<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
[AMENDMENT NO. ]
----------------
Filed by 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 (S)240.14a-11(c) or (S)240.14a-12
AirTran Holdings, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
AirTran Holdings, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14-a6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
AIRTRAN HOLDINGS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of AirTran Holdings, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of AirTran
Holdings, Inc. (the "Company") will be held at the Marriott at the Airport, 7499
Augusta National Drive, Orlando, Florida 32822 on Thursday, May 14, 1998 at
11:00 a.m. Eastern Daylight Savings Time, for the following purposes:
(1) To elect two Directors for the ensuing year; and
(2) To transact such other business as may properly come before the
meeting.
Holders of the Common Stock of record at the close of business on March 23,
1998, will be entitled to notice of and to vote at the meeting.
Whether or not you expect to be present in person at the meeting, please
sign and date the accompanying proxy and return it promptly in the enclosed
postage paid reply envelope. This will assist us in preparing for the meeting.
By Order of the Board of Directors
/S/ Leslie C. Head
---------------------------
Leslie C. Head
Secretary
April 6, 1998
Orlando, Florida
<PAGE>
AIRTRAN HOLDINGS, INC.
9955 AirTran Boulevard
Orlando, Florida 32827
(407) 261-5600
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of AirTran Holdings, Inc., a Nevada
corporation (the "Company") to be voted at the Annual Meeting of the
Stockholders of the Company to be held on May 14, 1998, and any adjournment or
adjournments thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders. The Annual Meeting of Stockholders will be held
at the Marriott at the Airport, 7499 Augusta National Drive, Orlando, Florida
32822, on Thursday, May 14, 1998, at 11:00 a.m. Eastern Daylight Savings Time.
This proxy statement and accompanying form of proxy were first sent or given to
Stockholders on or about April 6, 1998. The Company's Annual Report for the
year ended December 31, 1997, is being sent, concurrently herewith, to each
Stockholder of record.
SOLICITATION OF PROXIES
Proxies will be solicited by mail. Proxies may also be solicited by
officers and regular employees of the Company personally or by telephone or
facsimile, but such persons will not be specifically compensated for such
services. Banks, brokers, nominees and other custodians and fiduciaries will be
reimbursed for their reasonable out-of-pocket expenses in forwarding soliciting
material to their principals, the beneficial owners of Common Stock of the
Company. The expense of preparing, assembling, printing, mailing and soliciting
proxies will be borne by the Company.
ACTION TO BE TAKEN UNDER THE PROXIES
When a proxy in the enclosed form is properly executed and timely
returned, the shares represented thereby will be voted at the meeting in the
manner specified herein. Unless instructed otherwise in the space provided in
the proxy form, all properly executed proxies received by the Company will be
voted "FOR" the election of the nominees for Directors set forth below under the
heading ELECTION OF DIRECTORS. Any Stockholder who properly executes and
delivers a proxy may revoke it at any time prior to it being exercised. Any
proxy given pursuant to this solicitation may be revoked by any Stockholder who
attends the meeting and gives oral notice of his or her election to vote in
person, without compliance with any other formalities. In addition, any proxy
given pursuant to this solicitation may be revoked prior to the meeting by
delivering an instrument revoking it or a duly executed proxy bearing a later
date to the Secretary of the Company. The Company's management knows of no
matter to be brought before the meeting other than those mentioned herein. If,
however, any other matters properly come before the meeting, it is intended that
the proxies will be voted in accordance with the judgment of the person or
persons voting such proxies.
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
VOTING RIGHTS
The only class of securities entitled to vote at the meeting is the
Common Stock, $.001 par value, of the Company. The Board of Directors, pursuant
to the By-laws of the Company, has fixed March 23, 1998, at the close of
business, as the record date for the determination of Stockholders entitled to
notice of and to vote at the meeting or at any adjournment or adjournments
thereof. As of March 23, 1998, there were 64,533,305 shares of Common Stock of
the Company outstanding and entitled to be voted at the meeting. Each share of
Common Stock is entitled to one vote at the meeting. A majority of the
outstanding shares of Common Stock represented at the meeting, in person or by
proxy, will constitute a quorum.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of February 28, 1998 (unless otherwise
indicated in the footnotes), certain information with respect to the Company's
Common Stock owned beneficially by each Director, by each Nominee for election
as a Director, by all Executive Officers and Directors as a group and by each
person known by the Company to be a beneficial owner of more than 5% of the
outstanding Common Stock of the Company. Except as noted in the footnotes, each
of the persons listed has sole investment and voting power with respect to the
shares of Common Stock included in the table.
<TABLE>
<CAPTION>
Number of Shares Percent
Name of Beneficial Owner Beneficially Owned (1) of Ownership (2)
- ------------------------ ---------------------- ----------------
<S> <C> <C>
Lewis H. Jordan (3)............................ 4,389,540 6.5%
Robert L. Priddy (4)............................ 4,140,000 6.4%
Robert D. Swenson (5)........................... 709,895 1.1%
D. Joseph Corr (6).............................. 150,000 *
Don L. Chapman (7).............................. 79,000 *
John K. Ellingboe (8)........................... 29,620 *
Robert C. Pohlad ...............................
All Executive Officers and Directors as a
group (11 persons) (2)(3)(4)(5)(6)(7)(8)(9).. 9,576,255 13.9%
</TABLE>
- ---------------------
* Less than 1%
(1) Information with respect to beneficial ownership is based upon information
furnished by each owner.
