<PAGE1>
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 HOLDINGS, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box)
[ X ] No fee required.
[ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1) or
Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and O-11.
1. Title of each class of securities to which transaction
applies:
______________________________________________________
2. Aggregate number of securities to which transaction
applies:
______________________________________________________
3. Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule O-11 (set forth
maximum amount on which filing fee is calculated and state
how it was determined):
_______________________________________________________
4. Proposed maximum aggregate value of transaction:
_______________________________________________________
5. Total fee paid:
_______________________________________________________
[ ] Fee previously paid by written preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule O-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1. Amount Previously Paid:
_______________________
2. Form/Schedule or Registration Statement No.:
_______________________
3. Filing Party:
_______________________
4. Date Filed:
_______________________
<PAGE2>
ATLANTIC COAST AIRLINES HOLDINGS, INC.
515-A Shaw Road
Dulles, Virginia 20166
April 2, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Atlantic Coast Airlines Holdings, Inc., to be held on
Wednesday, May 19, 1999, 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 nine directors of the
Company to serve until the 2000 Annual Meeting. We are also asking
you to ratify the Board of Directors' selection of independent
auditors for the year ending December 31, 1999. The Board of
Directors recommends that you vote FOR each of these proposals.
At the Annual Meeting, the Board of Directors will also report
on the Company's affairs and provide a discussion period for
questions and comments. The Board of Directors appreciates and
encourages stockholder attendance and 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
card in the enclosed postage-paid envelope.
Thank you for your cooperation.
Sincerely,
/S/
C. Edward Acker
Chairman of the Board of
Directors
<PAGE3>
ATLANTIC COAST AIRLINES HOLDINGS, INC.
515-A Shaw Road
Dulles, Virginia 20166
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 19, 1999
To the Stockholders of
ATLANTIC COAST AIRLINES HOLDINGS, INC.:
NOTICE IS HEREBY GIVEN that the annual meeting of
stockholders (the "Meeting") of Atlantic Coast Airlines Holdings,
Inc., a Delaware corporation (the "Company"), will be held on
Wednesday, May 19, 1999, 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:
1) To elect nine directors to serve for the coming year and until
their successors are elected;
2) To ratify the Board of Directors' selection of the Company's
independent auditors for the fiscal year ending December 31,
1999; and
3) To transact such other business as may properly come before the
Meeting or any adjournment or postponement thereof.
Only holders of record of the Company's common stock, par
value $0.02 per share (the "Common Stock"), at the close of business
on March 24, 1999 are entitled to receive notice of and to vote at
the Meeting. A list of such holders will be open for examination by
any stockholder during regular business hours for a period of ten
days prior to the Meeting at the offices of the Company, located at
515-A Shaw Road, Dulles, Virginia.
All stockholders are cordially invited to attend the
Meeting. In order to ensure that your Common Stock is represented at
the Meeting, regardless of whether you intend to attend in person,
please complete, date and sign the enclosed proxy and return it
promptly in the accompanying postage-paid envelope.
By order of the Board of Directors
/S/
Richard J. Kennedy
Vice President, Secretary and
General Counsel
April 2, 1999
<PAGE4>
ATLANTIC COAST AIRLINES HOLDINGS, INC.
515-A 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 Holdings, Inc. (the "Company") for use at the Company's
annual meeting of stockholders, to be held at 10:00 a.m., local time,
on Wednesday, May 19, 1999, at the Washington Dulles Airport Hilton
Hotel, 13869 Park Center Road, Herndon, Virginia, and at any
adjournment or postponement thereof (the "Meeting").
Written communications to the Company should be sent to the
Company's office, located at 515-A Shaw Road, Dulles, Virginia 20166.
The Company can be reached by telephone at (703) 925-6000. This Proxy
Statement and the accompanying proxy card (the "Proxy Card"),
together with a copy of the Company's 1998 Annual Report, are first
being mailed on or about April 13, 1999, 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 March 24, 1999 (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 elect nine members to the Board of
Directors for the coming year; ratify the Board of Directors'
appointment of KPMG LLP, Certified Public Accountants, as the
Company's independent auditors for the fiscal year ending December
31, 1999; and transact such other business as may properly come
before the Meeting or any adjournment or postponement thereof.
Voting at the Meeting
The Board of Directors has fixed March 24, 1999 as the Record
Date, 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 19,531,623 shares of the Common Stock.
<PAGE5>
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. Nominees to the Board of
Directors will be elected by the affirmative vote of a plurality of
the shares of the Common Stock present and voting at the Meeting.
