SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a.12
CCAIR, INC.
(Name of Registrant as Specified In its Chapter)
CCAIR, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(4), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i) (3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (4) and 0-11.
1) Title of each class of securities to which transaction
applies: Common Stock
2) Aggregate number of securities to which transaction applies:
Not Applicable
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:(1) Not Applicable
4) Proposed maximum aggregate value of transaction: Not
Applicable
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of the filing.
1) Amount Previously Paid: $0
2) Form, Schedule or Registration Statement No.: Not Applicable
3) Filing Party: Not Applicable
4) Date Filed: Not Applicable
- --------
(1) Set forth the amount on which the filing fee is calculated
and state how it was determined.
<PAGE>
CCAIR, Inc.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held November 14, 1996
Notice is hereby given that the Annual Meeting of Stockholders of
CCAIR, Inc. will be held at the Sheraton Airport Plaza Hotel, 3315 South I-85 at
Billy Graham Parkway, Charlotte, North Carolina on November 14, 1996 at 10:00
a.m., for the following purposes:
1. To elect five Directors; and
2. To transact such other business as may properly come
before the Meeting or any adjournment or adjournments
thereof.
The Board of Directors has fixed the close of business on September 20,
1996 as the record date for the determination of stockholders entitled to notice
of and to vote at the Meeting. A complete list of the stockholders entitled to
vote at the Meeting will be available at the office of CCAIR, Inc., 4700
Yorkmont Road, Second Floor, Charlotte, North Carolina, at least ten days prior
to the Meeting.
Your attention is directed to the accompanying Proxy Statement.
By Order of the Board of Directors,
Eric W. Montgomery
Secretary
Charlotte, North Carolina
October 16, 1996
<PAGE>
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 14, 1996
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of CCAIR, Inc. (the "Company") for the
Annual Meeting of Stockholders to be held on November 14, 1996, and at any
adjournment thereof. The address of the Company's principal executive office is
4700 Yorkmont Road, Second Floor, Charlotte, North Carolina 28208. This Proxy
Statement and accompanying form of proxy are expected to be mailed to
stockholders on or about October 16, 1996.
The enclosed proxy is being solicited by the Board of Directors of the
Company. A stockholder who executes the accompanying form of proxy may revoke
his proxy at any time before it is voted by filing with Eric W. Montgomery,
Secretary of the Company, at 4700 Yorkmont Road, Second Floor, Charlotte, North
Carolina 28208, a written revocation or a properly executed proxy bearing a
later date, or by attending and voting in person at the Annual Meeting. All
shares represented by valid proxies received pursuant to the solicitation and
prior to the Meeting and not revoked before they are exercised will be voted,
and, if a choice is specified with respect to any matter to be acted upon, the
shares will be voted in accordance with such specifications. If no specification
is indicated, the shares will be voted in accordance with the recommendations of
the Board of Directors.
If a properly executed proxy is returned and the stockholder 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
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 a vote with respect to such matter. With respect
to the election of Directors, the vote required is a majority of the shares
actually voted. As a result, abstentions and broker nonvotes will not affect the
outcome of this matter.
The expense of the solicitation of proxies, including the costs of
preparing and distributing the proxy materials, the handling and tabulation of
proxies received and charges of brokerage houses and other institutions,
nominees or fiduciaries in forwarding such documents to beneficial owners, will
be paid by the Company. In addition to the mailing of proxy materials,
solicitation may be made in person or by telephone or telegraph by Directors,
Officers or regular employees of the Company. Such Directors, Officers and
employees will not receive additional compensation for such services.
VOTING SECURITIES OUTSTANDING
Only stockholders of record at the close of business as of September
20, 1996, will be entitled to notice of and to vote at the Annual Meeting of
Stockholders. As of the close of business on September 20, 1996, the Company had
7,740,695 outstanding shares of common stock par value $0.01 per share; there
are no other voting securities.
