MESABA HOLDINGS, INC.
7501 26th Avenue South
Minneapolis, Minnesota 55450
July 24, 2000
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
of Mesaba Holdings, Inc., to be held at the Marriott City Center, 30 South
Seventh Street, Minneapolis, Minnesota, on Monday, August 21, 2000, at 10:00
a.m.
At the meeting you will be asked to vote for the election of three
Class Three directors, one Class Two director and one Class One director,
to approve our 2000 Stock Incentive Plan, and to ratify the appointment by
the Board of Directors of Arthur Andersen LLP as the Company's independent
auditors for the fiscal year ending March 31, 2001.
I encourage you to vote FOR each of the nominees for director, FOR
approval of our 2000 Stock Incentive Plan and FOR ratification of the
appointment of Arthur Andersen LLP. Whether or not you are able to attend
the meeting in person, I also urge you to sign and date the enclosed proxy
card and return it promptly in the enclosed envelope. If you do attend
the meeting in person, you may withdraw your proxy and vote personally on
any matters properly brought before the meeting.
Sincerely,
Paul F. Foley
Chief Executive Officer
<PAGE>
MESABA HOLDINGS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS - AUGUST 21, 2000
____________________
The Annual Meeting of Shareholders of Mesaba Holdings, Inc. (the
"Company") will be held at 10:00 a.m. on Monday, August 21, 2000 at the
Marriott City Center, 30 South Seventh Street, Minneapolis, Minnesota, for
the following purposes:
1. To elect three Class Three directors, each for a term of three
years, one Class Two director for a term of one year and one
Class One director for a term of two years.
2. To consider and vote upon approval of the Company's 2000 Stock
Incentive Plan.
3. To ratify the appointment of Arthur Andersen LLP as the
Company's independent auditors for the fiscal year ending March
31, 2001.
4. To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on June 30, 2000
are entitled to notice of and to vote at the meeting.
Whether or not you expect to attend the meeting in person, please
complete, date, and sign the enclosed proxy exactly as your name appears
thereon and promptly return it in the envelope provided, which requires no
postage if mailed in the United States. Proxies may be revoked at any
time and if you attend the meeting in person, your executed proxy will be
returned to you upon request.
By Order of the Board of Directors
John S. Fredericksen
Secretary
Dated: July 24, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE
PROXY CARD EXACTLY AS YOUR NAME(S) APPEAR(S) THEREON AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
MESABA HOLDINGS, INC.
7501 26th Avenue South
Minneapolis, Minnesota 55450
_____________
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
AUGUST 21, 2000
____________________________
INTRODUCTION
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Mesaba Holdings, Inc. (the
"Company") for use at the Annual Meeting of Shareholders to be held at the
Marriott City Center, 30 South Seventh Street, Minneapolis, Minnesota on
Monday, August 21, 2000 at 10:00 a.m., and at any adjournment thereof.
All shares represented by properly executed proxies received in time
will be voted at the meeting and, where the manner of voting is specified
on the proxy, will be voted in accordance with such specifications.
Shares represented by properly executed proxies on which no specification
has been made will be voted FOR the election of the nominees for director
named herein, FOR approval of the Company's 2000 Stock Incentive Plan and
FOR ratification of the appointment by the Board of Directors of Arthur
Andersen LLP as the Company's independent public accountants for the year
ending March 31, 2001, and will be deemed to grant discretionary authority
to vote upon any other matters properly coming before the meeting. If a
properly executed proxy is returned and the shareholder has abstained from
voting on any matter, the shares represented by the proxy will be
considered present at the meeting for purposes of determining a quorum and
for purposes of calculating the vote, but will not be considered to have
been voted in favor of such matter. If an executed proxy is returned by a
broker holding shares in street name which indicates that the broker does
not have discretionary authority as to certain shares to vote on one or
more matters, such shares will be considered present at the meeting for
purposes of determining a quorum, but not for purposes of calculating the
vote with respect to such matter.
Any shareholder who executes and returns a proxy may revoke it at any
time prior to the voting of the proxies by giving written notice to the
Secretary of the Company; by executing a later-dated proxy; or by attending
the meeting and giving oral notice to the Secretary of the Company.
The Board of Directors of the Company has fixed the close of business
on June 30, 2000 as the record date for determining the holders of Common
Stock entitled to vote at the meeting. On that date, there were 20,268,641
shares of Common Stock issued and outstanding. Each share of Common Stock
entitles the holder to one vote at the meeting. The Notice of Annual
Meeting, this proxy statement and the form of proxy are first being mailed
to shareholders of the Company on or about July 24, 2000.
<PAGE>
ELECTION OF DIRECTORS
NOMINATION AND CLASSIFICATION
The Company's Board of Directors is divided into three separate
classes. The terms of the Class Three directors expire at the meeting and
the Company's Board of Directors has nominated Richard H. Anderson, Robert
C. Pohlad and Paul F. Foley to serve as Class Three directors. Each Class
Three director will be elected to serve until the annual meeting of
shareholders to be held in 2003 and until a successor is elected and
qualified. The Board of Directors has nominated Pierson M. Grieve to
serve as a Class One director. Mr. Grieve was appointed as a director of
the Company in October 1999 to fill the vacancy created by the resignation
of John S. Kern, a Class One director. Mr. Grieve will be elected to
serve until the annual meeting of shareholders to be held in 2001 and
until a successor is elected and qualified. The Board of Directors has
nominated Douglas M. Steenland to serve as a Class Two director. Mr.
Steenland was appointed as a director of the Company in October 1999 to
fill the vacancy created by the resignation of Richard B. Hirst, a Class
Two director. Mr. Steenland will be elected to serve until the annual
meeting of shareholders to be held in 2002 and until a successor is
elected and qualified. The terms of the Class One and Class Two directors
expire in 2001 and 2002, respectively. Each of the Company's directors
also serves as a director of the Company's wholly owned subsidiary, Mesaba
Aviation, Inc. ("Mesaba Aviation"). All nominees have agreed to stand for
election at the meeting.
Three of the nominees, Richard H. Anderson, Pierson M. Grieve and
Douglas M. Steenland, have been nominated pursuant to a provision of the
Regional Jet Services Agreement between the Company, Mesaba Aviation and
Northwest Airlines, Inc. The agreement requires the Company to nominate
and recommend for election a sufficient number of directors designated by
Northwest so that if such directors were elected, there would be three
directors designated by Northwest serving on the Board of Directors of the
Company and of Mesaba Aviation. See "Certain Transactions" for additional
information regarding the agreement.
All proxies will be voted in favor of the three nominees, unless a
contrary choice is specified on the proxy. If, prior to the annual
meeting, the Board of Directors learns that any nominee will be unable to
serve by reason of death, incapacity, or other unexpected occurrence, the
proxies which would have otherwise been voted for such nominee will be
voted for a substitute nominee, if any, selected by the Board. The
election of each nominee for director requires the affirmative vote of the
holders of a majority of the shares of Common Stock represented at the
meeting.
INFORMATION ABOUT NOMINEES
The names of the nominees, their principal occupations, and certain
other information regarding the nominees set forth below is based upon
information furnished to the Company by the respective nominees.
RICHARD H. ANDERSON, age 45, a Class Three director, was appointed as a
director of the Company in August 1999, to fill a vacancy created by the
resignation of Christopher E. Clouser in August 1999. Mr. Anderson is the
Executive Vice President and Chief Operating Officer of Northwest Airlines
Corporation where he has served in various capacities for over five years.
<PAGE>
PAUL F. FOLEY, age 47, a Class Three director, was appointed as a
director of the Company in October 1999, to fill a vacancy created by the
resignation of Bryan K. Bedford in June 1999. Mr. Foley has been the
President and Chief Executive Officer of the Company since October 1999.
He was Vice President Operations Support of Atlas Air from December 1996
to September 1999, and Group Vice President - North America of Lufthansa
Service Group from January 1992 to December 1996.
PIERSON M. GRIEVE, age 72, a Class One director, was appointed as a
director of the Company in October 1999, to fill a vacancy created by the
resignation of John S. Kern in October 1999. Mr. Grieve has been a member
of Palladium Equity Partners, LLC, a New York private investment firm,
since November 1998. He was Chairman of the Metropolitan Airports
Commission - State of Minnesota from April 1995 to April 1999. He is
currently a director of the St. Paul Companies and NRG, Inc.
ROBERT C. POHLAD, age 46, a Class Three director, was elected a
director of the Company in September 1995. Mr. Pohlad has been President
of Pohlad Companies since 1987. He has been Chairman, Chief Executive
Officer and a director of PepsiAmericas, Inc., (formerly Pepsi-Cola Puerto
Rico Bottling Company) since July 1998 and Chief Executive Officer and a
director of Delta Beverage Group, Inc. since 1988, a subsidiary of
PepsiAmericas, Inc., since 1988. Mr. Pohlad is the son of Carl R.
Pohlad, a director of the Company.
DOUGLAS M. STEENLAND, age 48, a Class Two director, was appointed as a
director of the Company in October 1999, to fill a vacancy created by the
resignation of Richard B. Hirst in October 1999. Mr. Steenland is an
Executive Vice President of Northwest Airlines Corporation, where he has
served in various capacities since July 1991.
INFORMATION ABOUT CONTINUING DIRECTORS
The following information regarding the directors of the Company whose
terms do not expire at the meeting is based upon information furnished to
the Company by the respective directors.
DONALD E. BENSON, age 70, a Class Two director, was elected a director
of the Company in June 1995. Mr. Benson has been Executive Vice President
and a director of Marquette Bancshares, Inc. since January 1993 and with
predecessor organizations since 1968. Mr. Benson is also a director of
National Mercantile Bancorp, Mass Mutual Corporate Investors, Mass Mutual
Participation Investors, Delta Beverage Group, Inc., and a director and
Vice President of CRP Sports, Inc., the managing general partner of the
Minnesota Twins baseball club.
CARl R. POHLAD, age 84, a Class Two director, was elected a director
of the Company in February 1995. Mr. Pohlad has been President and a
director of Marquette Bancshares, Inc. since 1993. Prior to 1993, Mr.
Pohlad was President and Chief Executive Officer of Marquette Bank
Minneapolis and Bank Shares Incorporated. Mr. Pohlad is also an owner,
director and the President of CRP Sports, Inc., the managing general
partner of the Minnesota Twins baseball club, and is a director of Genmar
Holdings, Inc.
<PAGE>
RAYMOND W. ZEHR, Jr., age 53, a Class One director, was elected a
director of the Company in June 1995. Mr. Zehr has been Vice President of
Pohlad Companies since 1987, and in various other capacities in Pohlad
Companies since 1971. He is also Chief Investment Manager of CRP
Holdings, LLC, and Vice President of CRP Sports, Inc., the managing
general partner of the Minnesota Twins baseball club. Mr. Zehr is
currently a director of PepsiAmericas, Inc.