This means that the nine nominees who receive the largest number of
votes cast "FOR" will be elected as directors at the Meeting.
Approval of other matters to be raised at the Meeting requires an
affirmative vote of at least a majority of the shares voted and
entitled to be voted at the Meeting. On each of these matters,
holders of record of Common Stock on the Record Date will be entitled
to one vote for each share of Common Stock held.
In accordance with Delaware law, abstentions and shares held of
record by a broker or other nominee ("Broker Shares") that are voted
on any particular matter are included for purposes of determining the
number of votes present and entitled to vote on that matter. Broker
Shares that are not voted on any particular matter at the Meeting
will not be treated as entitled to vote for that matter.
Proxies
If the enclosed Proxy Card is properly executed and returned in
time for the Meeting, the shares of Common Stock represented thereby
will be voted in accordance with the instructions given thereon. If
no instructions are given, shares will be voted "FOR" all of the
Board's nominees for election to the Board of Directors and "FOR"
each of the other matters discussed in this Proxy Statement. Proxies
will extend to, and be voted at, any adjournment or postponement of
the Meeting.
The Board of Directors does not presently intend to introduce
any business at the Meeting 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. Should any other matter properly come
before the Meeting, however, the persons named as proxies in the
accompanying Proxy Card or their duly authorized and constituted
substitutes intend to vote or act thereon in accordance with their
best judgment.
Any stockholder who has executed and returned a Proxy Card and
who for any reason wishes to revoke his or her proxy may do so at any
time before the proxy is exercised by (i) giving written notice to
the Secretary of the Company at the above address, (ii) voting the
shares represented by such proxy in person at the Meeting, or (iii)
giving a later dated proxy at any time before the Meeting.
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 Card and the Company's 1998 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 also include
telephone, facsimile or oral communications by directors, officers or
regular employees of the Company acting without special compensation.
<PAGE6>
PROPOSAL ONE
ELECTION OF DIRECTORS
Introduction
The nine individuals set forth in the table below are the
Company's nominees for election to the Board of 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. Each of the nominees has
consented to being named as a nominee in this Proxy Statement and has
agreed to serve if elected. If any nominee becomes unavailable for
election at the time of the Meeting or is not 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. Each
of the nominees currently serves on the Company's Board of Directors.
The following table sets forth each nominee's name, age as of
April 2, 1999 and position with the Company, and the year in which
each nominee first became a director:
<TABLE>
<S> <C> <C> <C>
Name Age Position Director
Since
C. Edward Acker 69 Chairman of the Board of 1991
Directors
Kerry B. Skeen 46 President, Chief 1991
Executive Officer and
Director
Thomas J. Moore 42 Executive Vice 1997
President, Chief
Operating Officer and
Director
Robert E. Buchanan 56 Director 1995
Susan MacGregor 53 Director 1997
Coughlin
Joseph W. Elsbury 69 Director 1991
James J. Kerley 76 Director 1991
James C. Miller 56 Director 1995
John M. Sullivan 62 Director 1995
</TABLE>
Recommendation of the Board
<PAGE7>
The Board of Directors recommends a vote "FOR" each of the
nominees. Unless a contrary choice is specified, proxies solicited
by the Board of Directors will be voted FOR election of each of the
nominees.
Background of Nominees
The following is a brief account of the business experience of
each of the nominees for election to the Board of Directors. There
are no family relationships among the nominees or special
understandings pursuant to which the nominees 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 its 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 its 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 it was acquired 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 the Company's Executive
Vice President and Chief Operating Officer since April 1997, and was
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 positions 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
<PAGE8>
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), which is home to the Company's corporate
office and of its hub at Washington-Dulles International Airport.
Susan MacGregor Coughlin. Mrs. Coughlin has been a Director
since October 1997. Mrs. Coughlin has been the chief operating
officer and Director of the ATA Foundation since April 1998 and prior
to that was the president of Air Safety Management Associates, an
aviation consulting firm, since October 1997. From August 1995 to
October 1997 she was President and Chief Operating Officer of BDM Air
Safety Management Corp., which designs and develops air traffic
control systems, and from April 1994 to August 1995 was a Senior Vice
President and General Manager of BDM Federal, Inc. She served as a
member of the National Transportation Safety Board from 1990 to 1994,
where she was appointed to two consecutive terms as Vice Chairman in
1990 and 1992 and served as Acting Chairman in 1992. She held
various positions with the U.S. Department of Transportation from
1987 to 1990 and from 1981 to 1983, and with the Export-Import Bank
of the U.S. from 1983 to 1987.