(2) The percent of outstanding Common Stock owned is determined by assuming that
in each case the person only, or group only, exercised his or its rights to
purchase all shares of Common Stock underlying presently exercisable stock
options.
(3) Includes options to purchase 3,040,000 shares of Common Stock which are
presently exercisable and also includes 100,000 shares owned by a trust
under which Mr. Jordan is a beneficiary. Mr. Jordan's address is 610
Wingspread, Peachtree City, Georgia 30269.
(4) Includes options to purchase 640,000 shares of Common Stock which are
presently exercisable. Excludes 100,000 shares of Common Stock owned by Mr.
Priddy's daughter and son-in-law, with respect to which Mr. Priddy disclaims
any beneficial ownership. Mr. Priddy's address is 9410 Laguna Niguel Drive,
#104, Las Vegas, Nevada 89134.
(5) Includes options to purchase 325,000 shares which are presently exercisable.
Includes 83,220 shares of Common Stock held by Mr. Swenson's wife and 71,720
shares of Common Stock Mr. Swenson holds as custodian for his minor
children.
(6) Includes options to purchase 150,000 shares which are presently exercisable.
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<PAGE>
(7) Includes 69,000 shares of Common Stock owned by a corporation in which Mr.
Chapman is an officer and sole stockholder and options to purchase 10,000
shares of Common Stock which are presently exercisable.
(8) Includes options to purchase 8,000 shares which are presently exercisable.
(9) In addition to outstanding shares of Common Stock owned by Executive
Officers not named in the table, also included are options to purchase
39,000 and 38,200 shares of Common Stock by Thomas Kalil and M. Ponder
Harrison, respectively, which are presently exercisable.
ELECTION OF DIRECTORS
Generally, the entire Board of Directors of the Company is to be elected
for a term of one year and until their successors are elected and qualified.
However, the Company's By-laws were amended in connection with the merger of
Airways Corporation ("Airways") into the Company in November 1997 to extend the
terms of 75% of the members of the Company's Board of Directors until the 1999
annual stockholders' meeting of the Company. As a result, the terms of D. Joseph
Corr, Don L. Chapman, John K. Ellingboe, Robert L. Priddy and Robert D. Swenson
have been extended until 1999 and such Directors are not subject to election at
the May 14, 1998 annual stockholders' meeting. The terms of Lewis H. Jordan and
Robert C. Pohlad expire at the 1998 stockholders' meeting and consequently, the
stockholders are to elect two Directors at such meeting. It is the intention of
the persons named in the accompanying proxy form to vote for the election of the
nominees: Lewis H. Jordan and Robert C. Pohlad, both of whom are currently
Directors. If for any reason any such nominee is not a candidate when the
election occurs, which event is not anticipated, it is the intention of the
persons named in the accompanying proxy form to vote for the remaining nominees
named and to vote in accordance with their best judgment if any substitute
nominees are named.
IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table contains the name, age and position with the Company
of each Executive Officer and Director of the Company. Their respective
backgrounds are described following the table.
<TABLE>
<CAPTION>
Age Position
--- --------
<S> <C> <C>
D. Joseph Corr 57 President, Chief Executive Officer and Director
M. Ponder Harrison 36 Senior Vice President - Sales and Marketing of Operating Subsidiaries
Thomas Kalil 61 Senior Vice President - Operations of Operating Subsidiaries
Jeffrey L. MacKinney 41 Senior Vice President - Planning and MIS of Operating Subsidiaries
Robert R. Wittenberg 54 Senior Vice President - Maintenance and Engineering of Operating
Subsidiaries
Don L. Chapman 58 Director
John K. Ellingboe 47 Director
Lewis H. Jordan* 53 Director
Robert C. Pohlad* 43 Director
Robert L. Priddy 51 Director
Robert D. Swenson 43 Chairman of the Board
</TABLE>
* Nominated for election at 1998 stockholders' meeting.
D. Joseph Corr joined the Company in November 1996 as President and Chief
Executive Officer of the Company's operating subsidiary. Mr. Corr was elected
to be a Director of the Company in July 1997 and was elected President and Chief
Executive Officer of the Company in November 1997. Since June 1990, Mr. Corr
has also been the President and owner of Aircorr, Inc., an aircraft repair
business, and D. Joseph Corr, Inc., an investments and management services firm.
Prior to 1990, Mr. Corr served as Chairman, President and Chief Executive
Officer of Continental Airlines from December 1988 to October 1989. From March
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<PAGE>
1986 to November 1988, Mr. Corr was Vice Chairman, President and a Director of
TransWorld Airways (TWA). From 1984 to 1986, Mr. Corr was President of ACF
Industries (a manufacturer and lessor of specialized railroad freight cars) and
Vice Chairman and a Director of ACF from 1984 to 1988. Mr. Corr also served as
Chairman and Director of Ozark Airlines during 1986 and as Chairman and a
Director of Mid-Coast Aviation from 1986 to 1988.
M. Ponder Harrison has been employed as Vice President - Sales and
Marketing of the Company since June 1993. In December 1996, he was elected as
Senior Vice President - Sales and Marketing of the Company's operating
subsidiary. Prior to joining the Company, he was employed by Delta Air Lines,
Inc. from 1988 to June 1993 in various marketing positions, his last position
being national accounts manager, corporate marketing. He was also employed by
Delta from 1983 to 1987.
