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
[ ] Confidential, for Use of the Commission Only(as permitted by
Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to section 240.14a-11(c) or
section 240.14a-12
ATLANTIC COAST AIRLINES, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
ATLANTIC COAST AIRLINES, INC.
515-A Shaw Road
Dulles, Virginia 20166
April 28, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders (the "Annual Meeting") of Atlantic Coast Airlines, Inc.
(the "Company"), to be held on Tuesday, June 3, 1997, at 10:00 a.m.
local time, at the Washington Dulles Airport Hilton Hotel, 13869 Park
Center Road, Herndon, Virginia. This year we are asking you to elect
eight directors of the Company to serve until the 1998 Annual
Meeting. The Board of Directors recommends that you vote FOR this
proposal.
Gordon A. Cain, one of our founding directors, will not be
standing for re-election. Gordon has provided the Company with
valuable assistance for six years, and we will always be indebted to
him for his contribution to the Company's success. At the same time,
we have recently welcomed Thomas J. Moore, who was promoted to the
position of Chief Operating Officer, to the Board as our newest
director. Tom has been with the Company since 1994, and previously
served as Senior Vice President of Maintenance and Operations. Tom is
appearing on our slate of director nominees for the first time.
At the Annual Meeting, the Board of Directors will also
report on the Company's affairs, and a discussion period will be
provided for questions and comments. The Board of Directors
appreciates and encourages stockholder participation.
Whether or not you plan to attend the Annual Meeting, it is
important that your shares be represented. Accordingly, we request
that you complete, sign, date, and promptly return the enclosed proxy
in the enclosed postage-paid envelope.
Thank you for your cooperation.
Sincerely,
/S/ C. Edward Acker
C. Edward Acker
Chairman of the Board of
Directors
ATLANTIC COAST AIRLINES, INC.
515-A Shaw Road
Dulles, Virginia 20166
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 3, 1997
To the Stockholders of
ATLANTIC COAST AIRLINES, INC.:
NOTICE IS HEREBY GIVEN that the annual meeting of
stockholders of Atlantic Coast Airlines, Inc., a Delaware corporation
(the "Company"), will be held on Tuesday, June 3, 1997, at 10:00
a.m., local time, at the Washington Dulles Airport Hilton Hotel,
13869 Park Center Road, Herndon, Virginia, for the following
purposes, as more fully described in the accompanying Proxy
Statement:
To elect eight directors to serve for the ensuing year and until
their successors are elected.
Only holders of record of Common Stock, par value $0.02 per
share, of the Company at the close of business on April 25, 1997, are
entitled to receive notice of and to vote at the meeting. A list of
such holders will be open for the examination of any stockholder
during regular business hours for a period of ten days prior to the
meeting at the offices of the Company at 515-A Shaw Road, Dulles,
Virginia.
All stockholders are cordially invited to attend the
meeting. In order to assure that your stock may be represented at the
meeting if you are not personally present, please complete, date, and
sign the enclosed proxy and mail it promptly in the accompanying
postage-paid envelope.
By order of the Board of Directors
/S/ Richard J. Kennedy
Richard J. Kennedy
Secretary and General Counsel
April 28, 1997
ATLANTIC COAST AIRLINES, INC.
515A Shaw Road
Dulles, Virginia 20166
Phone: (703) 925-6000
_________________________
PROXY STATEMENT
_________________________
INTRODUCTION
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Atlantic Coast
Airlines, Inc. (the "Company") for use at the annual meeting of
stockholders to be held at 10:00 a.m., local time, on Tuesday, June
3, 1997, at the Washington Dulles Airport Hilton Hotel, 13869 Park
Center Road, Herndon, Virginia, and at any adjournment thereof (the
"Meeting").
Written communications to the Company should be sent to the
Company's office at 515A Shaw Road, Dulles, Virginia 20166. The
Company can be reached by telephone at (703) 925-6000. This Proxy
Statement and a proxy card, together with a copy of the Company's
1996 Annual Report, are first being mailed on or about April 28,
1997, to persons who were holders of record of the Company's Common
Stock, par value $0.02 per share (the "Common Stock"), at the close
of business on April 25, 1997, (the "Record Date").
Matters to be Considered at the Meeting
At the Meeting, the holders of shares of Common Stock as of
the Record Date will be asked to consider and vote upon the election
of directors as described in this Proxy Statement and on any other
matter properly brought before the Meeting. With respect to any
matter to come before the Meeting, holders of record of Common Stock
will be entitled to one vote for each share of Common Stock held.
Voting at the Meeting
The Board of Directors has fixed April 25, 1997, as the
Record Date for the Meeting, and only holders of record of the Common
Stock at the close of business on the Record Date are entitled to
notice of, and to vote at, the Meeting. On the Record Date, there
were outstanding and entitled to vote approximately 8,508,000 shares
of the Common Stock.