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 and the president of Elsbury Production, Inc., an
operating company for privately owned oil and gas interests, for over
20 years.
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., DT Industries, Inc. and Goss Graphics
Systems, Inc. During the past five years, Mr. Kerley has been, but
is no longer, a member of the Boards 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 III. Mr. Miller has been a Director since March
1995. He has been associated with Citizens for a Sound Economy since
1988, 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 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.
<PAGE9>
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. He is also a director of
Group Maintenance America Corp.
<PAGE10>
Committees and Board Meetings
During 1998, there were four regular meetings of the Board of
Directors and two meetings by telephone conference. Each nominee
attended 75% or more of the aggregate of the meetings of the Board
and of the Board's committees on which he or she served.
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
held two meetings during 1998. The current members of the Audit
Committee are Ms. Coughlin and Messrs. Elsbury, Kerley and Miller,
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 six meetings during 1998.
The current members of the Compensation Committee are Messrs.
Sullivan, Buchanan and Acker, who serves as chairman.
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. Non-employee directors are entitled to certain
flight benefits made available to employees of the Company.
Effective for the 1998 calendar year, outside directors also
receive as additional compensation options to purchase 4,000 shares
per year of the Company's common stock, which options vest if the
individual continues to serve as a Director as of the end of the year
of the grant or if the Director retires by not standing for re-
election at the annual meeting of the stockholders. The option
exercise price for these grants is set out as the last traded price
of the Company's common stock on the date of the grant.
<PAGE11>
PROPOSAL TWO
RATIFICATION OF INDEPENDENT AUDITORS
The Board has selected KPMG LLP, Certified Public Accountants,
as the Company's independent auditors for the fiscal year ending
December 31, 1999. In the event that the Board's selection of
auditors is not ratified by a majority of the shares of Common Stock
voting thereon, the Board will review its future selection of
auditors.
Effective October 24, 1997, the Company dismissed BDO Seidman
LLP as its certifying accountant. BDO Seidman's report on the
Company's consolidated financial statements for the fiscal year
ending December 31, 1996, did not contain an adverse opinion or a
disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope or accounting principles. During 1996,
there were no disagreements with BDO Seidman on any matter of
accounting principles or practices, financial statement disclosure or
auditing scope or procedure that, if not resolved to BDO Seidman's
satisfaction, would have caused it to make reference to the subject
matter of the disagreements in connection with its reports. During
1997, the Board of Directors' Audit Committee recommended, and the
Board of Directors approved, the decision to change accountants. KPMG
LLP conducted the Company's audit for fiscal years 1997 and 1998.
A representative of KPMG LLP 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.
Vote Necessary to Approve Ratification
The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock present and entitled to vote at
the Meeting is necessary to ratify the Board's selection of KPMG LLP
as the Company's independent auditors.
Recommendation of the Board
The Board of Directors recommends a vote "FOR" the ratification
of the selection of KPMG LLP as the Company's independent auditors
for the year ending December 31, 1999. Unless a contrary choice is
specified, proxies solicited by the Board of Directors will be voted
FOR ratification of the selection of KPMG LLP.
<PAGE12>
EXECUTIVE OFFICERS
The following table sets forth the name, age as of April 2, 1999
and position of each executive officer of the Company:
<TABLE>
<S> <C> <C> <C>
Officer
Name Age Position Since
C. Edward Acker 69 Chairman of the Board 1991
of Directors
Kerry B. Skeen 46 Chief Executive 1991
Officer, President and
Director
Thomas J. Moore 42 Executive Vice 1994
President, Chief
Operating Officer and
Director
Paul H. Tate 47 Senior Vice President, 1997
Chief Financial
Officer, Treasurer and
Assistant Secretary
Michael S. Davis 34 Senior Vice President - 1995
Customer Service
Richard J. Kennedy 44 Vice President, General 1996
Counsel and Secretary
David W. Asai 43 Vice President - 1998
Financial Planning,
Controller and
Assistant Secretary
</TABLE>
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 apointed as executive officers of the
Company.
Paul H. Tate. Mr. Tate has served as Senior Vice President,
Chief Financial Officer, Treasurer and Assistant Secretary 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.
<PAGE13>
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 and was named Vice President in November
1997. 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.
David W. Asai. Mr. Asai has served as Vice President -
Financial Planning, Controller and Assistant Secretary since January
1998. From December 1994 until that time, he served as Vice
President, Controller and Chief Accounting Officer at Reno Air, Inc.
