SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MIDWAY AIRLINES CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies: N/A
--------
2) Aggregate number of securities to which transaction applies: N/A
---------
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: N/A
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( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: N/A
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2) Form, Schedule, or Registration Statement No.: N/A
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4) Date Filed: N/A
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<PAGE>
MIDWAY AIRLINES CORPORATION
2801 Slater Road
Suite 200
Morrisville, North Carolina 27560
(919) 595-6000
April 26, 2000
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
of Midway Airlines Corporation (the "Company") to be held at 10:00 a.m., Eastern
Daylight Saving Time, on Thursday, May 25, 2000, at the Embassy Suites on
Harrison Boulevard in Cary, North Carolina.
This year, we will have a brief agenda asking you to consider only one
proposal concerning election of directors. This matter is explained more fully
in the attached proxy statement, which you are encouraged to read. In addition,
I will be pleased to report on the affairs of the Company and a discussion
period will be provided for questions and comments of general interest to
stockholders.
The Board of Directors recommends that you approve the proposal and
urges you to return your signed proxy card at your earliest convenience, whether
or not you plan to attend the annual meeting.
Thank you for your cooperation.
Sincerely,
/s/ Robert R. Ferguson III
--------------------------
Robert R. Ferguson III
President, Chief Executive Officer and
Chairman of the Board of Directors
<PAGE>
MIDWAY AIRLINES CORPORATION
2801 Slater Road
Suite 200
Morrisville, North Carolina 27560
(919) 595-6000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 25, 2000
Notice is hereby given that the Annual Meeting of Shareholders of
Midway Airlines Corporation, a Delaware corporation (the "Company"), will be
held on Thursday, May 25, 2000, at 10:00 a.m., Eastern Daylight Saving Time, at
the Embassy Suites on Harrison Boulevard in Cary, North Carolina, for the
following purposes:
(l) To elect one Class III director of the Company to hold
office until the Annual Meeting of Shareholders to be held in 2003 or
until his respective successor is duly elected and qualified; and
(2) To transact such other business as may properly come
before the meeting or any adjournment thereof.
The holders of record of Common Stock at the close of business on April
5, 2000, will be entitled to vote at the meeting.
By Order of the Board of Directors,
/s/ Jonathan S. Waller
----------------------
Jonathan S. Waller
Secretary
April 26, 2000
EACH SHARE OWNER IS URGED TO VOTE PROMPTLY BY SIGNING AND RETURNING THE ENCLOSED
PROXY CARD.
<PAGE>
MIDWAY AIRLINES CORPORATION
2801 Slater Road
Suite 200
Morrisville, North Carolina 27560
(919) 595-6000
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 25, 2000
This Proxy Statement is furnished to the shareholders of Midway
Airlines Corporation (the "Company"), in connection with the solicitation by the
Board of Directors of the Company of proxies to be used at the annual meeting of
shareholders to be held on Thursday, May 25, 2000, at 10:00 a.m., Eastern
Daylight Saving Time, at the Embassy Suites on Harrison Boulevard in Cary, North
Carolina, or any adjournment thereof.
Proxies in the form enclosed, properly executed by shareholders and
received in time for the meeting, will be voted as specified therein. If a
shareholder does not specify otherwise, the shares represented by his or her
proxy will be voted by the persons named in the proxy (i) "for" the Class III
director nominee listed therein, and (ii) in the discretion of such persons, in
connection with any other business that may properly come before the meeting.
The giving of a proxy does not preclude the right to vote in person should the
person giving the proxy so desire, and the proxy may be revoked at any time
before it is exercised by written notice delivered to the Secretary of the
Company at the above address at or prior to the meeting. This Proxy Statement
and accompanying form of proxy are to be mailed on or about April 26, 2000, to
shareholders of record on April 5, 2000 (the "Record Date").
At the close of business on the Record Date, there were outstanding and
entitled to vote 8,613,595 shares of Common Stock, par value $.01 per share (the
"Common Stock"). There are no other voting securities of the Company
outstanding.
The holders of record of Common Stock on the Record Date will be
entitled to one vote per share on each matter presented to such holders at the
meeting. The presence at the meeting, in person or by proxy, of the holders of a
majority of the outstanding shares of Common Stock having voting power with
respect to a subject matter (excluding shares held by the Company for its own
account) is necessary to constitute a quorum for the transaction of business
with respect to such subject matter at the meeting. Abstentions and broker
non-votes will be counted for purposes of determining the presence or absence of
a quorum. "Broker non-votes" are shares held by brokers or nominees which are
present in person or represented by proxy, but which are not voted on a
particular matter because instructions have not been received from the
beneficial owner. Under applicable Delaware law, the effect of broker non-votes
on a particular matter depends on whether the matter is one as to which the
broker or nominee has discretionary voting authority under the applicable rule
of the New York Stock Exchange. The effect of broker non-votes on the specific
items to be brought before the meeting is discussed under each item.