Thomas Kalil has served as a Senior Vice President of the Company's
operating subsidiary since May 1995 and has served as the Senior Vice President
- - Operations since May 1996. Prior to joining the Company, Mr. Kalil was
employed by Continental Airlines from May 1987 until May 1995, in various
positions including Senior Vice President Airport Services and Senior Vice
President Customer Services. Prior to that, he served in various customer
service positions at Northwest, Republic and Southern Airways during the period
from 1960 to 1987.
Jeffrey L. MacKinney joined the Company in November 1997 as Senior Vice
President Planning and MIS of the Company's operating subsidiaries. Prior to
joining the Company, Mr. MacKinney served as Vice Chairman of Chicago Express
Airlines, a regional airline operating as ATA Connection, from April 1997 to
January 1998. From June 1995 to April 1997, he served as Senior Vice President
of Planning and Business Development for Phoenix Airline Services and Express
Airlines. From July 1986 to June 1995, Mr. MacKinney was employed with American
Airlines in various planning and marketing positions, his last position as
Managing Vice President of AMR Consulting Group. From 1983 to 1986, he served
as Vice President of Marketing and Planning for Air Virginia. Prior to that, he
was employed by Trans World Airlines from 1979 to 1983.
Robert R. Wittenberg has been employed by the Company since November 1995
as a line pilot and director of engineering and has served as Senior Vice
President- Maintenance and Engineering of the Company's operating subsidiaries
since November 1997. Mr. Wittenberg served as director of business development -
European region for Northrop Grumman from October 1993 to November 1994. Mr.
Wittenberg served in the U.S. Navy from 1966 to 1993, his last position being
the Executive Assistant to the Supreme Allied Commander in Europe.
Don L. Chapman was elected as a Director of the Company in April 1994. He
has served as Chief Executive Officer of Tug Manufacturing Company, a company
that manufactures ground support equipment for the airline industry, since he
acquired that company in 1977. He also served as Chief Executive Officer of Opti
World, Inc., an optical superstore chain, from 1983 (when he founded that
Company) until 1995. From July 1991 to November 1992, he served as Chairman of
Winkler Products, a plastic cutlery manufacturer. He also serves as a director
of Rare Hospitality (since 1992) and Omni Insurance Company (since 1993).
John K. Ellingboe was elected as a Director of the Company in November
1997 pursuant to the terms of the Merger agreement. He served as a director of
Airways from April 1995 until November 1997 when Airways merged into the Company
and a director of AirTran Airways from June 1994 until November 1997. Mr.
Ellingboe served as a director of Mesaba Holdings, Inc. from September 1990 to
September 1995. Since January 1998, Mr. Ellingboe has served as President,
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<PAGE>
Mergers and Acquisitions of NJK Holding Corporation, a private investment
company, and since June 1996, Mr. Ellingboe has also been Chief Executive
Officer of PMSA Management Group, LLC, a management consulting firm. From
October 1993 to May 1996, he was Senior Vice President, Business Development,
General Counsel and Secretary of Fingerhut Companies, Inc. From May 1990 to
October 1993, he was Vice President, General Counsel and Secretary of Fingerhut
Companies, Inc. Prior to 1990, he was an attorney in private practice.
Lewis H. Jordan is the founder and principal officer of Wingspread
Enterprises, an investment and consulting firm. Mr. Jordan has served as a
Director of the Company since June 1993. Mr. Jordan also served as President
and Chief Operating Officer of the Company from June 1993 until November 1997.
As of November 1996, he resigned his position as President and Chief Operating
Officer of the Company's operating subsidiary. He served as President and Chief
Operating Officer and as a director of Continental Airlines from August 1991 to
March 1993 and served as Executive Vice President of that company from 1986 to
August 1991. From 1985 to 1986, he served as President and Chief Operating
Officer of Flying Tigers, an air cargo carrier, and was previously employed by
Flying Tigers as Executive Vice President and Chief Operating Officer from 1984
to 1985, as Senior Vice President - Operations from 1980 to 1982 and as Vice
President - Maintenance and Engineering from 1979 to 1980. From 1982 to 1984,
he served as Executive Vice President and Chief Operating Officer of Air Treads,
Inc., an aviation tire retreading, wheel and brake company. From 1962 to 1979,
he held various positions with Southern Airways, his last position being
Assistant Vice President in charge of technical operations.
Robert C. Pohlad was elected as a Director of the Company in November
1997 pursuant to the terms of the Merger agreement. He has served as President
of Pohlad Companies, a holding and management services company, since 1987.
Since 1988 he has been Chief Executive Officer and a director of Delta Beverage
Group, Inc., a soft drink manufacturer and distributor. He also serves as a
director of Mesaba Holdings, Inc., a regional air carrier, Grow Biz
International, Inc. and North Central Life Insurance Company.
Robert L. Priddy is an investor and a founder of RMC Capital, LLC, an
investment company. Mr. Priddy was employed as the Chairman of the Board and
Chief Executive Officer of the Company from its inception until November 1997.
He has served as a Director of the Company since he participated in its founding
in July 1992. As of November 1996, he resigned his position as Chairman of the
Board and Chief Executive Officer of the Company's operating subsidiary. Prior
to his involvement with the Company, Mr. Priddy founded Florida Gulf Airlines as
a subsidiary of Mesa Airlines, for which he served as president from December
1991 to April 1993. From July 1991 to January 1993, he also served as a director
of Mesa Airlines, Inc. From January 1988 to November 1991, he served as
President and Chief Executive Officer of Air Midwest, Inc., a regional airline
headquartered in Wichita, Kansas, for which he also served as a director from
November 1987 to November 1991. From 1979 to 1987, he served as Vice President
and Chief Financial Officer of Atlantic Southeast Airlines, Inc. ("ASA"), a
regional airline headquartered in Atlanta, Georgia, for which he also served as
a director from 1981 to 1987. He was one of three founding shareholders of ASA.