From July 1992 to November 1994, Mr. Asai was Vice President -
Finance and Chief Financial Officer of Spirit Airlines, Inc. From
1981 to June 1992, Mr. Asai was employed by Midway Airlines, Inc. in
various capacities, most recently as Director of Financial Planning
and Analysis. Mr. Asai is a Certified Public Accountant.
Executive Compensation
The following table sets forth information regarding the
compensation of the individual who served as the Company's Chief
Executive Officer during 1998, and the Company's four other most
highly compensated executive officers serving as executive officers
at December 31, 1998. Bonus amounts reflect amounts earned for the
specified year regardless of when paid.
<PAGE14>
Summary Compensation Table
Annual Compensation Long Term
Compensation Awards
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Securiti
Name and Other Restrict es All
Current Year Salary Bonus Annual ed Underlyi Other
Position Compensa Stock ng Compensa
tion Awards Options tion
(1)(6) (2) (3) (3) (4)(6)
C. Edward 1998 $180,000 $26,541 $27,255 - $6,930
Acker
Chairman of 1997 180,000 52,406 3,758 20,000 6,930
the Board
1996 180,000 45,838 4,217 - 6,930
Kerry B. 1998 295,000 356,360 29,206 $653,854 173,000 147,500
Skeen
Chief 1997 275,577 363,474 11,055 - 220,000 148,680
Executive
Officer and 1996 255,000 327,823 5,300 - 200,000 81,680
President
Thomas J. 1998 184,942 180,307 12,674 326,927 73,000 60,000
Moore
Executive 1997 147,843 157,578 12,159 - 50,000 31,000
Vice
President and 1996 128,281 127,963 15,634 - 100,000 20,855
Chief
Operating
Officer
Paul H. Tate 1998 148,212 142,359 19,725 326,927 60,900 27,000
(5)
Senior Vice 1997 119,423 131,478 23,414 - 100,000 -
President
Chief
Financial
Officer,
Treasurer,
and Asst.
Secretary
Michael S. 1998 136,654 131,610 6,706 196,146 40,100 28,000
Davis
Senior Vice 1997 126,000 133,966 9,289 - 10,000 27,646
President
Customer 1996 117,298 116,627 4,895 - 110,000 21,560
Service
</TABLE>
______________
(1) Includes income from certain medical expense and tax
reimbursement payments. Automobile compensation for Mr. Acker of
$6,450 and Mr. Skeen $9,150 are also included.
(2) Shares of restricted stock were granted in exchange for
cancellation of previously granted options. See "Compensation
Committee Report on Executive Compensation." Value reported based on
a grant date closing stock price of $17.00 per share. The number of
shares of restricted stock granted and year end value based on a
closing stock price of $25.00 per share is as follows: Mr. Skeen,
38,462 shares, $961,550; Mr. Moore, 19,231 shares, $480,775; Mr.
Tate, 19,231 shares, $480,775; and Mr. Davis, 11,538 shares,
$288,450. Restricted stock vests in equal portions over a five year
period.
(3) Number of options reported in table includes options that were
cancelled upon the grant of restricted stock described in note 2,
above, as follows: Mr. Skeen, options for 100,000 shares were
cancelled; Mr. Moore, options for 50,000 shares were cancelled; Mr.
Tate, options for 50,000 shares were cancelled; and Mr. Davis,
options for 30,000 shares were cancelled. The May 15, 1998 two for
one stock dividend has been reflected in this table.
(4) Represents term life insurance premiums in the amount of $6,930
for Mr. Acker, and the total amount of premiums paid by the Company
for split dollar life insurance under the Company's deferred
compensation agreements in the amount of $147,500 for Mr. Skeen,
$60,000 for Mr. Moore, $27,000 for Mr. Tate, and $28,000 for Mr.
Davis
(5) Mr. Tate joined the Company in February 1997.
(6) Other annual compensation and all other compensation have been
restated for years 1997 and 1996 to be consistent with the
presentation in 1998.
<PAGE16>
The following table sets forth information regarding grants of
stock options by the Company during the fiscal year ended December
31, 1998, to the executive officers named in the Summary Compensation
Table above.
