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:
[X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to section 240.14a-11(c) or section
240.14a-12
WESTERN PACIFIC AIRLINES, INC.
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(Name of Registrant as Specified In Its Charter)
- ------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
WESTERN PACIFIC AIRLINES, INC.
2864 SOUTH CIRCLE DRIVE, SUITE 1100
COLORADO SPRINGS, COLORADO 80906
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 19, 1997
To the Stockholders of Western Pacific Airlines, Inc.:
The 1997 Annual Meeting of Stockholders of Western Pacific Airlines, Inc.,
a Delaware corporation (the "Company"), will be held on Thursday, June 19, 1997
at 10:00 a.m. local time at The Antlers Doubletree Hotel, Summit Ballrooms II
and III, 4 South Cascade Avenue, Colorado Springs, Colorado, for the following
purposes:
1. To elect two persons to the Company's Board of Directors to serve for a
three year term until the year 2000 Annual Meeting of Stockholders or until
their successors are duly elected and qualified;
2. To amend the Company's Restated Certificate of Incorporation to increase
the number of authorized shares of Common Stock to 40,000,000.
3. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on April 21, 1997 as
the record date (the "Record Date") for the Annual Meeting. Only stockholders
of record at the close of business on the Record Date will be entitled to
notice of and to vote at the Annual Meeting. A list of the Company's
stockholders entitled to vote at the Annual Meeting will be available for
examination during normal business hours at the Company's headquarters at the
address listed above during the ten days prior to the meeting date.
You are cordially invited to attend the Annual Meeting. Whether or not you
plan to attend the Annual Meeting in person, please complete, date and sign the
accompanying proxy card and return it promptly in the enclosed return envelope
to ensure that your shares are represented and voted in accordance with your
wishes. You may revoke your proxy by following the procedures set forth in the
accompanying Proxy Statement. If you choose, you may still vote in person at
the Annual Meeting even though you previously submitted your proxy.
By Order of the Board of Directors
Nina A. Ortega
Secretary
Colorado Springs, Colorado
April 24, 1997
<PAGE>
WESTERN PACIFIC AIRLINES, INC.
2864 SOUTH CIRCLE DRIVE, SUITE 1100
COLORADO SPRINGS, COLORADO 80906
PROXY STATEMENT
This Proxy Statement and the accompanying proxy card are being furnished in
connection with the solicitation of proxies by and on behalf of the Board of
Directors of Western Pacific Airlines, Inc., a Delaware corporation (the
"Company"), for use at the annual meeting of stockholders (the "Annual
Meeting"). The Annual Meeting will be held on Thursday, June 19, 1997 at 10:00
a.m. local time at The Antlers Doubletree Hotel, Summit Ballrooms II and III,
4 South Cascade, Colorado Springs, Colorado. The purposes of the Annual
Meeting are set forth in the accompanying Notice of Annual Meeting of
Stockholders. This Proxy Statement and the accompanying proxy card are being
mailed beginning May 9, 1997 to holders of common stock, $.001 par value
("Common Stock") of the Company on April 21, 1997 (the "Record Date"). At the
close of business on the Record Date, there were 13,411,921 shares of Common
Stock outstanding and entitled to vote at the Annual Meeting. The Company's
executive offices are located at 2864 South Circle Drive, Suite 1100, Colorado
Springs, Colorado 80906.
VOTING AT THE MEETING
Each holder of record of Common Stock is entitled to cast one vote per share.
The presence, in person or by proxy, of the holders of a majority of the votes
represented by the outstanding shares of Common Stock entitled to vote at the
Annual Meeting is necessary to constitute a quorum for the conduct of business
at the Annual Meeting. Abstentions will be counted as shares present for
purposes of determining whether a quorum is present.
At the Annual Meeting, directors of the Company will be elected by the
affirmative vote of a plurality of the outstanding shares of Common Stock
represented and entitled to be voted, which means the two nominees receiving
the highest vote totals will be elected. Shares as to which authority to vote
on the election of directors has been withheld and broker non-votes (Broker non-
votes are limited proxies submitted by brokers or other nominees who do not have
the required voting authority from beneficial owners) will not be counted as
votes cast for nominees and will have no effect on the outcome of the voting.
The affirmative vote of a majority of the outstanding shares of Common Stock
entitled to vote at the Annual Meeting is required for approval of the
amendment of the Company's Restated Certificate of Incorporation. Shares as to
which authority to vote on the amendment has been withheld will not be counted
as votes cast for the amendment and will have no effect on the outcome of
voting. Broker non-votes will be counted as votes cast against the proposed
amendment.
All shares of Common Stock represented by properly executed proxies received
prior to or at the Annual Meeting and not revoked will be voted in accordance
with the instructions indicated in such proxies. If no such instructions are
indicated, such shares will be voted FOR the election of the two nominees for
director, FOR the amendment of the Restated Articles of Incorporation, and, in
the discretion of the proxy holders, on any other matter that may properly come
before the Annual Meeting. Any stockholder may revoke his or her proxy at any
time prior to its use by filing with the Secretary of the Company written
revocation of his or her proxy, giving a duly executed proxy bearing a later
date or voting in person at the Annual Meeting. Attendance by a stockholder at
the Annual Meeting will not in itself revoke his or her proxy.
In addition to solicitation by mail, directors, officers and regular
employees of the Company may solicit proxies by telephone or personal contact,
for which such persons will receive no additional compensation. Banking
institutions, brokerage firms, custodians, trustees, nominees and fiduciaries
will be requested to forward solicitation materials to the beneficial owners of
Common Stock held of record by them, and will be reimbursed for their
reasonable forwarding expenses upon their request. All costs of the
solicitation of proxies will be paid by the Company.
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
Under the Company's Restated Certificate of Incorporation and Bylaws, the
Board of Directors has the authority to determine the size of the Board, which
must not be less than three nor more than 15 members. The Board of Directors
presently consists of seven members. The Company's Restated Certificate of
Incorporation provides for a classified Board of Directors under which there
are three classes of Directors, all of which are as equal in number as
possible. Edward R. Beauvais and Ivan Irwin, Jr. are the Class III directors
serving terms expiring at the Annual Meeting and are the nominees for election
as directors. George E. Leonard and Clayton I. Bennett are the Class I
directors, whose terms expire at the 1998 Annual Meeting, and Glenn M.
Stinchcomb, James R. Wikert and Robert A. Peiser are the Class II directors,
whose terms expire at the 1999 Annual Meeting. The directors elected at the
Annual Meeting will be elected to a three year term and will hold office until
the year 2000 Annual Meeting of Stockholders and until their successors are
duly elected and qualified. Unless authority is withheld, it is intended that
the shares represented by proxies at the Annual Meeting will be voted in favor
of the two nominees named below. Both nominees have agreed to serve if
elected.
If any nominee is not available for election at the time of the Annual
Meeting, the shares of Common Stock represented by proxy at the Annual Meeting
will be voted "for" the election of such other person as the Board of Directors
of the Company may recommend, unless the stockholder executing such proxy
withholds authority to vote for the election of directors.
NOMINEES FOR CLASS III DIRECTORS FOR TERM EXPIRING IN 2000
The following information concerning the nominees for election as Class III
directors has been provided by the respective nominees.
Edward R. Beauvais. Mr. Beauvais, age 60, founded the Company in 1994 and
is Chairman of the Board and a Director. From 1994 until November 1996, Mr.
