SCHEDULE 14A
(Rule 14a-101)
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
FRONTIER AIRLINES, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11,
1) Title of each class of securities to which transaction applies:
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 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
FRONTIER AIRLINES, INC.
12015 E. 46th Avenue
Denver, CO 80239
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------
TO THE SHAREHOLDERS OF FRONTIER AIRLINES, INC.:
The 1999 annual meeting of shareholders of Frontier Airlines,
Inc., a Colorado corporation, will be held on Thursday, September 9, 1999 at
9:30 a.m. local time at the Red Lion Inn, 4040 Quebec Street, Denver, Colorado
for the following purposes:
1. To consider and vote upon a proposal to elect Samuel D. Addoms,
B. Ben Baldanza, D. Dale Browning, Paul S. Dempsey,
William B. McNamara, B. LaRae Orullian and James B. Upchurch to the
Company's Board of Directors;
2. To transact any other business which properly comes before the meeting
or any adjournment.
All shareholders of record on the Company's transfer books as
of the close of business on July 30, 1999 are entitled to vote at the meeting. A
complete list of shareholders entitled to vote at the annual meeting will be
available for examination by any Company shareholder at 12015 E. 46th Avenue,
Denver, Colorado 80239 for purposes germane to the annual meeting, during normal
business hours from August 3, 1999 until the annual meeting.
We invite you to be present at the meeting and look forward to
seeing you there. However, if you cannot attend please read the attached proxy
statement carefully and SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD
AUTHORIZING REPRESENTATIVES OF THE COMPANY'S MANAGEMENT TO VOTE ON YOUR BEHALF
AT THE MEETING.
By order of the Board of Directors
August 4, 1999 FRONTIER AIRLINES, INC.
Arthur T. Voss
Secretary
<PAGE>
FRONTIER AIRLINES, INC.
12015 E. 46th Avenue
Denver, CO 80239
PROXY STATEMENT
This proxy statement and accompanying proxy card support a
proxy solicitation on behalf of the Board of Directors of Frontier Airlines,
Inc. (the "Company") for use at the September 9, 1999 annual meeting of
shareholders and at any adjournment of that meeting. This proxy statement and
form of proxy, together with the Company's Annual Report on Form 10-K will be
sent by mail to shareholders beginning approximately August 4, 1999.
The proxy card, when properly signed, dated and returned to
the Company, will be voted by the proxies at the annual meeting as directed.
Proxy cards returned without direction about business to be transacted at the
meeting will be voted in favor of the election of Samuel D. Addoms, B. Ben
Baldanza, D. Dale Browning, Paul S. Dempsey, William B. McNamara, B. LaRae
Orullian and James B. Upchurch to the Board of Directors of the Company. The
proxies will use their best judgment regarding other matters that properly come
before the meeting. The Company is not aware of any matters, other then those
discussed in this proxy statement, that will be presented at the meeting.
The Company can conduct business at the meeting only if
holders of a majority of the total outstanding shares of Common Stock entitled
to vote are present, either in person or by proxy. Abstentions will be counted
in determining whether a quorum has been reached. Broker-dealer non-votes will
also be counted for quorum purposes. Assuming a quorum exists, the affirmative
vote of a majority of the shares present and voted, excluding abstentions, is
necessary to elect directors and approve any other matters to be voted on.
Under Securities and Exchange Commission rules, boxes are
provided on the proxy card for shareholders to mark if they wish either to vote
"for," or to "withhold authority" for all director nominees. To withhold
authority to vote for any individual nominee, the shareholder may strike a line
through the nominee's name on the proxy card.
REVOCABILITY OF PROXY
Execution of the enclosed form of proxy will not affect a
shareholder's right to attend the meeting and vote in person. Any shareholder
giving a proxy may revoke it at any time before it is exercised by attending the
meeting and voting in person or by providing notice of revocation to the
corporate secretary of the Company at the address set forth above. Shareholders
may vote all their eligible shares if they are personally present at the
meeting. When a shareholder votes at the meeting, his or her vote will revoke
any proxy previously granted by the shareholder.
EXPENSE AND MANNER OF SOLICITATION
In addition to solicitation by mail, proxies may be solicited
in person or by telephone or telegram by directors and officers of the Company
who will not receive compensation for their soliciting activities. Brokers and
other nominees will solicit proxies or authorizations from beneficial owners and
will be reimbursed for their reasonable expenses of forwarding proxy material to
beneficial owners. The Company will bear all of the costs of the solicitation.