The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of the Common Stock is necessary
to constitute a quorum at the Meeting. The election of the Board of
Directors requires the affirmative vote of a plurality of the shares
of the Common Stock present and voting at the Meeting. "Plurality"
means that the individuals who receive the largest number of votes
cast "FOR" are elected as directors up to the maximum number of
directors to be chosen at the Meeting.
Approval of any other business properly brought before the
Meeting shall be decided by the affirmative vote of the holders of a
majority of the shares of Common Stock present, in person or
represented by proxy, at the Meeting and entitled to vote thereon,
unless a higher vote is required for any such other matter under
applicable state law or the Company's Restated Certificate of
Incorporation or By-laws.
In accordance with Delaware law, abstentions and shares
held of record by a broker or its nominee ("Broker Shares") that are
voted on any particular matter are included for purposes of
determining the number of votes present on such matter. Broker
Shares that are not voted on any particular matter at the Meeting
will not be treated as present for such matter.
Proxies
If the enclosed proxy is properly executed and returned in
time for the Meeting, the shares of stock represented thereby will be
voted in accordance with the instructions given thereon. If no
instructions are given, such shares will be voted "FOR" all of the
nominees as director. Proxies will extend to, and be voted at, any
adjournment of the Meeting.
The Board of Directors does not intend to bring before the
Meeting any business other than as set forth in this Proxy Statement
and has not been informed that any other business is to be presented
at the Meeting. However, should any other matter properly come
before the Meeting, it is the intention of the persons named as
proxies in the accompanying proxy or their duly authorized and
constituted substitutes to vote or act thereon in accordance with
their best judgment.
Any stockholder who has executed and returned a proxy and
who for any reason desires to revoke such proxy may do so at any time
before the proxy is exercised (i) by giving written notice to the
Secretary of the Company at the above address, (ii) by voting the
shares represented by such proxy in person at the Meeting, or (iii)
by giving a later dated proxy at any time before the voting.
Attendance at the Meeting will not, by itself, revoke a proxy.
Expenses of Solicitation
The costs of the solicitation of proxies will be borne by
the Company. Such costs include preparation, printing and mailing of
the Notice of Annual Meeting of Stockholders, this Proxy Statement,
the enclosed proxy and the Company's 1996 Annual Report, and the
reimbursement of brokerage firms and others for reasonable expenses
incurred by them in connection with the forwarding of proxy
solicitation materials to beneficial owners. The solicitation of
proxies will be conducted primarily by mail, but may include
telephone, facsimile or oral communications by directors, officers,
or regular employees of the Company acting without special
compensation.
ELECTION OF DIRECTORS
Introduction
The eight individuals set forth in the table below are all
of the Company's nominees for election as directors at the Meeting.
Directors are elected for terms of one year and until the next annual
meeting of stockholders, and serve until resignation, or succession
by election or appointment. All of the nominees have consented to
being named as such in this Proxy Statement and have agreed to serve
if elected. If any nominee should become unavailable for election at
the time of the Meeting or shall not be able to serve if elected, the
persons voting the proxies solicited hereby may in their discretion
vote for a substitute nominee or the Board of Directors may choose to
reduce the number of directors. The Board of Directors has no reason
to believe that any nominee will be unavailable. All nominees are
currently serving on the Company's Board of Directors.
Currently, the Board of Directors consists of nine
individuals. Mr. Gordon Cain, a founding director of the Company,
has determined not to stand for reelection to the Board. Accordingly,
as of the Meeting, the size of the Board will be set at eight.
The following table sets forth each nominee's name, age as
of April 28, 1997, position, and the year in which such nominee first
became a director:
Name Age Position Director
Since
C. Edward Acker 68 Chairman of the Board of 1991
Directors
Kerry B. Skeen 44 President, Chief 1991
Executive Officer, and
Director
Thomas J. Moore 40 Executive Vice 1997
President, Chief
Operating Officer, and
Director
Robert E. Buchanan 54 Director 1995
Joseph W. Elsbury 68 Director 1991
James J. Kerley 74 Director 1991
James C. Miller 54 Director 1995
John M. Sullivan 61 Director 1995
Background of Nominees
The following is a brief account of the business experience
of each of the nominees for election as a director. There are no
family relationships among the nominees or special understandings
pursuant to which such persons have been nominated as directors of
the Company.
C. Edward Acker. Mr. Acker is a co-founder of the Company
and was its Chief Executive Officer from its formation in October
1991 until March 1995. He became Chairman of the Board of Directors
in April 1993, prior to which he had been Vice Chairman of the Board
of Directors. He has been a Director since October 1991, and served
as President of the Company from October 1991 until October 1992.
Mr. Acker served as Chairman and Chief Executive Officer of Pan
American World Airways, Inc. ("Pan Am") from 1981 until 1988. Since
1988, Mr. Acker has served as Chairman of The Acker Group, a private
company which acts as both principal and adviser in airline-related
transactions; and as a partner in Elsbury & Acker, an oil and natural
gas exploration company. From February 1995 until February 1996, Mr.