COMMITTEES
The Board of Directors has established Executive, Audit, Safety,
Compensation, Nominating and Affiliated Transactions Committees.
The members of the Executive Committee are Paul F. Foley, Richard
H. Anderson and Carl R. Pohlad. The Executive Committee is delegated the
full and complete powers of the Board of Directors to act in place of the
full Board during all periods between regularly scheduled meetings of the
Board and at any other time at which a meeting of the full Board is not
practicable for any reason. Mr. Pohlad was appointed to the Executive
Committee in October, 1995. Messrs. Foley and Anderson were appointed to
the Executive Committee in October 1999.
The members of the Audit Committee are Donald E. Benson, Pierson
M. Grieve and Raymond W. Zehr, Jr. The Audit Committee is empowered by
the Board of Directors to review the financial books and records of the
Company in consultation with the Company's accounting staff and its
independent auditors and to review with the accounting staff and
independent auditors any questions raised with respect to accounting and
auditing policy and procedures. Messrs. Benson, Grieve and Zehr were
appointed to the Audit Committee in October 1999.
The members of the Safety Committee are Douglas M. Steenland,
Robert C. Pohlad and Raymond W. Zehr, Jr. The Safety Committee is also
empowered to review safety and regulatory compliance issues. Messrs.
Steenland, Pohlad and Zehr were appointed to the Safety Committee in
October 1999.
The members of the Compensation Committee are Donald E. Benson,
Raymond W. Zehr, Jr. and Richard H. Anderson. The Compensation Committee
is authorized by the Board of Directors to establish general levels of
compensation for all employees of the Company, to set the annual salary of
each of the executive officers of the Company, including bonus and
incentive programs, to grant options and to otherwise administer the
Company's stock option plans, and to review and approve compensation and
benefit plans of the Company. The Compensation Committee consists
exclusively of non-employee directors. Messrs. Benson and Zehr were
appointed to the Compensation Committee in September 1995. Mr. Anderson
was appointed to the Compensation Committee in October 1999.
The members of the Nominating Committee are Carl R. Pohlad and
Douglas M. Steenland. The Nominating Committee is authorized by the Board
of Directors to recommend the structure and makeup of the Board of
Directors and recommends the nomination of members to the Board to fill
vacancies or for election by the shareholders of the Company. Pursuant to
the Company's Bylaws, the Nominating Committee will consider nominees
proposed by shareholders in accordance with the procedures outlined in the
Bylaws. Messrs. Pohlad and Steenland were appointed to the Nominating
Committee in September 1995, and October 1999 respectively.
<PAGE>
The members of the Affiliated Transactions Committee are Donald E.
Benson, Robert C. Pohlad, Raymond W. Zehr, Jr. and Pierson M. Grieve. The
Affiliated Transactions Committee is authorized by the Board of Directors
to make recommendations to the Board of Directors on any actions relating
to Northwest Airlines, Inc. or its affiliates. Messrs. Benson, Pohlad and
Zehr were appointed to the Affiliated Transactions Committee in September
1995. Mr. Grieve was appointed to the Affiliated Transactions Committee
in October 1999.
During the fiscal year ended March 31, 2000, the Board of Directors
held five meetings, the Executive Committee held seven meetings, the Audit
Committee held two meetings, the Safety Committee held two meetings, the
Compensation Committee held two meetings. Each of the directors attended
at least 75% of the meetings of the Board and each committee of which he
was a member held during the period of his Board membership in the fiscal
year ended March 31, 2000.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive a fee of
$6,250 per quarter and are reimbursed for out-of-pocket expenses incurred
in performing their duties as directors, except for the Northwest
Airlines, Inc. designees, Messrs. Anderson and Steenland, who do not
receive director's fees. Mr. Carl R. Pohlad received $271,257 as
compensation for serving as Chairman of the Board during the fiscal year
ended March 31, 2000. Mr. Carl R. Pohlad was automatically granted
options to purchase 35,000 shares of the Company's Common Stock under the
1996 Director Stock Option Plan on October 8, 1999, at an exercise price of
$9.69 per share. Mr. Benson, Mr. Robert C. Pohlad and Mr. Zehr were each
automatically granted options to purchase 25,000 shares of the Company's
Common Stock under the 1996 Director Stock Option Plan on October 8, 1999,
at an exercise price of $9.69 per share. Mr. Grieve was automatically
granted an option to purchase 10,000 shares of the Company's Common Stock
under the 1996 Director Stock Option Plan on October16, 1999, at an
exercise price of $9.63 per share. The options have a term of six years
and become fully exercisable on the first anniversary of the date of
grant. Messrs. Anderson and Steenland have waived their rights to receive
options under the 1996 Director Stock Option Plan.
<PAGE>
COMPANY STOCK PERFORMANCE
The following graph provides a five-year comparison of the total
cumulative returns for the Company's Common Stock, the CRSP Index for the
Nasdaq Stock Market (U.S. companies), and the CRSP Index for air carriers
traded on the Nasdaq Stock Market. The CRSP Indexes are prepared by the
Center for Research in Security Prices of the University of Chicago. The
total cumulative return for each period is based on the investment of $100
on March 31, 1995, assuming compounded daily returns and the reinvestment
of all dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
CRSP Total Returns Index for:
03/31/95 03/31/96 03/31/97 03/31/98 03/31/99 03/31/00
-------- -------- -------- -------- -------- --------
Mesaba Holdings, Inc. 100.0 320.4 331.1 895.3 572.7 488.6
Nasdaq Stock Index 100.0 135.8 151.0 228.9 309.2 574.7
Air Carrier Index 100.0 182.9 129.2 211.1 168.3 171.0
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding
ownership of the Company's Common Stock by (i) each person known to the
Company to own beneficially more than 5% of its Common Stock, (ii) each
director and nominee for director of the Company, (iii) each executive
officer named in the Summary Compensation Table, and (iv) all directors
and executive officers as a group. Unless otherwise indicated, the
information is as of June 30, 2000 and each person has sole voting and
investment power as to the shares shown. For the purposes of this proxy
statement, beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission, and includes any shares as to
which the person has sole or shared investment power and any shares which
the person has the right to acquire within 60 days of June 30, 2000,
through the exercise of any stock option or other right.
Name and address Number Percentage
of beneficial owner of shares owned
------------------------------ ------------------ ------------
Northwest Airlines Corporation 9,809,035 (1) 40.17%
2700 Lone Oak Pkwy
Eagan, MN 55121
Wellington Management Company, LLP 2,029,350 (2) 10.01%
75 State Street
Boston, MA 02109
Carl R. Pohlad 1,922,715 (3) 9.47%
Pohlad Companies
60 South Sixth Street, Suite 3800
Minneapolis, Minnesota 55402
Raymond W. Zehr, Jr. 168,000 (4) *
John S. Fredericksen 64,750 (5) *
Donald E. Benson 42,750 (6) *
Robert C. Pohlad 33,000 (7) *
Scott L. Durgin 21,500 (8) *
Pierson M. Grieve 5,000 *
Richard H. Anderson 1,500 (9) *
Bryan K. Bedford 0
Paul F. Foley 0
F. Darrell Richardson 0
Douglas M. Steenland 0
All directors and executive
officers as a group (12 persons) 2,259,215 (10) 11.07%
__________________________________
* Less than 1%.
<PAGE>
(1) Consists of 5,657,113 shares held by an indirect subsidiary,
Northwest Aircraft, Inc., and warrants to purchase 4,151,922 shares
exercisable within 60 days held by an indirect subsidiary, Northwest
Airlines, Inc.
(2) Based upon the Form 13F filed by Wellington Management Company, LLP
on May 15, 2000. Wellington Management Company, LLP, in its capacity as an
investment advisor, may be deemed to beneficially own these shares, which
are held of record by its clients. Wellington Management Company, LLP has
sole power to dispose or direct the disposition of 1,889,850 of these
shares, shared power to dispose or direct the disposition of 139,500 of
these shares, sole power to vote or direct the vote of 654,850 of these
shares, and shared power to vote or direct the vote of 139,500 of these
shares.
(3) Includes 27,000 shares which may be purchased pursuant to stock
options exercisable within 60 days.
(4) Includes 18,000 shares which may be purchased pursuant to stock
options exercisable within 60 days.
(5) Includes 37,500 shares which may be purchased pursuant to stock
options exercisable within 60 days.
(6) Includes 18,000 shares which may be purchased pursuant to stock
options exercisable within 60 days.
(7) Includes 18,000 shares which may be purchased pursuant to stock
options exercisable within 60 days.
(8) Includes 16,500 shares which may be purchased pursuant to stock
options exercisable within 60 days.
(9) Consists of shares held in a trust for the benefit of Mr.
Anderson's children. Mr. Anderson's spouse is trustee of the trust. Mr.
Anderson disclaims beneficial ownership of these shares.
(10) Includes shares which may be purchased pursuant to stock options
exercisable within 60 days. See notes 3 through 8 above.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires
directors and executive officers of the Company and persons who own more
than 10% of the Company's Common Stock to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of the Company's Common Stock. Initial reports on Form 3 are
required to be filed within 10 days of an individual becoming a director,
executive officer or owner of 10% or more of the Company's Common Stock.
Reports of changes in ownership are required to be filed within the first
10 days of the month succeeding the month in which a change occurs.
Messrs. Foley and Steenland filed late reports on Form 3. To the
Company's knowledge, all other Section 16(a) filing requirements
applicable to its officers, directors and greater than 10% beneficial
owners required through the end of the Company's fiscal year ended March
31, 2000 were completed on a timely basis.
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table discloses the annual and long-term compensation
received in each of the last three fiscal years by (i) all persons serving
in the capacity of Chief Executive Officer of the Company during the last
fiscal year, (ii) by the Company's executive officers serving at the end
of the last fiscal year whose salary and incentive compensation exceeded
$100,000 in the last fiscal year, and (iii) by any executive officer of
the Company who resigned during the last fiscal year whose salary and
incentive compensation exceeded $100,000 in the last fiscal year.
<TABLE>
<CAPTION>
Long-term
Annual Compensation Compensation
Awards
Securities
Name and Principal Fiscal Incentive Underlying All Other
Position Year Salary Compensation(1) Options/# Compensation
--------------------- -------- --------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Paul F. Foley 2000 $103,912 $ 312,500(2)(3) 150,000 $ 9,826 (4)
President and Chief Executive 1999 - - - -
Officer of the Company and 1998 - - - -
Mesaba Aviation
John S. Fredericksen
Interim Chief Executive Officer 2000 $163,076 $123,600(2)(5) 30,000 $ 5,455 (6)
Vice President, Administration, 1999 141,135 40,000 15,000 4,079 (6)
General Counsel and 1998 134,764 62,500 22,500 2,015 (6)
Secretary of the Company and
Mesaba Aviation
Bryan K. Bedford 2000 $118,651 $ 0 0 $ 1,531 (6)
Former President and Chief 1999 278,269 112,000 20,000 3,469 (6)
Executive Officer of the 1998 266,538 140,000 0 19,916 (8)
Company and Mesaba Aviation
F. Darrell Richardson 2000 $117,226 $ 0 15,000 $ 0
Former Vice President, 1999 152,135 45,000 15,000 0
Operations of Mesaba Aviation 1998 143,699 65,000 22,500 0
Scott L. Durgin 2000 $119,855 $ 79,240(2)(10) 15,000 $ 1,798 (6)
Vice President,Customer Service 1999 104,135 33,600 15,000 1,559 (6)
of Mesaba Aviation 1998 98,269 50,000 0 364 (6)
</TABLE>
____________________
(1) Mr. Foley became an officer of the Company on October 1, 1999.