As of September 20, 1996, no stockholder was known to the Company to be
the beneficial owner of more than five percent of the common stock of the
Company.
The presence, in person or by proxy, of the holders of a majority of
the shares of common stock entitled to vote at the Annual Meeting constitutes a
quorum for the transaction of business.
1
<PAGE>
ELECTION OF DIRECTORS
Five Directors will be elected at the Annual Meeting to serve for a
one-year term and until their successors have been duly elected and qualified.
Stockholders do not have cumulative voting rights in the election of Directors.
Each shareholder is entitled to one vote for each share held for each Director.
Unless authority is withheld, it is the intention of the persons named
in the enclosed form of proxy to vote FOR the election as Directors of the
persons identified as nominees for Directors in the table below. If the
candidacy of any one or more of such nominees should, for any reason, be
withdrawn, the proxies will be voted FOR such other person or persons, if any,
as may be nominated by the Board of Directors. All nominees have consented to be
named herein as standing for election to the Board of Directors and have
consented to serve if elected.
The following information is furnished with respect to the nominees for
election to the Board of Directors of the Company:
<TABLE>
<CAPTION>
Name Age Principal Occupation for Past Five Years Director Since
<S> <C> <C> <C>
John A. Adams 47 President, Talon Resources, Inc., aviation and financial 1992
consulting firm (1982 to present); Chief Executive
Officer, GEO Environmental, Inc. (1992 to present).
K. Ray Allen 49 Chief Executive Officer and President, Computer 1994
Intelligence, Incorporated, a computer software
engineering firm (1981 to present); Chief Executive
Officer and President, Burl Software Laboratories,
Incorporated, a computer software development and
marketing firm (1992 to June 1994).
Kenneth W. Gann 57 Chief Executive Officer and President of the Company 1990
(November 1990 to present).
Gordon Linkon 67 Retired (September 1993); Chief Executive Officer 1994
and President, USAir Shuttle, commercial airline, New
York, NY (April 1992 to September 1993); Vice
President USAir Express Division, USAir Group, Inc.,
commercial airline, Arlington, VA (1988 to April 1992).
Dean E. Painter, Jr. 52 Co-owner and President, CLG, Inc., computer leasing 1985
and sales company, Raleigh, NC (1980 to present).
</TABLE>
During the fiscal year ended June 30, 1996, the Board of Directors held
a total of three (3) regular and special meetings. Each Director then serving
attended 75% or more of the total number of meetings of the Board and of the
committees of the Board on which he served.
The Board of Directors of the Company has the following standing
Committees: Audit Committee, Nominating Committee, Stock Option Committee and
Compensation Committee. The Stock Option Committee and the Audit Committee each
met once during the fiscal year ended June 30, 1996. The Nominating Committee
and Compensation Committee did not meet during that period.
2
<PAGE>
The Audit Committee confers with the Company's independent auditors and
reviews the scope of auditing of the Company's books and accounts and the
reports submitted by the auditors. The Committee also reviews, with the
independent auditors and appropriate Company personnel, procedures and methods
employed in connection with the Company's management policies relating to
internal controls. Reports are made by the Committee to the Board from time to
time. The members of the Audit Committee are Messrs. John A. Adams and Gordon
Linkon.
The Nominating Committee recommends to the Board the appropriate size
of the Board of Directors and the names of candidates for nomination to the
Board. The Committee will consider qualified candidates recommended by
stockholders. In order for a candidate recommended by a stockholder to be
considered as a nominee at the next Annual Meeting, the name of such candidate,
together with a written description of the candidate's qualifications, must be
received at the Company's principal executive offices on or before June 13,
1997. The members of the Nominating Committee are Messrs. Kenneth W. Gann and
Dean E. Painter, Jr.
