<PAGE> 1
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
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
ATLAS AIR, INC.
- --------------------------------------------------------------------------------
(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)(l) 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> 2
[ALTAS AIR, INC. LOGO]
ATLAS AIR, INC.
538 COMMONS DRIVE
GOLDEN, COLORADO 80401
April 28, 1998
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the
Annual Meeting of Stockholders of Atlas Air, Inc. The Annual Meeting will be
held at 10:00 a.m. Denver time on Wednesday, June 3, 1998, at the Hyatt Regency
Denver, 1750 Welton Street, Denver, Colorado 80202.
The business to be conducted at the meeting is outlined in the attached
Notice of Annual Meeting and Proxy Statement. In addition, members of management
will report on the Company's operations and answer stockholder questions.
It is important that your shares be represented at the meeting whether or
not you plan to attend. Accordingly, we request your cooperation by promptly
signing, dating and mailing the enclosed proxy in the envelope provided for your
convenience. If you attend the meeting and wish to vote in person, you may
revoke your proxy at that time.
Sincerely,
/s/ MICHAEL A. CHOWDRY
MICHAEL A. CHOWDRY
Chairman of the Board,
Chief Executive Officer and
President
<PAGE> 3
ATLAS AIR, INC.
538 COMMONS DRIVE
GOLDEN, COLORADO 80401
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 28, 1998
To the Stockholders of ATLAS AIR, INC.:
The Annual Meeting of Stockholders of Atlas Air, Inc. (the "Company") will
be held on Wednesday, June 3, 1998 at 10:00 a.m. Denver time, at the Hyatt
Regency Denver, 1750 Welton Street, Denver, Colorado 80202, for the following
purposes: (i) to elect a Board of Directors to serve until the next Annual
Meeting of Stockholders and until their successors are elected and qualify; (ii)
to approve the appointment of Arthur Andersen LLP as independent auditors of the
Company for fiscal year 1998; (iii) to approve an amendment to the 1995 Stock
Option Plan; and (iv) to transact such other business as may properly come
before the meeting.
The record date for stockholders entitled to notice of, and to vote at, the
Annual Meeting or at any adjournment thereof is the close of business on April
24, 1998.
A copy of the Company's Annual Report on Form 10-K (the "Form 10-K"), as
filed with the Securities and Exchange Commission (the "Commission") for the
year ended December 31, 1997, is enclosed.
Your vote is important. If you do not expect to be present at the meeting
and wish your stock to be voted, please sign and date the enclosed Proxy and
mail it promptly in the enclosed reply envelope addressed to American Securities
Transfer, Inc., Attention: Proxy Department, 938 Quail Street, Suite 101,
Lakewood, Colorado, 80215.
By Order of the Board of Directors,
/s/ DAVID BRICTSON
DAVID BRICTSON
Secretary
<PAGE> 4
ATLAS AIR, INC.
538 COMMONS DRIVE
GOLDEN, COLORADO 80401
PROXY STATEMENT FOR THE
1998 ANNUAL MEETING OF STOCKHOLDERS
---------------------
SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy, being mailed to stockholders on or about April 28,
1998, is solicited by the Board of Directors of Atlas Air, Inc. (the "Company")
for use at the Annual Meeting of Stockholders (the "Meeting") to be held on
Wednesday, June 3, 1998. A copy of the Company's Annual Report on Form 10-K for
the year ended December 31, 1997 is being furnished to each stockholder with
this Proxy Statement. If a proxy is received before the Meeting, the shares
represented by it will be voted unless the proxy is revoked by written notice
prior to the Meeting or by voting by ballot at the Meeting. If matters other
than those set forth in the accompanying Notice of Annual Meeting are presented
at the Meeting for action, which is not currently anticipated, the proxy holders
will vote the proxies in accordance with their best judgment.
The cost of soliciting proxies in the form enclosed will be borne by the
Company. In addition to the solicitation by mail, proxies may be solicited
personally, or by telephone, or by employees of the Company. The Company may
reimburse brokers holding Common Stock in their names or in the names of their
nominees for their expenses in sending proxy material to the beneficial owners
of such Common Stock.
STOCKHOLDERS ENTITLED TO VOTE AND SHARES OUTSTANDING
Only stockholders of record at the close of business on April 24, 1998,
will be entitled to vote at the Annual Meeting. On that date there were
22,504,634 shares of the Common Stock of the Company (the "Common Stock")
outstanding and entitled to vote at the Annual Meeting. Each share is entitled
to one vote. The presence at the Meeting in person or by proxy of the holders of
a majority of the outstanding shares of Common Stock entitled to vote shall
constitute a quorum for the transaction of business. Proxies marked as
abstaining (including proxies containing broker non votes) on any matter to be
acted upon by stockholders will be treated as present at the meeting for
purposes of determining a quorum but will not be counted as votes cast on such
matters.
ITEM 1. ELECTION OF DIRECTORS
Seven directors are to be elected at the Meeting, each director to hold
office until the next Annual Meeting of Stockholders and until his successor is
elected and qualified. The persons named as proxies on the enclosed proxy have
been designated by the Board of Directors and intend to vote, unless otherwise
directed, for the nominees listed below.