(2) Incentive compensation for services rendered has been included as
compensation for the year earned even though a portion of such
compensation was actually paid in the following year. Incentive
compensation is based upon the achievement by the Company and the
individual of certain profitability and operational goals as described
under "Compensation Committee Report on Executive Compensation."
(3) Includes $200,000 attributable to a signing bonus.
(4) Consists of temporary living and travel expenses.
(5) Includes $34,000 attributable to a retention bonus.
(6) Consists of matching contributions made by the Company on behalf of
such executive officer pursuant to the Company's 401(k) Retirement Savings
Plan.
(7) Mr. Bedford resigned as an officer of the Company and Mesaba
Aviation on June 29, 1999.
(8) Consists of moving expenses and matching contributions made by the
Company on behalf of such executive officer pursuant to the Company's
401(k) Retirement Savings Plan.
(9) Mr. Richardson resigned as an officer of Mesaba Aviation effective
December 8, 1999.
(10) Includes $22,000 attributable to a retention bonus.
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth, as to each executive officer named
in the Summary Compensation Table, certain information with respect to
stock options granted during the fiscal year ended March 31, 2000.
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------
Number of Potential Realizable Value
Securities Percent of Total at Assumed Annual Rates of
Underlying Options Granted Stock Price Appreciation
Options to Employees Exercise Expiration for Option Term(2)
Name Granted(1) in Fiscal Year Price($/sh) Date 5% 10%
--------------------- ---------- ---------------- ----------- ---------- ------------ ------------
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Paul F. Foley 150,000 50.0% $ 9.69 10/08/05 $494,329 $1,121,464
John S. Fredericksen 30,000 10.0% $ 9.63 10/18/05 $ 98,253 $ 222,904
Bryan K. Bedford 0 - - - - -
F. Darell Richardson 15,000 5.0% $ 13.81 (3) (3) (3)
Scott L. Durgin 15,000 5.0% $ 13.81 07/17/05 $ 70,451 $ 159,825
</TABLE>
________
(1) Represents options granted under the Company's 1994 Stock Option
Plan.
(2) These amounts are based on the assumed rates of appreciation as
suggested by the rules of the Securities and Exchange Commission and do
not represent a prediction by the Company of future stock prices. Actual
gains, if any, on stock option exercises are dependent upon the future
performance of the Company's Common Stock.
(3) Mr. Richardson's options expired unexercised upon his resignation on
December 8, 1999.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth, as to each executive officer named in the
Summary Compensation Table, certain information with respect to the
exercise of stock options during the fiscal year ended March 31, 2000 and
the value of unexercised stock options held at the end of such fiscal
year.
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Shares Unexercised Options at In-the-Money Options at
Acquired Value March 31, 2000 March 31, 2000(2)
Name on Exercise Realized(1)(2) Exercisable Unexercisable Exercisable Unexercisable
--------------------- ----------- -------------- ----------- ------------- ----------- -------------
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Paul F. Foley 0 0 0 150,000 - $ 262,200
John S. Fredericksen 0 0 33,000 57,000 79,326 95,874
Bryan K. Bedford 253,312 $2,417,911 0 0 - -
F. Darrell Richardson 55,500 451,875 0 0 - -
Scott L. Durgin 0 0 16,500 36,000 18,908 37,815
</TABLE>
(1) The exercise price of options granted under the Company's option
plans may be paid in cash or in shares of the Company's Common Stock
valued at fair market value on the date of exercise. In addition, the
exercise price of options granted under the plans may be paid pursuant to
a cashless exercise procedure under which the optionee provides
irrevocable instructions to a brokerage firm to sell the purchased shares
and to remit to the Company, out of the sale proceeds, an amount equal to
the exercise price plus all applicable withholding taxes.
<PAGE>
(2) Value is calculated as the excess of the market value of the Common
Stock at the date of exercise or March 31, 2000, as the case may be, over
the exercise price. The closing price per share of the Company's Common
Stock on March 31, 2000, as quoted on the Nasdaq Stock Market, was $11.438.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee of the Board of Directors
was an officer, former officer or employee of the Company or its
subsidiary during the fiscal year ended March 31, 2000. No executive
officer of the Company served as a member of the compensation committee or
board of directors of another entity, one of whose executive officers
served on the Company's Compensation Committee or Board of Directors
during the fiscal year ended March 31, 2000.
CERTAIN TRANSACTIONS
Northwest Airlines Corporation is the beneficial owner of more than
5% of the Company's outstanding Common Stock. See "Security Ownership of
Certain Beneficial Owners and Management." Mesaba Aviation, the Company's
wholly owned subsidiary, and Northwest Airlines, Inc. ("Northwest"), an
indirect subsidiary of Northwest Airlines Corporation, are parties to an
Airline Services Agreement, dated as of July 1, 1997 (the "Airlink
Agreement"). The Airlink Agreement provides exclusive rights to
designated service areas and support in acquiring new aircraft and
equipment. Mesaba Aviation became the exclusive provider of Airlink
service for Northwest's Minneapolis/St. Paul hub beginning August 1,
1997. Under the Airlink Agreement, substantially all of Mesaba Aviation's
revenues are collected by Northwest and remitted to Mesaba Aviation
semi-monthly, based on Mesaba Aviation's available seat miles and the
number of revenue passengers enplaned. Mesaba Aviation's flights appear
in Northwest's timetables and Mesaba Aviation receives ticketing and
certain check-in, baggage and freight-handling services from Northwest at
certain airports. Mesaba Aviation also benefits from its relationship
with Northwest through advertising and marketing programs. In addition,
Mesaba Aviation receives its computerized reservations services from
Northwest. The Airlink Agreement extends through June 30, 2007, and
continues indefinitely thereafter, subject to termination by either party
on 365 days' notice given at any time after July 1, 2000.
As consideration for entering into the Airlink Agreement, the
Company issued a warrant to Northwest on October 17, 1997, for the
purchase of 1,320,000 shares of the Company's Common Stock at an initial
exercise price of $9.42 per share, the closing price of the stock on the
date the warrant was issued. The warrant was fully exercisable upon
issuance and expires at 5:00 p.m. Minneapolis time, on July 1, 2007.
The Company, Mesaba Aviation and Northwest entered into a Regional
Jet Services Agreement, dated October 25, 1996 and amended April 1, 1998
and June 2, 1998 (the "Regional Jet Agreement"), under which Mesaba
Aviation operates Avro RJ85 regional jets for Northwest. The aircraft,
which are configured in a 69 seat, two class cabin, are leased or
subleased by Mesaba Aviation from Northwest. The Regional Jet Agreement
provides for a total of 36 aircraft. In May, 2000, Mesaba Aviation took
delivery of the final aircraft. The aircraft are operated as Northwest
Jet Airlink from the Minneapolis/St. Paul, Detroit and Memphis hubs
according to routes and schedules determined by Northwest, and all flights
are designated as Northwest flights using Northwest's designator code.
<PAGE>
Under the Regional Jet Agreement, Mesaba Aviation is responsible
for providing all flight and cabin crews, dispatch control, aircraft
maintenance and repair services and hull and passenger liability
insurance. Northwest provides passenger and gate check-in, aircraft
loading and unloading, ticketing, ramp services and fuel and fueling
services, or will compensate Mesaba Aviation for providing such services.
As consideration for entering into the Regional Jet Agreement, the
Company issued a warrant to Northwest on October 25, 1996, for the
purchase of 922,500 shares of the Company's Common Stock at an initial
exercise price of $7.25 per share, the closing price of the stock on the
date the warrant was issued. The warrant became fully exercisable in May
1998. In connection with the amendments to the Regional Jet Agreement,
the Company issued additional warrants to Northwest on April 1, 1998 and
June 2, 1998, for the purchase of 474,192 shares and 1,435,230 shares,
respectively, of the Company's Common Stock at an initial exercise price
of $21.25 per share. The April 1, 1998 warrant became fully exercisable in
October 1998. The June 2, 1998 warrant became fully exercisable in May
2000. All three warrants expire at 5:00 p.m. Minneapolis time, on October
25, 2006.
The Regional Jet Agreement continues in effect until October 25,
2006, unless terminated earlier in accordance with its provisions. The
Regional Jet Agreement may be terminated immediately by Mesaba Aviation or
Northwest in the event that the other party is the subject of a bankruptcy
proceeding or is divested of a substantial part of its assets. In the
event of a breach of a non-monetary provision of the Regional Jet
Agreement which remains uncured for a period of more than 30 days after
receipt of written notification of such default, or the breach of a
monetary provision which remains uncured for a period of more than 10 days
after receipt of written notification of such default, the non-defaulting
party may terminate the agreement. Northwest may terminate the Regional
Jet Agreement as of the sixth anniversary of the effective date of the
first jet aircraft lease if Northwest gives a termination notice to Mesaba
Aviation not less than 180 days nor more than 365 days prior to such sixth
anniversary. Northwest may also terminate the Regional Jet Agreement in
the event of certain lease and other performance defaults, change in
control events, revocation or failure to obtain DOT certification, or
failure to elect a chief executive officer of the Company and Mesaba
Aviation reasonably acceptable to Northwest.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee consists of three independent,
non-employee directors appointed by the Board of Directors. Messrs.
Benson and Zehr were elected to the Compensation Committee by the Board of
Directors in September 1995 and Mr. Anderson was elected to the
Compensation Committee by the Board of Directors in October 1999. None of
the current members of the Compensation Committee participated in
decisions pertaining to compensation made prior to their joining the
Board. The Committee has been authorized by the Board of Directors to set
the annual salary and incentive compensation of each of the executive
officers of the Company, to grant stock options to officers and key
employees under the Company's option plans and to review and approve
overall compensation levels and benefit plans of the Company. The full
Board of Directors generally does not review the Compensation Committee's
decisions relating to executive compensation except in the event that such
decisions require the adoption of certain documents or specific plans.