1
<PAGE>
PROPOSAL
--------
ELECTION OF CLASS III DIRECTOR
GENERAL
One director will be elected at the Meeting to serve as the Class III
Director of the Company's Board of Directors until the 2003 Annual Meeting of
Shareholders or until such person's successors shall be duly elected and
qualified. The Board of Directors recommends a vote for Gregory Harding-Brown as
the Class III Director. Mr. Harding-Brown is currently a director of the
Company.
Unless contrary instructions are set forth in the proxies, it is
intended that the persons executing a proxy will vote all shares represented by
such proxy for the election as director of Mr. Harding-Brown as a Class III
director. Should Mr. Harding-Brown become unable or unwilling to accept
nomination or election, it is intended that the person acting under the proxy
will vote for the election of such other person as the Board of Directors of the
Company may recommend. Management has no reason to believe that Mr.
Harding-Brown will be unable or unwilling to serve if elected.
There is currently one Class III directorship up for election. Proxies
cannot be voted for other than such directorship.
DIRECTORS
Set forth below is certain information concerning the current directors
of the Company, including the nominee for election as director at the Meeting,
with each person's business experience for at least the past five years:
<TABLE>
<CAPTION>
PRESENT
POSITION WITH BEGAN EXPIRATION OF
NAME AGE THE COMPANY DIRECTORSHIP PRESENT TERM
---- --- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Robert R. Ferguson III 51 President, Chief 1997 2001
Executive Officer,
Chairman of the
Board and Class I
Director
W. Greyson Quarles 58 Class I Director 1997 2001
Timothy R. Smith 51 Class II Director 2000 2002
Gregory J. Robitaille 36 Class II Director 1997 2002
Gregory Harding-Brown 44 Class III Director 1998 2000
</TABLE>
ROBERT R. FERGUSON III has served as Chairman of the Board, President
and Chief Executive Officer of the Company since February 1997. From October
1994 to February 1997, Mr. Ferguson served as President of Belmont Aviation,
L.L.C., an aviation consulting firm. From August 1991 to October 1994, Mr.
Ferguson held various executive positions, including Chief Executive Officer at
Continental Airlines, Inc. Mr. Ferguson also serves on the Board of Directors of
Capital Cargo International Airlines, Inc., an air freight company.
W. GREYSON QUARLES has been a director of the Company since February
1997 and has served as Chief Financial Officer of SAS Institute, Inc., a
computer software corporation, since 1982.
2
<PAGE>
TIMOTHY R. SMITH has been a director of the Company since February 2000
and has been the Owner and President of T.R. Smith, Inc. and S&R Realty
Investments for many years. Mr. Smith serves on numerous Boards of Directors,
primarily involved in community, educational and cultural activities.
GREGORY J. ROBITAILLE has served as a Director of the Company since
February 1997 and is the President and Chief Executive Officer of iDine.com,
Inc., a wholly owned subsidiary of Transmedia Network, Inc. (NYSE: TMN).
Previously, Mr. Robitaille was managing director with Equity Group Investments,
Inc., which is an affiliate of Zell/Chilmark Fund, L.P., from October 1995 to
April 2000. From September 1991 to September 1995, he served as a Vice President
of the Corporate Finance Department of Rauscher Pierce Refsnes, Inc., an
investment banking firm.
GREGORY HARDING-BROWN has served as a director of the Company since
August 1998 and is the retired co-founder of Pegasus Aviation Group, a
commercial jet aircraft lessor with other operations in the areas of aircraft
maintenance, engine leasing and aircraft parts sales. Mr. Harding-Brown worked
with Pegasus Aviation Group from December 1990 to November 1997. Since April
1998, Mr. Harding-Brown has served as President of Discovery Investment
Corporation, a privately held investment corporation. Mr. Harding-Brown also
serves on the Board of Directors of Capital Cargo International Airlines, Inc.,
an air freight company.
BOARD OF DIRECTORS MEETINGS; COMPENSATION AND COMMITTEES OF THE BOARD OF
DIRECTORS
Board of Directors Meetings were held on six occasions in 1999. The
members of the Board of Directors attended all Board of Directors meetings in
1999 either in person or by telephone with the exception of one meeting that Mr.
Quarles did not attend. Each non-employee member of the Board of Directors is
paid a fee of $2,000 for each meeting of the Board of Directors attended (either
in person or by telephone) by that member, and a quarterly retainer of $2,500.