From 1966 to 1979, he worked for Southern Airways in various capacities, his
last responsibilities being manager of scheduling, pricing and market analysis.
He has also served as a director of Lukens Medical Corporation, a medical
supplies company, since 1995 and of Accumed International, a medical equipment
company, since 1997.
Robert D. Swenson was elected as Chairman of the Board of the Company in
November 1997 pursuant to the terms of the merger agreement with Airways. He
served as Chairman of the Board and Chief Executive Officer of Airways from
April 1995 until November 1997 when Airways merged into the Company and he
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<PAGE>
served as Chairman of the Board of AirTran Airways from June 1994 until November
1997. From June 1994 to January 1995, Mr. Swenson was President of AirTran
Airways. On July 11, 1996, the Board of Directors of Airways and AirTran
Airways appointed him to the office of President of Airways and President and
Chief Executive Officer of AirTran Airways. Mr. Swenson served as Director,
President and Chief Executive Officer of Mesaba Holdings, Inc. and its
subsidiary, Mesaba Aviation, Inc. from 1981 to 1995 and was Chairman of the
Board of Mesaba Holdings, Inc. and Mesaba Aviation, Inc. from 1986 to September
1995. Mr. Swenson also served as President of Mesaba's predecessor from 1978
until March 1981. Mr. Swenson holds an Airline Transport Pilot certificate with
flight instructor privileges and is type rated in the Fokker F-27 aircraft. Mr.
Swenson was a member of the Board of Directors of the Regional Airline
Association from 1985 through 1988 and served as Treasurer of the Association
during 1987 and 1988. He was elected to serve as Vice Chairman of the Board of
Directors of the Association for 1992 and was elected Chairman for 1993.
The merger agreement between Airways Corporation and the Company provided
for the Company to select four members of the Board and for Airways to select
three members of the Board. The current members of the Board were selected by
the respective companies in accordance with the terms of the merger agreement.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has a standing Audit Committee and Compensation Committee.
The Audit Committee consists of Don L. Chapman, Robert L. Priddy and John K.
Ellingboe. The Audit Committee met two times during the 1997 fiscal year. The
Audit Committee is empowered to: (i) recommend the appointment or removal of the
Company's auditors; (ii) review and recommend approval of the scope and results
of the independent audit of the Company; (iii) review audit fees; and (iv)
review changes in accounting policies that have a significant effect on the
Company's financial reports.
The Compensation Committee consists of Robert D. Swenson and Robert C.
Pohlad. Lewis H. Jordan serves as a non-voting member of this committee.
Although the Compensation Committee did not meet separately from the entire
Board during 1997, it took action by unanimous consent of its members. The
Compensation Committee is empowered to: (i) approve compensation levels for each
Executive Officer who also serves as a member of the Board of Directors and for
any other officer or employee of the Company whose annual base salary is in
excess of $100,000; (ii) approve all incentive payments to each Executive
Officer who also serves as a member of the Board of Directors; and (iii)
undertake administration, upon specific direction of the Board of Directors, of
employee benefit plans.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors met six times during the Company's 1997 fiscal
year and took action on several other occasions by unanimous consent. Each
incumbent Director attended at least 75% of the total of all Board and Committee
meetings he was entitled to attend during the 1997 year.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Two former Directors, Timothy P. Flynn and Maurice J. Gallagher, Jr.,
filed Form 4's late on one occasion each. Each filing was to report open market
sales of stock. No filing was more than ten days late.
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<PAGE>
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ended December 31, 1995,
December 31, 1996, and December 31, 1997, the cash compensation paid by the
Company, as well as certain other compensation paid or accrued for such year,
for the Company's Chief Executive Officers and four most highly compensated
Executive Officers other than the Chief Executive Officer. Such table also
indicates all capacities in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------- ------------
Other All
Name and Annual other
Principal Compen- Options Compen-
Position Year Salary ($) Bonus ($) sation($) (#) sation ($)
- ---------------------------------- ---- --------- --------- ------------ ------- -----------
<S> <C> <C> <C> <C> <C> <C>
D. Joseph Corr, President and 1997 253,151 0 0 600,000(2) 0
Chief Executive Officer (1) 1996 31,644 0 0 450,000 0
Robert L. Priddy 1997 145,753 0 0 None 0
Chairman of the Board, 1996 135,781 0 0 None 0
Chief Executive Officer (3) 1995 150,000 250,000 0 290,000 0
Lewis H. Jordan 1997 145,753 0 0 None 0
President, Chief 1996 135,781 0 0 None 0
Operating Officer (4) 1995 150,000 250,000 17,507(5) 290,000 0
James R. Jensen 1997 239,340 0 0 None 0
Senior Vice President (6) 1996 110,465 0 0 5,000 30,000(7)
Thomas Kalil 1997 129,643 0 0 150,000 0
Senior Vice President (8) 1996 105,480 0 0 None 0
1995 65,206 30,000 0 55,000 5,000(7)
</TABLE>
- -----------------
(1) Mr. Corr commenced employment with the Company in October 1996, and
therefore, the compensation shown for him for 1996 is for the period from
his employment commencement date to December 31, 1996. Prior to November
1997, Mr. Corr served as President of the Company's operating subsidiary.
