTION>
NASDAQ NASDAQ
COMAIR COMPOSITE INDEX TRANSPORTATION INDEX
HOLDINGS, INC. (U.S. DOMESTIC ONLY) (U.S. DOMESTIC ONLY)
-------------- -------------------- --------------------
<S> <C> <C> <C>
March 1994 $100.00 $100.00 $100.00
March 1995 82.01 111.25 95.01
March 1996 251.62 151.06 115.68
March 1997 228.43 167.83 115.06
March 1998 442.98 254.43 169.16
March 1999 596.83 342.44 127.95
</TABLE>
* Assumes $100 invested on March 31, 1994
<PAGE> 14
10
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION POLICIES
The Company's policies on executive compensation are designed to encourage and
motivate its executive officers to achieve both short-term and long-term
operating, financial and strategic goals, and thereby build shareholder value on
a steady but aggressive basis. As a result of the Company's overall philosophy,
approximately 20% to 50% of an executive's total compensation depends on the
achievement of their goals. It is also the policy of the Committee to reward
superior corporate performance, recognize individual initiative and achievement,
and assist the Company in attracting and retaining qualified executives.
The Omnibus Budget Reconciliation Act of 1993 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
approved by the shareholders. The Committee does not believe any action is
required by the Company or its shareholders in order for the compensation paid
to its executive officers to meet the requirements for deductibility at this
time.
BASE SALARIES
The Committee believes it is important to maintain executive salaries at
competitive levels, and relies to some extent on comparisons with other regional
companies of similar size.
Base salary levels and salary increases were determined by an evaluation of the
Company's performance and each individual's performance and contribution.
The Chief Executive Officer's salary was determined on this basis.
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 at the beginning of the fiscal year. 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 targets
before any annual incentive awards are paid. In making its awards for fiscal
1999, the Committee determined which targets had been met and then awarded
specific bonuses based on its analysis of the achievement of performance goals
as established by the Committee.
The Chief Executive Officer's bonus was determined on this basis.
STOCK OPTIONS
The Company's 1998 and 1990 Stock Option Plans are the principal means by which
long-term incentive compensation is provided for key officers and employees of
the Company, bringing the interests of these persons more closely into tandem
with the interests of shareholders. The Plans are administered by the
Compensation Committee.
The Company's policies on executive compensation are applicable to the Stock
Option Plans, and all decisions regarding the number, pricing, timing and the
recipients of stock option grants are made by the Compensation Committee.
DEFERRED COMPENSATION
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.
401(k) PLAN
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.
RESPECTFULLY SUBMITTED BY THE MEMBERS OF THE COMPENSATION COMMITTEE, ROBERT H.
CASTELLINI, JOHN A. HAAS, AND PETER H. FORSTER (CHAIRPERSON).
<PAGE> 15
11
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
------------------- ------
Name and Fiscal Securities Underlying All Other
Principal Position Year Salary Bonus Options Compensation
- ------------------ ---- ------ ----- ------- ------------
<S> <C> <C> <C> <C> <C>
David R. Mueller 1999 $525,000 $378,000 225,000 $577,543(1)
Chairman 1998 $500,000 $375,000 225,000 $502,462
Chief Executive Officer 1997 $450,000 $295,110 216,571 $502,432
David A. Siebenburgen 1999 $420,000 $302,400 180,000 $427,817(2)
President 1998 $310,000 $193,750 135,000 $402,433
Chief Operating Officer 1997 $290,000 $158,485 87,758 $362,433
K. Michael Stuart 1999 $213,000 $89,460 67,500 $152,585(3)
Senior Vice President 1998 $203,000 $88,812 67,500 $162,545
Aircraft Operations 1997 $190,000 $43,890 42,188 $162,476
Charles E. Curran III 1999 $213,000 $89,460 67,500 $222,405(4)
Senior Vice President 1998 $203,000 $88,812 67,500 $221,269
Marketing 1997 $190,000 $72,884 42,188 $221,933
Randy D. Rademacher 1999 $205,000 $86,100 67,500 $132,569(5)
Senior Vice President 1998 $190,000 $83,125 67,500 $132,533
Finance, CFO 1997 $178,000 $68,281 42,188 $132,468
</TABLE>
1. Comprised of $575,000 of contributions by the Company to its Deferred
Incentive Compensation Plan and $2,543 of contributions by the Company
to the Comair Savings and Investment Plan.
2. Comprised of $425,000 of contributions by the Company to its Deferred
Incentive Compensation Plan and $2,817 of contributions by the Company
to the Comair Savings and Investment Plan.
3. Comprised of $150,000 of contributions by the Company to its Deferred
Incentive Compensation Plan and $2,585 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 $2,405 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 $2,569 of contributions by the Company
to the Comair Savings and Investment Plan.
The Company has Employment Agreements with David R. Mueller and David A.
Siebenburgen. The base compensation under the Agreements is currently $555,000
for Mr. Mueller and $500,000 for Mr. Siebenburgen. These may be increased by the
Compensation Committee.
The Employment Agreements for Messrs. David R. Mueller and David A. Siebenburgen
are each for a term of three years, with the term automatically extending each
year unless one of the parties to the Agreement gives notice not to extend the
term. The Agreements also provide that if an Agreement is terminated by the
Company, or in the case of death or disability, or a change in control of the
Company occurs, the Company is required to make a lump-sum payment equal to
three years compensation for Messrs. Mueller and Siebenburgen. The Agreements
also provide that if Messrs. Mueller or Siebenburgen are terminated following a
change in control of the Company, the covenant not to compete applicable to the
terminated employee shall be null and void.