The Board of Directors has no reason to believe that any of the nominees
for the office of director will be unavailable for election as a director.
However, if at the time of the Meeting any of the nominees should be unable or
decline to serve, the persons named in the proxy will vote for such substitute
nominees, vote to allow the vacancy created thereby to remain open until filled
by the Board of Directors, or vote to reduce the number of directors for the
ensuing year, as the Board of Directors recommends. In no event, however, can
the proxy be voted to elect more than seven directors. The election of the
nominees to the Board of Directors requires the affirmative vote of a plurality
of the shares held by stockholders present at the Meeting in person or by proxy.
INFORMATION WITH RESPECT TO NOMINEES
The following information sets forth the name and age of each nominee, all
other positions or offices, if any, now held by him with the Company and his
principal occupation during the past five years.
<PAGE> 5
Berl Bernhard, 68, has been a member of the Washington based law firm of
Verner, Liipfert, Bernhard, McPherson and Hand since 1960 and has served as its
Chairman since 1982. He was nominated by President Kennedy and confirmed by the
Senate in 1961 to serve as Staff Director of the U.S. Commission on Civil
Rights. He was Special Advisor to Secretary of State Dean Rusk and Under
Secretary of State W. Averell Harriman (1963-65), and was Senior Advisor to
Secretary of State Edmund S. Muskie (1980-81). He also served as a Trustee of
Dartmouth College (1974-1984). He acted as special counsel to the Trustees of
Eastern Airlines and special counsel to the Chairman of Northwest Airlines, and
served as Trustee of the Federal City Council from 1988-1992. Mr. Bernhard
served as Chairman of the Aspen Institute from 1991-1996 as well as Chairman of
its Executive Committee. He was a director of Uniroyal Chemical Company, Inc.
and UNC Inc.
Michael A. Chowdry, 43, has been Chairman of the Board of Directors and
Chief Executive Officer of the Company since its inception in August 1992, and
served as President from July 1995 to May 1996 and September 1997 to the
present. He is also Chairman of the Board (since its inception in April 1985) of
Aeronautics Leasing, Inc., an affiliate of the Company ("ALI"). Prior to his
founding of ALI, he formed a Colorado-based certificated commuter air carrier in
1981, and was the principal stockholder of Skybus, Inc., the certificated air
carrier successor to Frontier Horizon Airlines, from 1984 to 1985. He has been
involved in the operation, acquisition, financing and disposition of aircraft
and aviation assets since 1978.
Lawrence W. Clarkson, 59, has been President of Boeing Enterprises since
February 1997, where he is responsible for establishing and directing new
airplane-related business acquisitions, joint ventures and other relationships
outside of the traditional business scope of The Boeing Company ("Boeing").
Since April 1992 he has also been a Senior Vice President of Boeing. He
previously held various management and executive positions with Boeing which he
joined in 1987. Prior to that, for twenty years he held various management and
executive positions with Pratt & Whitney. He serves as Vice Chairman of the
National Bureau of Asian Research, Chairman of U.S.-Pacific Economic Cooperation
Council and Chairman of the National Center for APEC, and as a Director of the
U.S.-China Business Council, the National Association of Manufacturers and the
Atlantic Council. He also serves on the U.S.-Japan Joint High Level Advisory
Panel and is a member of the Council on Foreign Relations, the Pacific Council
on International Policy and the National Research Council -- Committee on Japan.
David K.P. Li, 58, has been a member of the Company's Board of Directors
since April 16, 1998. He has been Chairman of the Bank of East Asia, Limited
since 1997 and a director and the Chief Executive of the Bank of East Asia,
Limited since 1981. He is a director of Campbell Soup Company, CATIC Shenzhen
Holdings Limited, CBS Corporation, Chelsfield Plc., China Merchants China Direct
Investments Limited, China Overseas Land & Investment Limited, Dow Jones &
Company, Inc., Guangnan (Holdings) Limited, The Hong Kong and China Gas Company
Limited, The Hongkong and Shanghai Hotels, Limited, Hong Kong Interbank Clearing
Limited, The Hong Kong Mortgage Corporation Limited, Hong Kong
Telecommunications Limited (Deputy Chairman), KTP Holdings Limited, New World
Infrastructure Limited, PowerGen Plc., San Miguel Brewery Hong Kong Limited,
Sime Darby Berhad and Sime Darby Hong Kong Limited, South China Morning Post
(Holdings) Limited and Vitasoy International Holdings Limited. Mr. Li serves on
the international advisory boards of Avon Products Inc., Bank Austria, Bank of
Montreal, Carlos P. Romulo Foundation for Peace and Development, Daimler-Benz
AG, Federal Reserve Bank of New York's International Capital Markets Advisory
Committee, Gulfstream Aerospace, IBM, Jardine Fleming Asian Property Company,
Lafarge, PowerGen and Rolls-Royce Plc.
David T. McLaughlin, 66, has been a member of the Company's Board of
Directors since September 1995. He has been President and Chief Executive
Officer of The Aspen Institute since his appointment in 1988, as well as
Chairman of its Board of Trustees since 1994. From 1972 to 1977 he served as
Chief Executive Officer of The Toro Company, and served as its Chairman from
1977 to 1981. From 1981 to 1987, he served as president of Dartmouth College. He
is currently a director of ARCO, Chase Manhattan Corporation, Westinghouse
Electric Corporation, CBS Inc., Standard Fusee Corporation, and PartnerRe, Inc.
and serves as a member of the Board of Trustees of the Asia Foundation Center
for Asian Pacific Affairs.