(2) Includes the repricing of the 450,000 options granted in 1996.
(3) The options granted to Mr. Priddy during 1995 include options to purchase
250,000 shares of Common Stock at $18.375 per share granted in January 1996
as a part of Mr. Priddy's 1995 compensation package.
(4) The options granted to Mr. Jordan during 1995 include options to purchase
250,000 shares of Common Stock at $18.375 per share granted in January 1996
as a part of Mr. Jordan's 1995 compensation package.
(5) Consists of reimbursements of moving and related expenses which were paid in
accordance with the terms of his employment agreement with the Company.
(6) Mr. Jensen commenced employment with the Company in July 1996, and
therefore, the compensation shown for him for 1996 is for the period from
July 1996 through December 1996. Mr. Jensen's employment with the Company
has terminated in January 1998.
(7) The amounts indicated are amounts paid by the Company for moving and related
expenses.
(8) Mr. Kalil commenced employment with the Company in May 1995, and therefore,
the compensation shown for him for 1995 is for the period from May 1995
through December 1995. The options granted to Mr. Kalil during 1995 include
options to purchase 15,000 shares of Common Stock at $18.375 per share
granted in January 1996 as a part of Mr. Kalil's 1995 compensation package.
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<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Robert D. Swenson and John K.
Ellingboe, neither of whom are officers or employees of the Company.
EMPLOYMENT AGREEMENTS
D. Joseph Corr. The Company's employment agreement with Mr. Corr
provides for a three year term expiring in 1999 and severance pay equal to one
year's base salary in the event Mr. Corr's employment is terminated by the
Company without cause. Under the agreement, Mr. Corr is also entitled to
reimbursement of certain temporary living and moving expenses. Effective
January 1, 1998, Mr. Corr's base salary is $300,000 per year and he may earn a
bonus of up to $300,000 per year under the Company's executive incentive plan
based on the profitability of the Company during the year.
Robert L. Priddy. The Company's consulting agreement with Mr. Priddy
provides for a compensation of $100,000 per year for the first five years of the
agreement and $20,000 per year for the last two years. Mr. Priddy is to provide
consulting services to the Company during the seven-year term of his consulting
agreement expiring in 2004.
Lewis H. Jordan. The Company's consulting agreement with Mr. Jordan
provides for a compensation of $100,000 per year for the first five years of the
agreement and $20,000 per year for the last two years. Mr. Jordan is to provide
consulting services to the Company during the seven-year term of his consulting
agreement expiring in 2004.
STOCK OPTION PLANS
The Company has three existing stock option plans ("Stock Option Plans"):
the 1993 Stock Option Plan (the "1993 Plan"), the 1994 Stock Option Plan (the
"1994 Plan") and the 1996 Stock Option Plan (the "1996 Plan"). In addition, the
Company has assumed the Airways Corporation 1995 Stock Option Plan ("Airways
Plan") and the Airways Corporation 1995 Director Stock Option Plan ("Airways
DSOP").
A total of 4,800,000 shares of Common Stock are reserved for issuance
under the 1993 Plan. As of December 31, 1997, options to purchase 4,325,300
shares have been granted under the 1993 Plan, of which options to purchase
1,384,000 shares have been exercised and options to purchase 198,900 shares have
lapsed due to employment terminations prior to vesting. At such date, options
to purchase 2,742,400 shares were outstanding under the 1993 Plan at an average
option price of $1.72 per share and options for up to 673,600 additional shares
may be granted under the 1993 Plan. The 1993 Plan contemplates that options
will be granted to officers, directors and other key employees of the Company.
An optionee must remain an employee of the Company to retain his options. If
such status terminates, other than by reason of the death of the optionee, the
options will expire within three months of the termination.
The exercise price of the options granted under the 1993 Plan cannot be
less than the fair market value of the Common Stock on the date the option is
granted, as determined by the Compensation Committee or the Board of Directors.
Options granted under the 1993 Plan may be subject to vesting schedules which
defer the optionees' rights to exercise the option. The terms of the options
and the dates after which they become exercisable are established by the
Compensation Committee of the Board of Directors, subject to the terms of the
1993 Plan. All options granted to date under the 1993 Plan vest over a five
year period.
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<PAGE>
Options granted under the 1994 Plan, the 1996 Plan and Airways Plan may
be either incentive stock options or nonqualified options. The 1994 Plan, the
1996 Plan and Airways Plan contemplate that options may be granted to directors,
key employees and consultants of the Company. The exercise price of the options
granted under the 1994 Plan and 1996 Plan will be determined by the Compensation
Committee of the Board of Directors. Options granted under the 1994 Plan, the
1996 Plan and Airways Plan may be subject to vesting schedules which defer the
optionees' rights to exercise the option. The terms of the options and the
dates after which they become exercisable are established by the Compensation
Committee of the Board of Directors, subject to the terms of the respective
plan.
A total of 4,000,000 shares of Common Stock are reserved for issuance
under the 1994 Plan. As of December 31, 1997, options to purchase 3,945,100
shares have been granted under the 1994 Plan, of which options to purchase
589,290 have been exercised and options to purchase 448,480 shares have lapsed
due to employment terminations prior to vesting. At that date, options to
purchase 2,907,330 shares were outstanding under the 1994 Plan at an average
option price of $7.20 per share and options for up to 503,380 additional shares
may be granted under the 1994 Plan. Options granted under the 1994 Plan
generally vest over a five year period except for certain options granted to
certain officers and Directors of the Company.