The Board of Directors has established and appointed members of the
Board of Directors to serve upon an Audit Committee and upon a Compensation
Committee. Each non-employee member of the Audit Committee and of the
Compensation Committee receives a $500 fee for attending a committee meeting
(either in person or by telephone). The Board of Directors has not provided for
the establishment of an executive committee or a nominating committee.
The duties of the Audit Committee are to recommend to the Board of
Directors the selection of independent public accountants to audit annually the
books and records of the Company, discuss with the independent auditors and
internal auditors the scope and results of audits, and approve and review any
non-audit services performed by the Company's independent auditing firm. The
Audit Committee is comprised of Mr. Robitaille and Mr. Quarles. The Audit
Committee met twice in 1999.
The duties of the Compensation Committee are to provide a general
review of the Company's compensation and benefit plans to ensure that they meet
the Company's objectives. In addition, the Compensation Committee approves the
Chief Executive Officer's compensation and reviews the Chief Executive Officer's
recommendations on the compensation of all other officers of the Company, the
grant of awards under the Company's then existing compensation and benefit plans
and the adoption of major Company compensation policies and practices. The
Compensation Committee reports its recommendations to the Board of Directors for
approval and authorization. During 1999 the Compensation Committee was comprised
of Mr. Wolf and Mr. Harding-Brown. Mr. Wolf resigned as a member of the Board of
Directors in November 1999 and his position on the Compensation Committee has
not yet been filled. The Compensation Committee met once in 1999.
VOTE REQUIRED
The one nominee receiving the highest number of affirmative votes of
the shares present in person or represented by proxy and entitled to vote, a
quorum being present, shall be elected as director. Only votes cast for a
nominee will be counted, except that the accompanying proxy will be voted for
the nominee in the
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<PAGE>
absence of instruction to the contrary. Abstentions, broker non-votes and
instructions on the accompanying proxy card to withhold authority to vote for
the nominee will result in the respective nominee receiving fewer votes.
However, the number of votes otherwise received by the nominee will not be
reduced by such action.
4
<PAGE>
INFORMATION REGARDING EXECUTIVE OFFICERS
Set forth below is certain information concerning each executive
officer of the Company as of April 26, 2000, with each person's business
experience for at least the past five years:
<TABLE>
<CAPTION>
Name Age Title
---- --- -----
<S> <C> <C>
Robert R. Ferguson III 51 Chairman of the Board, President and Chief Executive Officer
Steven Westberg 45 Executive Vice President and General Manager
Jonathan S. Waller 39 Senior Vice President, General Counsel and Secretary
Alex Dietz 36 Vice President - Revenue Management & Marketing
Thomas Duffy, Jr. 44 Vice President - Maintenance
Lyn Hittle 47 Vice President - Accounting & Financial Planning and Controller
Paul Kinstedt 38 Vice President - Customer Service
Gary Marsh 58 Vice President - Operations
Florence Shaughnessy-Cox 44 Vice President - In-Flight Services
J. Carl Zeigler 39 Chief Information Officer
</TABLE>
ROBERT R. FERGUSON III has served as Chairman of the Board, President
and Chief Executive Officer of the Company since February 1997. From October
1994 to February 1997, Mr. Ferguson served as President of Belmont Aviation,
L.L.C., an aviation consulting firm. Prior to that, he held various executive
positions at Continental Airlines, Inc., last serving as Chief Executive
Officer, President and Director from August 1991 to October 1994. Mr. Ferguson
also serves on the Board of Directors of Capital Cargo International Airlines,
Inc., an air freight company.
STEVEN WESTBERG has served as Executive Vice President and General
Manager since February 2000. Prior to that time and since December 1995, he
served as Senior Vice President and Chief Financial Officer of the Company. Mr.
Westberg held various positions at Continental Airlines, Inc. from 1991 to
February 1995, last serving as Vice President of Corporate Planning. From
February 1995 to December 1995, Mr. Westberg served as Vice President of Belmont
Aviation, L.L.C., an aviation consulting firm. Mr. Westberg also serves on the
Board of Directors of Capital Cargo International Airlines, Inc.
JONATHAN S. WALLER has served as Senior Vice President, General Counsel
and Secretary of the Company since July 1995. From April 1989 to July 1995, Mr.
Waller was an attorney in private practice with the Chicago, Illinois law firm
of Rosenberg & Liebentritt, becoming a partner of the firm in January 1994.