Brian Rowe, 66, has been a member of the Company's Board of Directors since
March 1995. He retired as Chairman of the General Electric Aircraft Engines
division of the General Electric Company in
2
<PAGE> 6
January 1995, a position he held since September 1993, where he was in charge of
world-wide sales of GE engines. Prior to that, he held various management and
executive positions with General Electric, which he joined in 1957, including
President of General Electric Aircraft Engines (from 1979 to 1993), Vice
President and General Manager of the Aircraft Engineering Division (from 1976 to
1979), Vice President and General Manager of the Airline Programs Division (from
1974 to 1976) and Vice President and General Manager of the Commercial Engine
Projects Division (from 1972 to 1974).
Richard H. Shuyler, 51, has been a member of the Company's Board of
Directors since March 1995 and was Senior Vice President -- Finance, Chief
Financial Officer and Treasurer of the Company from June 1994 to February 1998.
As of February 1998, Mr. Shuyler became Executive Vice President -- Strategic
Planning of the Company and also retained his position as Treasurer. From
January 1993 to June 1994, he was Senior Vice President -- Finance and Chief
Financial Officer at Trans World Airlines, Inc. ("TWA"). From 1975 to 1992, he
held various management and executive positions with Continental Airlines, Inc.,
and various of its affiliates and corporate predecessors, including Texas
International Airlines, Inc., Texas Air Corporation and New York Air, serving as
Senior Vice President -- Finance and Chief Financial Officer at those entities.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE FOR THE ELECTION OF EACH NOMINEE FOR
DIRECTOR NAMED ABOVE.
EXECUTIVE OFFICERS
The following table sets forth as of the date hereof the executive officers
of the Company.
<TABLE>
<CAPTION>
NAME POSITION(S)
- ---- -----------
<S> <C>
Michael A. Chowdry....... Chairman of the Board, Chief Executive Officer and
President
Richard H. Shuyler....... Executive Vice President -- Strategic Planning and
Treasurer
James T. Matheny......... Senior Vice President -- Operations
R. Terrence Rendleman.... Senior Vice President -- Flight and Technical
Operations
Stanley G. Wraight....... Senior Vice President -- Marketing
Stephen C. Nevin......... Vice President and Chief Financial Officer
</TABLE>
For biographical information about Messrs. Chowdry and Shuyler see
"Information With Respect to Nominees."
James T. Matheny, 58, has been Senior Vice President -- Operations of the
Company since December 1992. From 1991 to 1992, he was Director -- Quality
Assurance and subsequently, Vice President -- Maintenance and Engineering for
Eastern Airlines, Inc. From 1961 to 1991, he served in the United States Navy,
rising to Commanding Officer of an aircraft squadron, two air wings and an
aircraft carrier, and Operations Officer of the Seventh Fleet based in Japan.
R. Terrence Rendleman, 53, has been Senior Vice President--Technical
Services and Flight Operations since November 18, 1996. From June 1993 to
October 1996, he was Senior Vice President for Maintenance Operations at United
Airlines. Prior to that, he served as Senior Vice President--Technical
Operations at Northwest Airlines from April 1985 to June 1993. From January 1983
to April 1985, he served as Vice President of Engineering and Maintenance at
Braniff Airlines, where he was a Boeing 727 pilot from 1979 to 1983.
Stanley G. Wraight, 51, has been Senior Vice President -- Marketing since
May 1997. From 1995 to 1997, he led KLM's worldwide sales efforts. From 1965 to
1995, he was employed by KLM in various capacities, including Vice President of
KLM's sales, marketing and operations in Asia, Australia and the Middle East.
Stephen C. Nevin, 48, has been Vice President and Chief Financial Officer
since February 16, 1998. From May 1994 to January 1998, he was Senior Vice
President of Finance and Chief Financial Officer at AirTran
3
<PAGE> 7
Holdings, Inc. From December 1982 to April 1994, he served as a Vice President
at McDonnell Douglas Finance Corporation.
SHARE OWNERSHIP OF DIRECTORS, OFFICERS AND CERTAIN BENEFICIAL OWNERS
Set forth in the following table is the beneficial ownership of Common
Stock as of April 24, 1998 for (i) each person (or group of affiliated persons)
known to the Company to be the beneficial owner of more than 5% of Common Stock,
(ii) all Directors, (iii) each of the Company's five most highly compensated
executive officers, including the Company's Chief Executive Officer and
President (the "Named Executive Officers") and (iv) all Directors and Named
Executive Officers as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF PERCENT OF
COMMON STOCK OUTSTANDING
NAME BENEFICIALLY OWNED(1) SHARES
- ---- --------------------- -----------
<S> <C> <C>
Michael A. Chowdry(2)................................. 13,292,628 59.1%
Richard H. Shuyler.................................... 169,088 *
James T. Matheny...................................... 51,605 *
R. Terrence Rendleman................................. 10,000 *
Stanley G. Wraight.................................... 4,000 *
Berl Bernhard......................................... 1,475 *
Lawrence W. Clarkson.................................. 2,661 *
David K.P. Li......................................... 2,000 *
David T. McLaughlin................................... 3,599 *
Brian Rowe............................................ 18,022 *
Mickey P. Foret(3).................................... 317,180 1.4
All Directors and Executive Officers as a Group....... 13,872,258 61.6%
</TABLE>
- ---------------
* Represents less than 1% beneficial ownership.