Beauvais was President, Chief Executive Officer and Chairman of the Company's
Board of Directors. Prior to founding the Company, Mr. Beauvais served as
General Manager of Aviation Consulting Group from 1992 through 1994. From 1981
through 1992, Mr. Beauvais was Chairman and Chief Executive Officer of America
West Airlines ("America West"). America West filed for Chapter 11 protection
in June 1991, and Mr. Beauvais resigned as Chairman of America West on July 31,
1992. America West emerged from Chapter 11 in August 1994.
Ivan Irwin, Jr. Mr. Irwin, age 63, was elected to the Board of Directors
of the Company in 1995. Since 1994, Mr. Irwin has been Vice President of Hunt
Petroleum of Texas, Inc. ("HPTI"), a significant stockholder of the Company,
and Vice Chairman and Executive Vice President of Hunt Petroleum Corporation,
the parent company of HPTI and a corporation primarily engaged in oil and gas
exploration and production. See "Beneficial Ownership of Shares" and "Certain
Transactions Involving the Company." Prior to assuming his position with HPTI,
Mr. Irwin was engaged for over 30 years in the private practice of law in
Dallas, Texas, including from February 1990 through June 1994, when he was a
partner in the Dallas, Texas office of the law firm of Vinson & Elkins, L.L.P.
DIRECTORS CONTINUING IN OFFICE
The following information concerning the directors continuing in office has
been provided by the respective directors.
CLASS II DIRECTORS-TERM EXPIRES IN 1999
Glenn M. Stinchcomb. Mr. Stinchcomb, age 69, was elected to the Board of
Directors of the Company in 1995. From October 1991 until his retirement in
1996, Mr. Stinchcomb was a director of The Oklahoma Publishing Company
("OPUBCO"), a publishing company. He was Vice President and Treasurer of
OPUBCO from October 1991 to July 1995. Mr. Stinchcomb also serves as a
director of Gaylord Entertainment Company ("GEC"), a diversified entertainment
and communications company. He was Chief Financial Officer and Treasurer of
GEC from 1974 to 1991, and he was Vice President of GEC from 1986 to 1991.
Edward L. Gaylord, a significant stockholder of the Company, is an affiliate of
GEC. See "Beneficial Ownership of Shares" and "Certain Transactions Involving
the Company."
James R. Wikert. Mr. Wikert, age 48, was elected to the Board of
Directors of the Company in 1995. Since 1993, Mr. Wikert has been Chief
Executive Officer of Express One International, Inc. ("Express One"), a cargo
and charter airline, and is the controlling stockholder of Aircorp, Inc., an
enterprise engaged in the ownership, lease and/or sale of commercial and
general aviation aircraft. From 1987 to 1993, Mr. Wikert was the President of
Express One. Mr. Wikert is the son-in-law of a controlling shareholder of
HPTI, a significant stockholder of the Company. See "Beneficial Ownership of
Shares" and "Certain Transactions Involving the Company."
Robert A. Peiser. Mr. Peiser, age 49, was elected to the Board of
Directors of the Company in November 1996, when he joined the Company as
President and Chief Executive Officer. Prior to joining the Company, Mr.
Peiser served as Vice Chairman and Chief Executive Officer of FoxMeyer Drug
Company from August 1996 through November 1996. In addition, Mr. Peiser was
Executive Vice President - Finance and Chief Financial Officer of Trans World
Airlines, Inc. ("TWA") from August 1994 through August 1996 following TWA's
emergence from Chapter 11 bankruptcy. Prior to his employment with TWA, Mr.
Peiser was a consultant with BBK, Ltd., a turnaround consulting firm based in
Southfield, Michigan, from November 1992 through July 1994. Prior to his
employment with BBK, Ltd., Mr. Peiser was the President and Chief Executive
Officer of Orange-co, Inc., a citrus processing company based in Bartow,
Florida.
CLASS I DIRECTORS-TERM EXPIRES IN 1998
Clayton I. Bennett. Mr. Bennett, age 37, was elected to the Board of
Directors of the Company in 1995. Since prior to April 1992, he has been the
Real Estate and Investment Manager for The Oklahoma Publishing Company, a
publishing company. Mr. Bennett is the son-in-law of Edward L. Gaylord, a
significant stockholder of the Company. See "Beneficial Ownership of Shares"
and "Certain Transactions Involving the Company."
George E. Leonard. Mr. Leonard, age 56, was elected to the Board of
Directors of the Company in November 1996, when he joined the Company as Vice
President - Finance and Chief Financial Officer. Prior to joining the Company,
Mr. Leonard was President and Chief Executive Officer of GEL Management, Inc.,
a company engaged in real estate and financial management and consulting
services, for two separate periods, from July 1996 through October 1996, and
from December 1991 through December 1995. From January 1996 through July 1996,
Mr. Leonard was Chairman and Chief Executive Officer of Consumer Guaranty
Corporation, an asset restructuring company.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held 11 regular and four special meetings in 1996.
Each director attended 75% or more of the total number of meetings of the board
and the committees of which he was a member that were held during the period
for which he has been a director or committee member.
The Company's Board of Directors has established Audit, Compensation and
Nominating Committees. In November 1996, the Board of Directors also
established a Legal Committee, which was dissolved in April 1997. The Audit
Committee is comprised only of outside directors. The Compensation and
Nominating Committees each have two directors who are neither officers nor
employees of the Company. The Legal Committee, when it was in existence, also
had as members two directors who were neither officers nor employees of the
Company. During 1996, the Audit Committee held two meetings and the
Compensation Committee held five meetings, while the Legal and Nominating
Committees did not meet (the Legal Committee having been created in November
1996 and dissolved in April 1997).
The duties of the Audit Committee include recommending to the Board of
Directors the selection of independent public accountants to audit the
financial statements of the Company, reviewing the activities and reports of
the independent public accountants and reporting the results of such review to
the Board of Directors. The Audit Committee also monitors the internal
accounting controls of the Company. The members of the Audit Committee are
Glenn M. Stinchcomb (Chairman) and Ivan Irwin, Jr.
The duties of the Compensation Committee include providing a general review of
the Company's compensation and benefit plans to ensure that they meet the
Company's objectives. The Compensation Committee has the sole authority to
administer and to grant awards under the Company's 1994 Amended and Restated
Stock Option Plan (the "Option Plan") and also acts as Administrator under the
Company's 1995 Amended and Restated Directors' Option Plan (the "Directors'
Plan") and the 1996 Restricted Stock Plan for Non-Employee Directors (the
"Restricted Stock Plan"). In addition, the Compensation Committee approves the
Chief Executive Officer's compensation and reviews the Chief Executive
Officer's recommendations with respect to (i) the compensation of all other
officers of the Company, (ii) the grant of awards under the Company's then-
existing compensation and benefit plans and (iii) the adoption of major
compensation policies and practices. The Compensation Committee consists of
Ivan Irwin, Jr. (Chairman) and Clayton I. Bennett.
The duties of the Nominating Committee include recommending to the Board of
Directors nominees for election as directors of the Company. Members of the
Nominating Committee are Clayton I. Bennett (Chairman) and James R. Wikert.
Prior to its dissolution, the duties of the Legal Committee included
recommending and reviewing outside counsel to the Board, reviewing with the
Company's internal counsel and outside counsel all legal affairs affecting the
Company and the Board and seeking the advice of outside counsel from time to
time with respect to the discharge by the Board of its responsibilities to the
Company and its stockholders. Members of the Legal Committee were Ivan Irwin,
Jr. (Chairman) and Glenn M. Stinchcomb.
EXECUTIVE OFFICERS
Set forth below is certain information relating to the current executive
officers of the Company. Each executive officer serves at the pleasure of the
Board of Directors, subject to the employment agreements described below.
NAME AGE POSITION
---- --- --------
Robert A. Peiser(1) 49 President, Chief Executive Officer and Director
Edward R. Beauvais(1) 60 Chairman of the Board
George E. Leonard(1) 56 Vice President - Finance, Chief Financial Officer
and Director
Mark Coleman 50 Senior Vice President - Marketing and Planning
Timothy D. Komberec 48 Vice President - Flight Operations
Donald E. Applegarth 34 Vice President - Information Systems and Chief
Information Officer
Glenn S. Goldberg 39 Vice President - Human Resources and
Administration
Martin J. Wax 43 Vice President - Technical Operations and Vendor
Administration
(1) Biographical information with respect to Messrs. Peiser, Beauvais and
Leonard is provided under the heading "Election of Directors."
