<PAGE> 1
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)(1) 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
[ATLAS AIR LOGO]
538 COMMONS DRIVE
GOLDEN, COLORADO 80401
May 7, 1999
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 9, 1999, at the Westin Tabor
Center Denver, 1672 Lawrence 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
May 7, 1999
To the Stockholders of ATLAS AIR, INC.:
The Annual Meeting of Stockholders of Atlas Air, Inc. (the "Company") will
be held on Wednesday, June 9, 1999 at 10:00 a.m. Denver time, at the Westin
Tabor Center Denver, 1672 Lawrence 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
qualified; (ii) to approve the appointment of Arthur Andersen LLP as independent
auditors of the Company for fiscal year 1999; and (iii) 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
27, 1999.
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, 1998, 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
1999 ANNUAL MEETING OF STOCKHOLDERS
------------------------
SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy, being mailed to stockholders on or about May 7,
1999, 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 9, 1999. A copy of the Company's Annual Report on Form 10-K for
the year ended December 31, 1998 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 27, 1999,
will be entitled to vote at the Annual Meeting. On that date there were
34,289,156 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, 69, has been a member of our Board of Directors since
October 28, 1997. He 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, 44, has been Chairman of the Board of Directors and
Chief Executive Officer since our 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 (and has served in that role 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, 61, has been a member of our Board of Directors since
May 13, 1997. He was President of Boeing Enterprises from February 1997 until
his retirement on February 1, 1999, where he was 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 until his retirement on February 1, 1999,
he was also a Senior Vice President of Boeing. He previously held various
management and executive positions with Boeing since 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, 60, has been a member of our Board of Directors since April
16, 1998. He has been Chairman of the Bank of East Asia, Limited since 1997 and
a Director and 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 Hong Kong
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 also 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, 67, has been a member of our Board of Directors since
September 1995. Since 1988, Mr. McLaughlin has served as Chairman and Chief
Executive Officer of Orion Safety Products (formerly Standard Fusee
Corporation). From 1987 to 1988, Mr. McLaughlin was Chairman of the Aspen
Institute and was appointed President and Chief Executive Officer in 1988. Upon
his retirement from The Aspen Institute in 1997, he was named President
Emeritus. From 1981 to 1987, Mr. McLaughlin served as President of Dartmouth
College. From 1970 to 1981, Mr. McLaughlin served in various management
positions at The Toro Company, being named Chairman and Chief Executive Officer
in 1977. Mr. McLaughlin is Chairman of the Board of CBS Inc. and a Director of
Atlantic Richfield Company and PartnerRe Ltd.
2
<PAGE> 6
Brian Rowe, 67, has been a member of our Board of Directors since March
1995. He retired as Chairman of the General Electric Aircraft Engines division
of the General Electric Company in 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, 52, has been a member of our Board of Directors since
March 1995 and was Senior Vice President -- Finance, Chief Financial Officer and
Treasurer from June 1994 to February 1998. As of February 1998, Mr. Shuyler
became Executive Vice President -- Strategic Planning 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.
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................................ Executive Vice President -- Operations
Development
R. Terrence Rendleman........................... Senior Vice President -- Operations
Stanley G. Wraight.............................. Senior Vice President -- Marketing
Stephen C. Nevin................................ Vice President and Chief Financial Officer
Thomas G. Scott................................. Senior Vice President and General Counsel
</TABLE>
For biographical information about Messrs. Chowdry and Shuyler see
"Information With Respect to Nominees."
James T. Matheny, 59, has been Executive Vice President -- Operations
Development since February 1999. He previously served as Senior Vice
President -- Operations 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, 54, has been Senior Vice President -- Operations
since February 1999. He previously served as Senior Vice President -- Technical
Services and Flight Operations since January 1997. 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
3
<PAGE> 7
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, 52, 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, 49, has been Vice President and Chief Financial Officer
since February 1998. From May 1994 to January 1998, he was Senior Vice President
of Finance and Chief Financial Officer at AirTran Holdings, Inc. From December
1982 to April 1994, he served as a Vice President at McDonnell Douglas Finance
Corporation.