(1) Unless otherwise indicated, ownership means sole voting and investment
power. As to each person or group named in the table, the table includes the
following shares issuable upon the exercise of options that are exercisable
within 60 days from April 24, 1998: Mr. Chowdry -- 35,627 shares; Mr.
Shuyler -- 115,246 shares; Mr. Matheny -- 51,605 shares; Mr.
Rendleman -- 10,000 shares; Mr. Wraight -- 4,000 shares; Mr.
Bernhard -- 1,000 shares; Mr. Clarkson -- 2,000 shares; Mr. Li -- 2,000
shares; Mr. McLaughlin -- 3,000 shares; Mr. Rowe -- 3,000 shares; Mr.
Foret -- 317,180 shares; and all directors and executive officers as a
group -- 544,658 shares.
(2) The number of shares of Common Stock listed for Mr. Chowdry includes
7,151,001 shares held by Chowdry, Inc., 5,981,001 shares of which are held
by Chowdry Limited Partnership (a limited partnership, the general partner
of which is Chowdry, Inc. and whose limited partner is a trust for the
benefit of Mr. Chowdry's children). Mr. Chowdry is the sole stockholder and
director of Chowdry, Inc. Mr. Chowdry has the sole voting and disposition
powers with respect to these shares. The Chowdry Family Foundation (the
"Foundation"), a non-profit corporation, owns 200,000 shares of Common
Stock. Mr. Chowdry is one of the Foundation's directors and officers, and as
such he may be deemed to share the power to vote and the power to dispose of
these shares. However, one person other than Mr. Chowdry has been given
authority by the Foundation's Board of Directors to determine whether any
disposition of these shares is to be made.
(3) Mr. Foret is no longer employed by the Company.
4
<PAGE> 8
BOARD OF DIRECTORS' MEETINGS, COMMITTEES AND FEES
The Board of Directors held six meetings during 1997. Each incumbent
director attended at least 75% of the aggregate of the total number of meetings
of the Board of Directors and the total number of meetings held by all
committees of the Board of Directors on which the Director served during 1997
(including in the case of each director for purposes of this calculation only
such committee and Board meetings as occurred after such Director commenced
service on the Board of Directors).
The Board of Directors has a standing Compensation Committee and a standing
Audit Committee. The membership of these committees is determined from time to
time by the Board.
The Compensation Committee, which in 1997 consisted of Michael A. Chowdry
and Brian Rowe, held one meeting during 1997. Lawrence W. Clarkson joined the
Compensation Committee on April 16, 1998. The Compensation Committee administers
the Company's executive compensation programs, which includes determining the
bonuses, if any, given to officers, and also administers the Employee Stock
Purchase Plan and the portion of the Company's 1995 Long Term Incentive and
Share Award Plan (the "1995 Stock Option Plan") applicable to employees.
The Audit Committee, which consists of Brian Rowe and David T. McLaughlin,
held one meeting during 1997. It has also been the Company's practice to provide
detailed financial information at each meeting of the Board of Directors. The
principal functions of the Audit Committee are to review the scope of the annual
audit and the annual audit report of the independent auditors, recommend the
firm of independent auditors to perform such audits, consider non-audit
functions proposed to be performed by the independent auditors, review the
functions performed by the internal audit staff, ascertain whether the
recommendations of auditors are satisfactorily implemented and recommend such
special studies or actions which the Committee deems desirable.
The Company's non-employee directors receive $12,500 on a quarterly basis
for their services, and receive $2,500 for each Board meeting attended in
person. Under the Company's Director Stock Plan (the "Director Plan"),
non-employee directors have had the option to receive all or a portion of their
quarterly renumeration in Common Stock instead of cash. Pursuant to a February
1998 amendment to the Director Plan, 25% of the quarterly compensation of
non-employee directors is to be paid in Common Stock and the balance is payable
in Common Stock or cash at the non-employee director's option. If a non-employee
director elects at the commencement of any quarter to receive his quarterly
renumeration, or a portion thereof, in Common Stock, the number of shares
received is determined by dividing the average price for the 30-day period
immediately preceding the end of the quarter into the amount of compensation
earned for the quarter which the non-employee director chooses not to receive in
cash.
In addition, pursuant to a February 1998 amendment to the Company's 1995
Stock Option Plan, non-employee directors of the Company receive options to
purchase 2,000 shares of Common Stock upon their initial election or appointment
to the Board at an exercise price equal to the fair market value of the Common
Stock at the time of such election or appointment, and all non-employee
directors receive options to purchase 2,000 shares of Common Stock on August 16
of each year. The Company reimburses non-employee directors for out-of-pocket
travel expenditures relating to their service on the Board.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors and persons who own more than 10% of a
registered class of the Company's equity securities to file initial reports of
ownership and changes in ownership with the SEC and to furnish copies of these
reports to the Company. Based on a review of these reports and written
representations from the Company's directors and officers regarding the
necessity of filing a report, the Company believes that during 1997 all filing
requirements were met on a timely basis, except a Form 3 report was not timely
filed for Mr. Rendleman.