Mark Coleman. Mr. Coleman joined the Company as Senior Vice President -
Marketing and Planning in November 1996. From July 1994 until August 1996, he
was Senior Vice President of Marketing for Trans World Airlines, Inc. ("TWA"),
working on TWA's restructuring and reorganization following TWA's emergence
from Chapter 11 bankruptcy. From September 1992 through July 1994, Mr. Coleman
was Vice President and General Manager of Avis Wiscom International, Ltd., a
company providing technology services to the travel industry. From December
1981 through September 1992, Mr. Coleman was Senior Vice President of America
West Airlines, Inc.
Timothy D. Komberec. Mr. Komberec joined the Company as Vice President-
Flight Operations in September 1994. Prior to joining the Company, Mr.
Komberec was employed by Empire Airlines as Director of Operations from January
1993 through August 1994, and by International Airlines Services as an Aviation
Consultant from September 1991 through December 1992. Prior to Empire
Airlines, Mr. Komberec was Vice President of Flight Operations for NPA Inc. dba
United Express (which merged in October 1990 into WestAir Airlines) from April
1987 to September 1991. Mr. Komberec is a licensed Airline Transport Pilot,
Commercial Pilot, Flight Instructor and Ground Instructor with turbojet and
rotary ratings and 12,700 hours in flight time as pilot in command and 2,200
hours as a flight instructor.
Donald E. Applegarth. Mr. Applegarth has been Vice President-Information
Systems since September 1, 1995. Mr. Applegarth joined the Company as Manager,
Marketing Automation in October 1994 and was promoted to Director of Market
Automation in June 1995. Prior to Joining the Company, he served as Manager of
Systems Services for Morris Air from March 1993 through October 1994, and as
Station Manager-Seattle Station for America West Airlines from November 1983
through February 1993, where he also served as chairman of America West's
system review board with responsibility for review and design of field station
software development. Mr. Applegarth has extensive experience in client-server
architecture and software design, and since June 1992 has owned his own
computer systems company.
Glenn S. Goldberg. Mr. Goldberg joined the Company as Vice President-
Human Resources and Administration in January 1995. From 1992 until joining
the Company, Mr. Goldberg served as Vice President-Human Resources and
Administration for Amvest Corporation, a coal and natural gas energy company,
as Manager of Human Resources Programs for General Electric Capital
Corporation, a finance company, from 1990 to 1992, and as Director of Human
Resources & Administration for Kelly Communications from 1987 to 1990. From
1981 to 1987 Mr. Goldberg was employed with People Express Airlines/Continental
Airlines in various capacities including Operations and Facilities Director,
Training Director and Employment Manager.
Martin J. Wax. Mr. Wax joined the Company in January 1995 and is
currently Vice President-Technical Operations and Vendor Administration. From
August 1995 through February 1997, Mr. Wax was the Company's Vice President -
Purchasing, and from January 1995 through July 1995, he served as the Company's
Director of Purchasing. From August 1994 through December 1994, he was a
consultant to AAR Corporation in connection with the reengineering of materials
programs for the airline industry. From September 1994 to December 1994 he was
a consultant to UltrAir in connection with the liquidation of airline
inventory. Mr. Wax was Director of Vendor Administration, Traffic and
Materials Sales for Continental Airlines from February 2, 1992 through July
1994.
BENEFICIAL OWNERSHIP OF SHARES
The following table sets forth, as of the Record Date, the beneficial
ownership, as defined by regulations of the Securities and Exchange Commission
(the "Commission") of Common Stock held by: (i) each person or group of persons
known to the Company to beneficially own more than five percent of the
outstanding shares of Common Stock; (ii) each director of the Company and each
nominee for director; (iii) each current executive officer named in the Summary
Compensation Table below; (iv) up to two executive officers who were employed
by the Company in 1996 and who, had they remained employed by the Company at
December 31, 1996, would have been included among the executive officers
required to be named in the Summary Compensation Table; and (v) all executive
officers and directors as a group. Except as noted below, each of the persons
listed has sole investment and voting power with respect to the shares of
Common Stock included in the table. The number of shares and percentage of
ownership of Common Stock for each person assumes that shares of Common Stock
issuable upon the exercise of stock options to such person (exclusive of
others) exercisable within sixty days after the Record Date are outstanding.
All information is taken from or based upon ownership filings made by such
persons with the Commission or upon information provided by such persons.
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNER(1) OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
- -------------------------- ---------------------- ----------------
Edward R. Beauvais 1,676,075 (2) 12.5%
Edward L. Gaylord 2,276,120 (3) 17.0%
GFI Company 1,798,620 (4) 13.4%
Hunt Petroleum of Texas, Inc. 1,606,120 (5) 12.0%
James R. Wikert 404,342 (6) 3.0%
Robert A. Peiser 6,000 Less than 1%
Ivan Irwin, Jr. 28,535 (7) Less than 1%
Glenn M. Stinchcomb 29,201 (8) Less than 1%
Clayton I. Bennett 23,201 (9) Less than 1%
Glenn S. Goldberg 39,413 (10) Less than 1%
Martin J. Wax 29,741 (11) Less than 1%
Timothy D. Komberec 41,667 (12) Less than 1%
Donald E. Applegarth 26,229 (13) Less than 1%
Thomas DeNardin 44,808 (14) Less than 1%
Martin J. Dugan, Jr. 113,434 (15) Less than 1%
George E. Leonard 1,002 Less than 1%
All executive officers and
directors as a group (13 persons) 2,035,785 (16) 15.2%
(1) The addresses of the more than five percent holders listed in the table
are as follows: Edward R. Beauvais -2864 South Circle Drive, Suite 1100,
Colorado Springs, Colorado 80906; Edward L. Gaylord-9000 North Broadway,
Oklahoma City, Oklahoma 73114; GFI Company ("GFI")-530 Las Vegas Boulevard
South, Las Vegas, Nevada 89101; and Hunt Petroleum of Texas, Inc.-5000
Thanksgiving Tower, Dallas, Texas 75201.
(2) Includes 1,551,075 shares of Common Stock held in the name of Aviation
Holdings Limited Company ("AHLC"). Under the AHLC Operating Agreement, Mr.
Beauvais has management rights and voting and investment power with respect to
all 1,551,075 shares of Common Stock held in the name of AHLC. Mr. Beauvais'
interest in AHLC, which currently represents a 68.3% interest in all
allocations and distributions from AHLC (equivalent to 1,058,774 shares or
7.9% of the outstanding Common Stock), is held in the name of Aviation
Consulting Group Limited Partnership, an Arizona limited partnership ("ACGLP")
of which Mr. Beauvais is a general partner and Mr. Beauvais, along with his
spouse and children, is a beneficial owner. Also includes 60,000 shares of
Common Stock issuable upon the exercise of stock options.
(3) Includes 1,225,000 shares of Common Stock owned of record by GFI and
437,500 shares of Common Stock owned of record by the Broadmoor Hotel, Inc.
Mr. Gaylord, individually and through certain trusts, may be deemed a
controlling person of GFI and GFI may be deemed a controlling stockholder of
the Broadmoor Hotel, Inc. As a result, Mr. Gaylord may be deemed to be the
beneficial owner of the shares of Common Stock owned of record by GFI and the
Broadmoor Hotel, Inc. Also includes 10,000 shares owned of record by Mr.
Gaylord's spouse, and currently exercisable warrants to purchase 136,120
shares of Common Stock held by GFI. Mr. Gaylord disclaims beneficial
ownership of shares of Common Stock not owned of record by him.
(4) All of the shares of Common Stock reflected as beneficially owned by GFI
are also reflected as beneficially owned by Mr. Gaylord. See Note (3) above.
Includes 437,500 shares of Common Stock owned of record by the Broadmoor
Hotel, Inc. GFI may be deemed to be a controlling stockholder of the
Broadmoor Hotel, Inc. As a result, GFI may be deemed to be the beneficial
owner of the shares of Common Stock owned of record by the Broadmoor Hotel,
Inc. Also includes currently exercisable warrants to purchase 136,120 shares
of Common Stock held by GFI. GFI disclaims beneficial ownership of shares of
Common Stock not owned of record by GFI.