The Stock Option Committee administers the Company's Amended and
Restated Stock Option Plan. This Committee is composed of Directors who are not
eligible for discretionary grants under the Plan. The Committee has full
authority, in accordance with the requirements of the Plan, to determine whether
to grant stock options to eligible recipients and to determine the size, terms
and restrictions on stock options granted. The members of the Stock Option
Committee are Messrs. K. Ray Allen and Gordon Linkon.
The Compensation Committee recommends to the Board appropriate levels
and types of compensation for each Executive Officer or position and Director of
the Company. The Committee will also make recommendations on various employee
benefits or benefit plans considered by the Board of Directors. The members of
the Compensation Committee are Messrs. Dean E. Painter, Jr. and John A. Adams.
The members of the Board of Directors do not receive fees in exchange
for their service to the Company. From time to time, the Directors receive
grants of options to purchase common stock in compensation for their service as
Directors. See disclosure under heading "Report of Compensation Committee" for
additional information. In addition, Mr. John A. Adams, through Talon Resources,
Inc., has a consulting arrangement with the Company. See disclosure under
headings "Compensation Committee Interlocks and Insider Participation" and
"Certain Relationships and Related Transactions" for additional information.
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth as of September 20, 1996, certain
information with respect to the beneficial ownership for each of the Directors
of the Company and of all Directors of the outstanding shares of the Company's
common stock, which is the only class of voting securities of the Company.
Each of the individuals listed below possesses sole voting and investment power
with respect to the shares listed opposite his name, unless noted otherwise.
Amount and Nature
Name of Beneficial Ownership Percent of Class(7)
Kenneth W. Gann 343,468(1) 3.9%
Dean E. Painter, Jr. 227,000(2) 2.6%
John A. Adams 265,750(3) 3.0%
K. Ray Allen 90,000(4) 1.0%
Gordon Linkon 95,000(5) 1.1%
All Directors and Officers
as a Group (7 persons) 1,093,218(6) 12.47%
3
<PAGE>
(1) Mr. Gann has the right to acquire 343,468 shares pursuant to
presently exercisable options.
(2) Mr. Painter has the right to acquire 207,000 shares pursuant
to presently exercisable options and warrants.
(3) Mr. Adams has the right to acquire 260,750 shares pursuant to
presently exercisable options and warrants.
(4) Mr. Allen has the right to acquire 80,000 shares pursuant to
presently exercisable options and warrants.
(5) Mr. Linkon has the right to acquire 65,000 shares pursuant to
presently exercisable options and warrants.
(6) Includes 1,028,218 shares which Officers and Directors have
the right to acquire pursuant to presently exercisable
options.
(7) All percentage calculations assume all presently exercisable
stock options and warrants held by Executive Officers and
Directors have been exercised.
MANAGEMENT
Executive Officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position and Background
<S> <C> <C>
Kenneth W. Gann 57 Chief Executive Officer, President and Director of the Company (November
1990 to present).
Eric W. Montgomery 37 Vice President of Finance, Secretary and Acting Treasurer of the
Company (February, 1995 to present); Controller, Hunter Farms, Inc., a
division of a regional grocery chain, High Point, NC (March 1993 to
February 1995); Assistant Controller, Denny's, Inc., a restaurant chain,
Spartanburg, SC (April 1990 to February 1993).
Peter J. Sistare 33 Vice President of Operations of the Company (March 1994 to present); Vice
President of Maintenance (December 1993 to March 1994); Director of
Maintenance of the Company (December 1990 to December 1993). Mr.
Sistare joined the Company in April 1986 as a mechanic and has served as
Manager of Avionics, Aircraft Instructor, Manager of Maintenance and Acting
Director of Maintenance before assuming his position of Director of
Maintenance of the Company. Mr. Sistare keeps current as a pilot on the
Shorts 360 by flying the line periodically.
</TABLE>
EXECUTIVE COMPENSATION
Compensation of Executive Officers
The following table sets forth certain summary information concerning
the compensation paid or accrued by the Company on behalf of the Company's Chief
Executive Officer. None of the Company's other executive officers had annual
income in excess of $100,000, the threshold level for reporting under the SEC
rules. Thus, only the Chief Executive Officer is a Named Executive Officer for
purposes of disclosure under the SEC rules.