<PAGE>
COMPENSATION PHILOSOPHY
The Company's executive compensation policies, as endorsed by the
Compensation Committee, are designed to:
- Attract, motivate and retain executives whom the Committee
believes are critical to the long-term success of the
Company;
- Reward individual contributions to the Company's
accomplishment of certain profit and operational goals;
- Promote a pay-for-performance philosophy by placing a
significant portion of total compensation "at risk" while
providing a level of compensation opportunity that is
competitive with companies of similar profitability,
complexity and size; and
- Provide an opportunity to own the Company's Common Stock so
that executives will have common interests with the Company's
shareholders.
The Compensation Committee believes that each of these factors is
important to the financial performance of the Company. In implementing
its executive compensation program, the Company and the Committee seek to
link executive compensation directly to earnings performance and,
consequently, to increases in shareholder value.
The components of the Company's current executive compensation
program are comprised of base salary, cash incentive compensation and
long-term incentive awards in the form of stock option grants.
BASE SALARY AND CASH INCENTIVE COMPENSATION
The Compensation Committee establishes, for recommendation to the
Board of Directors, the base salary and incentive compensation of the Chief
Executive Officer and approves the salaries and incentive compensation of
the other executive officers as recommended by the Chief Executive Officer.
Base salary levels, including that of the Chief Executive Officer, are
reviewed annually by the Committee and adjusted based upon competitive
market factors and the officer's ability to contribute to the overall
success of the Company's mission. Incentive compensation is based on the
individual's contribution to the Company's annual performance, as measured
against goals to be determined at the beginning of each fiscal year and
approved by the Board. Incentive compensation generally will not exceed
40% of an officer's base salary, although senior executive officers may on
occasion receive a larger portion of their total compensation through
incentive compensation than from salary, thereby placing a greater
percentage of their compensation at risk while more closely aligning their
interests with the interests of the Company's shareholders. The Chairman,
with the approval of the Compensation Committee, may authorize special
incentive payments.
In making its compensation decisions for fiscal 2000, the
Compensation Committee considered individual job performance and the
financial performance of the Company and did not use any predetermined
formula or assign any particular weight to any specific factors in setting
compensation.
<PAGE>
Mr. Foley became an officer of the Company on October 1, 1999,
after a national search. His fiscal year 2000 base salary was set at
$225,000. Bryan K. Bedford, who resigned as Chief Executive Officer on June
29, 1999 had a base salary for fiscal year 2000 of $280,000, the same as
for fiscal year 1999. Mr. Bedford's base salary was determined on the
basis of an in-depth market analysis of the top nine regional carriers
conducted by an outside consulting firm.
LONG-TERM INCENTIVE COMPENSATION
The Company's stock option program is intended to strengthen the
Company's ability to attract and retain key employees and to furnish
additional incentives to such persons by encouraging them to become owners
of Common Stock. The Committee believes that stock option grants allow
executives and key employees to participate in the success of the Company
and link their interests directly with those of the shareholders. If
there is no price appreciation in the Company's Common Stock, option
holders receive no benefit, because stock options are granted with an
exercise price equal to the fair market value of the Common Stock on the
day of grant. The number of stock options granted to executives,
including the Chief Executive Officer, is based primarily on base salary
level, the number of options previously granted, individual performance
and the Company's financial performance during the year. The executive
officers named in the Summary Compensation Table who received options in
fiscal 2000 were granted options principally to secure their commitment to
the future success of the Company.
Respectfully submitted,
THE COMPENSATION COMMITTEE
Donald E. Benson
Raymond W. Zehr, Jr.
Richard H. Anderson
<PAGE>
APPROVAL OF THE 2000 STOCK INCENTIVE PLAN
GENERAL
To provide the Company with the flexibility to issue stock options
and other stock-based awards in the coming years, the Board of Directors
has adopted, subject to shareholder approval, the Company's 2000 Stock
Incentive Plan (the "Plan"). The Plan provides for the issuance of
1,000,000 shares of Common Stock plus any shares of Common Stock remaining
available under the Company's 1994 Stock Option Plan and 1996 Director
Stock Option Plan when those plans terminate or when options granted under
those plans expire without having been exercised. As of June 30, 2000,
922,500 shares were subject to outstanding options and 182,475 shares
remained available for issuance under the old plans. On September 1st of
each year beginning in 2001, a maximum number of additional shares of
Common Stock, equal to the lesser of (a) 300,000 shares, (b) 1% of the
Company's outstanding Common Stock, or (c) a lower amount fixed by the
Board of Directors, will also become available for issuance under the
Plan. A general description of the Plan is set forth below, but is
qualified in its entirety by reference to the full text of the Plan, which
is attached as Appendix A.
DESCRIPTION OF THE PLAN
PURPOSE. The purpose of the Plan is to promote the long-term
financial interest of the Company and any related company by:
- attracting and retaining employees and other individuals providing
services to the Company,
- motivating such individuals, by means of appropriate incentives, to
achieve long-range goals,
- providing incentive compensation opportunities that are competitive
with those of other similar companies, and
- conforming participants' interests with those of the Company's
shareholders through compensation based on the Company's Common
Stock.
TERM. The effective date of the Plan is July 24, 2000 subject
to shareholder approval. The Plan may be terminated at any time, provided
that the termination would not adversely affect options then outstanding.
ADMINISTRATION. The Plan is administered by the Compensation
Committee of the Company's Board of Directors (the "Committee"). The
Committee has authority and discretion (a) to determine whether and to
what extent any award or combination of awards will be granted, (b) to
select from among eligible individuals those persons who will receive
awards, (c) to determine the number of shares of Common Stock to be
covered by each award, (d) to establish the terms, conditions, performance
criteria, restrictions and other provisions of such awards, (e) to
determine the treatment of awards upon the eligible individual's
retirement, disability, death, or other termination of employment or
service, (f) to cancel or amend the terms of any award, (g) to interpret
the Plan, and (h) to
<PAGE>
delegate any of its powers to any member of the Committee or to any other
person. The Committee may establish, amend and rescind any rules and
regulations relating to the Plan and make all other determinations that
may be necessary or advisable for the administration of the Plan. The
Committee may also grant awards as alternatives to or replacements of
awards outstanding under the Plan or any other plan or arrangement.
ELIGIBILITY. All employees of the Company or any subsidiary are
eligible to receive incentive stock options ("ISOs") pursuant to the Plan.
All (a) common law employees, prospective employees or officers of the
Company or any subsidiary, (b) members of the Company's Board of Directors,
(c) consultants and advisors to the Company, and (d) employees of any
related company or business partner of the Company are eligible to receive
non-qualified stock options ("NSOs").
OPTIONS. When an option is granted under the Plan, the Committee,
in its discretion, specifies the exercise price, the type of option (ISO or
NSO) to be granted, and the number of shares which may be purchased upon
exercise of the option. The exercise price of an ISO may not be less than
100% of the fair market value of the Common Stock on the date of grant.
However, with respect to any ISO granted to a holder of more than 10% of the
outstanding Common Stock, the exercise price may not be less than 110% of
the fair market value of the Common Stock on the date of grant. Fair market
value is determined by the price of the Common Stock on The Nasdaq Stock
Market. In the absence of a public trading market for the Common Stock,
fair market value will be determined in good faith by the Company's Board of
Directors. No individual may receive an option grant to purchase more than
400,000 shares in any fiscal year plus an additional 750,000 shares upon the
initial hiring of the individual.
The term during which an option may be exercised and whether an
option will be exercisable immediately, in stages or otherwise are set by
the Committee, but the term of an ISO may not exceed ten years from the
date of grant. Optionees may pay for shares upon exercise of options with
cash, cashier's check, Common Stock valued at the stock's then fair market
value and acceptable to the Committee, or a combination of these methods.
Except as otherwise provided by the Committee, awards granted under the
Plan are nontransferable during the life of the optionee. The plan gives
the Committee the authority to award options containing change in control
provisions.
The Committee will determine the form of stock option agreements
which will be used for options granted under the Plan. The agreements
will govern the right of an optionee to exercise an option upon
termination of employment or affiliation with the Company during the life
of an optionee and following an optionee's death. The Board of Directors
or the Committee may impose additional or alternative conditions and
restrictions on options granted under the Plan; however, each ISO must
contain the limitations and restrictions upon its exercise as are
necessary to ensure that the option will be an ISO as defined under
Section 422 of the Internal Revenue Code of 1986, as amended.
STOCK APPRECIATION RIGHTS AND OTHER STOCK BASED AWARDS. The Plan
provides for the granting of stock appreciation rights and other stock
based awards at any time and in such amounts as the Committee determines,
subject to the terms and provisions of the Plan. A stock appreciation right
gives the holder a right to receive stock, cash or a combination of both,
equal to the excess of the fair market value of a specified number of shares
over a fixed exercise price. Other stock based awards can be granted under
the Plan to provide additional compensation flexibility. These awards can be
paid with, valued by reference to, or otherwise be based on the Common
Stock. Any of these rights and awards can be conditioned or limited by
<PAGE>
restrictions based upon the achievement of specific business objectives,
tenure, and other measurements of individual or business performance as the
Committee may determine.
RESTRICTED STOCK. The Plan provides for the granting of restricted
stock at any time and in such amounts as the Committee determines, subject
to the terms and provisions of the Plan. Each grant of restricted stock and
the vesting thereof may be conditioned upon the completion of a specified
period of service with the Company or a related company, upon the attainment
of specified performance objectives or upon such other criteria as the
Committee may determine. Voting rights and rights to receive dividends will
be determined by the Committee.
TAX OFFSET PAYMENTS. Grants of tax offset payments may be made by
the Committee in its discretion subject to the terms and provisions of the
Plan. Tax offset payments may not exceed the amount necessary to pay
applicable federal, state, local and other taxes payable with respect to an
award and may be paid only in cash.
AMENDMENT. The Committee may amend or terminate the Plan, or any
part thereof, at any time; provided that no amendment or termination
impairs the terms and conditions of any outstanding option to the material
detriment of the optionee without the consent of the optionee. An amendment
will be subject to the approval of the Company's shareholders only to the
extent required by applicable law, rule or regulation.
ANTIDILUTION PROVISIONS. In the event of a corporate transaction
involving the Company, including any stock dividend, combination or reverse
stock split, sale of substantially all assets, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, distribution of
assets or other change in corporate structure, the Committee may adjust or
substitute awards to preserve the benefits or potential benefits of the
awards. Actions by the Committee may include (a) adjustment of the number
and kind of shares which may be delivered under the Plan, (b) adjustment of
the number and kind of shares subject to outstanding awards, (c) adjustment
of the exercise price of outstanding options, and (d) any other adjustments
that the Committee determines to be appropriate.