(5) The shares held of record by HPTI may be deemed beneficially owned by its
sole stockholder, Hunt Petroleum Corporation, which is owned by two trusts
with all voting and dispositive powers exercised by the trustees, Tom Hunt and
James L. Parker, 5000 Thanksgiving Tower, Dallas, Texas 75201. Also includes
currently exercisable warrants to purchase 136,120 shares of Common Stock held
by HPTI.
(6) Includes 50,400 shares held in the name of the Wisenbaker/Wikert 1986
Trusts for the benefit of Mr. Wikert's four children and 75,000 shares
reflected as beneficially owned by Mr. Wikert and held in the name of the Lyda
Hunt-Margaret Trusts, a testamentary trust for the benefit of Mr. Wikert's
spouse. Mr. Wikert disclaims beneficial ownership of all 125,000 shares held
in the name of such trusts. Also includes 20,300 shares held of record by Mr.
Wikert's stepsons, 4,600 shares held of record by Mr. Wikert's spouse and 200
shares held of record by Mr. Wikert's spouse as custodian for Mr. Wikert's
children, as to all of which shares Mr. Wikert disclaims beneficial ownership.
Also includes 17,500 shares of Common Stock issuable upon the exercise of
stock options.
(7) Includes 17,500 shares of Common Stock issuable upon the exercise of stock
options. Also includes 300 shares held by Mr. Irwin as trustee of three
educational trusts for the benefit of Mr. Irwin's children and grandchildren,
as to which shares Mr. Irwin disclaims beneficial ownership.
(8) Includes 17,500 shares of Common Stock issuable upon the exercise of stock
options. Also includes 1,000 shares held of record by Mr. Stinchcomb's
spouse, as to which shares Mr. Stinchcomb disclaims beneficial ownership.
(9) Includes 17,500 shares of Common Stock issuable upon the exercise of stock
options. Also includes 5,000 shares held of record by Mr. Bennett's spouse,
as to which shares Mr. Bennett disclaims beneficial ownership.
(10) Includes 1,843 shares held in the name of AHLC and reflected as
beneficially owned by Mr. Goldberg. Mr. Goldberg disclaims beneficial
ownership as to such shares. Also includes 36,000 shares of Common Stock
issuable to Mr. Goldberg upon the exercise of stock options.
(11) Includes 1,843 shares held in the name of AHLC and reflected as
beneficially owned by Mr. Wax. Mr. Wax disclaims beneficial ownership as to
such shares. Also includes 25,000 shares of Common Stock issuable to Mr. Wax
upon the exercise of stock options.
(12) Includes 16,667 shares of Common Stock issuable to Mr. Komberec upon the
exercise of stock options.
(13) Includes 479 shares held in the name of AHLC and reflected as
beneficially owned by Mr. Applegarth. Mr. Applegarth disclaims beneficial
ownership as to such shares. Also includes 25,000 shares of Common Stock
issuable to Mr. Applegarth upon the exercise of stock options.
(14) Mr. DeNardin resigned his position with the Company in December 1996.
Includes 25,570 shares held in the name of AHLC and reflected as beneficially
owned by Mr. DeNardin. Mr. DeNardin disclaims beneficial ownership as to such
shares. Also includes 16,668 shares of Common Stock issuable to Mr. DeNardin
upon the exercise of stock options.
(15) Mr. Dugan resigned his position with the Company on November 1, 1996.
Includes 15,934 shares held in the name of AHLC and reflected as beneficially
owned by Mr. Dugan. Mr. Dugan disclaims beneficial ownership as to such
shares. Also includes 40,000 shares of Common Stock issuable to Mr. Dugan
upon the exercise of stock options and 500 shares of Common Stock issuable to
Mr. Dugan's spouse upon the exercise of stock options. Mr. Dugan disclaims
beneficial ownership of shares issuable upon the exercise of stock options
held by his spouse.
(16) The shares reflected as beneficially owned by all directors and officers
as a group include (i) 1,551,075 shares held by AHLC and reflected as
beneficially owned by Mr. Beauvais, (ii) 208,000 additional shares issuable
upon the exercise of stock options and (iii) 272,238 additional shares
issuable upon the exercise of warrants held by HPTI and GFI. Excludes shares
held by Messrs. DeNardin and Dugan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and officers, and persons who own more than 10% of a registered
class of the Company's equity securities, to file with the Securities and
Exchange Commission reports of ownership and changes in ownership of common
stock and other equity securities of the Company. Officers, directors and
greater-than-10% stockholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on review of the copies of such reports furnished to the Company
or written representations that no other reports were required, the Company
believes that, during the 1996 calendar year, all filing requirements
applicable to its officers, directors and greater-than-10% beneficial owners
were complied with, except that an initial statement of beneficial ownership
(Form 3) was filed late by George E. Leonard and Robert A. Peiser, and
Clayton L. Bennett was late in filing a statement of changes in beneficial
ownership (Form 4).
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS
During 1996, each Director of the Company who was not an employee of the
Company or any parent or subsidiary of the Company (each a "Non-Employee
Director") was entitled to receive an annual retainer of $20,000, to be paid
July 1, 1996. In 1996, one half of such annual retainer was paid to each Non-
Employee Director in the form of an award under the Company's 1996 Restricted
Stock Plan for Non-Employee Directors of 701 shares of restricted stock having
an agreed value for this purpose of 100% of the fair market value on the date
of grant, July 1, 1996. Such shares have not been registered under the
Securities Act of 1933, and have been issued with appropriate restrictive
legends. The Company paid the $10,000 cash portion of the 1996 annual
retainer to its Non-Employee Directors at the March 1997 meeting of the
Company's Board of Directors. In 1996, Directors who received the stock award
portion of their annual retainer, and who received in 1997 the cash portion of
their annual 1996 retainer, were Messrs. Bennett, Irwin, Stinchcomb and Wikert
as well as John S. Lancy, who served as a director of the Company until his
resignation in November 1996. All Non-Employee Directors also receive
reimbursement of usual and ordinary expenses incurred in connection with their
service as a director.
During 1995, each of Messrs. Bennett, Irwin, Lancy, Stinchcomb and Wikert was
granted an option, pursuant to the 1995 Directors' Option Plan, to purchase
25,000 shares of Common Stock at an exercise price equal to the fair market
value of such shares on the date of grant. On the grant date of such options,
July 28, 1995, the exercise price per share was $6.00. Of the 25,000 options
granted to each of the aforementioned non-employee directors, 40%
(representing 10,000 shares of Common Stock) were exercisable on the date of
grant, 30% (representing 7,500 shares of Common Stock) became exercisable on
July 28, 1996, and the remaining 30% (representing 7,500 shares of Common
Stock) will become exercisable on July 28, 1997. The term of all options
granted under the Directors' Plan is five years, and subject to limited
exceptions for termination as director, disability and death, such options are
exercisable only while the Director remains a director of the Company or for a
period of three months thereafter.