Option Grants in Last Fiscal Year
Individual Grants
<TABLE>
<CAPTION>
Number % of
of Total Marke
Securit Options t Potential
ies Granted Exerc Price Realized Value at
Name Underly to ise on Expiratio Assumed Annual
ing Employee Price Date n Date Rates of Stock
Options in of Price
Granted Fiscal Grant Appreciation (4)
Year
5% 10%
<S> <C> <C> <C> <C> <C> <C> <C>
C. Edward -- --
Acker
Kerry B. 100,000 18.55% 17.25 17.25 Jan. 29, $1,084,043 $2,749,206
Skeen (1) 2008
50,000 9.28% 29.94 29.94 May 5, 941,377 2,385,633
(2) 2008
23,000 4.27% 14.38 14.38 October 207,928 526,931
(3) 14, 2008
Thomas J. 50,000 9.28% 17.25 17.25 Jan. 29, 542,422 1,374,603
Moore (1) 2008
10,000 1.86% 29.94 29.94 May 5, 188,275 477,127
(2) 2008
13,000 2.41% 14.38 14.38 October 117,525 297,831
(3) 14, 2008
Paul H. 50,000 9.28% 17.25 17.25 Jan. 29, 542,422 1,374,603
Tate (1) 2008
10,900 2.02% 14.38 14.38 October 98,540 249,720
(3) 14, 2008
Michael S. 30,000 5.57% 17.25 17.25 Jan. 29, 325,453 824,762
Davis (1) 2008
10,100 1.87% 14.38 14.38 October 91,308 231,391
(3) 14, 2008
</TABLE>
The May 15, 1998 two for one stock dividend has been reflected in
this table.
(1) These options were cancelled in exchange for restricted stock.
(2) Options vest in equal portions over a five year period and
become fully exercisable upon a change in control.
(3) Options, granted in lieu of salary increases, vest on first
anniversary of grant and become fully exercisable upon a change in
control.
(4) Assumed value at the end of a ten year period pursuant to SEC-
mandated calculations, although these percentages do not necessarily
reflect expected appreciation or the actual period of holding by the
executive.
<PAGE17>
The following table provides information regarding the exercise of
options during the year ended December 31, 1998, and the number
and value of unexercised options held at December 31, 1998, by the
executive officers named in the Summary Compensation Table above.
Aggregate Option Exercises in 1998 and Option Values at December 31,
1998
<TABLE>
<CAPTION
Shares Number of Value of
Acquired Securities Unexercised
Value Underlying In-the-Money
on Unexercised Options
Exercise Realized Options at Year- at Year-
(2) End(3) End(1)
Name Exercis Unexercis Exercis Unexercis
able able able able
<S> <C> <C> <C> <C> <C> <C>
C. Edward 90,000 $1,993,667 466,666 13,334 $11,112,008 $ 180,842
Acker
Kerry B. 283,505 6,184,897 93,991 286,336 1,548,535 3,766,918
Skeen
Thomas J. 37,859 836,310 74,470 89,671 1,528,750 1,351,530
Moore
Paul H. Tate 30,499 560,290 2,833 77,568 50,817 1,266,668
Michael S. 29,000 688,690 82,665 53,435 1,616,290 869,836
Davis
</TABLE>
The May 15, 1998, two for one stock dividend has been reflected in
this table.
(1) Based upon a closing market value of the Common Stock of
$25.00 per share as of December 31, 1998.
(2) Based on difference between option exercise price and market
price of Common Stock on date of exercise.
Employment Agreements
Under an agreement between the Company and Kerry B. Skeen, which
was amended and restated as of January 20, 1999 (the "Skeen
Agreement"), the Company has agreed to employ Mr. Skeen as Chief
Executive Officer for a three year term that is automatically
extended unless terminated. The Skeen Agreement provides for a
minimum annual base salary of $295,000, which amount may be increased
from time to time by the Board's Compensation Committee. The Skeen
Agreement further provides deferred compensation at a rate of 50% of
the annual base salary subject to ten year graduated vesting, and
provides that Mr. Skeen shall participate in any bonus plan provided
to executive officers generally and 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 100,000 shares on the first
business day in each January, beginning in 1999.
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 or by Mr. Skeen within twelve months after a "change in
control"), or upon Mr. Skeen's death or disability for more than
twelve months, then: (1) all of Mr. Skeen's options become
immediately exercisable; (2) he is paid a one-time bonus equal to
three times the highest annual bonus he received during any one of
the five previous years ; (3) he is paid his full base salary and
deferred compensation for 36 months following the termination; and
(4) he will become fully vested in any deferred compensation. In
addition, all of Mr. Skeen's options become immediately exercisable
upon any change in control of the Company, as defined in the Skeen
Agreement.