ALEX DIETZ has served as Vice President of Revenue Management and
Marketing since October 1999. Prior to that time, since April 1998, Mr. Dietz
was the Company's Director of Pricing and Revenue Management. From July 1997 to
February 1998, Mr. Dietz served as Director of Pricing and Revenue Management
for Western Pacific Airlines. From July 1991 to June 1997, Mr. Dietz served in
many positions with SABRE Decision Technologies, ultimately serving as a Senior
Manager. Mr. Dietz worked for American Airlines, Inc. prior to 1991.
THOMAS DUFFY, JR. has served as Vice President - Maintenance of the
Company since August 1995. Prior to that time and since August 1993, Mr. Duffy
served as Director of Maintenance for the Company. From May 1992 until August
1993, Mr. Duffy served as Manager of Maintenance Sales with Triad International
Maintenance Co.
LYN HITTLE has served as Vice President - Accounting and Financial
Planning since April 1, 2000. Prior to that time and since October 1995, Mrs.
Hittle served as Controller and Director of Treasury Management for the Company.
Mrs. Hittle worked as a Certified Public Accountant in Pennsylvania from 1991 to
October 1995.
5
<PAGE>
PAUL KINSTEDT has served as Vice President - Customer Service of the
Company since January 2000. Prior to that time and since September 1994, Mr.
Kinstedt served as the Company's Director of Flight Operations and as its
Manager of Flight Operations from the inception of the Company in 1993. Mr.
Kinstedt began his airline career in 1982 with the former Midway Airlines, Inc.
where he held various positions in customer service and dispatch.
GARY MARSH has served as Vice President - Operations of the Company
since July 1998. Prior to that time and since December 1993, Mr. Marsh served as
Vice President of Operations for USAirways Express/Allegheny Airlines. From
November 1978 to December 1993, Mr. Marsh served as a line pilot and ultimately
served as Vice President - Operations for Air Wisconsin.
FLORENCE SHAUGHNESSY-COX has served as Vice President - In-Flight since
September 1998. Prior to that time and since March 1997, Ms. Cox served as the
Company's Director of Inflight. From August 1993 until July 1995, Ms. Cox served
as the Company's Quality Assurance Coordinator for inflight services and as an
instructor of inflight services. Ms. Cox did not work from July 1995 to March
1997.
J. CARL ZEIGLER has served as Chief Information Officer of the Company
since November 1997. From January 1997 to November 1997, Mr. Zeigler served as
the Director of Engineering for DBStar, Inc., a software developer. From January
1996 to December 1996, Mr. Zeigler served as Vice President of Technology at
UNIXware Technology Group, Inc. From December 1985 to December 1995, Mr. Zeigler
served as Manager, Open Systems Research and Development for SAS Institute, Inc.
AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
The Company has agreements with three of the named executive officers
(Messrs. Ferguson, Waller and Westberg) that provide that each such officer is
entitled to benefits if such officer's employment is ended by the Company other
than for reason of death or disability or for cause (as defined in the
agreements). In general, the benefits provided are: (a) a cash termination
payment equal to one year's annual compensation at the rate then in effect or
continuing salary payments of up to one year following the date of termination;
(b) payments allowing for the officer to obtain medical benefits comparable to
those received by the officer in the preceding fiscal year for up to one year
following termination; (c) outplacement services; (d) airline travel privileges
on Midway for the executive and his/her spouse for their lifetime and their
dependent children; and (e) household relocation assistance. Messrs. Ferguson,
Waller and Westberg's agreements have no certain termination date. Mr.
Ferguson's agreement does not provide him with the benefits described in clauses
(b), (c), (d) and (e) above.
6
<PAGE>
SUMMARY COMPENSATION TABLE
The following table shows all the cash compensation paid or to be paid by the
Company or its subsidiaries as well as certain other compensation paid or
accrued during the fiscal years indicated to the Chief Executive Officer of the
Company and each of the four other most highly compensated executive officers of
the Company (the "Named Executive Officers") for such period in all capacities
in which they serve. In the table, amounts paid as Bonus are shown as paid in
the fiscal year to which the Bonus relates.
<TABLE>
<CAPTION>
Long Term
Compensation
------------
Annual Compensation Common
------------------------------------- Stock
Other Annual Underlying All Other
Salary Bonus Compensation Options Compensation
Name and Principal Position Year ($) ($) ($) (# of shares) ($)
- --------------------------- ---- ------ ------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert R. Ferguson III (1) 1997 177,036(1) 59,415(2) 124,608(5) 781,250 -
Chairman of the Board, President 1998 225,000 253,332(3) - - -
and Chief Executive Officer 1999 275,000 54,998(4) - -
Steven Westberg 1997 170,385 14,098(2) 36,041(5) 111,997 247,500(6)
Senior Vice President and 1998 175,000 51,015(3) - - -
Chief Financial Officer 1999 191,715 9,796 (4) - - -
-
Jonathan S. Waller 1997 164,303 13,777(2) - 27,999 247,500(6)
Senior Vice President, General 1998 167,500 45,339(3) - - -
Counsel, and Secretary 1999 176,748 9,305 (4) - -
Mark J. Coleman (7) 1997 - - - - -
Senior Vice President, 1998 116,731 21,936(3) 1,766 - -
Sales and Marketing 1999 174,426 - - - -
Thomas Duffy, Jr. 1997 103,032 8,942 (2) - 27,999 46,000(6)
Vice President, Maintenance and 1998 115,000 20,528(3) - - -
Engineering 1999 133,115 7,872 (4) - - -
</TABLE>
(1) Mr. Ferguson became an executive officer of the Company in February 1997.