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<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS
As of July 30, 1999, the record date, 17,315,017 shares of the
Company's Common Stock were outstanding and entitled to vote at the meeting.
Each share may cast one vote on each separate matter of business properly
brought before the meeting. Only shareholders of record at the close of business
on July 30, 1999 may vote.
The following table sets forth certain information regarding
beneficial ownership of the Company's Common Stock as of July 30, 1999 by: (i)
each director and nominee for director of the Company; (ii) all directors and
executive officers as a group; and (iii) persons to the knowledge of the Company
that beneficially own more than five percent of the Company's outstanding Common
Stock.
<TABLE>
<CAPTION>
<S> <C> <C>
Shares Beneficially Percentage of
Name and Address of Beneficial Owner Owned Ownership (1)
- ------------------------------------ ----- -------------
Directors and Executive Officers:
Samuel D. Addoms
12015 East 46th Avenue
Denver, CO 80239 243,961 (2) 1.41%
Paul S. Dempsey
12015 East 46th Avenue
Denver, CO 80239 72,000 (3) *
B. LaRae Orullian
12015 East 46th Avenue
Denver, CO 80239 25,000 (4) *
William B. McNamara
12015 East 46th Avenue
Denver, CO 80239 25,000 (5) *
D. Dale Browning
12015 East 46th Avenue
Denver, CO 80239 25,000 (5) *
B. Ben Baldanza
12015 East 46th Avenue
Denver, CO 80239 20,000 (6) *
James B. Upchurch
12015 East 46th Avenue
Denver, CO 80239 30,000 (7) *
2
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All directors and executive officers 778,532 (8) 4.50%
as a group (14 persons)
Five Percent and Greater Shareholders:
B III Capital Partners, L.P. (9) 3,455,229 (10) 19.96%
141 Linden Street, Suite 4
Wellesley, MA 02482
W.R. Hambrecht & Co., LLC(11) 1,101,900 (12) 6.36%
550 Fifteenth Street
San Francisco, California 94103
</TABLE>
- ---------------------------
* Less than 1%
(1) Unless otherwise indicated, the Company believes that all persons named
in the table have sole voting and investment power with respect to all
shares of Common Stock beneficially owned by them. A person is deemed
to be the beneficial owner of securities that can be acquired by such
person within 60 days from the date of filing of this proxy statement
upon the exercise of options, warrants or convertible securities that
are held by such person (but not those held by any other person). This
table assumes a base of 17,315,017 shares of Common Stock outstanding
as of the date of this proxy statement, before any consideration is
given to other outstanding options, warrants or convertible securities.
(2) Includes 124,500 shares held under option, all of which are currently
exercisable, and 2,461 shares allocated under the Company's Employee
Stock Ownership Plan ("ESOP").
(3) Includes 70,000 shares held under option, all of which are currently
exercisable.
(4) Includes 15,000 shares held under option, all of which are currently
exercisable.
(5) Consists of 25,000 shares held under option, all of which are currently
exercisable.
(6) Consists of 20,000 shares held under option, all of which are currently
exercisable.
(7) Includes 10,000 shares held under option, all of which are currently
exercisable.
(8) Includes 538,104 shares held under option by the Company's directors
and executive officers which are exercisable within 60 days, and 14,155
shares allocated under the ESOP.
(9) DDJ Capital III, LLC is the general partner of, and DDJ Capital
Management, LLC is the investment manager for, B III Capital Partners,
L.P., and may be deemed to be the beneficial owners of such shares.
(10) Includes warrants to purchase 716,929 shares of Common Stock, all of
which are currently exercisable. Information with respect to B III
Capital Partners, L.P., DDJ Capital III, LLC, and DDJ Capital
Management, LLC is based on the Schedule 13D dated April 24, 1998,
Amendment No. 1 dated May 25, 1998, Amendment No. 2 dated May 25, 1998,
Amendment No. 3 dated November 6, 1998, Amendment No. 4 dated December
1, 1998, Amendment No. 5 dated February 19, 1999, Amendment No. 6 dated
June 23, 1999, and Amendment No. 7 dated July 12, 1999, each as filed
with the Securities and Exchange Commission.
(11) W.R. Hambrecht & Co., Inc., The Hambrecht 1980 Revocable Trust, The E&M
RP Trust, William R. Hambrecht, Edmund H. Shea, Jr. and Mary S. Shea
are each deemed as a group to be the beneficial owners of such shares.