<PAGE18>
Under an agreement between the Company and Thomas J. Moore,
which was amended and restated as of January 20, 1999 (the "Moore
Agreement"), the Company has agreed to employ Mr. Moore as Chief
Operating Officer for a one year term that is continuously extended
unless terminated. The Moore Agreement is substantially similar to
the Skeen Agreement except that: the minimum annual base salary is
$200,000, adjustable as of May 1 in each year; the deferred
compensation rate is 30% of base salary, the annual stock option
grant is 35,000 shares as of May 1 in each year, the severance period
is two years, the bonus due on severance is two times the highest
annual bonus during the prior five years and the disability period
prior to termination is six months.
Under separate agreements between the Company and Mr. Davis
(which was effective January 1, 1997 and extended effective each
subsequent January 1) and Mr. Tate (which was effective February 1,
1998 and extended effective February 1, 1999) (collectively, the
"Officer Agreements"), the Company agreed to employ Mr. Davis as
Senior Vice President - Customer Service and Mr. Tate as Senior Vice
President, Chief Financial Officer, Treasurer and Assistant Secretary
each for a one year term. The Officer Agreements provide for
automatic twelve month extensions unless earlier terminated, and for
annual base salaries, all of which may be and have been increased
from time to time by the Compensation Committee to amounts above that
specified in the original agreements. The Officer Agreements provide
that Messrs. Davis and Tate shall participate in any bonus plan
provided to executive officers generally, in the Company's deferred
compensation program, and in employee benefit and medical plans and
other arrangements as the Compensation Committee shall determine, and
provide for automatic acceleration of any stock options held by them
upon a change in control of the Company.
Under the Officer Agreements, if Mr. Davis or Mr. Tate 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, and a portion of
any annual bonus prorated to the date of termination. If employment
is terminated by the Company "without cause", or by the applicable
officer, then the Company will release to the terminated officer its
interest in the officer's life insurance policy, including earnings
from invested funds in an amount equal to a specified percentage
(which shall be 100% upon a change in control) of the premiums paid
by the Company.
Mr. Skeen's and Mr. Moore's employment agreements provide that,
if a portion of the benefits payable in connection with a change in
control would be subject to an excise tax under the Internal Revenue
Code (which excise tax is imposed, generally, if the value of such
benefits exceeds three times the executive's average annual
compensation) and the deductibility of such payments by the Company
would be limited, then the amount of those benefits will be reduced
to a level that does not trigger the excise tax, but only if the
value of the benefits otherwise payable would be less after payment
of the excise tax. Under the Company's form of option agreement for
options granted to vice presidents and above, options become fully
exercisable upon a change in control of the Company, as defined in
the option agreements.
<PAGE19>
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-based awards and participation in a deferred
compensation program. Consistent with previous years' compensation
practices, in 1998 the Compensation Committee 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.
Agreements between the Company and each of the Senior Executive
Officers establish minimum base salaries. The Compensation Committee
amended the agreements with Mr. Skeen and Mr. Moore in order to
recognize their broader responsibilities arising from the expansion
of the Company's operations. The Compensation Committee also
increased base salaries for Mr. Tate effective February 1998 and for
Mr. Davis effective January 1998 in recognition of the current and
long-term level of the Company's performance and each individual's
contribution to that performance since the last review.
In October 1998, the Compensation Committee granted stock
options to the Senior Executive Officers in lieu of increases in base
salary that would have been provided at the next annual salary
review. These options vest twelve months from the date of grant, and
were valued based upon the equivalent value of expected increases in
base salary and other compensation relating thereto as the Committee
agreed would have been granted to these individuals based on the
Company's performance and each individual's contribution to that
performance since the last review. In order to eliminate the
possibility of disparate treatment among the Company's officers in
the event of certain types of change in control transactions, the
Compensation Committee also determined to amend the Company's form of
option agreement for options granted to vice presidents and above in
order to remove the Committee's discretion over whether such options
become exercisable upon certain change in control events, as defined
in the option agreements.
In January 1998, the Compensation Committee granted options to
certain officers, contingent upon stockholder approval of an increase
in the authorized number of shares under the Company's 1995 Stock
Incentive Plan. Stockholder approval was obtained on May 5, 1998.