FEDERAL INCOME TAX CONSEQUENCES
INCENTIVE STOCK OPTIONS. Under present law, an optionee who is
granted an ISO does not recognize taxable income at the time the option is
granted or upon its exercise, although the exercise is an adjustment item
for alternative minimum tax purposes and may subject the optionee to the
alternative minimum tax. Upon a disposition of the shares more than two
years after grant of the option and one year after exercise of the option,
any gain or loss is treated as long-term capital gain or loss. Net capital
gains on shares held more than 12 months are generally taxed at a maximum
federal rate of 20%. Capital losses are generally allowed in full against
capital gains and up to $3,000 against other income. If the above holding
periods are not satisfied, the optionee recognizes ordinary income at the
time of disposition equal to the difference between the exercise price and
the sale price of the shares. Any gain or loss recognized on such a
premature disposition of the shares in excess of the amount treated as
ordinary income is treated as long-term or short-term capital gain or loss,
depending on the holding period. Unless limited by Section 162(m) of the
Internal Revenue Code, the Company is entitled to a deduction in the same
amount as and at the time the optionee recognizes ordinary income.
<PAGE>
NON-STATUTORY STOCK OPTIONS. An optionee does not recognize any
taxable income at the time he or she is granted an NSO. Upon exercise, the
optionee recognizes taxable income generally measured by the excess of the
then fair market value of the shares over the exercise price. Any taxable
income recognized in connection with an option exercise by an employee of
the Company is subject to tax withholding by the Company. Unless limited by
Section 162(m) of the Internal Revenue Code, the Company is entitled to a
deduction in the same amount as and at the time the optionee recognizes
ordinary income. Upon a disposition of such shares by the optionee, any
difference between the sale price and the optionee's exercise price, to the
extent not recognized as taxable income as provided above, is treated as
long-term or short-term capital gain or loss, depending on the holding
period. Net capital gains on shares held more than 12 months may be taxed
at a maximum federal rate of 20% (lower rates may apply depending upon when
the stock is acquired and the applicable income tax bracket of the
taxpayer). Capital losses are generally allowed in full against capital
gains and up to $3,000 against other income.
RESTRICTED STOCK. Restricted stock awards are generally taxed on
the later of grant or the expiration of a substantial risk of forfeiture. A
restricted stock award is subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Internal Revenue Code if the award
will be forfeited in the event that the recipient ceases to provide services
to the Company. Because the restricted stock awards are subject to a
substantial risk of forfeiture, the recipient will not recognize ordinary
income at the time the award is granted. Instead the recipient will
recognize ordinary income on the earlier of (a) the date the restricted
stock is no longer subject to a substantial risk of forfeiture or (b) when
the restricted stock becomes transferable. The amount of ordinary income to
be recognized is equal to the difference between the amount paid for the
restricted stock and the fair market value of the restricted stock on the
date the restricted stock, if any, is no longer subject to a substantial
risk of forfeiture. The ordinary income recognized by the recipient who is
an employee will be subject to tax withholding by the Company. Unless
limited by Section 162(m) of the Internal Revenue Code, the Company is
entitled to a tax deduction in the same amount and at the same time as the
recipient recognizes ordinary income.
TAX OFFSET PAYMENTS. In the year of receipt of a tax offset
payment, the recipient will have taxable ordinary income equal to the amount
of the tax offset payment. In the case of a recipient who is also an
employee, any tax offset payment will be subject to tax withholding by the
Company. Unless limited by Section 162(m) of the Internal Revenue Code, the
Company will be entitled to a tax deduction in the same amount and at the
same time as the recipient recognizes ordinary income.
The foregoing is only a summary of the general effect of federal
income taxation upon the optionee or recipient and the Company with
respect to the grant and exercise of options and awards under the Plan.
This summary does not purport to be complete and does not discuss the tax
consequences arising in the context of the optionee's or recipient's death
or the income tax laws of any municipality, state or foreign country in
which the optionee's or recipient's income or gain may be taxable.
<PAGE>
VOTE REQUIRED
The affirmative vote of holders of a majority of the shares present
in person or represented by proxy and entitled to vote at the Annual
Meeting is required to approve the Plan. Abstentions will be considered
shares entitled to vote in the tabulation of votes cast on the proposal
and will have the same effect as negative votes. Broker non-votes are
counted towards a quorum, but are not counted for any purpose in
determining whether this matter has been approved. The Board of Directors
considers the Plan to be in the best interests of the Company and its
shareholders and recommends that you vote FOR approval of the Plan.
RATIFICATION OF
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP as
independent auditors for the Company for the year ending March 31, 2001.
A proposal to ratify that appointment will be presented to shareholders at
the annual meeting. Ratification of the appointment requires the
affirmative vote of the holders of a majority of the shares of Common
Stock represented at the meeting. If the shareholders do not ratify the
selection of Arthur Andersen LLP, another firm of independent public
accountants will be selected by the Board of Directors. Representatives
of Arthur Andersen LLP will be present at the meeting, will have an
opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions from shareholders in
attendance.
VOTING OF PROXIES AND EXPENSES
The Board of Directors recommends that an affirmative vote be cast
in favor of each of the proposals listed on the proxy card.
The Board of Directors knows of no other matters that may be
brought before the meeting which require submission to a vote of the
shareholders. If any other matters are properly brought before the
meeting, however, the persons named in the enclosed proxy or their
substitutes will vote in accordance with their best judgment on such
matters.
Expenses incurred in connection with the solicitation of proxies
will be paid by the Company. The proxies are being solicited principally
by mail. In addition, directors, officers and regular employees of the
Company may solicit proxies personally or by telephone, for which they
will receive no consideration other than their regular compensation. The
Company will also request brokerage houses, nominees, custodians and
fiduciaries to forward soliciting material to the beneficial owners of
Common Stock of the Company and will reimburse such persons for their
expenses so incurred.
SHAREHOLDER PROPOSALS
If a shareholder wishes to present a proposal for consideration for
inclusion in the proxy statement for the 2001 annual meeting, the proposal
must be sent by certified mail, return receipt requested, and must be
received at the executive offices of the Company no later than March 16,
2001. All proposals must conform to the rules and regulations of the
SEC. SEC Rule 14a-4(c)(1) provides that, if the proponent of a
shareholder proposal fails to notify the Company at least 45 days prior to
the month and day of the mailing of the prior year's proxy statement,
management's proxies would be permitted to use their discretionary
authority to vote on the proposal, if the proposal were raised at the next
annual meeting without having been included in the proxy statement. For
purposes of the Company's 2001 annual meeting, the deadline is May 30,
2001.
Dated: July 24, 2000
APPENDIX A
MESABA HOLDINGS, INC.
2000 STOCK INCENTIVE PLAN
SECTION 1
DEFINED TERMS
In addition to the other definitions contained herein, the following
definitions shall apply:
1.1 Award Agreement. The term "Award Agreement" means the document
that evidences an Award and which sets forth the terms, conditions and
limitations relating to such Award.
1.2 Award. The term "Award" shall mean any award or benefit
granted in accordance with the terms of the Plan. Awards under the Plan
may be in the form of (i) Stock Options; (ii) Restricted Stock; (iii)
Stock Appreciation Rights; (iv) Other Stock Based Awards and/or (v) Tax
Offset Payments. The terms and conditions of the Award shall be set forth
in an Award Agreement. 1.3 Board. The term "Board" shall mean the Board
of Directors of the Company. 1.4 Code. The term "Code" shall mean the
Internal Revenue Code of 1986, as amended. A reference to any provision
of the Code shall include reference to any successor provision of the
Code.
1.3 Board. The term "Board" shall mean the Board of Directors of
the Company.
1.4 Code. The term "Code" shall mean the Internal Revenue
Code of 1986, as amended. A reference to any provision of the Code shall
include reference to any successor provision of the Code.
1.5 Committee. The term "Committee" shall mean a committee
described in Section 11.
1.6 Company. The term "Company" shall mean Mesaba Holdings, Inc.
1.7 Covered Shares. The term "Covered Shares" shall mean the
number of shares of Stock that an Eligible Individual may purchase
pursuant to an Option.
1.8 Director. The term "Director" shall mean a member of the
Company's Board.
1.9 Eligible Individual. The term "Eligible Individual" shall mean
(a) any common law employee, prospective employee, or officer of the
Company, (b) members of the Company's Board, (c) consultants and advisors
to the Company, and (d) employees of any Related Company or business
partner of the Company. All Eligible Individuals must be natural persons
who provide bona fide services to the Company or a Related Company. In
addition, the services provided to the Company or Related Company must not
be in connection with an offer or sale of securities in a capital raising
transaction and must not directly or indirectly promote or maintain a
market for the Company's Stock. An Award may be granted to an Eligible
Individual prior to the date the Eligible Individual performs services for
the Company or Related Company, provided that such Award shall not become
vested prior to the date the Eligible Individual first performs such
services.
<PAGE>
1.10 Exchange Act. The term "Exchange Act" shall mean the
Securities Act of 1934, as amended.
1.11 Exercise Price. The term "Exercise Price" shall mean the
exercise price of each Option granted under Section 4 established by the
Committee and determined by any reasonable method established by the
Committee at the time the Option is granted. Options granted pursuant to
Section 4 of the Plan shall not have an Exercise Price of less than 100% of
the Fair Market Value of the Company's Stock on the date the Option is
granted.
1.12 Fair Market Value. The term "Fair Market Value" of a share of
Stock on a given date shall mean the closing price of the share of Stock as
reported on the Nasdaq Stock Market on such date, if the share of Stock is
then quoted on the Nasdaq Stock Market or, if the market is closed on that
date, the closing price of the share of Stock on the previous trading day.
If the Stock is not listed on the Nasdaq Stock Market, Fair Market Value
shall be determined in good faith by the Board or Committee.
1.13 Incentive Stock Option. The term "Incentive Stock Option" or
"ISO" shall mean an Option that is intended to satisfy the requirements of
Section 422(b) of the Code.
1.14 Non-Employee Director. The term "Non-Employee Director" shall
mean a "non-employee director" as defined in Rule 16b-3(b)(3)(i) of the
Exchange Act.
1.15 Non-Qualified Stock Option. The term "Non-Qualified Stock
Option" or "NSO" shall mean an Option that is not intended to satisfy the
requirements applicable to an "incentive stock option" described in
Section 422(b) of the Code. NSO grants may be awarded to any Eligible
Individual.
1.16 Option. The term "Option" or "Stock Option" shall mean an ISO
or NSO granted pursuant to the Plan. The grant of an Option entitles the
Eligible Individual to purchase shares of Stock at an Exercise Price
established by the Committee.
1.17 Other Stock Based Award. The term "Other Stock Based Award"
shall mean an Award, granted pursuant to Section 8, other than on Option,
Restricted Stock or SAR, that is paid with, valued in whole or in part by
reference to, or is otherwise based on Stock.
1.18 Performance Award. The term "Performance Award" shall mean an
award or grant of shares based upon the achievement of performance
objectives, as contemplated by Section 5.
1.19 Plan. The term "Plan" shall mean this 2000 Stock Incentive
Plan.