5
<PAGE> 9
COMPENSATION COMMITTEE INTERLOCKS, INSIDER PARTICIPATION
AND CERTAIN TRANSACTIONS
The members of the Compensation Committee in 1997 were Messrs. Rowe and
Chowdry. Mr. Chowdry is the Chairman of the Board, Chief Executive Officer and
President of the Company. Mr. Clarkson joined the Compensation Committee on
April 16, 1998.
In August and September 1995, the Company extended demand loans to three
senior vice presidents of the Company in the aggregate of $550,000, bearing
interest at an annual rate of 7.50%. Two of the loans plus interest were paid in
full in April and May 1996, and the third loan plus interest was paid in full in
December 1997. A loan of up to $750,000, bearing interest at 5.87%, was extended
in June 1996 to one officer for the purpose of constructing a residence. As of
December 31, 1997 the outstanding balance of officer demand loans was $735,000.
In February 1998, the Company extended a two year loan for $146,503, bearing
interest at a rate of 5.59%, to a vice president of the Company.
In October 1997, Atlas Flightlease, Inc. ("AFI"), a wholly-owned subsidiary
of the Company, purchased from MAC Flightlease, Inc. a Challenger aircraft (the
"Challenger") for corporate business travel. Initially, AFI secured a 2-year
LIBOR based financing with Bankers Trust Company for approximately 80% of the
purchase price of the Challenger. In December 1997, AFI refinanced the
Challenger for approximately 100% of its purchase price with Nationsbanc under a
5-year LIBOR based loan which was guaranteed by the Company. The Company paid
$15.3 million for the Challenger, which is considered by the Company to be at
fair market value.
Mr. Clarkson is President of Boeing Enterprises and Senior Vice President
of Boeing. During 1997, the Company paid Boeing approximately $178.8 million for
pre-delivery deposits for the purchase of new aircraft, conversion of certain
aircraft into freighter configuration, the purchase of parts and other services.
Mr. Bernhard is a partner of the law firm Verner, Liipfert, Bernhard,
McPherson and Hand which rendered legal services to the Company in 1997, for
which the Company paid approximately $243,000.
Mr. Li is Chairman and Chief Executive of The Bank of East Asia, Limited.
Pursuant to a consulting agreement entered into on December 15, 1997 between the
Company and The Bank of East Asia, Limited, The Bank of East Asia, Limited
received a retainer of $100,000.
6
<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth, for 1997, 1996 and 1995, the compensation
of the Named Executive Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
-------------------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND POSITION YEAR SALARY(1) BONUS COMPENSATION(2) OPTIONS COMPENSATION
- ----------------- ---- --------- ---------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Michael A. Chowdry 1997 $549,569 $ 242,500 $ 75,941 0 $ 0
Chairman of the Board, 1996 670,414 363,750(3) 50,888 0 0
Chief Executive Officer and 1995 563,783 240,000 49,684 0 0
President
Richard H. Shuyler 1997 192,500 87,500 15,248 0 0
Executive Vice President -- 1996 240,897 131,250(3) 1,021,318 0 0
Strategic Planning, 1995 188,470 87,500 16,013 150,391 0
Treasurer and Director(4)
James T. Matheny 1997 192,500 87,500 8,758 0 0
Senior Vice President 1996 180,207 131,250(3) 1,671,822 0 0
-- Operations 1995 128,342 0 0 93,750 0
R. Terrence Rendleman 1997 151,250 75,000 570 0 0
Senior Vice President -- 1996 18,750 300,000 0 50,000 0
Technical Services and 1995 0 0 0 0 0
Flight Operations(5)
Stanley G. Wraight 1997 58,333 55,000 41,148 20,000 0
Senior Vice President -- 1996 0 0 0 0 0
Marketing(6) 1995 0 0 0 0 0
Mickey P. Foret 1997 301,800 0 156,221 0 800,000
President and Director 1996 233,333 3,041,049(3)(7) 5,268 300,000 0
1995 0 0 0 0 0
</TABLE>
- ---------------
(1) Includes amounts paid under the Profit Sharing Plan.
(2) Represents compensation derived from the exercise of stock options, the
furnishing of Company-owned automobiles, relocation cost reimbursements and
other personal benefits.
(3) The Compensation Committee determined that, in lieu of cash, a portion of
the annual bonuses for Messrs. Chowdry, Foret, Shuyler and Matheny would be
paid in stock options having a value based upon the Black-Scholes pricing
method equal to the dollar amount of such bonuses. Such stock options will
have a term of five years and are immediately exercisable at $26.00 per
share. Mr. Chowdry received 35,627 options; Mr. Foret received 17,180
options; Mr. Shuyler received 12,855 options; and Mr. Matheny received
12,855 options.
(4) Mr. Shuyler commenced employment with the Company on June 26, 1994. Mr.
Shuyler served as Chief Financial Officer and Senior Vice
President -- Finance until February 17, 1998, at which time he assumed his
current position.