Subsequent to the stockholder approval date and award of these
options, the Compensation Committee discussed alternative forms of
stock-based compensation programs that provided relevant incentives
to retain certain officers. As part of these discussions, the
Compensation Committee requested certain executive officers to agree
to a cancellation of the January options and in lieu thereof to
accept the grant of a significantly smaller number of restricted
shares, which have the same vesting conditions as the January
options. Pursuant to this program, the Company cancelled options
potentially exercisable for 260,000 shares and granted 100,000 shares
of restricted stock. The number of restricted shares granted was
determined by comparing the fair value of the proposed restricted
shares to the fair value of the option shares, each at various stock
prices. Based on the assumptions used in the Black-Scholes option
model, the values were deemed equivalent assuming a market price of
approximately $28 per share on each vesting date. At a share price
below $28 the restricted shares would be more valuable, and at a
share price above $28 the options would be more valuable.
<PAGE20>
Senior Executive Officers participate in the Senior Management
Incentive Plan ("SMIP"), under which they may receive a percentage of
their salary as 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, each 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 1998,
participants in the SMIP received the maximum bonus allowed under the
program. Senior Executive Officers also participate with all other
management employees in the Company's Management Incentive Plan
("MIP"), which provides for additional bonus compensation based on
the attainment of specified levels of profit margin and operating
performance. The 1998 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.
Mr. Skeen's compensation for 1998 consisted of the minimum base
salary provided for under his employment agreement, an annual bonus
under the SMIP and the MIP, the option grants discussed above that
were made to all executive officers, and an option for 50,000 shares
that the Compensation Committee awarded on May 5, 1998 in order to
satisfy the Company's obligation under Mr. Skeen's employment
agreement. As noted above, as part of its annual review of Mr.
Skeen's compensation, the Compensation Committee determined not to
increase Mr. Skeen's cash salary under his employment agreement, but
determined to amend his employment agreement in order to recognize
Mr. Skeen's broader responsibilities arising from the expansion of
the Company's operations. The amendments are designed to further tie
Mr. Skeen's compensation to the Company's stock price performance and
to further commit him to the long-term success of the Company.
Accordingly, the amendments, among other things, increase the number
of options to be granted to Mr. Skeen in the future and the amount of
deferred compensation accruals in the future, which vest based on Mr.
Skeen's continued employment, and increase the amount of severance
benefits payable if Mr. Skeen's employment is involuntarily
terminated or if there is a change in control of the Company.
Section 162(m) of the Internal Revenue Code, 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 Company's 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
John M. Sullivan
<PAGE21>
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 1998 Mr. Acker served as Chairman of the Board of the
Company, and together with Messrs. Buchanan and Sullivan, served on
the Compensation Committee.
<PAGE22>
Company Stock Performance Graph
The graph below compares the cumulative total return on Atlantic
Coast Airlines Holdings, Inc. ("ACAI") Common Stock for the last five
fiscal years 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 December 31,
1993, with dividends reinvested when they are paid. The companies
included in the peer group are ASA Holdings, Inc. (formerly Atlantic
Southeast Airlines, Inc.), Comair Holdings, Inc., Mesa Air Group,
Inc., Mesaba Holdings, Inc., Midway Airlines and SkyWest, Inc. This
peer group differs from last year due to the omission of CCAIR, Inc.
which was acquired by another airline. The Company added Mesaba
Holdings, Inc. and Midway Airlines as these airlines have a similar
gage of equipment as that used by the Company. The addition of these
companies does not have a material effect on the total return of the
peer group for the periods shown. 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.
(PERFORMANCE GRAPH APPEARS HERE)
Cumulative Total Return
12/93 12/94 12/95 12/96 12/97 12/98
Atlantic Coast 100 23 126 151 391 615
Airlines Holdings,
Inc.
Peer Group 100 52 82 95 139 191
Old Peer Group 100 51 78 87 125 177
NASDAQ Stock 100 98 138 170 208 294
Market
<PAGE23>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information, as of
December 31, 1998 (except as noted otherwise), concerning beneficial
ownership of the Common Stock by each person known by the Company,
based upon Schedule 13D/G filings with the SEC, to own beneficially
more than five percent of the outstanding shares of the Common Stock.
Except as noted otherwise all amounts reflected in the table
represent shares in which the beneficial owners have sole voting and
investment power.
<TABLE>
<CAPTION> Number of Shares
Beneficially Owned
<S> <C> <C>
Name Shares Percent
Gordon A. Cain 2,110,400 10.8%
Eight Greenway Plaza
Suite 702
Houston, TX 77046
Franklin Resources, Inc. 1,581,600(1) 8.1%
777 Mariners Island Boulevard
San Mateo, CA 94404
Atlantic Coast Airlines 1,110,754(2) 5.7%
Employee Stock Ownership
Trust, Bank One, Texas, N.A.,
Trustee
910 Travis Street
Houston, TX 77002
Gilder Gagnon Howe & Co LLC 1,103,475(3) 5.7%
1775 Broadway, 26th Floor
New York, NY 10019
</TABLE>
(1)Based solely upon Amendment No. 2 to Franklin Resources, Inc.'s
Schedule 13G, which it filed with the SEC on January 27, 1999.