Acker served as Chairman and Chief Executive Officer of BWIA
International Airways, Ltd. From 1993 to the present, he has served
as Chairman of the Board and President of Air Assets, Inc.
Kerry B. Skeen. Mr. Skeen is a co-founder of the Company
and has been President since October 1992, and Chief Executive
Officer since March 1995. From October 1991 until October 1992, Mr.
Skeen was Executive Vice President of the Company. He has been a
Director of the Company since October 1991, and was Chief Operating
Officer from October 1991 to April 1997. Mr. Skeen was President of
the Atlantic Coast division of WestAir Commuter Airlines, Inc.
("WestAir") from 1989 until its acquisition by the Company in 1991.
From 1987 to 1989, Mr. Skeen was Vice President of Marketing and
Sales of WestAir and, in 1989, was named Senior Vice President of
WestAir. Mr. Skeen's affiliation with the regional airline industry
began in 1983 when he directed the development and marketing
activities of Delta Air Lines, Inc.'s regional airline program, "The
Delta Connection."
Thomas J. Moore. Mr. Moore has been Executive Vice
President and Chief Operating Officer since April 1997, and Senior
Vice President of Maintenance and Operations from June 1994 until
then. Prior to joining the Company, Mr. Moore spent nearly ten years
with Continental Airlines in Houston, Texas, where he served at
different times in the position of staff vice president, senior
director of technical planning, director of financial planning, and
division controller.
Robert E. Buchanan. Mr. Buchanan has been a Director since
March 1995. Mr. Buchanan is President of Buchanan Companies, LLC, a
metropolitan Washington, D.C., real estate firm specializing in
commercial and residential development, investments, construction,
and property management in suburban Washington. Mr. Buchanan has
served on the Board of Directors of USLICO Corporation, and currently
serves on the Board of Directors of the Washington Airports Task
Force, and the Economic Development Commission of Loudoun County,
Virginia (former Chairman), home to the corporate office of the
Company and of its hub at Washington-Dulles International Airport.
Joseph W. Elsbury. Mr. Elsbury has been a Director of the
Company since its formation in October 1991. Mr. Elsbury has been a
partner in Elsbury & Acker, an oil and natural gas exploration
company, since 1987.
James J. Kerley. Mr. Kerley has been a Director of the
Company since its formation in October 1991 and an independent
financial consultant since 1986. Between 1993 and 1994, Mr. Kerley
served as the non-executive Chairman of the Board of Rohr, Inc. From
1981 through 1985 he was Vice Chairman of the Board of Directors and
Chief Financial Officer of Emerson Electric Co., and for eleven years
prior to that was Chief Financial Officer of Monsanto Company. From
1962 to 1968, he served as Vice President-Finance and Chief Financial
Officer of Trans World Airlines, Inc. Mr. Kerley is a director of
Borg-Warner Automotive, Inc. and DT Industries, Inc. During the past
five years, Mr. Kerley has been, but is no longer, a member of the
Board of Directors of various other corporations, including Rohr
Industries, Inc., Kellwood Company, Cyprus Amax Minerals, ESCO
Electronics Corporation and Sterling Chemicals, Inc. He has also
served as a director of Trans World Airlines, Inc., World Airways,
and Frontier Airlines.
James C. Miller. Mr. Miller has been a Director since
March 1995. He has been associated with Citizens for a Sound Economy
since 1989, first as Chairman, and since 1993 as Counselor. He is
also co-chairman of the Tax Foundation, and John M. Olin
Distinguished Fellow at George Mason University. He is a director of
Goulds Pumps, Inc.; the Union Corporation; Hugoton Capital Limited
partnership; and Washington Mutual Investors Fund. From 1985 to
1988, he served as Director of the Office of Management and Budget of
the United States and as a member of President Reagan's cabinet.
From 1981 to 1985, he was Chairman of the Federal Trade Commission.
Mr. Miller wrote his Ph.D. dissertation on airline scheduling, and is
the co-author of, among other works, a Brookings Institution volume
on airline regulation.
John M. Sullivan. Mr. Sullivan has been a Director since
January 1995. Mr. Sullivan joined the accounting firm of Arthur
Andersen & Co. in 1958, and was a Partner from 1970 until his
retirement from the firm in 1992. He served as International Tax
Director for General Motors Corporation from 1992 to 1994, and is
currently a financial and tax consultant.
Special Arrangements With Respect to the Election of Directors
In connection with the December 1994 investment by British
Aerospace Asset Management Inc. ("BAe") (formerly JSX Capital
Corporation ("JSX")), the Company agreed to permit a representative
of BAe to have observer status on the Board of Directors. In 1997
BAe relinquished its right to observer status and no longer
participates in Board meetings. BAe does not have the right to
designate any Directors of the Company.
Committees and Board Meetings
During 1996, there were four regular meetings of the Board
of Directors and one by teleconference. Each incumbent director who
is a nominee for re-election attended 75% or more of the aggregate of
the meetings of the Board and of the Board committees on which he
served except that Messrs. Elsbury and Kerley attended 67% of said
meetings.