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<PAGE>
(12) Information with respect to W.R. Hambrecht & Co., Inc., The Hambrecht
1980 Revocable Trust, The E&M RP Trust, William R. Hambrecht, Edmund H.
Shea, Jr. and Mary S. Shea is based on Schedule 13D dated November 19,
1998, as filed with the Securities and Exchange Commission.
DIRECTORS AND EXECUTIVE OFFICERS
The following table contains the name, age and position with
the Company of each executive officer, each director of the Company, and each
nominee for director of the Company. Their respective backgrounds are described
following the table. Each of the officers devotes his or her full-time efforts
to the affairs of the Company.
Name Age Position
Samuel D. Addoms 59 President, Chief Executive Officer
and Chief Financial Officer; Director
Jimmie P. Wyche 64 Executive Vice President-Operations
Jon L. Bartram 61 Vice President-Maintenance and
Engineering
Jeff S. Potter 39 Vice President-Marketing
Elissa A. Potucek 42 Vice President, Controller and
Treasurer
Arthur T. Voss 57 Vice President-Administration and
General Counsel; Secretary
Henry R. Barringer 66 Vice President - Customer Service and
Station Operations
Ann E. Block 49 Vice President - Human Resources
Paul S. Dempsey 48 Director
B. LaRae Orullian 66 Director
William B. McNamara 67 Director
D. Dale Browning 61 Director
James B. Upchurch 40 Director
B. Ben Baldanza 37 Director
4
<PAGE>
Samuel D. Addoms is President and Chief Executive Officer and
a director of the Company, having earlier served as Executive Vice President,
Treasurer and a director of the Company during its early development in 1993
through September 1994 when he was elected to the position of President. He was
elected Chief Executive Officer effective January 1, 1995. Before commencing his
involvement in the development of the Company in 1993, he was associated with
some 15 firms for the previous ten years, either as an officer, director or
consultant. These include Gelco Corporation, Connecting Point of America and
Communications World, Inc. His 35 years of management experience include
positions as President and Vice President-Finance of Monfort of Colorado,
President of the Denver National Bank and Vice President of the Continental
Illinois National Bank in Chicago.
Jimmie P. Wyche has been Executive Vice President-Operations
of the Company since August 1995. Proir to that he had been Vice
President-Flight Operations of the Company since its inception in February 1994.
From 1989 to early 1994 Mr. Wyche was a jet captain with Skyways International,
headquartered in Houston, Texas. From 1987 to 1989, he served as Director-Flight
Operations with Ports of Call, a Denver-based charter airline. He served in
various capacities with the former Frontier Airlines, Inc. between 1961 and
1985, starting as a pilot and then in a succession of management positions
including Assistant Chief Pilot, Chief Pilot and Vice President-Flight
Operations.
Jon L. Bartram has been Vice President-Maintenance and
Engineering of the Company since July 1998 and Vice President-Maintenance since
December 1994. From 1993 to 1994 he served as Vice President-Maintenance
Operations for DynAir Tech of Texas. He held a number of key maintenance
positions with Alaska Airlines between 1987 and 1993 including
Director-Production Planning and Director-Base Maintenance. He was an Air
Carrier Inspector for the Federal Aviation Administration between 1986 and 1987.
Before this, he served with the former Frontier Airlines, Inc., for 27 years
(1959-1986) in a succession of maintenance management positions including
Director-Base Maintenance and Director-Technical Services.
Jeff S. Potter has been Vice President-Marketing of the
Company since July 1995. From 1993 to 1995 he was Regional Director of
Commercial Marketing-Pacific and Asia, for McDonnell Douglas Corporation, Long
Beach, California. He served from 1992 to 1993 as Director-Domestic Schedule
Development for Northwest Airlines in Minneapolis, Minnesota, having earlier
held a succession of marketing management positions with Continental Airlines
(1988-1991), Houston, Texas; Northwest Airlines (1986-1988), Minneapolis,
Minnesota; Pacific Southwest Airlines (1985-1986), San Diego, California; and
the former Frontier Airlines (1981-1985), Denver, Colorado.
Elissa A. Potucek has been Controller/Treasurer of the Company
since June 1995 and was promoted to Vice President in September 1996. From 1991
to 1995 she was Controller of Richardson Operating Company and Richardson
Production Company, an oil and gas company based in Denver, Colorado. She served
from 1990 to 1991 as Controller of Coral Companies, Inc., Denver, Colorado,
having earlier held accounting positions with US West Paging, Inc. (1988-1989),
Denver, Colorado, and KPMG Peat Marwick LLP (1985-1988), Denver, Colorado.