4
<PAGE>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
=====================================================================
Annual
Compensation Awards
================================================================================
- --------------------------------------------------------------------------------
Other Annual All Other
Name and Salary Bonus Compensation(2) Options(3) Compensation
Principal Position Year(1) ($) ($) ($) (#) ($)
================================================================================
- --------------------------------------------------------------------------------
Kenneth W. Gann 1996 131,040(4) --- ----- 34,625(5) 8,655(6,7)
Chief Executive -----------------------------------------------------------
Officer and 1995 125,040 6,000 248,000(8) 7,625(6,7)
President -----------------------------------------------------------
1994 125,040 6,000 125,000(9) 6,745(6,7)
================================================================================
(1) The Company's fiscal year runs from July 1 to June 30 in the succeeding
calendar year and the year stated in the table and in the notes to the
table refers to the year in which the fiscal year ends.
(2) The amounts paid as other annual compensation represent a car allowance
of $500 per month.
(3) The Company does not issue Stock Appreciation Rights (SARs). This
column reflects the stock options issued under its Amended and Restated
Stock Option Plan.
(4) For the fiscal year 1996, the salary for Mr. Gann was increased by
$6,000 and the separate car allowance of $500 per month was terminated.
(5) Mr. Gann received options to purchase 19,625 as additional
consideration for loans to the Company.
(6) The Company purchased a key man life insurance policy on Mr. Gann in
the face amount of $1 million; 60% of proceeds to Company and 40% to
Mr. Gann's spouse. The amounts included in All Other Compensation
represent that portion of the premium paid by the Company that funds
the death benefit for Mr. Gann's spouse.
(7) Amounts included under All Other Compensation are for premiums for
supplemental life insurance and medical insurance paid by Company.
(8) The options to purchase 248,000 shares of common stock granted in 1995
were, in part, a transaction in which Mr. Gann surrendered options to
purchase 236,000 shares that were granted in 1992-1994. However, the
rules of the Securities and Exchange Commission require that these
grants be shown without the effect of the surrender. The additional
12,000 options were granted in 1995.
(9) This grant is part of a transaction in which Mr. Gann surrendered stock
options to purchase 55,000 shares of common stock in exchange for stock
options to purchase the same number of shares.
Option Grants in Last Fiscal Year
The following table sets forth the individual grants of stock options
made to the Named Executive Officer during the fiscal year ended June 30, 1996.
5
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
=========================================================================================
Potential Realized Value
at Assumed Annual
Individual Rates of Stock Price
Grants Appreciation for
Option Term(2)
- --------------------------------------------------------------
% of Total Exercise
Options Options Granted or Base Expir-
Granted(1) to Employees in Price ation 5% 10%
Name (#) Fiscal Year ($/sh) Date
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth W. Gann 2,500 3.6% $3.125 07/01/05 $ 3,878.25 $ 5,894.75
2,500 3.6% $2.8438 08/01/05 $ 3,878.25 $ 5,894.75
2,500 3.6% $2.00 10/27/05 $ 3,878.25 $ 5,894.75
15,000 21.5% $2.00 11/16/05 $23,269.50 $35,368.50
2,500 3.6% $2.125 11/20/05 $ 3,878.25 $ 5,894.75
2,250 3.2% $2.125 12/22/05 $ 3,490.43 $ 5,305.28
2,000 2.9% $1.625 02/22/06 $ 3,102.60 $ 4,715.80
2,000 2.9% $1.8125 03/21/06 $ 3,102.60 $ 4,715.80
1,875 2.7% $1.9375 04/19/06 $ 2,908.69 $ 4,421.06
1,500 2.2% $1.875 06/21/06 $ 2,326.95 $ 3,536.85
==========================================================================================
</TABLE>
(1) All options granted are Non-qualified Stock Options granted under the
Company's Amended and Restated 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 over
the remaining term of the options 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.