The Board has two standing committees, an Audit Committee
and a Compensation Committee. Their functions are described below.
Audit Committee. The Audit Committee meets with management
and the Company's independent accountants to consider the adequacy of
the Company's internal controls and financial reporting. The Audit
Committee recommends to the Board the Company's independent
accountants; discusses with the independent accountants their audit
procedures, including the proposed scope and timing of the audit, the
audit results and accompanying management letters; reviews the
auditor's fees and services; and in general endeavors to ensure the
independence of the auditors and accountants. The Audit Committee met
once via teleconference in 1996. The current members of the Audit
Committee are Messrs. Elsbury, Kerley, Miller, and Sullivan, who
serves as chairman.
Compensation Committee. The Compensation Committee reviews
and approves the direct and indirect compensation and employee
benefits of the executive officers of the Company, particularly the
Chief Executive Officer; administers the Company's stock option and
incentive compensation plans; and reviews in general the Company's
policies relating to the compensation of senior management and other
employees. The Compensation Committee held five meetings during
1996. The current members of the Compensation Committee are Messrs.
Sullivan, Buchanan, and Acker, who serves as chairman, along with Mr.
Cain, who will retire from the position as of the stockholders
meeting.
Directors' Compensation
Directors, with the exceptions noted below, receive an
annual fee of $16,000 for serving as Directors, and are reimbursed
for out-of-pocket expenses incurred in attending meetings of the
Board of Directors or committees thereof. Messrs. Acker, Skeen, and
Moore, as officers of the Company, do not receive compensation for
their service on the Board, and Messrs. Sullivan and Cain (until his
retirement from the Board) have waived their annual fees. Non-
employee directors are entitled to certain flight benefits made
available to employees of the Company.
EXECUTIVE OFFICERS
The following table sets forth the name, age as of April
28, 1997, and position of each executive officer of the Company:
Officer
Name Age Position Since
C. Edward Acker 68 Chairman of the Board 1991
of Directors, and
formerly Chief
Executive Officer
Kerry B. Skeen 44 Chief Executive 1991
Officer, President, and
Director
Thomas J. Moore 40 Executive Vice 1994
President and Chief
Operating Officer
Paul H. Tate 46 Senior Vice President, 1997
Chief Financial
Officer, Treasurer, and
Assistant Secretary
Michael S. Davis 32 Senior Vice President - 1995
Customer Service
Richard J. Kennedy 42 General Counsel and 1996
Secretary
Stanley J. Gadek 45 Controller and 1995
Assistant Secretary
Background of Executive Officers
The following is a brief account of the business experience
of each of the executive officers of the Company other than Messrs.
Acker, Skeen, and Moore each of whose background is described above.
There are no family relationships or special understandings pursuant
to which such persons have been elected as officers of the Company.
Paul H. Tate Mr. Tate has served as Senior Vice President
and Chief Financial Officer since February 1997. From 1993 until that
time, he served in various officer capacities at Reno Air, Inc.,
based in Reno, Nevada, most recently as Chief Financial Officer.
Prior to that Mr. Tate served as Vice President Controller and Vice
President of Information Systems with Midway Airlines for over eleven
years. Mr. Tate is a Certified Public Accountant.
Michael S. Davis. Mr. Davis has served as Senior Vice
President - Customer Service since May 1995. From 1993 until that
time, he served as Vice President, Customer Service, for Business
Express Airlines, Inc. Previously, from 1986, he served in a variety
of positions with USAir, Inc., including Station Manager in Boston,
Passenger Service Manager in Philadelphia, Ramp Operations Manager in
Dayton, and various positions in Pittsburgh.
Richard J. Kennedy. Mr. Kennedy has served as General
Counsel and Secretary since May 1996. From 1991 until joining the
Company he was with British Aerospace Holdings, Inc., where he served
in various capacities including contract negotiation, aircraft
finance, and financial restructuring. Previously he was a private
attorney in Washington, D.C. for over ten years.
Stanley J. Gadek. Mr. Gadek has served as Controller and
Assistant Secretary of the Company since July 1995, and from May 1994
until then as Director of Finance. From 1978 to 1993, he held
financial management positions at Continental Airlines, Inc. and
Northwest Airlines, Inc. In 1994 he served as Vice President of
Finance and Chief Financial Officer of SunAire Express, a commuter
carrier based in the U.S. Virgin Islands. Mr. Gadek is a Certified
Public Accountant.
Executive Compensation
The following table sets forth information regarding the
compensation of the individual who served as Chief Executive Officer
during 1996 as well as the four other most highly compensated
executive officers of the Company serving as executive officers at
the end of calendar year 1996 whose total compensation during that
year exceeded $100,000. Salary and bonus amounts have been restated
from prior years' proxy statements to reflect amounts earned for the
specified year regardless of when paid.