5
<PAGE>
Arthur T. Voss has been Vice President-Administration, General
Counsel and Secretary of the Company since September 1995 and Vice President,
General Counsel and Secretary of the Company since its inception in February
1994. From 1991 to 1996, Mr. Voss was the Vice President-Legal of Professional
Fee Examiners, Inc. a professional fee auditing firm based in Denver, Colorado.
He was Vice President-Legal of Aeronautics Leasing, Inc., an aircraft leasing
firm based in Golden, Colorado, from 1990 to 1991. From 1986 to 1989 he served
as Vice President and General Counsel of Aspen Airways, Inc. He held various
management positions in the Legal Department of the former Frontier Airlines,
Inc. from 1971 to 1985, most recently as Associate General Counsel.
Henry R. Barringer has been Vice President-Customer Service
and Station Operations since October 1998. Prior to this appointment, from 1994
to 1998 he served in various capacities for the Company, including City Manager,
Missoula, City Manager, Salt Lake City, Senior Manager, Stations and Director,
Stations. From 1986 to 1994, he held various positions at Continental Airlines.
Mr. Barringer served in various capacities with the former Frontier Airlines,
Inc. between 1956 and 1986.
Ann E. Block has been Vice President-Human Resources since
March 1999. Prior to this appointment, she served as Director-Human Resources
Strategy and Services for BlueCross BlueShield of Colorado. From 1981 to 1996,
she served in various capacities with Public Service Company of Colorado. From
1996-1997, she served as Director-Total Compensation for HR Source, Inc.
Paul S. Dempsey has been a director of the Company since July
1994 and Vice Chairman of the Board of Directors since 1996. He is Professor of
Law and Director of the Transportation Law Program at the University of Denver,
College of Law, Denver, Colorado, having been associated with the institution
since 1979. He served as Legal Advisor to the Chairman, U.S. Interstate Commerce
Commission, in 1981 and 1982; Attorney-Advisor to the former Civil Aeronautics
Board's Office of General Counsel, and its Bureau of Pricing and Domestic
Aviation, 1977-1979; and Attorney-Advisor to the Interstate Commerce
Commission's Office of Proceedings, 1975-1977. Dr. Dempsey holds the following
degrees: A.B.J., J.D., University of Georgia; LL.M., George Washington
University; and D.C.L., McGill University. A Fulbright Scholar, he has written
more than 50 law review articles, numerous editorials for the news media and
various books on topics relating to air transportation.
B. LaRae Orullian has been a director of the Company since
July 1994 and Chair of the Board of Directors since September 1995. She is Vice
Chair of the Board of Guaranty Bank, a Denver, Colorado-based commercial bank,
and a director of The Guaranty Corporation, a bank holding company. She also
serves as Chair of the Boards of Colorado Blue Cross/Blue Shield and of Rocky
Mountain Administrative Services Corporation, Denver, Colorado, and is a member
of the Boards of five other companies in Colorado and Utah. She is a past
National President and former Chair of Girl Scouts of the USA, and is First Vice
Chair of the World Board of Girl Guides and Girl Scouts, based in London,
England. Among numerous business and civic activities in Colorado, she serves on
the Board of Downtown Denver Improvement Association.
William B. McNamara has been a director of the Company since
May 1996. A retired 35-year airline executive specializing in financial
management, he most recently served with Continental Airlines, Inc. (1987 to
1994) as Vice President-Finance. From 1983 to 1987 he was Staff Vice
President-Finance with New York Air, Inc. Before that he served in a succession
of positions with Trans World Airlines, Inc., for 22 years including service as
Staff Vice President-Marketing Administration.
D. Dale Browning has been a director of the Company since July
1996. A long-term bank and bank card executive, he has served since 1995 as
President and Chief Executive Office of ProCard, Inc., Golden, Colorado, and
from 1993 to 1995 as a Senior Consultant to Visa International. He was President
and Chief Executive Officer of the Colorado National Bank of Denver from 1986
through 1993, having concurrently served as Vice Chairman and Chief Operating
Officer of Colorado National Bankshares and as Chief Executive Officer of Rocky
Mountain BankCard System. In 1982 he founded Plus System,Inc., an international
automatic teller machine network, and served as President of that company until
1993. Mr. Browning has served as a director of Central States Indemnity Company
of Omaha since 1995.