1.20 Related Company. The term "Related Company" shall mean any
corporation other than the Company and any partnership, joint venture or
other entity in which the Company owns, directly or indirectly, at least a
20% beneficial ownership interest. A Related Company includes a
subsidiary of the Company and an unbroken chain of corporations beginning
with the Company if each of the corporations other than the last
corporation in the unbroken chain owns 50% or more of the voting stock in
one of the other corporations in such chain.
<PAGE>
1.21 Stock. The term "stock" shall mean shares of common stock,
$.01 par value, of the Company.
1.22 Stock Appreciation Right. The term "Stock Appreciation Right"
or "SAR" shall mean the grant, pursuant to Section 7, of a right to
receive a payment from the Company, in the form of Stock, cash or a
combination of both, equal to the excess of the Fair Market Value of one
or more shares of Stock over the exercise price of such shares under the
terms of such Stock Appreciation Right.
SECTION 2
PURPOSE
The Mesaba Holdings, Inc. 2000 Stock Incentive Plan has been
established by Mesaba Holdings, Inc. to (i) attract and retain individuals
eligible to participate in the Plan; (ii) motivate Eligible Individuals,
by means of appropriate incentives, to achieve long-range goals; (iii)
provide incentive compensation opportunities that are competitive with
those of other similar companies; and (iv) further identify Eligible
Individuals' interests with those of the Company's other shareholders
through compensation that is based on the Company's common stock; and
thereby promote the long-term financial interest of the Company and any
Related Company, including the growth in value of the Company's equity and
enhancement of long-term shareholder return.
SECTION 3
PARTICIPATION
Subject to the terms and conditions of the Plan, the Committee may
determine and designate, from time to time, Eligible Individuals who will
be granted one or more Awards under the Plan at the Exercise Price. In
its sole discretion and without shareholder approval, the Committee may
grant to an Eligible Individual any Award or Awards permitted under the
provisions of the Plan. Awards may be granted as alternatives to or
replacement of Awards outstanding under the Plan, or any other plan or
arrangement of the Company or Related Company (including a plan or
arrangement of a business or entity, all or a portion of which is acquired
by the Company or a Related Company). Only employees are eligible to be
granted Incentive Stock Options.
SECTION 4
STOCK OPTIONS
4.1 General. The grant of an Option entitles the Eligible
Individual to purchase shares of Stock at an Exercise Price established by
the Committee. Any Option awarded to Eligible Individuals under this
Section 4 may be either NSOs or ISOs, as determined in the discretion of
the Committee. To the extent that any Stock Option does not qualify as an
ISO, it shall constitute an NSO.
<PAGE>
4.2 Option Awards. Subject to the following provisions, Options
awarded under the Plan shall be in such form and shall have such terms as
the Committee may determine and specify in an Award Agreement entered into
between the Eligible Individual and the Company.
(a) Exercise of an Option. An Option shall be exercisable
in accordance with such terms and conditions and during
such periods as may be established by the Committee. In no
event shall any fraction of a share of Stock be issued upon
the exercise of an Option. An Option must be exercised for
at least 100 shares of Stock, or such lesser number of
shares of Stock if the remaining portion of an Option is
for fewer than 100 shares of Stock.
(b) Exercise Price. The Exercise Price of an Option granted
under this Section 4 shall be established by the Committee
or shall be determined by a method established by the
Committee at the time the Option is granted, except that
the Exercise Price for an ISO shall not be less than 100%
of the Fair Market Value of the Company's Stock on the date
of grant.
(c) Payment of Option Exercise Price. The payment of the
Exercise Price of an Option granted under this Section 4
shall be subject to the following:
(1) Subject to the following provisions of this Subsection
4.2(c), the full Exercise Price for shares of Stock
purchased upon the exercise of any Option shall be paid
at the time of such exercise or such other time as
approved by the Committee.
(2) Payment of the Exercise Price shall be made in such
manner as the Committee may provide in the Award, which
may include cash (including cash equivalents),
tendering of shares of Stock acceptable to the
Committee and either already owned by the Eligible
Individual or subject to Awards hereunder (so-called
"cashless" or "immaculate" exercise methods), and any
other manner permitted by law and approved by the
Committee, or any combination of the foregoing. If the
Company determines that a Stock Option may be exercised
using shares of Restricted Stock, then unless the
Committee provides otherwise, the shares received upon
the exercise of a Stock Option which are paid for using
Restricted Stock shall be restricted in accordance with
the original terms of the Restricted Stock Award. In
the case of any deferred payment arrangement, interest
shall be compounded at least annually and shall be
charged at the minimum rate of interest necessary to
avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than
amounts stated to be interest under the deferred
payment arrangement.
<PAGE>
(3) An Eligible Individual may elect to pay the Exercise
Price upon the exercise of an Option by irrevocably
authorizing a third party to sell shares of Stock (or a
sufficient portion of the shares) acquired upon
exercise of the Option and remit to the Company a
sufficient portion of the sale proceeds to pay the
entire Exercise Price and any tax withholding resulting
from such exercise.
(d) Settlement of Option. Shares of Stock delivered pursuant
to the exercise of an Option shall be subject to such
conditions, restrictions and contingencies as the
Committee, in its discretion, may establish in addition to
such conditions, restrictions, and contingencies set forth
in the Award Agreement.
(e) Reload Options. The Committee may grant "reload" options,
pursuant to the terms and conditions established by the
Committee and any applicable requirements of Rule 16b-3 of
the Exchange Act ("Rule 16b-3") or any other applicable
law. The Eligible Individual would be granted a new Option
when the payment of the Exercise Price of a previously
granted Option is made by the delivery of shares of the
Company's Stock owned by the Eligible Individual pursuant
to Section 4.2(c)(2) hereof and/or when shares of the
Company's Stock are tendered or forfeited as payment of the
amount to be withheld under applicable income tax laws in
connection with the exercise of an Option. The new Option
would be an Option to purchase the number of shares not
exceeding the sum of (i) the number of shares of the
Company's Stock provided as consideration upon the exercise
of the previously granted Option to which such "reload"
option relates and (ii) the number of shares of the
Company's Stock tendered or forfeited as payment of the
amount to be withheld under applicable income tax laws in
connection with the exercise of the Option to which such
"reload" option relates. "Reload" options may be granted
with respect to Options granted under this Plan. Such
"reload" options shall have a per share exercise price
equal to the Fair Market Value as of the date of grant of
the new Option.
(f) Vesting. Eligible Individuals shall vest in all Options in
accordance with the terms and conditions of the Award
Agreement entered into by and between the Eligible
Individual and the Company. The total number of shares of
Stock subject to an Option may, but need not, vest and
therefore become exercisable in periodic installments that
may, but need not, be equal.
(g) Option Term. The term of each Option shall be fixed by the
Committee. In the event that the Plan is terminated
pursuant to terms and conditions of Section 12, the Plan
shall remain in effect as long as any Awards under it are
outstanding.
<PAGE>
(h) Termination of Employment. Following the termination of
Eligible Individual's employment with the Company or a
Related Company, the Option shall be exercisable to the
extent determined by the Committee and specified in the
Award Agreement. The Committee may provide different
post-termination exercise provisions with respect to
termination of employment for different reasons.
(i) Incentive Stock Options. ISO grants may only be awarded to
employees of the Company, a "parent corporation," or a
"subsidiary corporation" as those terms are defined in
Sections 424(e) and 424(f) of the Code. In order for an
employee to be eligible to receive an ISO grant, the
employee must be employed by the Company, parent
corporation, or subsidiary corporation during the period
beginning on the date the Option is granted and ending on
the day three months prior to the date such Option is
exercised. Notwithstanding the provisions of Section 4.2,
no ISO shall (i) have an Exercise Price which is less than
100% of the Fair Market Value of the Stock on the date of
the ISO Award, (ii) be exercisable more than ten (10) years
after the ISO is awarded, or (iii) be awarded more than ten
(10) years after the Effective Date of this Plan. No ISO
awarded to an employee who owns more than 10% of the total
combined voting power of all classes of Stock of the
Company, its "parent corporation" or any "subsidiary
corporation" shall (i) have an Exercise Price of less than
110% of the Fair Market Value of the Stock on the date of
the ISO Award or (ii) be exercisable more than five (5)
years after the date of the ISO Award. Notwithstanding
Section 10.7, no ISO shall be transferable other than by
will and the laws of descent and distribution. To the
extent that the aggregate fair market value (determined at
the time of grant) of shares of Stock with respect to ISOs
are exercisable for the first time by the employee during
any calendar year, in combination with shares first
exercisable under all other plans of the Company and any
Related Company, exceeds $100,000, such Options shall be
treated as NSOs.
(j) Early Exercise. The Option may, but need not, include a
provision whereby the Eligible Individual may elect at any
time prior to his or her termination of employment with the
Company to exercise the Option as to any part or all of the
shares of Stock subject to the Option prior to the full
vesting of the Option. Any unvested shares of Stock so
purchased may be subject to a repurchase option in favor of
the Company or to any other restrictions the Committee
determines to be appropriate.
<PAGE>
SECTION 5
PERFORMANCE AWARDS
The Committee shall have the right to designate Awards as
"Performance Awards." The grant or vesting of a Performance Award shall
be subject to the achievement of performance objectives established by the
Committee based on one or more of the following criteria, in each case
applied to the Company on a consolidated basis or to a business unit, as
specified by the Committee in an Award Agreement, and which the Committee
may use as an absolute measure, as a measure of improvement relative to
prior performance, or as a measure of comparable performance relative to a
peer group of companies: sales, operating profits, operating profits
before interest expenses and taxes, net earnings, earnings per share,
return on equity, return on assets, return on invested capital, total
shareholder return, cash flow, debt to equity ratio, market share, stock
price, economic value added, and market value added. The terms and
conditions of a Performance Award shall be set forth in an Award Agreement
entered into between the Company and the Eligible Individual.
SECTION 6
RESTRICTED STOCK
Subject to the following provisions, the Committee may grant Awards
of Restricted Stock to an Eligible Individual in such form and on such
terms and conditions as the Committee may determine and specify in a
Restricted Stock Award Agreement entered into between the Company and the
Eligible Individual:
(a) The Restricted Stock Award shall specify the number of
shares of Restricted Stock to be awarded, the price, if
any, to be paid by the Eligible Individual and the date or
dates on which, or the conditions upon the satisfaction of
which, the Restricted Stock will vest. The grant and/or
the vesting of Restricted Stock may be conditioned upon the
completion of a specified period of service with the
Company or a Related Company, upon the attainment of
specified performance objectives or upon such other
criteria as the Committee may determine.
(b) Stock certificates representing the Restricted Stock
awarded to an Eligible Individual shall be registered in
the Eligible Individual's name, but the Committee may
direct that such certificates be held by the Company or its
designee on behalf of the Eligible Individual. Except as
may be permitted by the Committee, no share of Restricted
Stock may be sold, transferred, assigned, pledged or
otherwise encumbered by an Eligible Individual until such
share has vested in accordance with the terms of the
Restricted Stock Award. At the time the Restricted Stock
vests, a certificate for such vested shares shall be
delivered to the Eligible Individual (or his or her
designated beneficiary in the event of death), free from
the restrictions imposed thereon except that any
restrictions under federal or state securities laws shall
continue to apply.