A total of 5,000,000 shares of Common Stock are reserved for issuance
under the 1996 Plan. As of December 31, 1997, options to purchase 1,734,000
shares have been granted and are outstanding under the 1996 Plan at an average
exercise price of $5.92 per share. No options have been exercised or have
lapsed. Options for up to an additional 3,266,000 shares may be granted under
the 1996 Plan. Options granted under the 1996 Plan generally vest over a three
year period.
A total of 1,150,000 shares of Common Stock are reserved for issuance
under the Airways Plan. As of December 31, 1997, options to purchase 170,300
shares have been exercised and options to purchase 322,000 shares have lapsed
due to employment terminations prior to vesting. At such date, options to
purchase 683,700 shares were outstanding under the Airways Plan at an average
price of $4.50 per share and options for up to 296,000 additional shares may be
granted under the Airways Plan.
A total of 150,000 shares of Common Stock are reserved for issuance under
the Airways DSOP. As of December 31, 1997, options to purchase 40,000 shares
have been granted under the Airways DSOP, of which no options have been
exercised and options to purchase 4,000 shares have lapsed due to termination of
service as a director. At such date, options to purchase 36,000 shares were
outstanding under the Airways DSOP at an average exercise price of $6.02 per
share and options for up to 114,000 additional shares may be granted under the
Airways DSOP. Prior to the merger of Airways into the Company, each outside
director of Airways was automatically granted options to purchase 4,000 shares
on a set date annually, the exercise price for which was equal to the market
value of the underlying stock at that time. All options granted under the
Airways DSOP are nonqualified options.
The Company has from time to time granted stock options under the Stock
Option Plans in order to provide certain officers, directors, employees and
consultants with a competitive total compensation package and to reward them for
their contribution to the Company's performance. These grants of stock options
are designed to align the individual's interest with that of the Stockholders of
the Company.
The closing sale price of the Company's Common Stock on the NASDAQ Stock
Market on March 23, 1998, was $6.97 per share.
-9-
<PAGE>
The number of shares and per share stock prices indicated above have been
adjusted to reflect the two separate 2-for-1 stock splits paid to Stockholders
in the form of 100% stock dividends in April 1995 and November 1995.
FEDERAL INCOME TAX ASPECTS OF STOCK OPTION PLANS
The following general summary is based upon the Internal Revenue Code and
does not include a discussion of any state or local tax consequences.
Incentive Stock Options. An optionee does not generally realize taxable
income upon the grant or exercise of an incentive stock option.
The income tax treatment of any gain or loss realized upon an optionee's
disposition of shares of Common Stock received upon exercise of an incentive
stock option depends on the timing of the disposition. If the optionee holds
the shares received upon exercise of an incentive stock option for at least two
years from the date such incentive stock option was granted, and at least one
year from the date of exercise, the difference between the amount realized from
the sale of such shares and the optionee's tax basis will be taxed as long-term
capital gain or loss.
If an optionee disposes of the shares of Common Stock before the end of
the applicable holding periods described above (i.e., he makes a "disqualifying
disposition"), such optionee may have taxable income in the year of the
disqualifying disposition, depending on the selling price. If the selling price
exceeds the fair market value of the incentive stock option on the date of
exercise, the excess of that fair market value over the exercise price is
taxable to the optionee as ordinary income, and the excess of the selling price
over the fair market value is taxable to the optionee as capital gain. If the
selling price exceeds the exercise price but not the fair market value on the
date of exercise, the excess of the selling price over the exercise price is
taxable to the optionee as ordinary income. If the selling price is less than
the exercise price, the difference is treated as capital loss.
The Company is not entitled to a deduction for federal income tax
purposes with respect to the grant or exercise of an incentive stock option or
the disposition of shares of Common Stock acquired upon exercise (if the
applicable holding periods have been met). In the event of a disqualifying
disposition, however, the Company is entitled to a federal income tax deduction
in an amount equal to the ordinary income recognized by the optionee.
Nonqualified Stock Options. An optionee will not recognize any taxable
income upon the grant of a nonqualified option. However, upon exercise of a
nonqualified option, an optionee must recognize ordinary income in an amount
equal to the excess of the fair market value of the shares of Common Stock at
the time of exercise over the exercise price. Upon the subsequent disposition
of the shares, the optionee will realize a capital gain or loss, depending on
whether the selling price exceeds the fair market value of the shares on the
date of exercise.
An optionee's tax basis in the shares of Common Stock received on
exercise of a nonqualified option will be equal to the amount of consideration
paid by the optionee on exercise, plus the amount of ordinary income recognized
as a result of the receipt of such shares. The Company will be entitled to a
deduction for federal income tax purposes at the same time and in the same
amount as the optionee recognizes taxable income.
-10-
<PAGE>
The summary of federal income tax consequences set forth above is for
general information only and may not be applicable to or complete with respect
to all individuals. Individuals to whom options are granted should consult
their own tax advisors for a determination as to the specific tax consequences
applicable to them.