Thomas G. Scott, 49, has been Senior Vice President and General Counsel
since July 1998. Prior to his employment with us and since 1980, Mr. Scott was
employed with United Parcel Service Co. where he served in a variety of
positions, including Vice President and Chief Legal Officer, with primary
responsibility for managing the airline legal department including aircraft
acquisitions, airport projects and international expansion.
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 15, 1999 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. Amounts are restated to reflect the 3-for-2 stock
split which occurred on January 25, 1999.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
OF COMMON STOCK OUTSTANDING
NAME BENEFICIALLY OWNED(1) SHARES
- ---- --------------------- -----------
<S> <C> <C>
Michael A. Chowdry(2)....................................... 19,993,895 58.1%
Richard H. Shuyler.......................................... 279,225 *
James T. Matheny............................................ 36,180 *
R. Terrence Rendleman....................................... 46,898 *
Stanley G. Wraight.......................................... 8,169 *
Berl Bernhard............................................... 11,559 *
Lawrence W. Clarkson........................................ 7,993 *
David K.P. Li............................................... 8,261 *
David T. McLaughlin......................................... 20,114 *
Brian Rowe.................................................. 31,324 *
All Directors and Executive Officers as a Group............. 20,439,618 58.9%
</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 15, 1999: Mr. Chowdry -- 109,690 shares; Mr.
Shuyler -- 195,368 shares; Mr. Matheny -- 34,282 shares; Mr.
Rendleman -- 45,000 shares; Mr. Wraight -- 6,000 shares; Mr.
Bernhard -- 4,500 shares; Mr. Clarkson -- 6,000 shares; Mr. Li -- 6,000
shares; Mr. McLaughlin -- 7,500 shares; Mr. Rowe -- 7,500 shares; and all
directors and executive officers as a group -- 421,840 shares.
(2) The number of shares of Common Stock listed for Mr. Chowdry includes
10,726,501 shares held by Chowdry, Inc., 8,971,501 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
4
<PAGE> 8
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 292,500 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.
BOARD OF DIRECTORS' MEETINGS, COMMITTEES AND FEES
The Board of Directors held four meetings during 1998. 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 1998
(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) except Mr. Li who attended two of the three
Board meetings held after he became a Director.
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 1998 consisted of Michael A. Chowdry,
Brian Rowe and Lawrence W. Clarkson (who joined the Compensation Committee on
April 16, 1998), held four meetings during 1998. The Compensation Committee
administers our 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 our 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 1998. In addition, it has been our 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.
Our non-employee directors receive $12,500 on a quarterly basis for their
services, and receive $2,500 for each Board meeting attended in person. We
reimburse non-employee directors for out-of-pocket travel expenditures relating
to their service on the Board. Under our Director Stock Plan (the "Director
Plan"), non-employee directors previously 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, however, 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 (or a combination of Common
Stock and cash) at the non-employee director's election. If a non-employee
director elects at the commencement of any quarter to receive his quarterly
remuneration, or a portion thereof, in Common Stock, the number of shares
received is determined by dividing the average price for the date immediately
preceding the first meeting of directors of each quarter (or if no meeting is
held in the quarter, then the last day of such 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 our 1995 Stock Option
Plan, non-employee directors 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.
5
<PAGE> 9
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires our executive
officers and directors and persons who own more than 10% of a registered class
of our 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 our
directors and officers regarding the necessity of filing a report, we believe
that during 1998 all filing requirements were met on a timely basis, except that
Mr. Bernhard failed to timely file two Form 4's and Mr. McLaughlin failed to
timely file one Form 4.
COMPENSATION COMMITTEE INTERLOCKS, INSIDER PARTICIPATION
AND CERTAIN TRANSACTIONS
The members of the Compensation Committee in 1998 were Messrs. Rowe,
Chowdry and Clarkson. 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.
A loan of up to $750,000, bearing interest at approximately 5.9%, was
extended in June 1996 to one officer for the purpose of constructing a
residence. In May 1998, the Company forgave $500,000 of the principal, plus
accrued interest on the loan. In February 1998, the Company extended a two year
loan for approximately $147,000, bearing interest at a rate of approximately
5.5%, to a Vice President of the Company. In June 1998, an interest-free demand
loan of $100,000 was extended to a Senior Vice President of the Company, which
loan will be forgiven if such employee remains in Atlas' employ through June 15,
2003 . As of December 31, 1998 the outstanding balance of officer demand loans,
including accrued interest, was approximately $516,000.