Aggregated Option Exercises in Last Fiscal Year and Year-End Option Values
The following table sets forth the aggregate value of unexercised
options to acquire shares of common stock held by the Named Executive Officer on
June 30, 1996 and the value realized upon the exercise of options during the
fiscal year ended June 30, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
==================================================================================================
Number of Value of
Unexercised Unexercised
Options In-The-Money
Shares at Options
Acquired June 30, 1996 at June 30, 1996(2)
on Value _________________________ _________________________
Exercise1 Realized(1)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth W. Gann -0- -0- 337,593 5,875 $308,279.63 $2,351.56
==================================================================================================
</TABLE>
6
<PAGE>
(1) Mr. Gann did not exercise any stock options held by him during the
fiscal year ended June 30, 1996.
(2) The value is calculated as the excess of market value of the common
stock as of June 28, 1996 over the exercise price, the last trading day
for the 1996 fiscal year. On June 28, 1996, the last sales price for
the Company's common stock on the NASDAQ Small Cap Market was $2.125.
Compensation Agreements
Officers of the Company, except for Mr. Gann, Chief Executive Officer,
serve at the pleasure of the Board of Directors. Mr. Gann has an Employment
Agreement with the Company that is described below in the Report of the
Compensation Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. John A. Adams and Mr. Dean E. Painter, Jr. served as members of the
Compensation Committee of the Board of Directors of the Company for the fiscal
year ended June 30, 1996, but were not and have not been officers or employees
of the Company or any subsidiaries.
The Company has engaged Talon Resources, Inc. over the last five fiscal
years as a consultant on aviation and financial matters, including assistance in
the preparation of the Chapter 11 plan of reorganization for the Company. Talon
Resources performs airline and financial planning services for the Company. It
bills at an hourly rate, plus travel expenses, that has not increased since last
approved in Bankruptcy Court. Records of hours for work performed are submitted
to the Company's President for approval. John A. Adams, a Director of the
Company, is the President and fifty-percent shareholder of Talon Resources, Inc.
At the inception of the Company's relationship with Talon Resources, Inc., John
A. Adams was not a Director of the Company. Since the hourly billing rate of
Talon Resources, Inc. has not changed since John A. Adams became a Director of
the Company in 1993, the Company believes this rate reflects the rate which
might have been obtained from a nonaffiliated party. In the fiscal year ended
June 30, 1996, Talon Resources, Inc. received payments in the aggregate amount
of $88,409 for services rendered in that fiscal year and the prior fiscal year.
Mr. Adams and Mr. Painter have each extended short-term secured lines
of credit to the Company as follows:
=========================================================================
Date Date Warrants
Name Loaned Amount Expired Granted
=========================================================================
John A. Adams 04/15/96 $200,000 04/30/96 5,000
05/14/96 300,000 05/31/96 7,500
06/01/96 300,000 06/30/96 7,500
07/01/96 100,000 07/31/96 2,500
08/01/96 100,000 08/30/96 2,500
=========================================================================
Dean E. Painter, Jr. 04/15/96 $400,000 04/30/96 10,000
05/15/96 400,000 05/31/96 10,000
06/14/96 400,000 06/30/96 10,000
07/16/96 200,000 07/31/96 5,000
08/16/96 250,000 08/30/96 6,250
09/16/96 400,000 09/30/96 10,000
=========================================================================
7
<PAGE>
The lines of credit were extended to assist the Company with short-term
cash flow. The interest rate was at ten percent (10%) on the lines of credit.
The lines of credit were secured by liens on certain personal property owned by
the Company. As additional consideration, the Company issued warrants to
purchase 2,500 shares of common stock at the then current market price for each
$100,000 loaned. If the loan was not repaid at the end of the month in which it
was made, the loan was considered a new loan for purposes of the issuance of
warrants. The terms of the loans were proposed by Dean Painter and approved by
the remaining members of the Board of Directors. These warrants were not issued
pursuant to a plan under Rule 16b-3. Given the size of the loans and the time
and expense of obtaining outside credit, the Company did not solicit these funds
from unaffiliated parties.