OPTION GRANTS IN LAST FISCAL YEAR
The table below sets forth information regarding all stock options
granted in the 1997 fiscal year under the Company's Stock Option Plans to those
Executive Officers of the Company named in the Compensation Table above:
<TABLE>
<CAPTION>
% of
Total Market
Number of Options Price
Securities Granted to or Fair Potential Realized Value at
Underlying Employees Value Assumed Annual Rates of
Options in Fiscal Exercise on Date Expiration Stock Price Appreciation (2)
Granted Year Price of Grant Date 5% 10%
----------- ---------- -------- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
D. Joseph Corr 450,000(1) 25.7% $7.125 $7.125 10/29/06 $2,016,393 $5,109,937
D. Joseph Corr 150,000 8.6% $ 5.50 $ 5.50 11/25/07 $ 518,838 $1,314,838
James R. Jensen None
Robert L. Priddy None
Lewis H. Jordan None
Thomas Kalil 150,000 8.6% $ 5.50 $ 5.50 11/25/07 $ 518,838 $1,314,838
</TABLE>
- -------------------
(1) Includes the repricing of 450,000 options granted in 1996.
(2) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the Securities and Exchange Commission and therefore
are not intended to forecast possible future appreciation, if any, of the
price of the Company's stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table shows aggregate exercises of options during 1997 and
the values of options held by the Company's Executive Officers as of December
31, 1997.
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised Options In-The-Money Options
December 31, 1997 (#) December 31, 1997 (1)
Shares Acquired Value Exercisable (E)/ Exercisable (E)/
Name on Exercise (#) Realized Unexercisable (U) Unexercisable (U)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
D. Joseph Corr - - 150,000 E None
D. Joseph Corr - - 450,000 U None
Robert L. Priddy - - 640,000 E $ 212,500 E
Lewis H. Jordan - - 3,040,000 E $ 9,412,480 E
James R. Jensen - - 5,000 E None
Thomas Kalil - - 31,000 E None
Thomas Kalil - - 174,000 U None
</TABLE>
- --------------
(1) Amounts shown are based upon the closing sale price for the Company's Common
Stock on December 31, 1997, which was $4.00 per share.
-11-
<PAGE>
DIRECTOR COMPENSATION
The Company's outside Directors (Messrs. Chapman, Ellingboe, Jordan,
Pohlad, Priddy and Swenson) receive a retainer of $5,000 per quarter plus
meeting fees of $1,000 per meeting of the Board of Directors or Committee
attended in person and $500 per meeting of the Board of Directors or Committee
attended by phone in addition to reimbursement of their expenses in attending
meetings of the Board of Directors. In addition, each outside Director is to
receive options to purchase 5,000 shares of Common Stock upon the date of the
Company's annual stockholders' meeting at the then current stock price, with
vesting over three years of service for the Company.
REPORT ON REPRICING OF OPTIONS
In January 1997, the Company repriced options granted to D. Joseph Corr
in October 1996. The options were originally granted to Mr. Corr to provide
incentive to him in connection with his acceptance of the position of Chief
Executive Officer of the Company's operating subsidiary. Unrelated to Mr.
Corr's performance in such capacity, the Company's stock price fell from $9.625
on the date of grant of such options to $7.125 on January 6, 1997. The Board
determined to reprice the options in order to maintain in place the incentive
sought to be provided by way of such options. No other options for Company
employees have ever been repriced.
Submitted by:
BOARD OF DIRECTORS
Don L. Chapman
Timothy P. Flynn
Maurice J. Gallagher, Jr.
Lewis H. Jordan
Robert L. Priddy
The following table sets forth information regarding all repricing of
stock options held by any executive officer since the Company's inception:
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
Market Exercise Length of
Number of Price Price at Original
Securities of Stock at Time of Option Term
Underlying Time of Repricing New Remaining at
Options Repricing or or Exercise Date of
Repriced or Amendment Amendment Price Repricing or
Name Date Amended (#) ($) ($) ($) Amendment
- ---- ---- ----------- ------------ ---------- ------ ----------------
<S> <C> <C> <C> <C> <C> <C>
D. Joseph Corr 1/6/97 450,000 $7.125 $9.625 $7.125 Expires 10/29/06
</TABLE>
-12-
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation of the Company's Executive Officers is determined by the
Compensation Committee of the Board of Directors on an annual basis. The
Compensation Committee considers all elements of compensation in making its
determinations. With respect to those Executive Officers who do not serve on the
Company's Board of Directors, the Compensation Committee also considers the
recommendations of the Company's President. The principal elements of
compensation for the Company's Executive Officers are base salary, cash bonuses
and stock incentives and stock options.
Base Salary. The base salary of the Company's President and Chief
Executive Officer (D. Joseph Corr) was initially established under his
employment agreement which was signed in 1996. The employment agreement
establishes a base salary of $250,000 per year. The entire Board of Directors
determined to increase Mr. Corr's base salary to $300,000 for 1998.
Cash Bonuses. The Company has adopted an Executive Incentive Compensation
Plan for 1998 under which Mr. Corr and other management employees will be
entitled to a bonus in 1998 based on the Company's profitability (calculated
based on a return on equity) in excess of a base rate equal to the treasury bill
rate. Due to the Company's lack of profitability during 1997, no bonuses were
paid to the Company's Executive Officers for the year.
Stock Options. The Company intends to rely heavily on stock options to
provide incentive compensation to its Executive Officers and other key employees
and to align their interests with those of the Company's Stockholders. In that
regard, stock options to purchase 1,284,000 were granted, all exercisable at
fair market value, to 33 employees, including 654,000 options to the five
Executive Officers of the Company. All of these options will vest over three
years. These options were granted at the end of 1997. The vesting schedule is
designed to encourage employment with the Company throughout the vesting period.
