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. Nonemployee 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 Compensati All
on Awards
Compens Annual Securities Other
ation
Name and Current Year Salary Bonus Compens Underlying
Compensat
Position ation Options ion
C. Edward Acker 1996 $180,00 $45,83 $275 0
$14,188
0 8 (1)
(2)
Chairman and 1995 180,000 44,097 3,768 0 13,588
former Chief (1)
Executive 1994 180,000 0 0 0 8,269
Officer
Kerry B. Skeen 1996 255,000 327,82 4,699 100,000
61,464
3 (1)
(2)
Chief Executive 1995 199,933 299,58 2,015 100,000 7,697
Officer and 1 (1)
President
1994 160,000 0 0 0 3,405
James B. Glennon 1996 143,605 144,48 10,145 60,000
23,819
(4) 8 (1)
(2)
Senior Vice 1995 125,175 104,68 3,657 5,000 7,824
President - 5 (1)
Chief Financial
Officer, 1994 (3) (3) (3) 25,000
(3)
Treasurer, and
Asst. Secretary
Thomas J. Moore 1996 128,281 127,96 15,147 50,000
19,982
3 (1)
(2)
Executive Vice 1995 112,170 77,011 1,881 5,000 7,404
President and (1)
Chief Operating 1994 (3) (3) (3) 25,000
(3)
Officer
Michael S. Davis 1996 117,298 116,62 4,007 55,000
22,425
7 (1)
(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>
Individ
ual
Grants
Potential Number % of
Realized
of Total Marke Value
at
Securiti Options t Assumed
Annual
es Granted Exercis Price Expirati Rates of
Stock
Name Underlyi to e Price on on Price
Error! ng Employe Error! Date Date
Bookmark Options e in Bookmar of Error!
Appreciation
not Granted Fiscal k not Grant Bookmark (4)
defined. Error! Year defined Error not
Bookmark Error! . ! defined.
not Bookmar Bookm
defined. k not ark
defined not
. defin
ed.
<S> <C> <C> <C> <C> <C> <C>
<C>
5% 10%
C. Edward 0 0% $ - $ - $ - $
- -
Acker -
Kerry B. 50,000( 25% 11.750 11.75 Septembe 369,47
936,324
Skeen 1) 11.750 0 r 30, 6
936,324
50,000( 11.75 2006 369,47
1) 0 October 6
16, 2006
James B. 20,000( 15% 9.250 9.250 January 116,34
294,842
Glennon 2) 16.125 16.12 28, 1998 6
256,991
10,000( 14.125 5 January 101,40
225,116
2) 11.750 14.12 28, 1998 9
374,529
10,000( 5 January 88,831
2) 11.75 28, 1998 147,79
20,000( 0 January 0
5) 28, 1998
Thomas J. 20,000( 13% 9.250 9.250 January 116,34
294,842
Moore 3) 16.125 16.12 17, 2006 6
256,991
10,000( 11.750 5 April 101,40
374,529
3) 11.75 17, 2006 9
20,000( 0 October 147,79
3) 16, 2006 0
Michael 20,000( 14% 16.125 16.12 April 202,81
513,982
S. Davis 3) 11.750 5 17, 2006 9
655,427
35,000( 11.75 October 258,63
3) 0 16, 2006 3
</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 Unexer
Acquire of cised
d Value Securit In-the-Money Op
Name Error! on Realize ies tions
Bookmark not Exercis d(2) Underly at FY-End(1)
defined. e ing Error!
Bookmark
Error! Unexerc not defined.
Bookmar ised Exercisable
k not Options
Unexercisable
defined at FY-
. End
Exercis
able
Unexerc
isable
<S> <C> <C> <C> <C> <C> <C>
C. Edward 347,500 $4,256,8 $
Acker 75 --
Kerry B. 41,667 $500,08 66,667 166,66 816,671 2,041,6
Skeen 8 6 59
James B. 18,333 179,789 71,667 -- 877,921 --
Glennon
Thomas J. -- -- 18,334 61,666 224,592 755,409
Moore
Michael S. -- -- 71,666 102,092
Davis 8,334 877,909
</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.
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> > > > > > > > > >
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
ATLANTIC COAST AIRLINES, INC.
ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1997
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
The undersigned, as holder of Common Stock, par value $0.02 per
share (the
"Common Stock"), of Atlantic Coast Airlines, Inc. (the "Company")
as of April
25, 1997 (the "Record Date") hereby appoints Richard J. Kennedy and
Paul H.
Tate, and each of them, the true and lawful attorneys, agents and
proxies of the
undersigned, with full power of substitution to vote all the shares
of Common
Stock which the undersigned may be entitled to vote at the Annual
Meeting of
Stockholders of the Company to be held on June 3, 1997, and at any
adjournment
of such meeting, with all powers which the undersigned would
possess if
personally present, for the following purposes:
1. ELECTION OF DIRECTORS
[ ] FOR each nominee listed below
(except as marked to the contrary below)
C. EDWARD ACKER
ROBERT E. BUCHANAN
JAMES C. MILLER
[ ]WITHHOLD AUTHORITY to vote for
all nominees listed below
KERRY B. SKEEN
JOSEPH W. ELSBURY
JOHN M. SULLIVAN
THOMAS J. MOORE
JAMES J. KERLEY
(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike
through that nominee's name.)
- -------------------------------------------------------------------
- -------------
2. OTHER MATTERS
In their discretion upon such other matters as may properly come
before said
meeting.
(Continued, and to be signed, on
the other side)
(Continued from reverse side)
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS
INDICATED, WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES AS DIRECTORS NAMED ON THE
REVERSE HEREOF.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting and
Proxy Statement dated April 28, 1997.
</TABLE>
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Dated..............................................
...................................................
(Signature)
...................................................
(Signature)
...................................................
(Print Name Here)
(THIS PROXY MUST BE EXECUTED BY THE RECORD
HOLDER(S) AS OF THE CLOSE OF BUSINESS ON THE RECORD
DATE, APRIL 25, 1997, IN EXACTLY THE SAME MANNER AS
THE NAME(S) APPEAR(S) ON THE COMMON STOCK TO WHICH
THIS PROXY RELATES. IF THE COMMON STOCK TO WHICH
THIS PROXY RELATES IS HELD OF RECORD BY TWO OR MORE
JOINT HOLDERS ON THE RECORD DATE, ALL SUCH HOLDERS
MUST SIGN THIS PROXY. IF SIGNATURE IS BY A TRUSTEE,
EXECUTOR, ADMINISTRATOR, GUARDIAN,
ATTORNEY-IN-FACT, OFFICER OF A CORPORATION OR OTHER
PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE
CAPACITY, SUCH PERSON SHOULD SO INDICATE WHEN
SIGNING AND MUST SUBMIT PROPER EVIDENCE
SATISFACTORY TO THE COMPANY OF SUCH PERSON'S
AUTHORITY SO TO ACT).
</TABLE>
PLEASE MARK, SIGN, DATE AND MAIL
THIS PROXY IN THE ENVELOPE PROVIDED