(5) Mr. Rendleman commenced employment with the Company on November 18, 1996.
(6) Mr. Wraight commenced employment with the Company on September 1, 1997.
(7) Mr. Foret commenced employment with the Company on June 1, 1996, and
received a signing bonus of $2,865,639. Mr. Foret resigned from the Company
on September 17, 1997. Upon termination of employment from the Company, Mr.
Foret's options to purchase 300,000 shares of the Company's Common Stock
immediately vested and are exercisable for three years following such
termination. These options, among other things, are the subject of ongoing
litigation and are being contested by the Company.
7
<PAGE> 11
The following table sets forth information with respect to grants of stock
options to each of the Named Executive Officers during the year ended December
31, 1997.
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
NUMBER OF PERCENTAGE OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME GRANTED(1) FISCAL 1997 PER SHARE DATE 5% 10%
- ---- ---------- ------------- --------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Michael A. Chowdry........ 35,627 26.0% $26.00 4/10/02 $582,537 $1,476,276
Richard H. Shuyler........ 12,855 9.4 26.00 4/10/02 210,192 532,673
James T. Matheny.......... 12,855 9.4 26.00 4/10/02 210,192 532,673
Stanley G. Wraight........ 20,000 14.6 28.13 5/19/07 353,760 896,480
Mickey P. Foret(3)........ 17,180 12.5 26.00 4/10/02 280,910 711,888
</TABLE>
- ---------------
(1) There were no stock options granted to Mr. Rendleman.
(2) The potential realizable value uses the hypothetical rates specified by the
Securities and Exchange Commission and is not intended to forecast future
appreciation, if any, of the Company's stock price. The Company did not use
an alternative formula for this valuation as the Company is not aware of any
formula which will determine with reasonable accuracy a present value based
on future unknown or volatile factors. In fact, the Company disavows the
ability of this or any other valuation model to predict or estimate the
Company's future stock price or to place a reasonably accurate present value
on the stock options because all models depend on assumptions about the
stock's future price movement, which is unknown. The value indicated is a
net amount, as the aggregate exercise price has been deducted from the final
appreciated value.
(3) Mr. Foret is no longer employed by the Company.
The following table sets forth information with respect to each of the
Named Executive Officers concerning the value of all exercised and unexercised
stock options of such individuals at December 31, 1997.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael A. Chowdry......... 0 $0 35,627 0 $ 0 $ 0
Richard H. Shuyler......... 0 0 96,365 18,881 932,141 148,688
James T. Matheny........... 0 0 37,021 14,584 190,307 114,849
R. Terrence Rendleman...... 0 0 10,000 40,000 0 0
Stanley G. Wraight......... 0 0 0 20,000 0 0
Mickey P. Foret(1)......... 0 0 317,180 0 0 0
</TABLE>
- ---------------
(1) Mr. Foret is no longer employed by the Company.
EMPLOYMENT AGREEMENTS
Mr. Michael A. Chowdry has entered into an employment agreement with the
Company that provides for a base salary of $485,000 per annum and discretionary
annual bonuses to be determined by the Compensation Committee of the Board of
Directors of the Company. The employment agreement will expire June 30, 2002 and
is subject to termination by either party with or without cause. If the
employment agreement is terminated by the Company without cause, Mr. Chowdry
would be entitled to receive a termination payment equal to twelve months of his
base compensation.
8
<PAGE> 12
The Company has also entered into employment agreements with Messrs.
Shuyler and Matheny, each of which will expire on June 30, 1998. The Company
entered into an employment agreement with Mr. Rendleman on November 18, 1996,
which will expire on November 18, 2001. The Company entered into an employment
agreement with Mr. Wraight in May 1997, which became effective on September 1,
1997 and will expire on May 18, 2002. The Company entered into an employment
agreement with Mr. Nevin as of February 16, 1998, which will expire on February
15, 2001. Each such agreement will be subject to termination by the Company with
or without cause. If such employment agreements are terminated by the Company
without cause, the employees are entitled to receive a termination payment equal
to twelve months of their base compensation and all the options granted to such
employees under the 1995 Stock Option Plan will vest on the date of such
termination, except Mr. Rendleman will receive a termination payment equal to
twice his base annual compensation. The employment agreement with Mr. Shuyler
provides for an annual salary of $250,000. The employment agreements with
Messrs. Wraight, Nevin and Matheny each provide for an annual salary of
$175,000, respectively, while the employment agreement with Mr. Rendleman
provides for an annual salary of $150,000. In addition to the annual salary,
each employee may receive an annual bonus at the discretion of the Compensation
Committee. Mr. Rendleman is guaranteed a bonus of no less than 50% of his base
annual compensation for 1997 and 1998. Pursuant to Mr. Nevin's employment
agreement, in February 1998, the Company extended to Mr. Nevin a two year loan,
bearing interest at 5.59%. The employment agreements require that the employees
devote substantially all of their time to the Company.
On July 11, 1997, Mr. Clark Onstad, a former executive officer of the
Company, resigned from the Company and entered into a consulting agreement with
the Company. Pursuant to Mr. Onstad's severance agreement, the Company paid Mr.