Summary Compensation Table
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Long Term
Annual Other Compensation All
Awards
Compensation Annual Securities Other
Name and Current Year Salary Bonus Compen- Underlying Compensation
Position sation Options
C. Edward Acker 1996 $180,000 $45,838 $275(1) 0 $14,188(2)
Chairman and 1995 180,000 44,097 3,768(1) 0 13,588
former Chief
Executive 1994 180,000 0 0 0 8,269
Officer
Kerry B. Skeen 1996 255,000 327,823 4,699(1) 100,000 61,464(2)
Chief Executive 1995 199,933 299,581 2,015(1) 100,000 7,697
Officer and
President 1994 160,000 0 0 0 3,405
James B. Glennon 1996 143,605 144,488 10,145(1) 60,000 23,819(2)
(4)
Senior Vice 1995 125,175 104,685 3,657(1) 5,000 7,824
President -
Chief Financial
Officer, 1994 (3) (3) (3) 25,000 (3)
Treasurer, and
Asst. Secretary
Thomas J. Moore 1996 128,281 127,963 15,147(1) 50,000 19,982(2)
Executive Vice 1995 112,170 77,011 1,881(1) 5,000 7,404
President and
Chief Operating 1994 (3) (3) (3) 25,000 (3)
Officer
Michael S. Davis 1996 117,298 116,627 4,007(1) 55,000 22,425(2)
Senior Vice 1995 (3 (3) (3) (3) (3)
President
Customer Service
</TABLE>
_______________
(1) Includes certain tax reimbursement payments.
(2) Represents 1996 ESOP allocations of $3,316 for Mr. Acker,
$3,305 for Mr. Skeen, $3,275 for Mr. Glennon, $3,275 for Mr.
Moore, and $3,275 for Mr. Davis; term life insurance premiums in
the amount of $10,872 for Mr. Acker, $6,689 for Mr. Skeen, $5,377
for Mr. Glennon, $2,242 for Mr. Moore, $3,347 for Mr. Davis, and
the actuarial valuation, determined under SEC rules, for the
"whole life" component of coverage paid by the Company for split-
dollar life insurance under the Company's deferred compensation
program, in the amount of $51,470 for Mr. Skeen, $15,167 for Mr.
Glennon, $14,465 for Mr. Moore, and $15,803 for Mr. Davis. If all
assumptions as to life expectancy, length of service and other
factors occur in accordance with projections, the Company expects
to recover the premiums it pays with respect to the whole life
component of the coverage.
(3) Not previously reportable.
(4) Mr. Glennon resigned from the Company effective January 28, 1997.
The following table sets forth information regarding grants
of stock options by the Company during the fiscal year ended December
31, 1996, to the executive officers named in the Summary Compensation
Table above.
Option Grants in Last Fiscal Year
<TABLE>
Individual
Grants
Potential
Number % of Realized
of Total Market Value at
Securities Options Assumed Annual
Granted Exercise Price Expiration Rates of Stock
Name Underlying to Price on on Price
Employee Date Date
Options in of Appreciation
Granted Fiscal Grant (4)
<S> <C> <C> <C> <C> <C> <C> <C>
5% 10%
C. Edward 0 0% $ - $ - $ - $ -
Acker -
Kerry B. 50,000(1) 25% 11.750 11.750 September 369,476 936,324
Skeen 30, 2006
50,000(1) 11.750 11.750 October 16, 369,476 936,324
2006
James B. 20,000(2) 15% 9.250 9.250 January 116,346 294,842
28, 1998
Glennon 10,000(2) 16.125 16.125 January 101,409 256,991
28, 1998
10,000(2) 14.125 14.125 January 88,831 225,116
28, 1998
20,000(5) 11.750 11.750 January 147,790 374,529
28, 1998
Thomas J. 20,000(3) 13% 9.250 9.250 January 116,346 294,842
Moore 17, 2006
10,000(3) 16.125 16.125 April 17, 101,409 256,991
2006
20,000(3) 11.750 11.750 October 147,790 374,529
16, 2006
Michael 20,000(3) 14% 16.125 16.125 April 17 202,819 513,982
S. Davis 17, 2006
35,000(3) 11.750 11.750 October 258,633 655,427
16, 2006
</TABLE>
(1) Options vest in equal portions over a three year period and
become fully exerciseable upon a change in control.
(2) Options are fully vested pursuant to 1997 severance agreement.
(3) Options vest in equal portions over a three year period and
become fully exerciseable upon a change in control unless
otherwise
determined by either the Compensation Committee or the Board of
Directors.
(4) Assumed value at the end of ten year period pursuant to SEC
mandated calculations, although these percentages do not
necessarily reflect
expected appreciation or actual period of holding by executive.
(5) Options are one third vested pursuant to 1997 severance
agreement; the remaining two thirds are canceled.
The following table provides information regarding the
exercise of options during the year ended December 31, 1996, and the
number and value of unexercised options held at December 31, 1996, by
the executive officers named above.