<PAGE>
(c) The Committee may provide that the Eligible Individual
shall have the right to vote or receive dividends on
Restricted Stock. Unless the Committee provides otherwise,
Stock received as a dividend on, or in connection with a
stock split of, Restricted Stock shall be subject to the
same restrictions as the Restricted Stock.
(d) Except as may be provided by the Committee, in the event of
an Eligible Individual's termination of employment or
relationship with the Company prior to all of his or her
Restricted Stock becoming vested, or in the event any
conditions to the vesting of Restricted Stock have not been
satisfied prior to any deadline for the satisfaction of
such conditions as set forth in the Restricted Stock Award,
the shares of Restricted Stock which have not vested shall
be forfeited, and the Committee may provide that (i) any
purchase price paid by the Eligible Individual be returned
to the Eligible Individual or (ii) a cash payment equal to
the Restricted Stock's fair market value on the date of
forfeiture, if lower, be paid to the Eligible Individual.
(e) The Committee may waive, in whole or in part, any or all of
the conditions to receipt of, or restrictions with respect
to, any or all of the Eligible Individual's Restricted
Stock.
SECTION 7
STOCK APPRECIATION RIGHTS
SARs may be granted at a price determined by the Committee, and may
be granted in tandem with an Option or independently of any Option. If
granted in tandem with an Option, the exercise of the SAR or related
Option will result in a forfeiture of the right to exercise the related
Option for an equivalent number of shares.
An SAR may be exercised at such times as may be specified in an
Award Agreement, in whole or in installments, which may be cumulative and
shall expire at such time as the Committee shall determine at the time of
grant; provided that no SAR shall be exercisable later than ten (10) years
after the date granted. The Committee may amend any SAR to accelerate the
dates after which the SAR may be executed in whole or in part.
SARs shall be exercised by the delivery of a written notice of
exercise to the Company setting forth the number of shares of Stock with
respect to which the SAR is to be exercised.
SECTION 8
OTHER STOCK BASED AWARDS
The Committee shall have complete discretion in determining the
number of shares of Stock subject to Other Stock Based Awards, the
consideration for such Awards and the terms, conditions and limitations
pertaining to same including, without limitation, restrictions based upon
the achievement of specific business objectives, tenure, and other
measurements of individual or business performance, and/or restrictions
under applicable federal or state securities laws, and conditions under
which such Awards will lapse.
<PAGE>
Payment of Other Stock Based Awards may be in the form of cash,
shares, other Awards, or in such combinations thereof as the committee
shall determine at the time of grant, and with such restrictions as it may
impose. Payment may be made in a lump sum or in installments as
prescribed by the Committee. The Committee may also require or permit
Eligible Individuals to elect to defer the issuance of Stock or the
settlement of Awards in cash under such rules and procedures as it may
establish under the Plan. The Committee may also provide that deferred
settlements include the payment or crediting of interest on the deferred
amounts or the payment of crediting of dividends equivalent to deterred
amounts denominated in Stock.
The Committee may, at its sole discretion, direct the Company to
issue Stock subject to such restrictive legends and/or stock transfer
instructions as the Committee deems appropriate.
SECTION 9
TAX OFFSET PAYMENTS
The Committee may provide for a Tax Offset Payment to be made by
the Company to an Eligible Individual with respect to one or more Awards
granted under the Plan. The Tax Offset Payment shall be in an amount
specified by the Committee, which shall not exceed the amount necessary to
pay the federal, state, local and other taxes payable with respect to the
applicable Award, assuming that the Eligible Individual is taxed at the
maximum tax rate applicable to such income. The Tax Offset Payment shall
be paid solely in cash. No Eligible Individual shall be granted a Tax
Offset Payment for any fiscal year with respect to more than the number of
shares of Stock covered by Awards granted to such Eligible Individual in
such fiscal year. The terms and conditions of a Tax Offset Payment Award
shall be set forth in an Award Agreement entered into between the Company
and the Eligible Individual.
SECTION 10
OPERATION AND ADMINISTRATION
10.1 General. The operation and administration of this Plan,
including any Awards granted under this Plan, shall be subject to the
provisions of Section 10.
10.2 Effective Date. Subject to the approval of the shareholders
of the Company, the Plan shall be effective as of July 24, 2000 (the
"Effective Date") provided, however, that to the extent that Awards are
granted under the Plan prior to its approval by the shareholders of the
Company, the Awards shall be subject to the approval of the Plan by the
shareholders of the Company. The term of the Plan shall be limited in
duration to ten (10) years from the earlier of (a) the Effective Date or
(b) the date the Plan is approved by the Company's shareholders.
<PAGE>
10.3 Shares Subject to Plan. The shares of Stock for which Awards
may be granted under this Plan shall be subject to the following:
(a) Subject to the following provisions of this Section 10.3,
the maximum aggregate number of shares of Stock that may be
issued and sold under the Plan shall be the sum of (i)
1,000,000 shares of Stock, (ii) any shares of Stock
available for future awards under the Company's 1994 Stock
Option Plan and 1996 Director Stock Option Plan, in each
case on the date such plan terminates on its own terms or
by action of the Board and (iii) any shares of Stock
covered by options granted under the Company's 1994 Stock
Option Plan and 1996 Director Stock Option Plan which
expire or are canceled without delivery of shares of Stock.
The number of shares of Stock so reserved for issuance
shall be subject to adjustment pursuant to Sections 10.3
(b) and 10.3(d). The shares of Stock may be authorized, but
unissued, or reacquired Stock.
(b) On September 1st of each year, commencing with year 2001,
the aggregate number of shares of Stock that may be awarded
under the Plan shall automatically increase by the lesser
of (i) 300,000 shares of Stock, (ii) 1% of the outstanding
shares of Stock on such date, or (iii) a lesser amount
determined by the Committee.
(c) To the extent an Award terminates without having been
exercised, or shares awarded are forfeited, such shares
shall again be available issue under the Plan. Shares of
Stock surrendered in payment of the Exercise Price and
shares of Stock which are withheld in order to satisfy
federal, state or local tax liability, shall not count
against the maximum aggregate number of shares authorized
to be issued pursuant to this Plan, and shall again be
available for issuance pursuant to the terms of the Plan.
(d) In the event of any merger, reorganization, consolidation,
sale of substantially all assets, recapitalization, stock
dividend, stock split, combination or reverse stock split,
spin-off, split-up, split-off, distribution of assets or
other change in corporate structure affecting the Stock, a
substitution or adjustment, as may be determined to be
appropriate by the Committee or the Board in its sole
discretion, shall be made in the aggregate number of shares
reserved for issuance under the Plan. The Board or
Committee may make such other adjustments to participant
Awards as it deems appropriate to prevent substantial
dilution or enlargement of the rights granted to, or
available for, participants in the Plan.
(e) No Eligible Individual shall be granted Awards with respect
to more than 400,000 shares of Stock in any fiscal year and
up to an additional 750,000 shares of Stock upon the
initial hiring of such Eligible Individual (subject to
adjustment as provided in Section 10.3(d)).
<PAGE>
10.4 Securities Laws Restrictions. Issuance of shares of Stock or
other amounts under the Plan shall be subject to the following:
(a) If at any time the Committee determines that the issuance
of Stock under the Plan is or may be unlawful under the
laws of any applicable jurisdiction, the right to exercise
any Stock Option or receive any Restricted Stock shall be
suspended until the Committee determines that such issuance
is lawful. The Company shall have no obligation to effect
any registration of qualification of the Stock under
federal or state laws.
(b) Any person exercising a Stock Option or receiving
Restricted Stock shall make such representations (including
representations to the effect that such person will not
dispose of the Stock so acquired in violation of federal
and state securities laws) and furnish such information as
may, in the opinion of counsel for the Company, be
appropriate to permit the Company to issue the Stock in
compliance with applicable federal and state securities
laws. The Committee may refuse to permit the exercise of a
Stock Option or issuance of Restricted Stock until such
representations and information have been provided.
(c) The Company may place an appropriate legend evidencing any
transfer restrictions on all shares of Stock issued under
the Plan and may issue stop transfer instructions in
respect thereof.
(d) To the extent that the Plan provides for issuance of stock
certificates to reflect the issuance of shares of Stock,
the issuance may be effected on a non-certificated basis,
to the extent not prohibited by applicable law or the
applicable rules of any stock exchange.
10.5 Tax Withholding. Each Eligible Individual shall, no later
than the date as of which the value of an Award first becomes includible
in such person's gross income for applicable tax purposes, pay, pursuant
to such arrangements as the Company may establish from time to time, any
federal, state, local or other taxes of any kind required by law to be
withheld with respect to the Award. The obligations of the Company under
the Plan shall be conditional on such payment, and the Company (and, where
applicable, any Related Company), shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind
otherwise due to the Eligible Individual.
10.6 Payments. Awards may be settled in any of the methods
described in Section 4.2(c). Any Award settlement, including payment
deferrals, may be subject to such conditions, restrictions and
contingencies as the Committee shall determine. The Committee may permit
or require the deferral of any Award payment, subject to such rules and
procedures as it may establish, which may include provisions for the
payment or crediting of interest, or dividend equivalents, including
converting such credits into deferred Stock equivalents. Each Related
Company shall be liable for payment of cash due under the Plan with
respect to any Eligible Individual to the extent that such benefits are
attributable to the services rendered for that Related Company by the
Eligible Individual. Any disputes relating to liability of a Related
Company for cash payments shall be resolved by the Committee.
<PAGE>
10.7 Transferability. Except as otherwise provided by the
Committee, Awards under the Plan may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by
beneficiary designation, will or by the laws of descent and distribution.
If the Committee makes an Award transferable, the Award Agreement shall
set forth such additional terms and conditions regarding transferability
as the Committee deems appropriate.
10.8 Form and Time of Elections. Unless otherwise specified
herein, each election required or permitted to be made by any Eligible
Individual or other person entitled to benefits under the Plan, and any
permitted modification, or revocation thereof, shall be in writing filed
with the Committee at such times, in such form, and subject to such
restrictions and limitations, not inconsistent with the terms of the Plan,
as the Committee shall require.
10.9 Agreement With Company. Any Award under the Plan shall be
subject to such terms and conditions, not inconsistent with the Plan, as
the Committee shall, in its sole discretion, prescribe. The terms and
conditions of any Award shall be reflected in an Award Agreement. A copy
of the Award Agreement shall be provided to the Eligible Individual, and
the Committee may, but need not require, the Eligible Individual to sign
the Award Agreement.