6
<PAGE>
James B. Upchurch has been a director of the Company since
October 1998. Since Janaury 1999, Mr. Upchurch has served as the President and
Chief Operating Officer of the U.S. Bancorp Libra division of U.S. Bancorp
Investments, Inc., a registered broker-dealer ("USBI"). Mr. Upchurch was the
President and Chief Operating Officer of Libra Investments, Inc. ("Libra") from
May 1991 through January 1999, a registered broker-dealer that merged with USBI
in January 1999. From 1989 to 1991, Mr. Upchurch was Head Portfolio
Manager-High Yield Securities for Columbia Savings and Loan Association.
Mr. Upchurch has been a director of Supermarkets General Holdings Corporation
since 1996, a director of Pritikin Enterprises, LLC since 1997 and a director of
Camp Group, LLC since 1999.
B. Ben Baldanza has been a director of the Company since May
1998. From May 1997 to the present, he has served as Managing Director and Chief
Operating Officer of Grupo Taca, a group of five Central American airlines. From
1994 to 1996, he held various executive positions with Continental Airlines,
Inc., including Executive Vice President-Marketing and Senior Vice
President-Pricing and Route Scheduling. From 1985 to 1993, he held management
posts with United Parcel Service, Inc., Northwest Airlines, Inc. and American
Airlines, Inc.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors, certain officers and persons holding 10% of the
Company's Common Stock to file reports with the Securities and Exchange
Commission regarding their ownership and regarding their acquisitions and
dispositions of the Company's Common Stock. Based solely on its review of the
copies of such forms received by it, or written representations from certain
reporting persons, the Company believes that during the fiscal year ended March
31, 1999 all filing requirements applicable to its executive officers, directors
and greater than 10% beneficial owners were complied with.
Meetings of the Board of Directors
The Company's Board of Directors met nine times in the fiscal
year ended March 31, 1999. All members of the Board of Directors attended the
meetings, except for Messrs. Baldanza and Dempsey, who were each unable to
attend one meeting
Committees
The Company's Board of Directors has an Audit Committee and a
Compensation Committee. The Board of Directors does not have a Nominating
Committee.
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<PAGE>
The duties of the Audit Committee are to recommend independent
accountants for selection by the Board of Directors, to review the arrangements
for and scope of the independent accountants' audit, to review the findings and
recommendations of the independent accountants concerning internal accounting
procedures and controls, to review professional services rendered by the
independent accountants in regard to the Company and its management, and to
review potential conflicts of interest between the Company and its employees.
During the fiscal year ended March 31, 1999, the members of the Audit Committee
were B. LaRae Orullian, Paul S. Dempsey, William B. McNamara, D. Dale Browing,
B. Ben Baldanza and James B. Upchurch. The Audit Committee met twice during the
fiscal year.
The duties of the Compensation Committee include recommending
to the Board of Directors the compensation to be provided to the executive
officers of the Company and the grant of stock options to eligible individuals
under the Company's stock option plan. During the fiscal year ended March 31,
1999, the members of the Compensation Committee were B. LaRae Orullian, Paul S.
Dempsey, William B. McNamara and D. Dale Browning, B. Ben Baldanza and James B.
Upchurch. The Compensation Committee did not separately meet during the fiscal
year as matters relating to compensation for executive officers and the grant of
stock options were acted upon during the fiscal year by the full Board of
Directors.
Certain Relationships and Related Transactions
On April 24, 1998, the Company sold to B III Capital Partners,
L.P. ("B III"), 4,363,001 shares of Common Stock and warrants to purchase
716,929 shares of Common Stock at an exercise price of $3.75 per share for an
aggregate purchase price of $14,179,753. In connection with the sale of the
shares and warrants, the Company granted B III (a) the right to designate a
maximum of two members of the Company's Board of Directors and (b) certain
registration rights with respect to the securities sold to B III. Mr. Baldanza
and Mr. Upchurch are B III's designees for election to the Company's Board of
Directors.