<PAGE> 16
12
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value of
Assumed Annual Rates of Stock
Percent of Total Options Price Appreciation for Option Term
Options Granted for Employees Exercise Price ----------------------------------
Individual Grants Granted in Fiscal Year 1999 ($ Per Share) Expiration Date 5% 10%
- ----------------- ------- ------------------- ------------- --------------- -- ---
<S> <C> <C> <C> <C> <C> <C>
David R. Mueller 225,000 20% $16.500 04/13/08 $2,335,050 $5,916,825
David A. Siebenburgen 180,000 16% $16.500 04/13/08 $1,868,040 $4,733,460
Charles E. Curran 67,500 6% $16.500 04/13/08 $ 700,515 $1,775,048
K. Michael Stuart 67,500 6% $16.500 04/13/08 $ 700,515 $1,775,048
Randy D. Rademacher 67,500 6% $16.500 04/13/08 $ 700,515 $1,775,048
</TABLE>
FISCAL 1999 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of
Unexercised Options Unexercised In-The-Money
At Fiscal 1999 Year-end Options at Fiscal Year-end
----------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
David R. Mueller 339,868 586,665 $5,727,878 $6,930,289
David A. Siebenburgen 156,224 361,200 $2,620,637 $3,950,523
Charles E. Curran 46,071 153,520 $ 723,909 $1,730,187
K. Michael Stuart 45,945 153,395 $ 721,362 $1,727,652
Randy D. Rademacher 107,116 203,007 $1,948,783 $2,698,206
</TABLE>
The table above shows the number and value of unexercised stock options
at the end of fiscal 1999. No options were exercised during the last
fiscal year by any of the individuals named in the table.
The dollar values shown are calculated by determining the difference
between the fair market value of the Company's Common Stock on March
31, 1999 and the exercise price of the options. At the close of trading
on March 31, 1999, the price per share of the Company's Common Stock
was $23.625.
<PAGE> 17
13
RELATIONSHIPS AND RELATED TRANSACTIONS
Delta Air Lines, Inc. owns approximately 22% 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 1999 were approximately $30,416,000. Accounts
payable in the Company's March 31, 1999 financial statements included
approximately $11,272,000 due Delta Air Lines, Inc. for these services.
Approximately 45% of Comair's passengers in fiscal 1999 connected with Delta Air
Lines, Inc.
The Company has a lifetime Consulting Agreement with Raymond A. Mueller which
became effective upon his retirement from the Company in 1990. Mr. Mueller's
consulting compensation is $150,000 per year. Mr. Mueller also received
transportation services and insurance amounting to $24,568 for fiscal 1999.
In 1999, the Company received $108,576 from a company owned by Mr. Castellini
for aircraft charters. These charges were in the same range as those to
non-affiliated customers.
SHAREHOLDER PROPOSALS FOR NEXT YEAR
The deadline for shareholder proposals for next year's meeting is March 1, 2000.
On request, the Secretary will provide detailed instructions for submitting
proposals.
The form of Proxy for this meeting grants authority to the designated proxies to
vote in their discretion on any matters that come before the meeting except
those set forth in the Company's Proxy Statement and except for matters as to
which adequate notice is received. In order for notice to be deemed adequate for
the fiscal 2000 Annual Shareholders' Meeting, it must be received prior to May
10, 2000. If there is a change in the anticipated date of next year's annual
meeting or these deadlines by more than 30 days, notification will be supplied
through Form 10-Q filings.
QUESTIONS?
If you have questions or need more information about the annual meeting, write
to:
Comair Holdings, Inc.
Secretary
Richard D. Siegel
P.O. Box 75021
Cincinnati, Ohio 45275
or call us at (606) 767-2515
For information about your record holdings call Chase Mellon Shareholder
Services at 1-800-756-3353.
We also invite you to visit Comair's Internet site at www.comair.com. Internet
site materials are for your general information and are not part of this proxy
solicitation.
<PAGE> 18
PLEASE MARK YOUR
VOTE AS INDICATED IN X
THIS EXAMPLE
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR THE LISTED NOMINEES",
AGAINST PROPOSAL TO, AND "FOR PROPOSAL 3"
1. To elect the following three persons as Directors:
Peter H. Forster, John A. Haas, Gerald L. Wolken
FOR all WITHHOLD
nominees listed AUTHORITY
(except as marked and vote for all
to the contrary) nominees listed
To withhold authority to vote for any individual nominee, write that nominee's
name in the space below.
- -----------------------------------------------------------------------------
2. Shareholder proposal urging Board to take the necessary steps to declassify
the Board of Directors.
FOR AGAINST ABSTAIN
3. To ratify the selection of Arthur Andersen LLP as independent certified
public accountants for fiscal 2000.
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, against proposal 2 and for proposal 3.
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.
Date: , 1999
---------------------------------------------------
- ---------------------------------------------------------------
SIGNATURE
- ---------------------------------------------------------------
SIGNATURE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
X FOLD AND DETACH HERE X
<PAGE> 19
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 10, 1999, 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)
X FOLD AND DETACH HERE X