(2) Includes amount paid to all eligible full-time employees plus an amount
proportionate to that paid to all full-time employees under the Company's
bonus plan, plus $50,000 to Mr. Ferguson, $5,000 each to Mr. Westberg and
Mr. Waller, and $3,500 to Mr. Duffy.
(3) Includes amount proportionate to that paid to eligible employees under the
Company's bonus plan, plus $235,000 to Mr. Ferguson, $35,000 to Mr.
Westberg, $30,000 to Mr. Waller, $11,000 to Mr. Coleman, and $10,000 to Mr.
Duffy.
(4) Includes amount proportionate to that paid to full-time employees under the
Company's bonus plan, plus $45,350 to Mr. Ferguson, $3,500 each to Mr.
Westberg and Mr. Waller and Mr. Duffy.
(5) Includes taxable and nontaxable moving expenses paid to Mr. Ferguson of
$124,608 and to Mr. Westberg of $36,041.
(6) Amount reflects bonus paid by Zell/Chilmark Fund, L.P. on behalf of the
Company as a result of negotiations in connection with the recapitalization
and change in control of the Company in February 1997.
(7) Mr. Coleman became an executive officer of the Company in April 1998 and
left in September 1999.
BOARD COMPENSATION
Non-employee directors of the Company are paid a $2,000 fee for each board
meeting attended by that director and a $500 fee for each committee meeting
attended by that director, whether attended in person or via telephone and
a quarterly retainer of $2,500.
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
None of the people named in the Summary Compensation Table were granted
options during 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
Number of Value of Unexercised
Securities Underlying In-the-Money
Shares Unexercised Options Options at
Acquired on Value At December 31, 1999 At December 31, 1999 (1)
Exercise Realized --------------------------- -------------------------------
Name # ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert R. Ferguson III - - 747,590 - 1,620,775 -
Steven Westberg - - 40,358 67,199 87,496 145,687
Jonathan S. Waller - - 11,200 16,800 24,282 36,422
Mark J. Coleman - - - - - -
Thomas Duffy, Jr. - - 11,200 16,800 24,282 36,422
</TABLE>
(1) The closing price for the Common Stock as reported on December 31, 1999 was
$6.188. The value of unexercised in-the-money options is the difference
between the per share option exercise price and $6.188 multiplied by the
number of shares of Common Stock underlying in-the-money options.
8
<PAGE>
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
This report of the Compensation Committee (the "Compensation
Committee") shall not be deemed to be incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933, as amended (the "Securities Act"), or under the
Exchange Act, except to the extent that the Company specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
The Compensation Committee of the Board of Directors was formed in
August, 1998 and until November 1999 consisted of Messrs. Wolf and
Harding-Brown, each of whom was an independent non-employee director. Mr. Wolf
resigned from the Board of Directors in November, 1999 and his position on the
Compensation Committee has not yet been filled. The Compensation Committee
administers the Company's executive compensation programs, monitors corporate
performance and its relationship to compensation of executive officers, and
makes appropriate recommendations concerning matters of executive compensation.
COMPENSATION PHILOSOPHY
The Company was formed in 1993 as a private company and experienced two
ownership changes and two senior management changes in the period July 1994 to
February 1997. The Company became publicly held in December 1997 and one of its
key missions was to stabilize management and to focus the management on the
Company's primary business objectives. One of the Company's strengths
contributing to its operating results since February 1997 is a strong management
team, many of whom have extensive airline experience or have been with the
Company for several years. The Committee believes that low executive turnover
has been instrumental to the Company's operating results, and that the Company's
compensation program has played a major role in limiting executive turnover. The
compensation program is designed to enable the Company to attract, retain and
reward capable employees who can contribute to the continued favorable results
of the Company, principally by linking compensation with the attainment of key
business objectives. Equity participation and a strong alignment to
stockholders' interests are key elements of the Company's compensation
philosophy. Accordingly, the Company's executive compensation program is
designed to provide competitive compensation, support the Company's strategic
business goals and reflect the Company's performance.