Aggregate Option Exercises in 1996 and Option Values at December 31,
1996
<TABLE>
Shares Number Value of Unexercised
Acquired of
Value Securities In-the-Money Options
Name on Realized
Exercise (2) Underlying at FY-End(1)
Unexercised
Options at
FY -End
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
C. Edward 347,500 $4,256,875 $--
Acker
Kerry B. 41,667 $500,088 66,667 166,666 816,671 2,041,659
Skeen
James B. 18,333 179,789 71,667 -- 877,921 --
Glennon
Thomas J. -- -- 18,334 61,666 224,592 755,409
Moore
Michael S. -- -- 8,334 71,666 102,092 877,909
Davis
</TABLE>
(1) Based upon a market value of the Common Stock of $12.25 per
share as of December 31, 1996.
(2) Based on difference between option exercise price and
market price of Common Stock on date of exercise.
Employment Agreements
Under the Company's agreement with Mr. Skeen, as amended on
October 16, 1996, (the "Skeen Agreement"), the Company agreed to
employ Mr. Skeen as Chief Executive Officer through October 1999.
The Skeen Agreement provides for automatic twelve month extensions
unless earlier terminated, and for an annual base salary of $270,000,
which amount may be increased from time to time by the Compensation
Committee. It further provides that Mr. Skeen shall participate in
any bonus plan provided to executive officers generally, shall be
provided a split dollar life insurance policy under the Company's
deferred compensation program, and shall participate in employee
benefit and medical plans and other arrangements as the Compensation
Committee shall determine. In addition, the Skeen Agreement provides
that Mr. Skeen shall be granted options covering 50,000 shares on
October 1, 1996, 1997, and 1998.
Under the Skeen Agreement, if Mr. Skeen's employment is
terminated by the Company "without cause", or if he terminates his
own employment "with good reason" (including any termination by the
Company within twelve months, or by Mr. Skeen within six months,
after a "Change in Control"), then: (1) all of Mr. Skeen's options
become immediately exercisable; (2) he is paid the maximum bonus
amounts under all bonus programs in which he is participating; and
(3) he is paid his full base salary for the longer of 24 months or
through October 19, 1999. In addition, all of Mr. Skeen's options
become immediately exercisable upon any Change in Control. If Mr.
Skeen's employment is terminated by the Company other than for Cause,
or by Mr. Skeen, then the Company will pay to Mr. Skeen an amount
equal to a specified percentage (which shall be 100% upon a change in
control) of the premiums theretofore paid by the Company under Mr.
Skeen's split dollar life insurance policy, and the Company will
release its interest in such policy to such extent.
Under the Company's agreements with Messrs. Moore and
Davis, both effective January 1, 1997, (collectively, the "Officer
Agreements"), the Company agreed to employ Mr. Moore as Senior Vice
President of Maintenance & Operations and Mr. Davis as Senior Vice
President of Customer Sales and Services, both through December 31,
1997. The Officer Agreements provide for automatic twelve month
extensions unless earlier terminated, and for annual base salaries of
$131,250 and $119,700, respectively, which amounts may be increased
from time to time by the Compensation Committee. The Officer
Agreements provide that Messrs. Moore and Davis shall participate in
any bonus plan provided to executive officers generally, shall be
provided a split dollar life insurance policy under the Company's
deferred compensation program, and shall participate in employee
benefit and medical plans and other arrangements as the Compensation
Committee shall determine.
Under the Officer Agreements, if Mr. Moore or Mr. Davis is
terminated by the Company "without cause", then the terminated
officer shall receive his full base salary and major medical
insurance coverage for a period of twelve months, a portion of any
annual bonus prorated to the date of termination, and an immediate
vesting of certain stock options. If employment is terminated by the
Company "without cause", or by the applicable officer, then the
Company will pay to said officer an amount equal to a specified
percentage (which shall be 100% upon a change in control) of the
premiums theretofore paid by the Company under said officer's split
dollar life insurance policy, and the Company will release its
interest in such policy to such extent.
Mr. Glennon resigned from his position as Senior Vice
President, Chief Financial Officer, Treasurer, Assistant Secretary,
and Director effective January 28, 1997. Mr. Glennon's severance
agreement provided for his then current base compensation and certain
benefits to continue for one year, and for certain options to vest
and to remain exercisable for one year.
While the Company does not currently have an employment
agreement in place for Mr. Tate, the Company anticipates that one
will be completed during the first half of 1997 which will be
substantially similar to the Officer Agreements.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Compensation for Messrs. Skeen, Moore, Tate, and Davis (the
"Senior Executive Officers"), consists primarily of base salary,
bonus, stock option grants, and participation in a deferred
compensation program funded through split dollar life insurance. In
1996 the Compensation Committee, in line with previous years'
compensation practices, maintained a policy of using primarily
operational and financial performance criteria, along with other
discretionary factors, to adjust the compensation of its executive
officers. The Committee reviewed and considered performance measures
for year-to-date improvements by the Company's executive officers and
also used industry performance averages as a comparison factor. With
the exception of Mr. Skeen, whose salary was established pursuant to
the Skeen Agreement, executive officer salaries are established by
the Compensation Committee after consultation with the Chief
Executive Officer and evaluation of the individual's responsibility,
contribution to the Company's performance, and comparable pay among
other public regional airlines.