All shares are beneficially owned by Franklin Advisers, Inc., an
investment advisory subsidiary of Franklin Resources, Inc.
(2)Pursuant to the ESOP, voting of shares allocated to participants'
accounts is passed through to such participants.
(3)Based solely upon Gilder Gagnon Howe & Co. LLC's Schedule 13G,
which it filed with the SEC on February 16, 1999. Gilder Gagnon
Howe & Co. LLC has shared power to dispose or direct the
disposition of these shares. Gilder Gagnon Howe & Co. LLC holds
these shares in customer accounts over which its members and/or
employees have discretionary authority to dispose of or direct
the disposition of these shares.
<PAGE24>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information, as of March
1, 1999, concerning beneficial ownership of the Company's Common
Stock by (i) each director of the Company, (ii) each executive
officer of the Company named in the Summary Compensation Table, and
(iii) all directors and executive officers of the Company as a group.
Except for the effect of community property laws and as noted
otherwise all amounts reflected in the table represent shares in
which the beneficial owners have sole voting and investment power.
<TABLE> Number of Shares
<CATPION> Beneficially Owned (1)
<S> <C> <C>
Name Shares Percent
C. Edward Acker 884,394 4.4%
Kerry B. Skeen 128,326 *
Robert E. Buchanan 22,600 *
Susan MacGregor Coughlin 4,830 *
Joseph W. Elsbury 86,000 *
James J. Kerley 6,000 *
James C. Miller 18,000 *
John M. Sullivan 6,000 *
Thomas J. Moore 114,534 *
Paul H. Tate 37,012 *
Michael S. Davis 86,330 *
All directors and executive
officers 1,407,369 7.0
as a group (13 persons)
Less than one percent.
</TABLE>
(1)Includes options that are exercisable as of or within 60 days
after March 1, 1999, as follows: Mr., Acker, 466,666 shares; Mr.
Skeen, no shares; Mr. Buchanan, 4,000 shares; Ms. Coughlin, 4,000
shares; Mr. Elsbury, 4,000 shares; Mr. Kerley, 4,000 shares; Mr.
Miller, 4,000 shares; Mr. Sullivan, 4,000 shares; Mr. Moore,
107,806 shares; Mr. Tate, 26,167 and Mr. Davis, 83,489 shares.
<PAGE25>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 1998, all required reports were filed on
time except for one late report by Ms. Coughlin to report the
purchase of Company stock.
STOCKHOLDER PROPOSALS
Securities and Exchange Commission regulations permit
stockholders to submit certain types of proposals for inclusion in
the Company's proxy statement. Any such proposals for the Company's
Annual Meeting of Stockholders to be held in 2000 must be submitted
to the Company on or before December 4, 1999, and must comply with
the requirements of Securities and Exchange Commission Rule 14a-8 in
order to be eligible for inclusion in proxy materials relating to
that meeting. Such proposals should be sent to: Atlantic Coast
Airlines Holdings, Inc., Attn: Secretary, 515-A Shaw Road, Dulles,
Virginia 20166. The submission of a stockholder proposal does not
guarantee that it will be included in the Company's proxy statement.
Alternatively, stockholders of record may introduce certain
types of proposals that they believe should be voted upon at the
Annual Meeting or nominate persons for election to the Board of
Directors. Under the Company's Bylaws, unless the date of the 2000
Annual Meeting of Stockholders is advanced by more than 30 days or
delayed (other than as a result of adjournment) by more than 30 days
from the anniversary of the 1999 Annual Meeting, notice of any such
proposal or nomination must be provided in writing to the Secretary
of the Company no later than February 9, 2000 and not before January
10, 2000. Stockholders wishing to make such proposals or nominations
must in addition satisfy other requirements under the Company's
Bylaws. If the stockholder does not also comply with the
requirements of Rule 14a-4 under the Securities Exchange Act of 1934,
the Company may exercise discretionary voting authority under proxies
it solicits to vote in accordance with its best judgment on any such
proposal submitted by a stockholder.
___________________________
Please complete, date, sign and return promptly the
accompanying Proxy Card in the postage-paid envelope enclosed for
your convenience. The signing of the Proxy Card will not prevent
your attending the Meeting and voting in person.
April 2, 1999
Dulles, Virginia