In addition, each Director of the Company receives a positive space pass
which allows him to book positive space travel on Company flights for himself
and a guest traveling with him. In addition, each spouse of a Director and
each dependant child also receives a positive space pass. In addition,
Margaret Hill, a director of Hunt Petroleum Corporation, and her children
Alinda Hill (spouse of James R. Wikert), Lyda Hill and Al Hill, Jr. each
received a positive space pass.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION OF EXECUTIVE OFFICERS
The Summary Compensation Table set forth below provides, for the period from
April 12, 1994 (inception) to December 31, 1996, information concerning annual
and long-term compensation paid or accrued by the Company for the Company's
(i) two Chief Executive Officers who served in 1996, (ii) next four most
highly compensated executive officers who served in 1996, and (iii) two
additional officers who where employed by the Company in 1996 and who, had
they remained employed by the Company at December 31, 1996, would have been
included in the next four most highly paid officers for 1996, in each case for
services rendered in all capacities to the Company.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION<F3> LONG-TERM COMPENSATION
RESTRICTED STOCK SECURITES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARD($) OPTIONS (#) COMPENSATION ($)
- -------------------------------- ---- --------- ----------- ---------------- -------------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Peiser<F1>
President and Chief Executive
Officer 1996 $25,000 $300,000<F1> $0<F1> $300,000<F1> $0
Edward R. Beauvais<F2>
Chairman of the Board,President
and Chief Executive Officer 1996 218,938 0 0 0 28,693<F6>
1995 175,500 0 0 0 780<F6>
1994 93,750 0 90,000<F4> 90,000<F5> 0
Glenn Goldberg
Vice President - Human Resources
and Administration 1996 113,400 0 0 0 4,455<F6>
1995 90,708 0 0 0 1,567<F6>
Martin J. Wax
Vice President - Technical
Operations and Vendor
Administration 1996 113,400 0 0 0 3,888<F6>
1995 79,055 0 0 0 1,632<F6>
Timothy D. Komberec
Vice President - Flight
Operations 1996 113,400 0 0 0 3,530<F6>
1995 93,625 0 0 0 3,530<F6>
1994 23,333 0 0 0 2,752<F6>
Donald E. Applegarth
Vice President - Information
Systems 1996 113,400 0 0 0 3,390<F6>
1995 65,505 0 0 0 0
Thomas DeNardin<F2>
Vice President - Sales and
Marketing 1996 113,400 0 0 0 3,390<F6>
1995 93,625 0 0 0 1,757<F6>
1994 23,333 0 50,000<F4> 0 0
Martin J. Dugan, Jr.<F2>
Vice President -Finance and
Chief Financial Officer 1996 95,200 0 0 0 7,434<F6>
1995 93,625 0 0 0 1,446<F6>
1994 23,333 0 60,000<F4> 0 0
Nolan A. Wiley<F2>
Vice President - Maintenance 1996 113,400 0 0 0 2,498<F6>
1995 93,625 0 0 0 1,789<F6>
1994 23,333 0 50,000<F4> 0 0
<FN>
<F1>
Mr. Peiser commenced employment with the Company on November 21, 1996. Mr.
Peiser's listed salary includes salary paid from November 21, 1996 through
December 31, 1996. Mr. Peiser received a signing bonus of $300,000 upon
execution of his employment agreement. For a discussion of the terms of Mr.
Peiser's employment agreement, including stock and stock option awards, see
discussion under "Employment Agreements- Robert A. Peiser" below.
<F2>
Mr. Beauvais commenced employment with the Company on April 15, 1994. Mr.
Dugan, Mr. DeNardin and Mr. Wiley commenced employment with the Company on
September 1, 1994. Mr. Dugan resigned as an officer of the Company effective
November 1, 1996. In November 1996, Mr. Beauvais resigned his positions as
President and Chief Executive Officer, retaining his position as Chairman of
the Board. Mr. DeNardin resigned his position in December 1996, and Mr. Wiley
resigned his position in April 1997.
<F3>
The aggregate amount of any perquisites or other personal benefits was less
than 10% of the total annual salary and bonus and is not included in the above
table.
<F4>
Reflects a stock bonus award of 45,000 and 30,000 shares of Common Stock to
Mr. Beauvais and Mr. Dugan, respectively, and 25,000 shares of Common Stock to
each of Mr. Wiley, Mr. Komberec and Mr. DeNardin, on September 29, 1994. Such
awards vested upon receipt. The fair market value of such shares at December
31, 1996 was $315,000, $210,000, $175,000, $175,000 and $175,000,
respectively, based on the closing price of the Common Stock on December 31,
1996 of $7.00.
<F5>
All such options were granted on September 29, 1994 at an exercise price of
$6.00 per share and vest over a three-year period with one-third vesting on
each of the first, second and third anniversaries of the date of grant.
<F6>
Consists of life insurance premiums paid by the Company in the applicable year
for the benefit of the named officer.
</FN>
</TABLE>
EMPLOYMENT AGREEMENTS
Robert A. Peiser. Mr. Peiser has an employment agreement with the
Company, dated November 21, 1996, for his employment as President and Chief
Executive Officer at a minimum compensation of $300,000 per annum for a three
year term, with automatic one year extensions thereafter unless terminated by
either party on specified prior written notice. Mr. Peiser also received (1)
a $300,000 signing bonus upon execution of his employment agreement, (2) a
grant of 100,000 shares of the Company's common stock, of which shares 34,000
vest on November 21, 1997, 33,000 vest on November 21, 1998 and 33,000 vest on
November 21, 1999, (3) a grant of 300,000 options under the Company's Amended
and Restated 1994 Stock Option Plan, vesting at a rate of 100,000 shares per
year and exercisable at $7.75 per share, (4) an allowance of $650 per month in
automobile expenses, and reimbursement for reasonable living expenses during
the first twelve months of the employment agreement, and (5) lifetime positive
space passes on the Company's flights for himself and his eligible dependents.
Upon termination of Mr. Peiser's employment by the Company for cause, as
defined in the employment agreement, Mr. Peiser shall be entitled to all
outstanding amounts then due him under the employment agreement. Upon
termination of Mr. Peiser's employment by the Company without cause, as
defined in the employment agreement, Mr. Peiser shall be entitled to (1) a
lump sum payment equal to his base salary for the longer of the remaining term
of the Employment agreement or twelve months, (2) continuation of certain
benefits through the remaining term of the employment agreement, (3) immediate
vesting of all granted but unvested stock and options and (4) continuation of
lifetime positive space passes on the Company's flights for Mr. Peiser and his
eligible dependents.
Edward R. Beauvais. Mr. Beauvais has an Amended and Restated Employment
Agreement with the Company, dated November 21, 1996. for his employment as
Chairman of the Board of Directors of the Company at a minimum compensation of
$350,000 per year for a three year term. Mr. Beauvais also receives an
allowance of $550 per month in automobile expenses and reimbursements for
travel, entertainment and mileage expenses incurred in promoting the Company's
business. Upon termination of Mr. Beauvais' Employment Agreement by the
Company for cause, as defined in the Employment Agreement, or voluntarily by
Mr. Beauvais, Mr. Beauvais shall be entitled to all outstanding amounts and
benefits then due him under the Employment Agreement through the date of
termination. Upon termination of Mr. Beauvais' Employment Agreement by the
Company without cause, as defined in the Employment Agreement, Mr. Beauvais
shall be entitled to (1) payment of his base salary through the term of the
Employment Agreement, either as a lump sum or in periodic installments, at Mr.
Beauvais' election, (2) continuation of certain benefits through the term of
the Employment Agreement, (3) at his election, within 60 days of such
termination, immediate vesting and exercise of all granted but unexercised
stock options and (4) a lifetime positive space pass on the Company's flights
for Mr. Beauvais and his spouse.
Mark Coleman. Mr. Coleman has a three-year employment agreement with the
Company, dated as of December 9, 1996, for his employment as Senior Vice
President - Marketing and Planning at a minimum compensation of $175,000 per
year for a three year term, with automatic one year extensions thereafter
unless terminated by either party on specified prior written notice. In
addition, Mr. Coleman received (1) a grant of 200,000 options under the
Company's Amended and Restated 1994 Stock Option Plan, vesting at a rate of
67,000 options on December 9, 1997, 67,000 options on December 9, 1998 and
66,000 on December 9, 1999, such options exercisable at $8.25 per share and
(2) an allowance of $550 per month in automobile expenses and reimbursement of
reasonable living expenses from December 9, 1996 through March 31, 1997. Upon
termination of Mr. Coleman's employment agreement by the Company for cause, as
defined in the employment agreement, Mr. Coleman shall be entitled to all
outstanding amounts then due him through the date of termination under the
employment agreement. Upon termination of the employment agreement by the
Company without cause, as defined in the employment agreement, Mr. Coleman
shall be entitled to (1) a lump sum payment equal to his base salary for the
longer of the remaining term of the employment agreement or twelve months, (2)
continuation of certain benefits through the remaining term of the employment
agreement, (3) immediate vesting of all granted but unvested stock and
options.