The compensation program reflects the following principles:
o Compensation programs should support the short- and long-term
strategic business goals and objectives of the Company.
o Compensation should be aligned with increasing stockholder value and
corporate profitability.
o Compensation programs should reflect and promote the Company's values
and reward individuals for outstanding contributions toward business
goals.
o Compensation programs should enable the Company to attract and retain
highly qualified professionals.
PAY MIX AND MEASUREMENT
The Company's executive compensation is comprised of two components,
base salary and incentives, each of which is intended to serve the overall
compensation philosophy.
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<PAGE>
BASE SALARY
The Company's salary levels are conservative and are intended to be
consistent with competitive pay practices and level of responsibility, with
salary increases reflecting competitive trends, the overall financial
performance and resources of the Company, general economic conditions as well as
a number of factors relating to the particular individual, including the
performance of the individual executive, and level of experience, ability and
knowledge of the job. The President and the Senior Vice Presidents of the
Company received no salary increases in 1997. In 1999, the President of the
Company received a retroactive salary increase attributable to 1998 pursuant to
Board of Director approval (with Mr. Ferguson abstaining) and upon the
recommendation of the Compensation Committee. The Senior Vice Presidents of the
Company received salary increases in 1998 and 1999 in accordance with a
merit-based system utilized for all administrative and salaried personnel of the
Company with minor adjustments thereto. In 1999 this merit based system used an
average increase rate of 3%.
INCENTIVES
Incentives consist of cash awards and stock options. In 1999, cash
awards were paid to the Company's executives under the Company's Profit Sharing
and Bonus Program, which included all eligible employees of the Company. The
Profit Sharing and Bonus Program has allowed the Company's Board of Directors,
in its discretion, to distribute certain amounts based on the Company's annual
profits. The Company's executives may be paid additional cash bonuses as
determined by the Board of Directors based on factors such as relative
performance of the Company during the year and the individual's contribution to
the Company's performance.
The Committee believes that the overall pay program should provide
employees with an opportunity to increase their ownership and potentially gain
financially from Company stock price increases. By this approach, the best
interests of stockholders, executives and employees will be closely aligned.
Therefore, executives and other employees have previously received or may, in
the future receive stock options, giving them the right to purchase shares of
Common Stock of the Company at a specified price. The grant of stock options is
based primarily on an employee's contribution to the Company's operating
results, based on the Committee's discretionary evaluation. Stock options have
been or may in the future be granted at the prevailing market value of the
Company's Common Stock and will only have value if the Company's stock price
increases. Generally, grants of stock options vest over a period of time and the
holders of these stock options must be employed by the Company for such stock
options to vest.
CHIEF EXECUTIVE OFFICER 1999 COMPENSATION
In 1999, Mr. Ferguson's 1997 salary of $200,000 per year was increased
to $275,000 with effect as of September 1, 1998. Mr. Ferguson's 1998 salary of
$275,000 per year was not increased in 1999. For the 1998 fiscal year, Mr.
Ferguson received a bonus of $235,000, which bonus was paid in 1999. The Board
of Directors (with Mr. Ferguson abstaining) approved the particular dollar
amount of Mr. Ferguson's 1998 salary increase and bonus in recognition of Mr.
Ferguson's significant contributions to the growth, profitability and increased
value of the Company in 1997 and 1998. Mr. Ferguson received no new grant of
stock options in 1999, although he continues to own options to purchase 747,590
shares of the Company's stock.
TAX EFFECTS
Changes made in 1993 to the Internal Revenue Code of 1986, as amended
(the "Code"), impose certain limitations on the deductibility of executive
compensation paid by public companies. In general, under the limitations, the
Company will not be able to deduct annual compensation paid to certain executive
10
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officers in excess of $1,000,000 except to the extent that such compensation
qualifies as "performance-based compensation" (or meets other exceptions not
here relevant). Non-deductibility would result in additional tax cost to the
Company. It is possible that at least some of the cash and equity-based
compensation paid or payable to the Company's executive officers will not
qualify for the "performance-based compensation" exclusion under the deduction
limitation provisions of the Code. Nevertheless, the Committee anticipates that
in making compensation decisions it will give consideration to the net cost to
the Company (including, for this purpose, the potential limitation on
deductibility of executive compensation).
SUMMARY
The Compensation Committee believes that linking executive compensation
to corporate performance results in a better alignment of compensation with
corporate business goals and stockholder value. The Committee believes its
compensation practices are appropriately tied to stockholder returns and linked
to the achievement of annual and longer-term financial and operational results
of the Company on behalf of the Company's stockholders. In view of the Company's
performance and achievement of goals and competitive conditions, the
Compensation Committee believes that compensation levels during 1999 adequately
reflected the Company's compensation goals and policies.