Mr. Clarkson was President of Boeing Enterprises and Senior Vice President
of Boeing until his retirement on February 1, 1999. During 1998, the Company
paid Boeing approximately $167.6 million for pre-delivery deposits for the
purchase of new aircraft, conversion of certain aircraft into freighter
configuration, purchase of parts and other related services.
Mr. Bernhard is a partner of the law firm Verner, Liipfert, Bernhard,
McPherson and Hand, which rendered legal services to the Company in 1998 for
which the Company paid approximately $380,000.
Mr. Li is Chairman and Chief Executive of The Bank of East Asia, Limited.
Pursuant to a consulting agreement entered into between the Company and The Bank
of East Asia, Limited, The Bank of East Asia, Limited received a retainer of
approximately $127,000 in 1998.
In May 1998, the Company agreed to purchase a Boeing Business Jet ("BBJ")
from Boeing for approximately $32 million. At the end of January 1999, the
Company took delivery of the BBJ from Boeing and immediately delivered the
aircraft to a third party for installation of the interior business
configuration. This aircraft will be used to transport the Company's executives
on business trips throughout the world. The Company intends to sell its current
corporate aircraft (currently owned by one of its subsidiaries), upon delivery
of the BBJ from the third party, and the Company's Chairman, President and CEO
has agreed to share in the acquisition costs and capital improvement costs of
the BBJ.
6
<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth, for 1998, 1997 and 1996, the compensation
of the Named Executive Officers. Share amounts and per share amounts are
restated to reflect the 3-for-2 stock split which occurred on January 25, 1999.
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............ 1998 $644,226 $193,125 $ 51,523 337,500 $ 0
Chairman of the Board, 1997 549,569 242,500 75,941 0 0
Chief Executive Officer 1996 670,414 363,750(3) 50,888 0 0
and President
Richard H. Shuyler............ 1998 283,626 93,750 17,099 135,000 524,654(5)
Executive Vice 1997 192,500 87,500 15,248 0 0
President -- Strategic 1996 240,897 131,250(3) 1,021,318 0 0
Planning, Treasurer
and Director(4)
James T. Matheny.............. 1998 220,521 72,188 9,767 90,000 0
Executive Vice 1997 192,500 87,500 8,758 0 0
President -- Operations 1996 180,207 131,250(3) 1,671,822 0 0
Development(6)
R. Terrence Rendleman......... 1998 217,303 72,188 376,828 90,000 0
Senior Vice President -- 1997 151,250 75,000 570 0 0
Operations(7) 1996 18,750 300,000 0 75,000 0
Stanley G. Wraight............ 1998 227,468 82,500 23,384 90,000 0
Senior Vice President -- 1997 58,333 55,000 41,148 30,000 0
Marketing(8) 1996 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, 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 have a term
of five years and were immediately exercisable at $17.3333 per share. Mr.
Chowdry received 53,440 options; Mr. Shuyler received 19,282 options; and
Mr. Matheny received 19,282 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) In May 1998 the Company forgave $500,000 of the principal, plus accrued
interest, of a $750,000 loan extended to Mr. Shuyler.
(6) Mr. Matheny served as Senior Vice President -- Operations until February 22,
1999, at which time he assumed his current position.
(7) Mr. Rendleman commenced employment with the Company on November 18, 1996.
Mr. Rendleman served as Senior Vice President -- Technical Services and
Flight Operations until February 22, 1999, at which time he assumed his
current position.
(8) Mr. Wraight commenced employment with the Company on September 1, 1997.
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, 1998. Amounts are restated to reflect the 3-for-2 stock split which occurred
on January 25, 1999.
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENTAGE OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME GRANTED FISCAL 1998 PER SHARE DATE 5% 10%
- ---- ---------- ------------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Michael A. Chowdry............ 56,250 4.2% $16.31 2/10/08 $ 577,086 $ 1,462,455
281,250 20.8 24.11 4/16/08 4,263,919 10,805,597
Richard H. Shuyler............ 22,500 1.7 16.31 2/10/08 230,834 584,982
112,500 8.3 24.11 4/16/08 1,705,568 4,322,239
James T. Matheny.............. 15,000 1.1 16.31 2/10/08 153,890 389,988
75,000 5.6 24.11 4/16/08 1,137,045 2,881,493
Stanley G. Wraight............ 15,000 1.1 16.31 2/10/08 153,890 389,988
75,000 5.6 24.11 4/16/08 1,137,045 2,881,493
R. Terrence Rendleman......... 15,000 1.1 16.31 2/10/08 153,890 389,988
75,000 5.6 24.11 4/16/08 1,137,045 2,881,493
</TABLE>
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(1) 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.