On June 30, 1995 the Company entered into a sale and leaseback
transaction with Adallipa Partners. John Adams, K. Ray Allen, Gordon Linkon and
Dean Painter are the general partners of Adallipa Partners. As additional
consideration for entering into this transaction, the Company issued warrants to
purchase 250,000 shares of common stock at the then current market price to the
partnership which were immediately distributed pro rata to the partners. The
sale and leaseback transaction involved certain aircraft engines owned by the
Company. These engines were sold for $1,000,000 which represented the valuation
of the engines at the higher of current value or book value. This transaction
resulted in a gain of $70,000. The monthly lease term was determined by taking
into consideration that both types of engines were mature and by including a
substantial factor for probable obsolescence. The President of the Company,
Kenneth Gann, made the decision on behalf of the Company to enter into the sale
and leaseback transaction. The Company was unable to compare the terms of this
transaction with similar unaffiliated transactions because the Company was
unable to attract any other proposal from any other lender to obtain the sale
and leaseback financing. The sale and leaseback financing was critically
important to the Company's cash flow.
REPORT OF THE COMPENSATION COMMITTEE
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that incorporate by reference, in
whole or in part, subsequent filings including this Proxy Statement, the
following Report of the Board of Directors as well as the Performance Graph set
forth on page 10 hereof shall not be deemed to be incorporated into any such
filings.
The SEC rules addressing disclosure of executive compensation in proxy
statements require a report by a Compensation Committee or similar entity or by
the Board of Directors as a whole concerning compensation policies applicable to
executive officers including the specific relationship of corporate performance
to executive compensation. The focus of this Report is to be the compensation
paid or accrued for the last fiscal year.
The compensation policies of the Company for the fiscal year ended June
30, 1996 were established by the Compensation Committee and the Stock Option
Committee of the Board of Directors. The Compensation Committee is composed of
two nonemployee Directors and has oversight responsibility for executive
compensation and executive benefit program of the Company, except for the
Amended and Restated Stock Option Plan (the "Stock Option Plan") which is
administered by the Stock Option Committee. This bifurcation of responsibilities
resulted from the necessity of administration by disinterested Directors under
Rule 16b-3 of the Securities Exchange Act of 1934, as amended.
Compensation Committee Report on Executive Compensation
The Company's executive compensation policies during the last fiscal
year has focused on cash compensation in the form of annual salary and incentive
compensation in the form of stock options. Given the financial circumstances
during that period, the objective was to pay salaries at a level sufficient to
hire and retain executive officers but consistent with the cash flow needs of
the Company. Executive officers were provided opportunity for far greater
compensation by the award of stock options. Directors of the Company were also
compensated through the award of stock options in lieu of Directors' fees or
other benefits.
8
<PAGE>
Mr. Gann's compensation has been composed of two elements: (1) a base
salary, effective in 1991, of $125,000 adjusted for inflation; and (2) the
awards of stock options. Mr. Gann received stock options to purchase 200,000
shares of common stock as an inducement to join the Company as its President and
Chief Executive Officer when it was in the first phase of its Chapter 11
Reorganization proceeding. The stock options became exercisable in three roughly
equal annual installments. Since Mr. Gann joined the Company, there has been
only one adjustment in the base salary.
In February of 1994, upon the recommendation of the Compensation
Committee, the Company entered into a new employment agreement with Mr. Gann.