COMPENSATION COMMITTEE
Gregory Harding-Brown
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THE COMPANY'S PERFORMANCE
The following graph compares the cumulative total return of the Common
Stock of Midway Airlines Corporation, the Total Return Index for The Nasdaq
Stock Market (US), the Total Return Index for The S&P Small Cap 600 Index and
the Total Return Index for Nasdaq Trucking & Transportation Stocks since
December 4, 1997. The Company made an initial public offering of Common Stock on
December 4, 1997 at $15.50 per share. The graph assumes $100 was invested in
each of the Common Stock, the Nasdaq Stock Market (US), the S&P Small Cap 600
and the Nasdaq Trucking & Transportation Stocks on that date. The graph does not
take into account trading commissions or taxes.
COMPARISON OF 25 MONTH CUMULATIVE TOTAL RETURN*
AMONG MIDWAY AIRLINES CORPORATION,
THE NASDAQ STOCK MARK (U.S.) INDEX, THE S & P SMALLCAP 600 INDEX
AND THE NASDAQ TRUCKING & TRANSPORTATION INDEX
[PERFORMANCE GRAPH APPEARS HERE WITH THE FOLLOWING PLOT POINTS]
Cumulative Total Return
---------------------------------
12/4/1997 12/97 12/98 12/99
MIDWAY AIRLINES CORPORATION 100 101 80 41
NASDAQ STOCK MARKET (U.S.) 100 98 138 250
S&P SMALLCAP 600 100 102 105 118
NASDAQ TRUCKING & TRANSPORTATION 100 101 91 97
* $100 INVESTED ON 12/4/97 IN STOCK OR ON 11/30/97
IN INDEX - INCLUDING REINVESTMENT OF DIVIDENDS,
FISCAL YEAR ENDING DECEMBER 31.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of April 5, 2000, with
respect to (i) persons known to the Company to be beneficial holders of five
percent or more of the outstanding shares of Common Stock, (ii) named executive
officers and directors of the Company and (iii) all executive officers and
directors of the Company as a group.
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP(1)
-----------------------
NAME AND ADDRESS OF BENEFICIAL COMMON
OWNER STOCK %
----- ----- -----
James H. Goodnight, Ph.D. 2,745,274(2) 31.9%
SAS Campus Drive
Cary, North Carolina 27513
John P. Sall 1,333,418(2) 15.5%
SAS Campus Drive
Cary, North Carolina 27513
Robert R. Ferguson III 747,590(3) 8.0%
2801 Slater Road, Suite 200
Morrisville, North Carolina 27560
Dimensional Fund Advisors 489,800(2) 5.7%
1299 Ocean Avenue
11th Floor
Santa Monica, California 90401
Brinson Partners, Inc. 462,953(2) 5.4%
209 South LaSalle Street
Chicago, Illinois 60604-1295
Steven Westberg 62,757 *
2801 Slater Road, Suite 200
Morrisville, North Carolina 27560
Jonathan S. Waller 17,000(5) *
2801 Slater Road, Suite 200
Morrisville, North Carolina 27560
Thomas Duffy, Jr. 16,800(6) *
2801 Slater Road, Suite 200
Morrisville, North Carolina 27560
W. Greyson Quarles 1,550 *
SAS Campus Drive
Cary, North Carolina 27513
Gregory J. Robitaille 500 *
iDine.com, Inc.
100 S. Wacker Drive
Suite 1840
Chicago, Ill. 60606
Gregory Harding-Brown 1,000 *
Discovery Investment Corporation
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4090 Happy Valley Road
Lafayette, CA 94549
Timothy Smith 0 0
100 Weston Estates Way
Cary, North Carolina 27513
All Directors and Executive
Officers as a Group (13 persons) 853,607 9.0%
* Less than 1% of issued and outstanding shares of Common Stock.
(1) Each beneficial owner's ownership of Common Stock and percentage
ownership is determined by assuming that options, warrants and other
convertible securities that are held by all persons that are
exercisable or convertible within 60 days of April 5, 2000 have been
exercised or converted.
(2) The amount of Common Stock beneficially owned by Dr. Goodnight, Mr.
Sall, Dimensional Fund Advisors and Brinson Partners, Inc. has been
determined solely on the basis of the Company's review of Schedule 13D
and Schedule 13G filings made pursuant to Regulations 13D-G of the
Securities Exchange Act of 1934.
(3) Includes 747,590 shares of Common Stock issuable to Mr. Ferguson upon
exercise of an option.