Submitted by
COMPENSATION COMMITTEE
John K. Ellingboe Robert D. Swenson
The foregoing report should not be deemed incorporated by reference by
any general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
-13-
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following stock price performance graph compares the Company's
performance to the CRSP Total Return Index for The NASDAQ Stock Market (US) and
the Standard & Poors Airlines Index. The stock price performance graph assumes
an investment of $100 in the Company and the two indexes, respectively, on June
28, 1994, and further assumes the reinvestment of all dividends. The Standard &
Poors Airlines Index includes AMR Corporation, Delta Air Lines, USAir Group and
Southwest Airlines. Stock price performance, presented for the period from June
28, 1994 (the date upon which the Common Stock of the Company was first traded)
through December 31, 1997 is not necessarily indicative of future results. The
June 28, 1994 stock price used for the Company's stock is the initial public
offering price.
<TABLE>
6/28/94 12/31/94 12/31/95 12/31/96 12/31/97
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
AirTran Holdings, Inc. $100.00 $170.00 $792.00 $206.00 $128.00
Standard & Poors Airlines Index $100.00 $ 84.08 $122.79 $134.61 $226.57
NASDAQ Stock Market Index (US) $100.00 $107.71 $152.33 $187.35 $229.91
</TABLE>
The stock price performance graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
-14-
<PAGE>
CERTAIN TRANSACTIONS
The Company purchases ground support equipment from Tug Manufacturing
Corporation ("Tug") in which Don L. Chapman is an officer and 100% stockholder.
The amount of ground support equipment purchased by the Company from Tug was
approximately $230,000 during 1997. The Company intends to continue purchasing
such equipment from Tug so long as Tug's equipment meets the Company's quality,
price and time of delivery requirements. The Company began to purchase
equipment from Tug prior to Mr. Chapman being elected to the Company's Board of
Directors and management believes that its purchases from Tug are at competitive
prices and terms.
Severance pay of $200,000 was paid to Robert D. Swenson in connection
with the termination of his employment as President and Chief Executive Officer
of Airways.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP as the Company's
independent auditors for the ensuing fiscal year. Ernst & Young LLP has served
as the Company's independent auditors since its inception. Representatives of
Ernst & Young LLP are expected to be present at the Annual Meeting with the
opportunity to make a statement if they desire to do so and to respond to
appropriate questions.
OTHER MATTERS
STOCKHOLDERS' PROPOSALS FOR ANNUAL MEETING TO BE HELD IN 1999
The Company plans to hold its 1999 Annual Meeting of Stockholders during
the month of May. Any proposal of a Stockholder intended to be presented at
said Annual Meeting of Stockholders must be received by the Company for
inclusion in the proxy statement and form of proxy for that meeting no later
than December 7, 1998.
ACTION ON OTHER MATTERS AT THE ANNUAL MEETING
At this time, the Company does not know of any other matters to be
presented for action at the Annual Meeting other than those mentioned in the
Notice of Annual Meeting of Stockholders and referred to in this proxy
statement. If any other matter comes before the meeting, it is intended that the
proxies will be voted in respect thereof in accordance with the judgment of the
persons voting the proxies.
-15-
<PAGE>
STOCKHOLDERS ARE URGED TO DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED
PROXY IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. YOUR COOPERATION WILL BE APPRECIATED. YOUR PROXY WILL BE VOTED,
WITH RESPECT TO THE MATTERS IDENTIFIED THEREON, IN ACCORDANCE WITH ANY
SPECIFICATIONS ON THE PROXY.
BY ORDER OF THE BOARD OF DIRECTORS,
Leslie C. Head
Secretary
-16-
<PAGE>
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 14, 1998
AIRTRAN HOLDINGS, INC.
The undersigned hereby appoints D. Joseph Corr and Leslie C. Head, or either
of them, as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares
of common stock held of record on March 23, 1998, at the Annual Meeting of the
Stockholders to be held on May 14, 1998, at 11:00 A.M. at the Marriott at the
Airport, 7499 Augusta National Drive, Orlando, Florida 32822, or any
adjournment thereof.
1. Election of Directors
For all nominees [_] Withhold [_]
listed below (except authority to
as marked to the vote for all
contrary below) nominees listed
below
(Instruction: To withhold authority to vote for any individual nominee
strike a line through the nominee's name in the list below).
Lewis H. Jordan, Robert C. Pohlad
2. In their discretion, the Proxies are authorized to vote upon such other
business as may come before the meeting or adjournment thereof.
THIS PROXY, DULY EXECUTED, WILL BE VOTED AS SPECIFIED. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
<PAGE>
AIRTRAN HOLDINGS, INC.
PROXY
The undersigned hereby acknowledges receipt of the Proxy Statement and Notice
of Annual Meeting to be held May 14, 1998.
Dated: ____________________ , 1998
___________________________ (SEAL)
___________________________ (SEAL)
(Please sign exactly as your name
appears hereon. If stock is reg-
istered in more than one name,
each holder should sign. When
signing as an attorney, adminis-
trator, executor, guardian or
trustee, please add your title as
such. If executed by a corpora-
tion, the proxy should be signed
by a duly authorized officer).
PLEASE SIGN, DATE AND PROMPTLY
RETURN THIS PROXY IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
I PLAN TO ATTEND
---------