This employment agreement provided for a base salary of $125,000 and contained a
three-year term. The base salary was increased to $131,000 when a car allowance
was terminated and combined with Mr. Gann's salary. The Compensation Committee
recommended the new employment agreement in light of the uncertainties related
to the Company's financial circumstances, as a means to retain the services of
Mr. Gann. Other than the change in term from one year to three years, the only
material difference to the employment relationship concerned a potential change
in Mr. Gann's responsibilities. If the Board of Directors determined to elect a
new Chief Executive Officer, then Mr. Gann had the choice to remain as Chief
Operating Officer and President or to resign and receive compensation for twelve
(12) months after resignation. If the Board of Directors shall reduce the job
responsibilities of Mr. Gann below those normally attributable to the Chief
Executive Officer of a Delaware corporation, then Mr. Gann has the right to
terminate the agreement and receive the compensation due for the remaining term
of the agreement.
In November of l995, Mr. Gann received grants of options to purchase
15,000 shares of common stock at market prices under the Company's Stock Option
Plan. Mr. Gann also received grants of options in connection with loans made to
the Company. See discussion under "Certain Relationships and related
transactions.
During the last fiscal year, even though the results of operations
showed substantial improvement as compared to the prior fiscal year, Mr. Gann's
level of cash compensation was not directly related to measures of the Company's
performance. The cash compensation was provided in accordance with the
employment agreement stated above. The Compensation Committee does not currently
have policies concerning the payment of cash bonuses, preferring to tie
incentive compensation to the performance of the Company's common stock through
the issuance of stock options. The Compensation Committee does not currently
have specific policies concerning the relationship between the Company's
performance and the issuance of stock options, preferring to assess each
issuance of stock options in light of the surrounding facts and circumstances.
The issuance to Mr. Gann of options to purchase 15,000 shares of the common
stock of the Company during the previous fiscal year was in lieu of directors'
fees.
Compensation Committee
John A. Adams Dean E. Painter, Jr.
Stock Option Committee
K. Ray Allen Gordon Linkon
PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative return on the
Company's common stock since June 30, 1991 with the cumulative total return in
the CRSP Index for the Nasdaq Stock Market (U.S. companies) and the CRSP Index
for NASDAQ stocks having an SIC Code's of 3700-3799, 4200-4299, 4400-4599 and
4700-4799 over the same period. The companies comprising those SIC Codes are
engaged in trucking and transportation.
The graph assumes an initial $100.00 investment on June 30, 1991.
9
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS
Performance Graph for
CCAIR, INC.
Prepared by the Center for Research in Security Prices (CRSP)
The University of Chicago Graduate School of Business
Produced on 09/18/96 including data to 06/28/96
CRSP Total Returns Index
6/28/91 6/30/92 6/30/93 6/30/94 6/30/95 6/28/96
CCAIR, Inc. 100.0 190.0 315.0 80.0 127.5 85.0
NASDAQ Stock Market
(U.S. Companies) 100.0 120.1 151.1 152.5 203.6 261.4
NASDAQ Trucking
& Transportation
Stocks 100.0 121.6 149.6 153.2 171.3 189.9
Notes:
A. The index level for all series was set to $100.00 on 06/28/91.
B. The NASDAQ Trucking & Transportation Stocks include SIC Codes
3700-3799, 4200-4299, 4400-4599 & 4700-4799, both U.S. and
foreign companies included.