Onstad $175,000 of compensation and approximately $20,000 for other fringe
benefits. In addition, stock options for 18,881 shares of Common Stock at an
exercise price of $16.00 per share granted to Mr. Onstad on October 30, 1995
became immediately exercisable. In addition, Mr. Onstad has stock options for
4,750, 37,760 and 12,855 shares of Common Stock at exercise prices of $10.00,
$16.00 and $26.00 per share, respectively, which have previously vested.
The Company entered into an employment agreement with Mr. Foret dated as of
April 19, 1996, pursuant to which Mr. Foret began his employment as President of
the Company effective June 1, 1996. In addition, Mr. Foret received signing
bonuses of $750,000 and $2,115,639 on June 1, 1996 and January 1, 1997,
respectively. In September 1997, the Company entered into a separation agreement
with Mr. Foret. Pursuant to this agreement, the Company paid Mr. Foret $800,000
of compensation in accordance with his employment agreement. In addition, stock
options for 240,000 shares of Common Stock at an exercise price of $41.75 per
share granted to Mr. Foret in June 1996 became immediately exercisable. In
addition, Mr. Foret has options for 60,000 and 17,180 shares of Common Stock at
exercise prices of $41.75 and $26.00 per share, respectively, which had
previously vested. The Company and Mr. Foret are currently in litigation with
respect to the terms of the separation agreement, including the options.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The Company's executive compensation philosophy has been to align the
interests of the Company's stockholders and executive officers, while promoting
teamwork among the Company's executive officers. The Board of Directors and the
Compensation Committee, which administers the Company's executive compensation
programs, have implemented this philosophy through a compensation program which
combines four components: base salary, profit sharing, stock options and, in
certain circumstances, bonuses.
Base Salary. The base salaries of the Company's senior vice presidents and
vice presidents were set at the time such executives were hired, and have
remained constant. Such salaries as determined at the time of hire were based on
several factors, including comparisons with industry compensation levels and the
individual executive's prior salary. In addition, base salary determinations
were made in conjunction with the other components of executive compensation
discussed herein, to assure proper attention to the Company's goals.
9
<PAGE> 13
Mr. Chowdry's base salary was premised on the salaries of major airline
executives, adjusted to reflect in small portion the risk capital which he
committed to the start up of the Company.
Profit Sharing. The Company's Profit Sharing Plan provides for payments to
eligible employees in semiannual distributions based upon the Company's pretax
profits. The Company is obligated to make an annual profit sharing contribution
of ten percent of the Company's pretax profits, which is defined to mean net
income before taxes, but excluding (i) any income or loss related to charges or
credits for unusual or infrequently occurring items and (ii) extraordinary items
reported on separate line items in the Company's income statement. For the years
1997, 1998 and 1999, beginning with an employee's thirteenth month of
employment, an employee is entitled to receive a guaranteed profit sharing
payment of 10% of salary, except for captains, who receive a guarantee of 20%.
In 1997, every officer of the Company who had completed one year of service
received the same profit sharing distribution as all other eligible employees.
Stock Options. The Company's 1995 Stock Option Plan was adopted in March
1995, as a means to attract, retain and motivate selected employees of the
Company. The 1995 Stock Option Plan provides for the grant to eligible employees
of incentive stock options, non-qualified stock options, stock appreciation
rights, restricted shares, performance shares and performance units, dividend
equivalents and other share based awards.
Bonuses. The Compensation Committee's policy is to provide a significant
portion of executive officers' total compensation through annual bonuses as
incentives to achieve the Company's financial and operational goals and increase
shareholder value. The Company's bonus arrangements for its executive officers
are intended to make a major portion of each executive officer's compensation
dependent on the Company's overall performance. Such bonuses are also intended
to link executive compensation to shareholder value and to encourage the
executives to act as a team. Bonuses are also intended to recognize the
executive's individual contributions to the Company.
After reviewing the performance of the Company's executive officers during
1997 against board approved financial plans of the Company, along with certain
industry comparisons, the Committee determined to grant bonuses to executive
officers in amounts based on 50% of such officers' base salaries.
Michael A. Chowdry
Brian Rowe
10
<PAGE> 14
PERFORMANCE GRAPH
The following graph compares the performance of the Company's Common Stock
to the S&P 500 Index and the S&P Airlines Index for the dates indicated.
TOTAL RETURN TO SHAREHOLDER+
<TABLE>
<CAPTION>
TOT RET TOT RET
S&P 500 S&P ATLAS AIR
MEASUREMENT PERIOD STOCK AIRLINE COMMON
(FISCAL YEAR COVERED) INDEX* INDEX* STOCK**
<S> <C> <C> <C>
8/10/95 100.00 100.00 100.00
12/31/95 111.14 97.39 104.69
12/31/96 136.66 107.04 298.44
12/31/97 182.26 180.34 150.00
</TABLE>
* Based on Close Price on 8/9/95
** Based on IPO of $16 on 8/10/95
+ Assume $100 invested on August 10, 1995 in each of the Company's Common
Stock, the S&P 500 Stock Index and the S&P Airlines Index.
ITEM 2. APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Arthur Andersen LLP ("Arthur
Andersen") as independent auditors of the Company for the year 1998. Arthur
Andersen has performed this function since May 22, 1995.