Martin J. Dugan, Jr., Thomas J. DeNardin, Nolan A. Wiley, Glenn S.
Goldberg, Martin J. Wax, Timothy D. Komberec and Donald E. Applegarth. The
Company's employment agreements with Messrs. Dugan, DeNardin and Wiley were
terminated on November 1, 1996, December 19, 1996 and April 11, 1997,
respectively. Pursuant to severance agreements with each of Mr. Dugan, Mr.
DeNardin and Mr. Wiley, the Company is paying to each former executive up to
24 months of his base salary at the time of his resignation, paid over a 24
month period, and providing to each executive continuation of certain
benefits, including insurance coverage, for the same 24 month period. In
addition, each former executive received a one year extension of the exercise
period applicable to all stock options vested as of the date of termination,
and lifetime positive space passes for themselves and their spouses on the
Company's flights. The Company's employment agreements with Messrs. Goldberg,
Wax, Komberec and Applegarth, as well as the terminated contracts with Mr.
Dugan, Mr. DeNardin and Mr. Wiley when they were in effect, provide for a
three-year term and are automatically extended on each anniversary of the date
of the agreement to a new termination date three years from the date of such
anniversary. Each agreement with Mssrs. Goldberg, Wax, Komberec and
Applegarth provides for an annual base salary of $113,400, and entitles each
such executive officer to participate in medical, life and disability
insurance plans established by the Company for its executive officers and
specifies that term life insurance will be maintained at three times the
executive's annual salary. Each such agreement provides for continuation of
salary and benefits payable to the executive officer for the balance of the
term of the agreement in the event the agreement is terminated other than for
cause. If the executive officer is terminated as a result of a long-term
illness or disability, salary and benefits continue for 12 months from the
date of termination. Each such executive officer's agreement also entitles
him to reimbursement of ordinary and necessary business expenses and to an
automobile allowance equal to $550 per month.
EMPLOYEE STOCK OPTIONS
The Company has an Amended and Restated 1994 Stock Option Plan (the "1994
Plan") pursuant to which stock options may be granted to the Company's
employees. Stock options granted under the 1994 Plan may be either incentive
stock options or nonstatutory stock options. Incentive stock options granted
to employees who own more than ten percent of the voting power of the
Company's stock are granted at 110% of fair market value at the time of grant,
and incentive stock options granted to all other employees are granted at 100%
of fair market value at the time of grant. Nonstatutory stock options may be
granted at 85% of fair market value at the time of grant. However, to date no
stock options have been granted at less than 100% of fair market value as of
the date of grant.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding individual grants of
stock options made during the fiscal year ended December 31, 1996 to the
executive officers named in the summary compensation table.
<TABLE>
<CAPTION>
POTENTAIL REALIZABLE VALUE
NUMBER OF SHARES PERCENT OF TOTAL AT ASSUMED ANNUAL RATES OF
UNDERLYING OPTIONS OPTIONS GRANTED TO EXERCISE OR BASE EXPIRATION OF STOCK PRICE APPRECIATION
NAME GRANTED (#) EMPLOYEES IN FISCAL YEAR PRICE PER SHARE ($) DATE FOR OPTION TERM
- ------------------ ------------------ ------------------------ ------------------- ---------- ---------------------------
5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Robert A. Peiser 300,000 45% $7.75 11/20/06<F1> $366,478 $769,575
Mark Coleman 200,000 30% $8.25 12/8/06<F2> $260,081 $546,150
<FN>
<F1>
Such options were granted on November 15, 1996 and vest over a three year
period with one-third vesting on each of the first, second and third
anniversaries of the grant date.
<F2>
Such options were granted on December 3, 1996 and vest over a three year
period, with 67,000 vesting on December 9, 1997, 67,000 vesting on December 9,
1998, and 66,000 vesting on December 9, 1999.
</FN>
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information regarding option exercises during
the fiscal year ended December 31, 1996 as well as any unexercised options
held as of December 31, 1996 by each named executive.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTION
AT FISCAL YEAR-END (#) AT FISCAL YEAR END $<F1>
------------------------------ ---------------------------
SHARES ACQUIRED VALUE
NAME ON EXERCISE (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- --------------- ------------ ------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Peiser -0- -0- -0- 300,000 -0- -0-
Edward R. Beauvais -0- -0- 60,000 40,000 60,000 40,000
Thomas J. DeNardin 16,666 166,660 16,668 -0- 16,668 -0-
Glenn S. Goldberg 14,000 140,000 36,000 25,000 36,000 25,000
Mark Coleman -0- -0- -0- 200,000 -0- -0-
Martin J. Dugan, Jr. -0- -0- 40,000 -0- 40,000 -0-
Martin J. Wax 5,000 50,000 25,000 45,000 25,000 45,000
Timothy D. Komberec 16,666 166,660 15,667 16,667 15,667 16,667
Donald E. Applegarth 5,000 50,000 25,000 45,000 25,000 45,000
Nolan A. Wiley 11,166 184,239 22,167 16,667 22,167 16,667
<FN>
<F1>
Fair market value of each unexercised in-the-money option at December 31,
1996 is based on the positive spread between the exercise price of the options
and $7.00, the closing price of Common Stock on December 31, 1996.
</FN>
</TABLE>
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors furnished the following
report with respect to executive compensation for 1996. This report of the
Compensation Committee shall not be deemed incorporated by reference by any
general statement incorporating this Proxy Statement by reference into any
filing under the Securities Act of 1933 or the Securities Exchange Act of 1934
(the "Acts"), except to the extent that the Company specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
The Compensation Committee of the Board of Directors is responsible for
determining the compensation arrangements for the executive officers of the
Company. It also administers the 1996 Restricted Stock Plan for Non-Employee
Directors, the 1994 Stock Option Plan and the 1995 Directors' Option Plan.
The Company applies a consistent philosophy to compensation for all employees,
including senior management. This philosophy incorporates the following goals:
1. Provide a competitive level of compensation to attract and retain talented
management.
2. Reward management for corporate performance by linking a substantial portion
of total compensation to the achievement of measurable performance objectives.
3. Align the interests of management with the shareholders in order to maximize
shareholder value.
The Company has a simple compensation program that consists of cash and equity
based compensation. This program is intended to enable the Company to attract
and retain key employees, enhance stockholder value, motivate innovation,
foster teamwork, and adequately reward employees.
CASH-BASED COMPENSATION
------------------------
SALARY
The Company sets base salary for employees based upon the philosophy indicated
above. Using these elements, the Compensation Committee, with the help of
outside consultants, compares corresponding amounts paid by other companies
(the "peer group") selected because of the similarity of their businesses, size
and prospects to those of the Company. The committee believes that these
companies accurately reflect the market in which the Company competes for
executive talent. Salary increases granted to the Company's executive officers
during 1996 were based on observed competitive salary levels within the peer
group, taking into account the Company's performance and financial
circumstances.
EQUITY-BASED COMPENSATION
--------------------------
1994 STOCK OPTION PLAN
The Company's 1994 Stock Option Plan (the "1994 Plan") provides additional
incentives to maximize stockholder value. The plan utilizes vesting periods to
encourage key employees to continue in the employ of the Company. All options
granted under the 1994 Plan become exercisable in one-third increments one
year, two years and three years after the date of grant. The Company grants
stock options to a broad-based population of senior and middle management
employees. In determining the size of incentive awards to individual key
employees, the Compensation Committee considers a number of factors, including:
1. Level of job responsibilities;
2. Past performance;
3. Size and frequency of grants by comparable companies;
4. Salary level;
5. Corporate performance, as measured by various tests of profitability such
as operating income, net income and earnings per share; and
6. Size of any prior grants.
In 1996, the Company granted Stock Options to two executive officers (Mr.