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, 1998. Amounts are restated to
reflect the 3-for-2 stock split which occurred on January 25, 1999.
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 53,440 337,500 $ 758,180 $2,940,666
Richard H. Shuyler............ 0 0 172,868 135,000 3,750,977 1,176,267
James T. Matheny.............. 0 0 77,407 90,000 1,485,714 784,178
R. Terrence Rendleman......... 0 0 30,000 135,000 180,628 1,055,120
Stanley G. Wraight............ 0 0 6,000 114,000 76,625 1,090,678
</TABLE>
EMPLOYMENT AGREEMENTS
Mr. Michael A. Chowdry has entered into an employment agreement with the
Company that provides for a base salary of $515,000 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
8
<PAGE> 12
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.
The Company has also entered into employment agreements with Messrs.
Shuyler and Matheny, each of which will expire on June 30, 2000, subject to
annual renewal thereafter. 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. The Company entered into an
employment agreement with Mr. Scott on June 22, 1998, which will expire on July
1, 2003. 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 agreements with Messrs.
Shuyler and Matheny provide for annual base salaries of $250,000 and $225,000,
respectively. The employment agreements with Messrs. Rendleman and Wraight each
provide for an annual salary of $200,000. The employment agreements with Messrs.
Nevin and Scott each provide for an annual base salary of $175,000. In addition
to the annual salary, each employee may receive an annual bonus at the
discretion of the Compensation Committee. Mr. Rendleman was 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 approximately 5.5%. The
employment agreements require that the employees devote substantially all of
their time to the Company.
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, except for promotions and in some cases for certain market
adjustments. 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. 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 1998, every officer of the Company who had completed one year of service
received the same profit sharing distribution as all other eligible employees.
In April, 1999,
9
<PAGE> 13
Atlas flight crews elected to be represented by a union, and they are therefore
no longer eligible for profit sharing.
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
1998 against Board approved financial plans of the Company, along with certain
industry comparisons, the Committee determined to grant cash bonuses to
executive officers in amounts based on a range of 37.5% to 41.3% of such
officers' base salaries.
Michael A. Chowdry
Brian Rowe
Lawrence W. Clarkson
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 SHAREHOLDERS+
[ATLAS AIR, INC. PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
ATLAS AIR** S&P 500* S&P AIRLINES*
----------- -------- -------------
<S> <C> <C> <C>
8/9/95 100.00 100.00 100.00
12/29/95 104.69 111.14 97.39
12/31/96 298.44 136.66 107.04
12/31/97 150.00 182.26 180.34
12/31/98 305.86 234.35 174.93
</TABLE>
* Based on Close Price on August 9, 1995.
** Based on IPO of $16 on August 10, 1995.
+ Assumes $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 1999. 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 1999.
11
<PAGE> 15
STOCKHOLDER PROPOSALS
The Company will not consider including a stockholder's proposal for action
at its 2000 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, 2000.
Any such proposal, including any accompanying supporting statement, may not
exceed 500 words.
By Order of the Board of Directors,
/s/ DAVID BRICTSON
--------------------------------------
DAVID BRICTSON
Secretary
Dated: May 7, 1999
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.
<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 9, 1999
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 Westin
Tabor Center Denver, 1672 Lawrence Street, Denver, Colorado 80202, on
Wednesday, June 9, 1999 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
Berl 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 auditors.
[ ] For [ ] Against [ ] Abstain
3. In their discretion, upon other matters as they may properly come before the
meeting.
(Continued and to be signed on the other side.)
- -------------------------------------------------------------------------------
<PAGE> 17
-2-
- -------------------------------------------------------------------------------
(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 shares 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 and 2.
Dated , 1999
--------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
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.
- -------------------------------------------------------------------------------