EXECUTIVE COMPENSATION
The following table summarizes the cash and noncash
compensation awarded to, earned by or paid to the Chief Executive Officer of the
Company and other executive officers of the Company in the fiscal years ended
March 31, 1999, 1998 and 1997 who had total salary and bonus exceeding $100,000.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Annual Compensation Long Term
------------------- Compensation
------------
Securities
Underlying
Name and Principal Other Annual Options/SARs
Position Year Salary ($) Bonus($) Compensation($) Granted #(1)
- -------- ---- ---------- -------- --------------- ------------
Samuel D. Addoms, 1999 $103,304 $69,542 $4,074 100,000
Chief Executive Officer 1998 $84,000 0 $388 0
1997 $79,846 0 $917 0
Jeff S. Potter 1999 $104,455 $70,477 $4,361 50,000
. 1998 $100,000 0 $462 35,000
1997 $96,932 0 $1,179 0
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Jimmie P. Wyche 1999 $82,455 $55,623 $3,427 30,000
1998 $78,000 0 $361 35,000
1997 $73,167 0 $876 0
Arthur T. Voss 1999 $76,455 $51,572 $3,173 50,000
1998 $72,000 0 $333 0
1997 $68,778 0 $834 0
Jon L. Bartram 1999 $76,455 $51,572 $3,173 40,000
1998 $72,000 0 $333 30,000
1997 $68,778 0 $834 0
Elissa A. Potucek 1999 $76,455 $51,572 $3,173 40,000
1998 $72,000 0 $333 35,000
1997 $67,436 0 $786 0
</TABLE>
(1) Other annual compensation represents shares contributed to the
executive officers' respective accounts in the Company's Employee Stock
Ownership Plan ("ESOP") on December 31 of each of the years indicated.
As of March 31, 1999 the respective officers' ESOP accounts held the
following number of shares of Common Stock with corresponding values
based on the closing price of the Common Stock on that date: Mr. Addoms
- 2,461 shares valued at $24,311; Mr. Potter - 2,325 shares valued at
$22,969; Mr. Wyche - 2,293 shares valued at $22,643; Mr. Voss - 2,220
shares valued at $21,930; Mr. Bartram - 2,135 shares valued at $21,089;
Ms. Potucek - 1,614 shares valued at $15,945. Messrs. Addoms, Wyche,
Voss and Bartram are 100% vested in their ESOP accounts. Mr. Potter and
Ms. Potucek will be 80% vested in their ESOP accounts if they are
employed by the Company on December 31, 1999
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<PAGE>
Option/SAR Grants in Last Fiscal Year
The following table sets forth certain information regarding
options granted during the fiscal year ended March 31, 1999 to the Chief
Executive Officer and other executive officers of the Company.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Individual Grants Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Option
Term
Number of % of Total
Securities Options/ SARs
Under- lying Granted to Exercise or
Options/ SARs Employees in Base Price
Name Granted (#) Fiscal Year ($/Sh) Expiration Date 5%($) 10%($)
---- ------------- ------------- ----------- --------------- ---------- ----------
Samuel D. Addoms, CEO 100,000 17.8% $8.125 3/10/09 $1,036,900 $1,308,500
Jeff S. Potter 50,000 8.9% $8.125 3/10/09 $518,450 $654,250
Jimmie P. Wyche 30,000 5.4% $8.125 3/10/98 $311,070 $392,550
Arthur T. Voss 50,000 8.9% $8.125 3/10/09 $518,450 $654,250
Jon L. Bartram 40,000 7.1% $8.125 3/10/09 $414,760 $523,400
Elissa A. Potucek 40,000 7.1% $8.125 3/10/09 $414,760 $523,400
</TABLE>
So long as the employee remains in the Company's employ, each of the above
options is exercisable in five equal annual installments commencing on the
first anniversary of the grant date.
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Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
The following table sets forth certain information regarding
options exercised during the fiscal year ended March 31, 1999 by the Chief
Executive Officer and other executive officers of the Company.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Shares Number of Securities
Acquired on Value Underlying Unexercised Value of Unexercised In-The-Money
Name Exercise (#) Realized ($) Options at March 31, 1999 (#) Options at March 31, 1999 ($)(1)
- ---- ------------ ------------ ----------------------------- ---------------------------------
Exercisable Unexercisable Execisable Unexercisable
Samuel D. Addoms -0- -0- 124,500 100,000 $1,104,937 $175,000
Jimmie P. Wyche 73,333 (2) 11,667 30,000 $80,211 $52,500
- -------------------------
</TABLE>
(1) Based on the closing price of Common Stock on the Nasdaq SmallCap
Market of $9.875 per share on March 31, 1999.
(2) Mr. Wyche exercised options to acquire 73,333 shares of the Company's
Common Stock, but did not sell any of the shares. The exercise price of
the options was $1.00 per share for 50,000 option shares and $3.00 per
share for 23,333 option shares.