Senior Executive Officers participate in the Senior
Management Incentive Plan ("SMIP"), under which they may receive a
percentage of their salary as a bonus. SMIP payments are based on
percentage improvements in the Company's earnings per share over the
prior year, and on price performance of the Company's stock relative
to its peer group members, both in comparison to targets established
early in the year. Maximum payouts range from 100% for the Chief
Executive Officer to lesser percentages for other participants. For
1996, participants in the SMIP received the maximum bonus allowed
under the program. Senior Executive Officers also participate with
all other management employees in the Management Incentive Plan
("MIP"), which provides for additional bonus compensation based on
the attainment of specified levels of profit margin, costs, and
operating performance. The 1996 MIP bonus was in the upper one-third
of the maximum payout and represented a composite rate made up of
actual performance in each of the goal categories. Finally, the
Committee granted options in April 1996 based on prior years
performance, and in October 1996 in recognition of each individual's
contribution to favorable mid-year results.
The Committee reviewed Mr. Skeen's compensation as
President and Chief Executive Officer at the October 16, 1996,
Committee meeting. The Skeen Agreement was amended at that time to
provide for a base pay adjustment of eight percent (8%) and an
increase of the Company's contribution under the deferred
compensation program. The Committee also made a discretionary award
of stock options to Mr. Skeen for 50,000 shares. The pay adjustment
and the stock award were given in recognition of his continued
successful guidance of the Company and the attainment of performance
goals.
Section 162(m) of the Internal Revenue Code of 1986, as
amended, disallows corporate tax deductions for compensation in
excess of $1 million paid to each of the five highest paid officers
of the Company unless such compensation is deemed performance related
within the meaning of Section 162(m). The 1995 Stock Incentive Plan
is designed so that compensation under the Plan can qualify as
"performance based compensation" which is not subject to 162(m).
The Company does not believe that, apart from stock options, its
arrangements will result in excess of $1 million being paid to any of
its executive officers, but is continuing to study how to respond to
the possible effects of 162(m).
Compensation Committee
C. Edward Acker, Chairman
Robert E. Buchanan
Gordon A. Cain
The above report of the Compensation Committee shall not be
deemed incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates
this information by reference, and shall not otherwise be deemed
filed under such Acts.
Compensation Committee Interlocks and Insider Participation
During 1996 Mr. Acker served as Chairman of the Board of the
Company, and together with Messrs. Buchanan and Cain, served on the
Compensation Committee.
Company Stock Performance Graph
The graph below compares the cumulative total return on Atlantic
Coast Airlines, Inc. ("ACAI") Common Stock since July 21, 1993, when
the Company became publicly traded, with the cumulative total return
on the Nasdaq Market Index and the peer group index selected by the
Company. The comparison assumes an investment of $100 each in the
Company's Common Stock, the Nasdaq Market Index and the peer group on
July 21, 1993, with dividends reinvested when they are paid. The
companies included in the peer group are ASA Holdings, Inc. (formerly
Atlantic Southeast Airlines, Inc.), Mesaba Holdings, Inc. (formerly
AirTran Corporation), CCAIR, Inc., Comair Holdings, Inc., Mesa Air
Group, Inc., and SkyWest, Inc. The Company is not included in the
peer group. In the calculation of the annual cumulative stockholder
return of the peer group index, the stockholder returns of the
companies included in the peer group are weighted according to their
stock market capitalization.
GRAPH
<TABLE>
<S> <C> <C <C> <C <C <C <C><C <C <C <C><C <C <C <C> <C>
> > > > > > > > > >
7/2 9/ 12/ 3/ 6/ 9/ 12/3/ 6/ 9/ 12/3/ 6/ 9/ 12/ 2,3
1/9 93 93 94 94 94 94 95 95 95 95 96 96 96 96 /97
3
ACAI 100 13 81 56 40 26 19 26 88 78 103 15 13 11 123 135
6 5 1 8
PEER 100 10 106 10 75 70 54 55 96 89 82 10 11 95 93 86
GROUP 1 5 1 6
NASDAQ 100 10 111 10 10 11 109 11 13 15 154 16 17 18 189 191
9 7 2 0 8 6 2 1 4 0
</TALE>
Prior to July 21, 1993, there was no active market for the
Company's Common Stock Therefore, the prices of the Company's Common
Stock as set forth in the Performance Graph are for a period from
July 21, 1993 until March 31, 1997.