10
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Painter, Mr. Adams, Mr. Allen and Mr. Gann have extended short-term
secured lines of credit to the Company since July 1, 1995. Their lines of credit
were extended to assist the Company with short-term cash flow. Please refer to
the disclosure under the heading "Compensation Committee Interlocks and Insider
Participation" for a description of certain transactions between the Company and
Mr. Painter and Mr. Adams. Mr. Allen lent $100,000 in June, 1996, $100,000 in
July, 1996 and $150,000 in August, 1996 and received warrants to purchase 2,500,
2,500 and 3,750 shares of the Company's common stock, respectively. Mr. Gann
extended short-term lines of credit under terms similar to those set forth
above. Mr. Gann was issued options to acquire shares of the Company's common
stock under the Company's Stock Option Plan. See page 8 for a more complete
description. Mr. Gann made loans as follows:
===============================================================================
Date Loaned Amount Date Expired Related Rights Granted
===============================================================================
08/14/96 $ 65,000 08/29/96 1,625
07/16/96 70,000 07/31/96 1,750
06/21/96 60,000 07/03/96 1,500
04/19/96 75,000 04/30/96 1,875
03/21/96 80,000 04/01/96 2,000
02/22/96 80,000 03/05/96 2,000
12/22/95 90,000 12/29/95 2,250
11/24/95 100,000 11/29/95 2,500
10/27/95 100,000 10/31/95 2,500
08/01/95 100,000 08/16/95 2,500
07/01/95 100,000 07/31/95 2,500
===============================================================================
The Company believes that the foregoing transactions were contracted on
terms at least as favorable to the Company as could be obtained from unrelated
third parties.
COMPLIANCE WITH SECTION 16(a)
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Officers and Directors and persons who own more than ten percent of
the Company's common stock to file reports of ownership or change in ownership
in the Company's common stock with the Securities and Exchange Commission. Based
solely on a review of those reports and on information supplied to the Company,
without independent inquiry, all Section 16(a) filing requirements applicable to
its executive Officers, Directors and greater than ten-percent shareholders were
complied with, except as set forth below.
Mr. Adams and Mr. Painter did not report the issuance of warrants to
purchase shares of common stock until the Form 5 was filed with respect to the
1996 fiscal year.
11
<PAGE>
PROPOSALS OF SECURITY HOLDERS
It is expected that the Company's Annual Meeting in 1997 will be held
on or about November 13, 1997. Stockholders desiring to submit proposals for
action at that meeting will be required to submit them to the Company on or
about June 13, 1997. Any shareholder proposal must also be proper in form and
substance as determined in accordance with the Securities Exchange Act of 1934
and the rules and regulations promulgated thereunder.
OTHER MATTERS
The Board of Directors does not know of any other matter to be
presented at the Annual Meeting that is not listed in the Notice of Annual
Meeting and discussed above. If other matters are properly brought before the
Annual Meeting,however, the persons named in the accompanying form of proxy will
vote the proxy on such matters in accordance with their best judgment.
By Order of the Board of Directors
October 16, 1996
12
<PAGE>
*****************************************************************************
APPENDIX
CCAIR, INC. PROXY
4700 YORKMONT ROAD, SECOND FLOOR
CHARLOTTE, NORTH CAROLINA 28208
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of CCAIR, Inc. (the "Company") hereby
constitutes and appoints Kenneth W. Gann and Peter J. Sistare, and each of them,
with full power of substitution, attorneys and proxies to appear and vote, as
indicated below, all the shares of Common Stock of the Company held of record by
the undersigned on September 20, 1996 at the Annual Meeting of the Stockholders
of the Company to be held on November 14, 1996 and at any and all adjournments
thereof.
1. PROPOSAL TO ELECT THE FIVE NOMINEES LISTED BELOW AS DIRECTORS TO SERVE FOR A
TERM EXPIRING AT THE ANNUAL MEETING FOR THE FISCAL YEAR ENDING JUNE 30, 1997 AND
UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFIED.
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to vote for all nominees
listed below
(except as marked to the contrary below)
(Instruction: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below)
NOMINEES: Kenneth W. Gann, Dean E. Painter Jr., John A. Adams, K. Ray Allen and
Gordon Linkon.
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" PROPOSAL 1. THE PROXIES ARE AUTHORIZED TO VOTE ON SUCH
OTHER BUSINESS AS MAY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF, IN
THEIR SOLE DISCRETION.
Dated: , 1996.
Signature of Stockholder(s)
Please sign exactly as name appears on
this proxy. When shares are held by
joint tenants, both should sign. When
signing on behalf of a corporation or
partnership, or as attorney, agent or
fiduciary, please indicate the capacity
in which you are signing.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE.