Representatives of Arthur Andersen will be present at the Meeting with the
opportunity to make a statement, if they wish, and to respond to appropriate
questions from stockholders. The affirmative vote of a majority of the shares
present and entitled to vote at the Meeting is necessary for the approval of the
appointment of Arthur Andersen as independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE
YEAR 1998.
ITEM 3. APPROVAL OF AMENDMENT TO THE 1995 STOCK OPTION PLAN
The Board of Directors is recommending, pursuant to a resolution adopted on
April 16, 1998, an amendment to the 1995 Stock Option Plan to increase the
number of shares of Common Stock authorized for the granting of awards from
2,100,000 to 2,600,000. This amendment must be approved by a majority of the
stockholders present, or represented by proxy, and entitled to vote at the
Meeting.
11
<PAGE> 15
The 1995 Stock Option Plan is intended to provide a means to attract,
retain and motivate selected employees of the Company and non-employee directors
of the Company. The 1995 Stock Option Plan provides for the grant to eligible
employees of incentive stock options, non-qualified stock options, stock
appreciation rights, restricted shares, performance share and performance units,
dividend equivalents and other share based awards. All employees and directors
are eligible to participate in the 1995 Stock Option Plan. The portion of the
1995 Stock Option Plan applicable to employees is administered by the
Compensation Committee. The Compensation Committee has the full and final
authority to select employees to whom awards may be granted, to determine the
type of awards to be granted to such employees and to make all administrative
determinations required by the 1995 Stock Option Plan. The Compensation
Committee also has authority to waive conditions relating to an award or
accelerate vesting of awards. The 1995 Stock Option Plan also provides for
certain grants of non-qualified stock options to non-employee directors, and, in
the case of such grants, is intended to operate automatically and not require
administration.
An aggregate of 2,100,000 shares of Common Stock have been reserved for
issuance under the 1995 Stock Option Plan, subject to anti-dilution adjustments
in the event of certain changes in the Company's capital structure. The proposed
amendment would increase the number of shares reserved for issuance to
2,600,000. No eligible employee may receive options or stock appreciation rights
under the 1995 Stock Option Plan for more than 300,000 shares of Common Stock
(subject to adjustment) during any calendar year.
The Board has determined that the increase in the number of shares reserved
for issuance under the 1995 Stock Option Plan is in the best interests of the
Company and its stockholders. The Board believes that grants of stock options
are an effective method to attract and retain employees and that the
availability of shares for future grants under the 1995 Stock Option Plan is
important to the Company's business prospects and operations.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSED AMENDMENT TO
THE 1995 STOCK OPTION PLAN.
STOCKHOLDER PROPOSALS
The Company will not consider including a stockholder's proposal for action
at its 1999 Annual Meeting of Stockholders in the proxy material to be mailed to
its stockholders in connection with such meeting unless such proposal is
received at the principal office of the Company no later than January 1, 1999.
By Order of the Board of Directors,
/s/ DAVID BRICTSON
DAVID BRICTSON
Secretary
Dated: April 28, 1998
Your vote is important. Stockholders who do not expect to be present at the
Annual Meeting and who wish to have their stock voted are requested to sign and
date the enclosed proxy and return it in the enclosed envelope. No postage is
required if mailed in the United States.
12
<PAGE> 16
ATLAS AIR, INC.
538 COMMONS DRIVE, GOLDEN, COLORADO 80401
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING OF STOCKHOLDERS -- JUNE 3, 1998
The undersigned hereby constitutes and appoints Michael A. Chowdry and
Richard H. Shuyler, and each of them, his true and lawful agents and proxies
with full power of substitution in each, to represent the undersigned at the
Annual Meeting of Stockholders of Atlas Air, Inc. to be held at the Hyatt
Regency Denver, 1750 Welton Street, Denver, Colorado 80202, on Wednesday, June
3, 1998 at 10:00 a.m. Denver time and at any adjournments thereof, on all
matters coming before said meeting.
(1) Election of Directors. Nominees: [ ] For [ ] Withheld
Beri Bernhard, Michael A. Chowdry, Lawrence W. Clarkson, David K.P. Li,
David T. McLaughlin, Brian Rowe and Richard H. Shuyler
(To withhold vote for any individual nominee write that name below.)
- --------------------------------------------------------------------------------
2. Ratification of appointment of Arthur Andersen LLP as independent public
accountants.
[ ] For [ ] Against [ ] Withheld
3. Approval of amendment to the 1995 Stock Option Plan.
[ ] For [ ] Against [ ] Withheld
4. In their discretion, upon other matters as they may properly come before the
meeting.
(Continued and to be signed on the other side.)
(Continued from other side.)
You are encouraged to specify your choices by marking the appropriate boxes, see
reverse side, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations. The persons named on the reverse
side as agents and proxies cannot vote your share unless you sign and return
this card.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned. If no direction is made, this proxy will be voted FOR Proposals
1, 2 and 3.
Dated
-------------------------------------,
1998
-------------------------------------
-------------------------------------
-------------------------------------
Signature(s)
Please mark, sign and return promptly
using the enclosed envelope.
Executors, administrators, trustees,
etc. should give a title as such. If
the signer is a corporation, please
sign full corporate name by duly
authorized officer.