INDEPENDENT AUDITORS
The audit for the Company for the fiscal year ending
December 31, 1996, was conducted by BDO Seidman, Certified Public
Accountants. A representative of BDO Seidman is expected to attend
the Meeting and will have the opportunity to make a statement and/or
respond to appropriate questions from stockholders present at the
Meeting. The Company has not yet selected an auditor for Fiscal Year
1997, a decision which is pending evaluation by the Audit Committee.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information, as of
March 11, 1997, concerning beneficial ownership of the Company's
Common Stock by (i) each person known by the Company to own
beneficially more than five percent of the outstanding shares of the
Common Stock, (ii) each director of the Company, (iii) each executive
officer of the Company named in the Summary Compensation Table, and
(iv) all directors and executive officers of the Company as a group.
Except as noted otherwise all amounts reflected in the table
represent shares in which the beneficial owners have sole voting and
investment power.
Number
of Shares
Name Beneficially Owned Percent
Gordon A. Cain 1,520,500 17.9%
Eight Greenway Plaza
Suite 702
Houston, TX 77046
British Aerospace Asset Management Company 1,460,000 17.2%
15000 Conference Center Drive
Chantilly, VA 20151
Atlantic Coast Airlines, Inc. 638,300(1) 7.5%
Employee Stock Ownership
Trust, Bank One, Texas, N.A.,
as Trustee
910 Travis Street
Houston, TX 77002
C. Edward Acker 597,600(2) 6.7%
Kerry B. Skeen 112,501(3) 1.3%
Joseph W. Elsbury 50,000 *
Robert E. Buchanan 2,000 *
James J. Kerley 1,000 *
James C. Miller 1,000 *
John M. Sullivan 1,000 *
James B. Glennon 60,734(4) *
Thomas J. Moore 28,334(5) *
Michael S. Davis 13,001(6) *
All directors and executive
officers as a group (12 persons) 2,393,503 26.5%
* Less than one percent.
(1) Pursuant to the ESOP, voting of shares allocated to
participants' accounts is passed through to such participants.
(2) Includes options to purchase 347,500 shares with an exercise
price of $2.08 a share.
(3) Includes options to purchase 25,000 shares with an exercise
price of $2.08 per share; options to purchase 25,000 shares with
an exercise price of $2.50 per share; options to purchase 16,667
shares with an exercise price of $2.625 per share; and options to
purchase 16,667 shares with an exercise price of $8.875 per share.
(4) Includes options to purchase 1,666 shares with an exercise price
of $2.625; options to purchase 20,000 shares with an exercise
price of $9.250; options to purchase 10,000 shares with an
exercise price of $16.125; options to purchase 10,000 shares with
an exercise price of $14.125; and options to purchase 6,667 shares
with an exercise price of $11.750.
(5) Includes options to purchase 16,667 shares with an exercise
price of $3.75 per share; options to purchase 1,667 shares with an
exercise price of $7.313 per share; options to purchase 6,667
shares with an exercise price of $9.25 per share; and options to
purchase 3,333 shares with an exercise price of $16.125 per share.
(6) Includes options to purchase 4,667 shares with an exercise price
of $4.625 per share; options to purchase 1,667 shares with an
exercise price of $8.000 per share; and options to purchase 6,667
shares with an exercise price of $16.125.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 17, 1996, the Board of Directors declared a
dividend to JSX, payable in cash, for cumulative dividends owing for
the four quarters of 1995 with respect to JSX's cumulative
convertible preferred stock. On March 31, 1996, the Board of
Directors redeemed JSX's cumulative convertible preferred stock in
its entirety.
REPORTS OF BENEFICIAL OWNERSHIP
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's directors, executive officers, and persons who
own more than ten percent of the Common Stock to file reports of
beneficial ownership with the Securities Exchange Commission, the
Nasdaq National Market and the Company. Based solely upon its review
of the copies of such forms received by it, the Company believes
that, during fiscal year 1996, all filing requirements applicable to
such persons were complied with.
STOCKHOLDER PROPOSALS
Securities and Exchange Commission regulations permit
stockholders to submit proposals for consideration at annual meetings
of stockholders. Any such proposals for the Company's Annual Meeting
of Stockholders to be held in 1998 must be submitted to the Company
on or before January 1, 1998, and must comply with applicable
regulations of the Securities and Exchange Commission in order to be
included in proxy materials relating to that meeting. Proposals
should be sent to: Atlantic Coast Airlines, Inc., Attn: Secretary,
515A Shaw Road, Dulles, Virginia 20166.
MISCELLANEOUS
A copy of the Company's Annual Report on Form 10-K for the
year ended December 31, 1996, (including the financial statements and
financial statement schedules of the Company), as filed with the
Securities and Exchange Commission, has been delivered free of charge
to stockholders with this solicitation.
___________________________
Please complete, date, sign and mail promptly the
accompanying proxy in the postage-paid envelope enclosed for your
convenience. The signing of the proxy will not prevent your
attending the Meeting and voting in person.
April 28, 1997
Dulles, Virginia
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