(4) Includes 62,757 shares of Common Stock issuable to Mr. Westberg upon
exercise of an option.
(5) Includes 16,800 shares of Common Stock issuable to Mr. Waller upon
exercise of an option and 200 shares of Common Stock owned by Mr.
Waller's wife and mother-in-law.
(6) Includes 16,800 shares of Common Stock issuable to Mr. Duffy upon
exercise of an option.
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CERTAIN TRANSACTIONS
In 1999, the Company engaged the law firm of Fulbright & Jaworski
L.L.P. to act as its counsel in connection with its purchase and financing of
certain aircraft and in connection with its filings and registrations with the
United States Securities and Exchange Commission. The Company has engaged
Fulbright & Jaworski L.L.P. to perform similar services for the Company in 2000.
Howard Wolf, a senior partner of Fulbright & Jaworski L.L.P. was a member of the
Company's Board of Directors until November 1999.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The financial statements of the Company at December 31, 1999, 1998 and
1997 and for the years then ended, appearing in the annual report which
accompanies this proxy statement have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon appearing in such
annual report.
Ernst & Young LLP has been selected by the Board of Directors to serve
as the Company's independent accountants for the current year. Representatives
of Ernst & Young LLP are expected to be present at the annual meeting of
shareholders, will have the opportunity to make a statement if they so desire
and will be available to respond to appropriate questions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended
("Section 16(a)"), requires the Company's officers, directors and persons who
own more than 10% of a registered class of the Company's equity securities to
file statements of ownership and changes in ownership with the Securities and
Exchange Commission on Form 3, Form 4, and Form 5. Officers, directors and
greater than 10% stockholders are required by the regulation to furnish the
Company with copies of all Section 16(a) reports which they file.
Based solely on a review of such statements and amendments thereto
furnished to the Company and written representations from the Company's
executive officers and directors, the Company believes that the reporting
requirements of Section 16(a) were complied with on a timely basis.
PROPOSALS FOR NEXT ANNUAL MEETING
Stockholder proxies obtained by the Board of Directors in connection
with the annual meeting of shareholders of the Company to be held in 2001 will
confer on proxy holders discretionary authority to vote on any matters presented
at the meeting which were not included in the proxy unless notice of the matter
is provided to the Company's Corporate Secretary in accordance with the
following paragraph.
Any proposals of shareholders intended to be presented at the annual
meeting of shareholders of the Company to be held in 2001 must be received by
the Company's Corporate Secretary at the Company's principal executive offices,
not earlier than November 26, 2000 and not later than January 25, 2001 in order
to be included in the proxy statement and form of proxy relating to that
meeting.
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OTHER MATTERS
The management of the Company knows of no other matters that may come
before the meeting. However, if any matters other than those referred to above
should properly come before the meeting, it is the intention of the persons
named in the enclosed proxy to vote such proxy in accordance with their best
judgment.
The cost of solicitation of proxies in the accompanying form will be
paid by the Company. In addition to solicitation by use of the mails, certain
directors, officers or employees of the Company may solicit the return of
proxies by telephone, telegram or personal interview.
16
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MIDWAY AIRLINES CORPORATION
2801 Slater Road, Suite 200
Morrisville, NC 27560
PROXY SOLICITED BY BOARD OF DIRECTORS
The undersigned hereby appoints Robert R. Ferguson III, W. Greyson Quarles,
Timothy Smith, Gregory J. Robitaille and Gregory Harding-Brown, or any of them,
attorneys and proxies, with power of substitution, to vote all outstanding stock
of the undersigned at the Annual Meeting of Shareholders of Midway Airlines
Corporation to be held at 10:00 a.m. on Thursday, May 25, 2000, at Embassy
Suites, Cary, NC, or any adjournment thereof, on the matters listed below:
1. To elect one (1) Class III Director to a term of three (3) years. The Board
intends that the following person shall be nominated to office for a period of
three (3) years: Gregory Harding-Brown.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To consider and transact such other business as may properly come before the
meeting or any adjournment thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed on the reverse side)
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THIS PROXY CARD IN THE
ENCLOSED ENVELOPE.
THIS PROXY WILL BE VOTED AS DIRECTED
OR, IF NO DIRECTION IS INDICATED
WILL BE VOTED "FOR" THE STATED
PROPOSAL.
------------------------------------
Signature of Stockholder
------------------------------------
Signature if held jointly
IMPORTANT: If shares are jointly owned,
both owners should sign. If signing as
attorney, executor, administrator,
trustee, guardian or other person signing
in a representative capacity, please give
your full title as such. If a corporation,
please sign in full corporate name by
President or other authorized officer. If
a partnership, please sign in partnership
name by authorized person.