Director Compensation
For the year ended March 31, 1999, the Company paid each
director who is not a Company employee $10,000 for serving in that capacity and
the Company has agreed to pay each such director the same amount for serving as
a director for the Company's fiscal year beginning April 1, 1999 and ending
March 31, 2000. Directors who are also employees of the Company receive no
additional compensation for serving as directors. The Company reimburses all of
its directors for travel and out-of-pocket expenses in connection with their
attendance at meetings of the Board of Directors, and permits them to fly
without charge on the Company's scheduled flights. The Company's outside
directors are also eligible to receive stock options under the Company's 1994
Stock Option Plan. During the fiscal year ended March 31, 1999, the Company
granted nonqualified options to each of Messrs McNamara and Browning to purchase
5,000 shares at an exercise price of $3.19 per share and to each of Messrs.
Baldanza and Upchurch to purchase 10,000 shares at exercise prices of $3.125 and
$3.81 respectively
Samuel D. Addoms Severance Agreement
During the fiscal year ended March 31, 1999, the Company
entered into a termination agreement with Samuel D. Addoms, the President and
Chief Executive Officer of the Company. The termination agreement provides that
if Mr. Addoms' employment is terminated involuntarily, by permitted resignation,
by disability or death he shall receive (a) two years' salary, (b) $50,000 per
year for the period beginning on the second anniversary of his termination and
ending on his 65th birthday, (c) a warrant to purchase 100,000 shares of common
stock, and (d) certain other travel and insurance perquisites. In connection
with such termination agreement, Mr. Addoms has agreed to provide consulting
services to the Company and not to become employed by any competitor of the
Company, each during the period beginning on his termination and ending on his
65th birthday.
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Compensation Committee Interlocks and Insider Participation
During the fiscal year ended March 31, 1999, the Company's
Compensation Committee consisted of Ms. Orullian and Messrs. Dempsey, McNamara,
Browning, Baldanza and Upchurch.
Report of the Compensation Committee on Executive Compensation
Overall Policy
Salary compensation of the Company's executive officers is
determined by the Compensation Committee in conjunction with the Company's
entire Board of Directors. The Committee's consideration of and decisions
regarding executive compensation are guided by a number of factors described
below. The objectives of the Company's total executive compensation package are
to attract and retain executive talent, to provide an economic framework to
motivate the Company's executives to achieve goals consistent with the Company's
business strategy, to provide an identity between executive and shareholder
interests through stock options and to provide a compensation package that
recognizes an executive's individual results and contributions in addition to
the Company's overall business results.
Salaries
The key elements of the Company's executive compensation
consist of salary, stock options, and bonuses. The Compensation Committee, in
conjunction with the Company's entire Board of Directors, determines salary
levels of officers and employee stock option awards. Because the Compensation
Committee did not intend to target the base salary levels in effect for the
executive officers at a designated percentile of the salary levels in effect for
other companies in the airline industry, there is no meaningful correlation
between the Company's salary levels and the rates of base salary in effect for
those companies which are taken into account in the Peer Group Index utilized
for purposes of the stock price performance graph which follows this report.
Salaries for executive officers are determined by evaluating
the responsibilities of the position held and the experience of the individual,
and by reference to the competitive marketplace for executive talent, including
a comparison of salaries for comparable positions at other airlines.
The salary levels of the executive officers of the Company for
the next fiscal year are generally established by the Compensation Committee at
fiscal year-end and are reviewed and approved by the entire Board of Directors.
Specific individual performance and overall corporate or business segment
performance are reviewed in determining the compensation level of each
individual officer.
Mr. Addoms' current salary as Chief Executive Officer is
$175,000 per annum. This is comparable to the salary and bonus paid Mr. Addoms
in fiscal 1999. The Compensation Committee believes that Mr. Addoms' salary for
prior years was substantially below that of similarly situated executives in the
airline industry. The Compensation Committee believes that Mr. Addoms' current
annual salary is comparable to or below the annual salaries for similarly
situated executives within the airline industry.
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Bonuses
The Company paid bonuses to its executive officers for the
first time in fiscal 1999. The Compensation Committee and Board of Directors
approved these bonuses due to the improved financial performance of the Company
and the long term commitment of the executive officers of the Company. The Board
of Directors determined to award Mr. Addoms a bonus of $69,542 based on the
Company's operating profit for the fiscal year. The Board of Directors also
agreed to create a bonus pool for executive officers in an amount equal to 2% of
net operating income before taxes computed prior to reduction of net operating
income for such bonus pool, but after 5% of net operating income which was paid
in bonuses to other employees. Bonuses were distributed at the discretion of the
Chief Executive Officer.