Peiser and Mr. Coleman) as part of their employment agreements with the
Company. See discussion under "Employment Agreements" above. The Compensation
Committee believes that the grant of these options encourages officers to
remain with the Company in order to realize the options' underlying economic
value. Also, the Compensation Committee feels that it is appropriate to grant
options to newly hired senior officers in order to help them embrace the
Company's goal of increasing shareholder value.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Compensation Committee believes that the base salary, signing bonus and
stock and stock options granted to Mr. Peiser under his employment agreement as
the Company's Chief Executive Officer are appropriate in light of the
Compensation Committee's philosophy as described above, and important in
attracting, motivating and retaining an appropriately qualified Chief Executive
Officer. For a summary of the terms of Mr. Peiser's employment agreement, see
discussion under "Employment Agreements - Robert A. Peiser" above.
COMPENSATION COMMITTEE
Ivan Irwin, Jr.
Clayton I. Bennett
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee are Ivan Irwin, Jr.
(Chairman) and Clayton I. Bennett.
On December 18, 1996, the Company borrowed $2.5 million from Hunt Petroleum of
Texas, Inc. ("HPTI"), and on December 20, 1996, the Company borrowed $2.5
million from GFI Company ("GFI") under terms that anticipated repayment in
thirty days. HPTI and GFI are major stockholders of the Company. Ivan Irwin,
Jr., a Director of the Company, Chairman of the Legal and Compensation
Committees, and a member of the Audit Committee, is Vice President of HPTI and
James R. Wikert, a Director of the Company, is the son-in-law of a related
party to HPTI. Clayton L. Bennett, a Director of the Company, is the son-in-
law of Edward L. Gaylord, a significant stockholder of the Company and a
controlling person of GFI, and Glenn M. Stinchcomb, a Director of the Company,
is also a director of Gaylord Entertainment Company, a company controlled by
Edward L. Gaylord, a controlling person of GFI.
On January 31, 1997, the Company's Board of Directors created Series B
Preferred Stock, $0.001 par value per share (the "Preferred Stock"), and began
a series of transactions which resulted in the sale of 200,000 shares of such
Preferred Stock to HPTI and GFI. On that same date, each of HPTI and GFI
loaned to the Company the principal amount of $10,000,000, which included the
$2,500,000 previously loaned by each of HPTI and GFI to the Company in December
1996 (the "Loans"), such Loans evidenced by Promissory Notes. Pursuant to the
terms of the Stock Purchase Agreement entered into among HPTI, GFI and the
Company on February 27, 1997, each of HPTI and GFI purchased 100,000 shares of
the Company's Preferred Stock at a purchase price of $100 per share. The
Preferred Stock is subject to certain redemption rights of the Company and the
investors, respectively. Payment of the purchase price for the Preferred Stock
was made by cancellation of the Promissory Notes. In addition, the Company
issued to each of HPTI and GFI warrants to purchase, subject to certain vesting
conditions, an aggregate of 2,650,000 shares of the Company's common stock,
$0.001 par value per share, at a price of $0.01 per share.
PERFORMANCE GRAPH
The performance graph below shall not be deemed incorporated by reference by
any general statement incorporating this Proxy Statement by reference into any
filing under either the Securities Act of 1933 or the Securities Exchange Act
of 1934 (the "Acts"), except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
The graph below compares cumulative total return on the Company's common
stock, for the period since the Company's initial public offering on December
5, 1995, through December 31, 1996, assuming an investment of $100 on December
5, 1995 in each of (i) the Company's Common Stock; (ii) the NASDAQ Stock Market
Index of U.S. Companies; and (iii) a group of four peer companies chosen by the
Company, consisting of America West Airlines, Reno Air, Inc., Southwest
Airlines Co. and ValuJet Airlines, Inc. (the "Peer Group").
[GRAPH NOT INCLUDED IN EDGAR FORMAT OF THIS FILING]
PROPOSAL TO AMEND THE COMPANY'S
RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK
(ITEM 2 ON PROXY CARD)
The Company's Restated Certificate of Incorporation (the "Certificate")
currently authorizes 20,000,000 shares of Common Stock. On April 21, 1997,
there were 13,411,921 shares of Common Stock outstanding, and another 5,977,702
reserved for issuance pursuant to outstanding stock options, the Company's
Employee Stock Purchase Plan, unvested stock grants, and outstanding warrants,
leaving 610,377 shares of Common Stock available for all other corporate
purposes. The Board of Directors believes it to be highly advisable to
increase the number of authorized shares of Common Stock to 40,000,000. The
additional shares of Common Stock would be capable of being issued for any
proper corporate purpose by the Company's Board of Directors at any time
without further stockholder approval unless otherwise required under applicable
law or by the provisions of any listing agreement to which the Company is or
may become a party. The Board of Directors believes it is desirable to
increase the number of authorized shares of Common Stock in order to give the
Company flexibility in considering such matters as raising additional capital,
acquisitions and other corporate purposes.
Effective April 1, 1997, the Company entered into an Information Technology
Services Agreement with Perot Systems Corporation ("Perot"), pursuant to which
Perot will deliver an integrated suite of technology related services to the
Company over a five-year period. Within 30 days of the effective date the
Company has agreed to issue to Perot a number of shares of Common Stock having
a value of $800,000. By the first anniversary of the effective date, the
Company will issue to Perot a number of shares of Common Stock having a value
of $600,000. By the first anniversary of the effective date, the Company will
issue to Perot a number of shares of Common Stock having a value of $400,000.
During the first six months of the agreement, the Company may elect to issue
shares of its Common Stock to Perot in lieu of cash for up to three months of
base monthly service fees and pass-through expenses, not to exceed $2,000,000
in the aggregate. The number of shares to be issued is to be determined by
dividing the amount of the base monthly service fees by the average closing bid
price for the Company's Common Stock for the five trading days ending two days
prior to the date the shares are to be delivered.
On April 22, 1997, the Company entered into a letter of intent (the "Letter of
Intent") with a placement agent regarding a proposed private placement of $8-10
million of a new class of convertible preferred stock to be created by the
Company (the "Convertible Preferred Stock"). The Convertible Preferred Stock
is anticipated to carry a preferred dividend of 8% and be convertible into
shares of the Company's Common Stock at a conversion price equal to the lesser
of 110% of the closing bid price of the Company's Common Stock at the time of
funding (subject to certain adjustments based on the performance of the Common
Stock) or 90% of the previous average 20 day closing bid price of the Company's
Common Stock at the time of conversion (subject to certain further discounts of
up to 10% based on the number of months elapsed between the original issuance
of the Convertible Preferred Stock and conversion). It is anticipated that the
proceeds to the Company of any private placement of the Convertible Preferred
Stock would be used for working capital purposes.
On April 25, 1997, the Company entered into a revised Aviation Fuel Management
Agreement (the "Fuel Management Agreement") with Mercury Air Group, Inc.
("Mercury"), whereby Mercury has agreed to provide certain fuel supply services
to the Company. The Company also executed a promissory note in favor of
Compass Bank in the principal sum of $6,000,000 (the "Compass Note"). The
Compass Note provides that the Company may borrow funds from Compass Bank in
order to pay amounts due and owing under the Fuel Management Agreement.
Payment of all amounts due and owing from the Company to Compass Bank under the
Compass Note is guaranteed by Mercury. In consideration of Mercury's entering
into the Fuel Management Agreement and its agreement to guarantee the
obligations of the Company arising pursuant to the Compass Note, on April 25,
1997 the Company issued warrants to Mercury to purchase 200,000 shares of the
Company's Common Stock (the "Mercury Warrants") at an exercise price of $6.875
per share. The Mercury Warrants became exercisable upon issuance and expire on
April 25, 2000. With respect to Mercury Warrants that remain unexercised on
July 25, 1998, the Company may become obligated to issue additional shares of
Common Stock to Mercury (or make cash payments to Mercury) to the extent that
the highest average trading price of the Company's Common Stock (as reported on
Nasdaq during any 20 consecutive trading days during the three month period
ending July 25, 1998) does not meet at least a 20% target return level, as set
forth in the Mercury Warrants.