10.10 Limitation of Implied Rights.
(a) Neither an Eligible Individual nor any other person shall,
by reason of participation in the Plan, acquire any right
in or title to any assets, funds or property of the Company
or any Related Company whatsoever, including, without
limitation, any specific funds, assets, or other property
which the Company or any Related Company, in its sole
discretion, may set aside in anticipation of a liability
under the Plan. An Eligible Individual shall have only a
contractual right to the Stock or amounts, if any, payable
under the Plan, unsecured by any assets of the Company or
any Related Company, and nothing contained in the Plan
shall constitute a guarantee that the assets of the Company
or any Related Company shall be sufficient to pay any
benefits to any Eligible Individual.
(b) This Plan does not constitute a contract of employment, and
selection as a Eligible Individual will not give the
Eligible Individual the right to be retained in the employ
of the Company or any Related Company, nor any right or
claim to any future grants or to any benefit under the
Plan, unless such right or claim has specifically accrued
under the terms of the Plan. Except as otherwise provided
in the Plan, no Award under the Plan shall confer upon an
Eligible Individual any rights of a shareholder of the
Company prior to the date on which the Eligible Individual
fulfills all conditions for receipt of such rights.
<PAGE>
10.11 Termination for Cause. If the employment of an Eligible
Individual is terminated by the Company or a Related Company for "cause,"
then the Committee shall have the right to cancel any Options granted to
the Eligible Individual under the Plan. The term "cause" shall mean (1)
the Eligible Individual's violation of any provision of any
non-competition agreement or confidentiality agreement with the Company;
(2) an illegal or negligent action by the Eligible Individual that
materially and adversely affects the Company; (3) the Eligible
Individual's failure or refusal to perform his/her duties (except when
prevented by reason of illness or disability); or (4) conviction of the
Eligible Individual of a felony involving moral turpitude.
10.12 Evidence. Evidence required of anyone under the Plan may be
by certificate, affidavit, document or other information which the person
acting on it considers pertinent and reliable, and signed, made or
presented by the proper party or parties.
SECTION 11
COMMITTEE
11.1 Administration. The Plan shall be administered by the
Compensation Committee of the Board or such other committee of Directors
as the Board shall designate, which shall consist of not less than two
Non-Employee Directors. The members of the Committee shall be
Non-Employee Directors and shall serve at the pleasure of the Board. To
the extent that the Board determines it to be desirable to qualify Awards
granted hereunder as "performance-based compensation" within the meaning
of Section 162(m) of the Code, the Plan shall be administered by a
Committee of two or more "outside directors" within the meaning of Section
162(m) of the Code. To the extent that the Board determines it to be
desirable to qualify Awards as exempt under Rule 16b-3, the Award
transactions contemplated hereunder shall be structured to satisfy the
requirements for exemption under Rule 16b-3. All determinations made by
the Committee pursuant to the provisions of the Plan shall be final and
binding on all persons, including the Company and Eligible Individuals.
The Board may administer the Plan or exercise any or all of the
administration duties of the Committee at any time when a Committee
meeting the requirements of this Section has not been appointed, and the
Board may exempt Awards pursuant to Rule 16b-3(d)(1) of the Exchange Act.
11.2 Powers of Committee. The Committee shall have the following
authority with respect to Awards under the Plan: to grant Awards; to
adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan as it shall deem advisable; to interpret the
terms and provisions of the Plan and any Award granted under the Plan; and
to otherwise supervise the administration of the Plan. In particular, and
without limiting its authority and powers, the Committee shall have the
authority:
(a) to determine whether and to what extent any Award or
combination of Awards will be granted hereunder;
(b) to select the Eligible Individuals to whom Awards will be
granted;
(c) to determine the number of shares of Stock to be covered by
each Award granted hereunder subject to the limitations
contained herein;
<PAGE>
(d) to determine the terms and conditions of any Award granted
hereunder, including, but not limited to, any vesting or
other restrictions based on such performance objectives and
such other factors as the Committee may establish, to
determine the acceleration of any vesting restrictions
under certain circumstances such as a change in control of
the Company, and to determine whether the performance
objectives and other terms and conditions of the Award are
satisfied;
(e) to determine the treatment of Awards upon the Eligible
Individual's retirement, disability, death, termination for
cause or other termination of employment or service;
(f) to determine that amounts equal to the amount of any
dividends declared with respect to the number of shares
covered by an Award (i) will be paid to the Eligible
Individual currently or (ii) will be deferred and deemed to
be reinvested or (iii) will otherwise be credited to the
Eligible Individual or that the Eligible Individual has no
rights with respect to such dividends; and
(g) to amend the terms of any Award, prospectively or
retroactively; provided, however, that no amendment shall
impair the rights of the Eligible Individual without his or
her written consent.
Determinations by the Committee under the Plan relating to the
form, amount, and terms and conditions of Awards need not be uniform, and
may be made selectively among Eligible Individuals who receive Awards
under the Plan, whether or not such Eligible Individuals are similarly
situated. The Committee shall have the power to accelerate the time at
which an Award may first be exercised or the time during which an Award or
any part thereof will vest in accordance with the Plan, notwithstanding
any provisions in an Award Agreement stating the time at which the Award
may first be exercised or the time during which the Award will vest.
11.3 Delegation by Committee. Except to the extent prohibited by
applicable law or the applicable rules of a stock exchange, the Committee
may allocate all or any portion of its responsibilities and powers to any
one or more of its members and may delegate all or any part of its
responsibilities and powers to any person or persons selected by it. Any
such allocation or delegation may be revoked by the Committee at any
time.
11.4 Information to be Furnished to Committee. The Company and any
Related Company shall furnish the Committee with such data and information
as it determines may be required for it to discharge its duties. The
records of the Company and any Related Company as to an Eligible
Individual's employment, termination of employment, leave of absence,
reemployment and compensation shall be conclusive on all persons unless
determined to be incorrect. Eligible Individuals and other persons
entitled to benefits under the Plan must furnish the Committee such
evidence, data or information as the Committee considers desirable to
carry out the terms of the Plan.
<PAGE>
11.5 Non-Liability of Board and Committee. No member of the Board
or the Committee, nor any officer or employee of the Company acting on
behalf of the Board or the Committee, shall be personally liable for any
action, determination or interpretation taken or made with respect to the
Plan, and all members of the Board or the Committee and all officers or
employees of the Company acting on their behalf shall, to the extent
permitted by law, be fully indemnified and protected by the Company with
respect to any such action, determination or interpretation.
SECTION 12
AMENDMENT AND TERMINATION
The Board may, at any time, amend or terminate the Plan, provided
that no amendment or termination may, in the absence of written consent to
the change by the affected Eligible Individual (or, if the Eligible
Individual is not then living, the affected beneficiary), adversely affect
the rights of any Eligible Individual or beneficiary under any Award
granted under the Plan prior to the date such amendment is adopted by the
Board; provided that adjustments made pursuant to Subsection 10.3(d) shall
not be subject to the foregoing limitations of this Section 12. An
amendment shall be subject to approval by the Company's shareholders only
to the extent required by applicable laws, regulations or rules of a stock
exchange or similar entity.
SECTION 13
GENERAL PROVISIONS
13.1 Award Agreements. No Eligible Individual will have rights
under an Award granted to such Eligible Individual unless and until an
Award Agreement has been duly executed on behalf of the Company and the
Eligible Individual.
13.2 No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company or any Related Company
from adopting or continuing in effect other or additional compensation
arrangements, and such arrangements may be either generally applicable or
applicable only in specific cases.
13.3 Headings. The headings of the sections and subsections of
this Plan are intended for the convenience of the parties only and shall
in no way be held to explain, modify, construe, limit, amplify or aid in
the interpretation of the provisions hereof.
13.4 Beneficiaries. An Eligible Individual may, from time to time,
name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan may be paid or
transferred in case of death. Each designation will revoke all prior
designations, shall be in a form prescribed by the Committee, and will be
effective only when filed by the Eligible Individual in writing with the
Committee during his or her lifetime. In the absence of any such
designation, benefits outstanding at the Eligible Individual's death shall
be paid or transferred to his or her estate. There shall be no third
party beneficiaries of or to this Plan. Any beneficiary of the Eligible
Individual shall have only a claim to such benefits as may be determined
to be payable hereunder, if any, and shall not, under any circumstances
other than the right to claim such benefits, be deemed a third party
beneficiary of or to this Plan.
<PAGE>
13.5 Repurchase Option. The terms of any repurchase option shall
be specified in the Award Agreement.
13.6 Governing Law. The Plan, and all agreements hereunder, shall
be construed in accordance with and governed by the laws of the State of
Minnesota, except to the extent preempted by federal law, without regard
to the principles of comity or the conflicts of law provisions of any
jurisdiction.
[End of Plan.]
<PAGE>
MESABA HOLDINGS, INC.
ANNUAL MEETING OF SHAREHOLDERS
Monday August 21, 2000
10:00 a.m.
Marriott City Center Hotel
30 South Seventh Street
Minneapolis, Minesota
MESABA HOLDINGS, INC.
7501 26th Avenue South, Minneapolis, Minnesota, 55450 PROXY
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This proxy is solicited by the Board of Directors for use at the Annual Meeting
on August 21, 2000.
The shares of common stock of Mesaba Holdings, Inc. you hold of record or in
your account or in dividend reinvestment account will be voted as you specify
below.
If no choice is specified, the proxy will be voted "FOR" each of the nominees
for the director listed in Proposal 1 and "FOR" Proposals 2 and 3.
By signing this proxy, you revoke all prior proxies and appoint Paul F. Foley
and John S. Fredericksen, and each of them, with full power of substituition,
to vote your shares on the proposals shown on the reverse side and any other
business which may come before the Annual Meeting and all adjournments.
See reverse for voting instructions.
<PAGE>
Please detach here
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The Board of Directors Recommends a Vote FOR Proposals 1, 2 and 3
1. Election of Directors 01 Richard H. Anderson 04 Robert C. Pohlad
02 Paul F. Foley 05 Douglas M. Steenland
03 Pierson M. Grieve
[ ] vote For [ ] Vote WITHELD
all nominees from all nominees
(except as marked)
(Instructions: To withhold authority to vote for any
indicated nominee, write the number(s)of the nominee(s) ---------------------
in the box provided to the right | |
---------------------
2. Approval for the Company's 2000 Stock Incentive Plan
[ ] For [ ] Against [ ] Abstain
3. Ratification of the appointment of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending March 31, 2001.
[ ] For [ ] Against [ ] Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
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Address Change? Mark Box [ ]
Indicate changes below: Date ________________________
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| |
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Sign in box
Please sign exactly as your name appears on this card. When shares are held by
joint tennants, both should sign. If signing as attorney, executor,
administrator, trustee or guardian, please give full title and authority. If a
corporation, please give full corporate name and title of authorized officer
signing this card. If a partnership, please give partnership name and title
of authorized person signing this card.