COMPENSATION COMMITTEE
B. LaRae Orullian D. Dale Browning
Paul S. Dempsey B. Ben Baldanza
William B. McNamara James B. Upchurch
Performance Graph
The following graph shows the cumulative total shareholder
return on the Company's Common Stock compared to the cumulative total return of
two other indices: (i) The Nasdaq Market Index of U.S. Companies, and (ii) the
Peer Group Index of similar line-of-business companies as chosen by the Company,
consisting of Midway Airlines Corp. and AirTran Holdings, Inc. (formerly ValuJet
Airlines, Inc.) (the "Peer Group"). Each member of the Peer Group's stock is
listed on the Nasdaq National Market or the Nasdaq SmallCap Market. The time
period graphed is the period from May 20, 1994 (the date the Company's Common
Stock commenced trading) through March 31, 1999.
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
COMPANY/INDEX/MARKET 05/20/94 03/31/95 03/31/96 03/31/97 03/31/98 03/31/99
Frontier Airlines, Inc. 100.00 162.71 189.83 91.53 101.69 267.93
Peer Group Index (3) 100.00 302.32 620.14 182.94 173.64 105.54
NASDAQ Market Index 100.00 104.29 140.28 156.94 237.17 309.94
</TABLE>
(1) Assumes $100 invested on May 20, 1994 in the Company's Common Stock,
the Nasdaq Market Index and the Peer Group Index of similar
line-of-business companies.
(2) Total shareholder return assumes reinvestment of dividends.
(3) The Peer Group Index used in the Company's 1997 Proxy Statement
included Western Pacific Airlines, Inc., which filed for bankruptcy in
1997 and whose stock is no longer publicly traded. The 1997 Proxy
Statement Peer Group Index also included Airways Corporation, the
parent company of AirTran Holdings, Inc. (then AirTran Airlines, Inc.,
and formerly ValuJet Airlines, Inc.). The stock of Airways Corporation
is no longer publicly traded. The Peer Group Index used in the
Company's 1998 Proxy Statement included Reno Air, Inc. Reno Air, Inc.
is no longer used as a member of the Peer Group Index and has been
replaced by Midway Airlines Corp. because Reno Air, Inc. was purchased
by American Airlines. Reno Air, Inc. is no longer a national carrier.
PROPOSAL 1
ELECTION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has nominated Samuel D.
Addoms, B. Ben Baldanza, D. Dale Browning, Paul S. Dempsey, William B. McNamara,
B. LaRae Orullian and James B. Upchurch for election to the Board of Directors.
Each of these nominees is a member of the existing Board of Directors and, with
the exception of Mr. Upchurch, was elected to the Board of Directors at the
Company's 1998 Annual Meeting of Shareholders.
A proposal to elect Samuel D. Addoms, B. Ben Baldanza, D. Dale
Browning, Paul S. Dempsey, William B. McNamara, B. LaRae Orullian and James B.
Upchurch to the Board of Directors of the Company will be presented to the
shareholders at the annual meeting.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
THE SHAREHOLDERS VOTE FOR THE ELECTION OF SAMUEL D. ADDOMS, B. BEN BALDANZA, D.
DALE BROWNING, PAUL S. DEMPSEY, WILLIAM B. MCNAMARA, B. LARAE ORULLIAN AND JAMES
B. UPCHURCH TO THE COMPANY'S BOARD OF DIRECTORS.
SHAREHOLDER PROPOSALS
Shareholders are entitled to submit proposals on matters
appropriate for shareholder action consistent with regulations of the Securities
and Exchange Commission and the Company's bylaws. Should a shareholder wish to
have a proposal appear in the Company's proxy statement for next year's annual
meeting, under the regulations of the Securities and Exchange Commission it must
be received by the corporate secretary at 12015 East 46th Avenue, Denver,
Colorado 80239 on or before May 30, 2000.
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INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP has acted as independent public accountants for the
Company continuously since 1994. A representative of KPMG LLP will be present at
the annual meeting and will have the opportunity to make a statement if he
desires to do so and will be available to respond to appropriate questions.
KPMG LLP was selected by the Board of Directors to perform the
audit function for fiscal year 1999. No independent public accountant has yet
been recommended to perform the audit function for fiscal year 2000. It is
expected that the Board of Directors will make such selection at its annual
meeting to be held in September, 1999, or subsequent thereto.
OTHER BUSINESS
All items of business to be brought before the meeting are set
forth in this proxy statement. Management knows of no other business to be
presented. If other matters of business not present known to management are
properly raised at the meeting, the proxies will vote on the matters in
accordance with their best judgment.
NOTE: SHAREHOLDERS ARE REQUESTED TO SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED
PROXY CARD, USING THE ENCLOSED POSTAGE PREPAID ENVELOPE.
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