Other than the Company's agreements with Perot and Mercury and commitments
under the Letter of Intent, existing stock grants, options and warrants, the
Company has no present agreements or commitments to issue any additional
shares. However, the Company is actively seeking other arrangements that will
allow it to increase its liquidity, enhance its working capital or achieve
other business goals. Such arrangements could include transactions in which
the Company could issue shares of its Common Stock or other securities
convertible into or exchangeable for Common Stock.
The authorization of additional shares of Common Stock will not, by itself,
have any effect on the rights of holders of Common Stock. Nonetheless, any
issuance of additional shares could, among other things, have a dilutive effect
on earnings per share and on the voting rights and equity of present
stockholders. Holders of the Company's outstanding shares of Common Stock have
no preemptive rights to subscribe for or purchase any stock of the Company and
will not have any appraisal rights in connection with the proposed amendment.
The proposed amendment would amend the first sentence of Article 4 of the
Certificate to read as follows:
"4. CAPITAL STOCK. The total number of shares of all classes of stock which
this Corporation shall have the authority to issue is forty-three million
forty-seven thousand (43,047,000), of which forty million (40,000,000) shall be
common stock, par value $0.001 per share, and three million forty-seven
thousand (3,047,000) shall be preferred stock, par value $0.001 per share."
VOTE REQUIRED.
The affirmative vote of a majority of the outstanding shares of Common Stock
entitled to vote at the Annual Meeting is required for approval of the
foregoing proposed amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE AMENDMENT TO
THE RESTATED CERTIFICATE OF INCORPORATION.
CERTAIN TRANSACTIONS INVOLVING THE COMPANY
On May 5, 1995, the Company entered into an Aircraft Lease Agreement with
Aircorp, Inc. ("Aircorp"). Aircorp is owned by James R. Wikert, who was
elected to the Board of Directors of the Company in 1995. Pursuant to the
Lease Agreement, the Company leases a Boeing 737-300 aircraft from Aircorp.
The Company paid Aircorp lease payments totaling $4,800,000 in 1996.
Management believes that the Lease Agreement with Aircorp constitutes an arms-
length transaction at fair market value.
Effective January 1, 1996, the Company entered into a consulting agreement
with AVFORS, Inc., a company owned by John Beauvais, the son of Edward R.
Beauvais, to provide market analysis, forecasting, scheduled service pattern
development, pricing policy analysis, yield management, economic analysis and
related services for the Company. The agreement provided for payment of
consulting fees to AVFORS and John Beauvais in the amount of $8,750 per month,
plus additional fees for services rendered. The Company paid AVFORS and John
Beauvais a total of $176,435 under this agreement in fiscal 1996. The Company
terminated this agreement with AVFORS in December 1996.
Effective January 1, 1995, the Company entered into a consulting agreement
with InnoVision Incorporated ("InnoVision"). InnoVision is owned, operated and
controlled by Paul Beauvais, the son of Edward R. Beauvais, and Michael Lancy,
brother of John S. Lancy, a former member of the Company's Board of Directors.
Under the agreement, InnoVision provided creative media and related services,
including advertising liaison, promotion and marketing. Compensation to
InnoVision was based upon hourly rates for services performed by InnoVision
personnel, with minimum monthly compensation of $12,500. InnoVision received
an aggregate of $3,172,393 under the agreement in 1996. The Company terminated
this agreement with InnoVision in December 1996.
In 1996, the Company ordered uniforms and logo merchandise from Looks Like A
Pro, Inc., a company owned by Matthew Beauvais, the son of Edward R. Beauvais.
The Company had no written agreement with Looks Like A Pro, Inc. Looks Like A
Pro, Inc. received a total of $436,400 for merchandise ordered by the Company
in 1996. The Company ceased ordering merchandise from Looks Like A Pro, Inc.
in December 1996.
In June 1996, the Company entered into a short-term lease agreement with
Express One International, Inc. ("Express One") for two Boeing 727-200
aircraft. James R. Wikert, a Director of the Company, is the Chief Executive
Officer of Express One. The lease covered the cost of the aircraft, in-flight
crews, maintenance and insurance. The agreement was terminated on September 5,
1996. The Company paid Express One lease payments totaling $2,787,583 in 1996.
Management believes that the lease agreement with Express One constituted an
arms-length transaction at fair market value.
Pursuant to an agreement that became effective on April 26, 1996 between the
Company and DC9-41, Inc., a Florida corporation of which James R. Wikert owns a
50% interest, the Company paid commissions to DC9-41, Inc. in the amount of
$800,000 in connection with the purchase by the Company of a Boeing 737-300
aircraft from Aerovias Venezolanas, S.A. DC9-41, Inc. assisted in the
negotiation of and otherwise accomplished the procurement of the aircraft for
the Company. Management believes that the Agreement with DC9-41, Inc.
constitutes an arms-length transaction at fair market value.
The Company was a party to a consulting agreement with John S. Lancy, who was
the Company's Vice Chairman of the Board until his resignation in November 21,
1996, pursuant to which Mr. Lancy served as the Company's outside general
counsel. The Company terminated its agreement with Mr. Lancy on November 11,
1996, and paid Mr. Lancy a lump sum of $348,000 in connection with such
termination. Not including the lump sum termination payment, the Company paid
Mr. Lancy monthly stipends totaling $159,000.00 in 1996. Management believes
that the consulting agreement with Mr. Lancy constituted an arms-length
transaction at fair market value.
The law firm in which Mr. Lancy is a partner provided legal services to the
Company until November 1996. The Company paid an aggregate of $552,573.15 in
fees (in addition to monthly stipends totalling $159,000.00) and $31,258.50 in
cost reimbursement to such firm in 1996, which included $118,658.25 in fees and
$2,658.42 in costs paid by Mr. Lancy's firm in 1996 for contract services to
the law practice owned by C. Steven Rorke, the Company's Secretary until
February 1997.
See also the discussion of certain transactions under the heading
"Compensation Committee Interlocks and Insider Participation" above.
INDEPENDENT PUBLIC ACCOUNTANT
Arthur Andersen LLP served as independent certified public accountants of the
Company for the fiscal year ended December 31, 1996. A representative of
Arthur Andersen LLP is expected to be present at the Annual Meeting. He will
have an opportunity to make a statement if he so desires, and is expected to be
available to respond to appropriate questions.
The Audit Committee of the Board of Directors has recommended to the Board of
Directors that Arthur Andersen LLP be retained as independent certified public
accountants of the Company for fiscal 1997.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended December 31, 1996, as
filed with the Commission has been mailed to stockholders with this Proxy
Statement. The Company will provide, without charge, a copy of the Company's
annual report on Form 10-K for 1996, upon written request directed to: Nina A.
Ortega, Office of the Corporate Secretary, Western Pacific Airlines, Inc., 2864
South Circle Drive, Suite 1100, Colorado Springs, Colorado 80906.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholders' proposals on matters appropriate for stockholder action at the
Company's 1998 annual meeting of stockholders must be submitted in writing to
the Secretary of the Company at the address of the Company set forth on the
first page of this Proxy Statement no later than January 8, 1998 in order to be
considered for inclusion in the Company's 1998 Proxy Statement and proxy card.
OTHER MATTERS
The Board of Directors knows of no other business that will be presented for
consideration at the Annual Meeting other than the business identified in the
Notice of Meeting. If other matters properly come before the Annual Meeting,
the proxies will be voted upon such matters in accordance with the judgment of
the persons acting under the proxies.
PLEASE SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED PROXY.
By Order of the Board of Directors
Nina A. Ortega
Secretary
Colorado Springs, Colorado
May 9, 1997
