PRE 14A 1 d644689dpre14a.htm PRE 14A PRE 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN

PROXY STATEMENT

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant  þ                            Filed by a Party other than the Registrant  ¨

Check the appropriate box:

 

þ    Preliminary Proxy Statement
¨    Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
¨    Definitive Proxy Statement
¨    Definitive Additional Materials
¨    Soliciting Material Pursuant to § 240.14a-12
DELTA AIR LINES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ    No fee required.
¨    Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
   (1)   

Title of each class of securities to which the transaction applies:

 

     

 

   (2)   

Aggregate number of securities to which the transaction applies:

 

     

 

   (3)   

Per unit price or other underlying value of the 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 the transaction:

 

     

 

   (5)   

Total fee paid:

 

     

 

¨    Fee paid previously with preliminary materials.
¨    Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
   (1)   

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LOGO

Delta Air Lines, Inc.

P.O. Box 20706

Atlanta, GA 30320

DELTA AIR LINES, INC.

Notice of Annual Meeting

Dear Stockholder:

On behalf of the Board of Directors, it is a pleasure to invite you to attend the 2014 Annual Meeting of Stockholders of Delta Air Lines, Inc. The meeting will be held at 7:30 a.m. Eastern Daylight Time on Friday, June 27, 2014, at the offices of Cravath, Swaine & Moore LLP, 825 Eighth Avenue, New York, New York 10019. At the meeting, stockholders will vote on the following matters:

 

   

the election of directors for the next year;

 

   

an advisory vote on executive compensation (also known as “say on pay”);

 

   

the ratification of the appointment of Ernst & Young LLP as Delta’s independent auditors for the year ending December 31, 2014;

 

   

an increase in the maximum number of directors;

 

   

one stockholder proposal (if the proposal is properly presented at the meeting); and

 

   

any other business that may properly come before the meeting.

If you were a holder of record of Delta common stock at the close of business on May 2, 2014, you will be entitled to vote at the meeting. A list of stockholders entitled to vote at the meeting will be available for examination during normal business hours for ten days before the meeting at Delta’s Investor Relations Department, 1030 Delta Boulevard, Atlanta, Georgia 30354. The stockholder list will also be available at the meeting.

Because space at the meeting is limited, admission will be on a first-come, first-served basis. Stockholders without appropriate documentation may not be admitted to the meeting. If you plan to attend the meeting, please see the instructions on page 8 of the attached proxy statement. If you will need special assistance at the meeting because of a disability, contact Investor Relations toll free at (866) 715-2170.

We encourage stockholders to sign up to receive future proxy materials electronically, including the Notice Regarding the Availability of Proxy Materials. Using electronic communication significantly reduces our printing and postage costs and helps protect the environment. To sign up, visit

http://enroll.icsdelivery.com/dal.

Please read our attached proxy statement carefully and submit your vote as soon as possible. Your vote is important. You can ensure that your shares are voted at the meeting by using our Internet or telephone voting system, or by completing, signing and returning a proxy card.

Sincerely,

 

LOGO

 

   LOGO
Richard H. Anderson    Daniel A. Carp
Chief Executive Officer    Chairman of the Board

Atlanta, Georgia

May 13, 2014


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TABLE OF CONTENTS

 

PROXY STATEMENT SUMMARY

     1   

GENERAL INFORMATION

     5   

Internet Availability of Proxy Materials

     5   

Stockholders Entitled to Vote

     5   

Voting Shares of Common Stock Registered in Your Name or Held under Plans

     5   

Revoking a Proxy or Voting Instructions

     6   

Voting Shares Held in “Street Name”

     6   

Limitation on Brokers’ Authority to Vote Shares

     6   

Quorum for the Annual Meeting

     7   

Votes Necessary to Act on Proposals

     7   

Recommendations of the Board of Directors

     7   

Presentation of Other Business at the Meeting

     8   

Attending the Meeting

     8   

GOVERNANCE MATTERS

     9   

Governance Overview

     9   

Director Independence

     9   

Directors Elected Annually; Majority Voting for Directors

     9   

Identification and Selection of Nominees for Director

     9   

Audit Committee Financial Experts

     10   

Compensation Committee Interlocks and Insider Participation

     10   

Communications with Directors

     10   

Board of Directors

     10   

Board of Directors Leadership Structure

     10   

Board Committees

     11   

Board Oversight of Risk Management

     13   

PROPOSAL 1 — ELECTION OF DIRECTORS

     15   

Certain Information About Nominees

     15   

BENEFICIAL OWNERSHIP OF SECURITIES

     21   

Directors, Nominees for Director and Executive Officers

     21   

Beneficial Owners of More than 5% of Voting Stock

     22   

EXECUTIVE COMPENSATION

     23   

Compensation Discussion and Analysis

     23   

Executive Summary

     23   

Executive Compensation Philosophy and Objectives

     26   

Say on Pay Voting Results

     27   

Administration of the Executive Compensation Program

     27   

Compensation Decision Factors

     29   

Comparative Market Data; Peer Group

     29   

Elements of Compensation

     31   

Risk Assessment

     39   

Executive Compensation Policies

     39   

Compensation for Mr. Anderson

     41   

Post-Employment Compensation

     41   

 

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Tax and Accounting Impact and Policy

     42   

Compensation Committee Report

     42   

Information about Summary Compensation Table and Related Matters

     43   

Summary Compensation Table

     43   

Grants of Plan-Based Awards Table

     46   

Outstanding Equity Awards at Fiscal Year-end Table

     48   

Option Exercises and Stock Vested Table

     49   

Post-Employment Compensation

     49   

Defined Benefit Pension Benefits

     49   

Pension Benefits Table

     50   

Potential Post-Employment Benefits upon Termination or Change in Control

     51   

Other Benefits

     52   

Tables Regarding Potential Post-Employment Benefits upon Termination or Change in Control

     55   

DIRECTOR COMPENSATION

     59   

Stock Ownership Guidelines

     59   

Director Compensation Table

     60   

AUDIT COMMITTEE REPORT

     61   

PROPOSAL 2 — ADVISORY VOTE ON EXECUTIVE COMPENSATION

     63   

PROPOSAL 3 — RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS

     64   

Fees of Independent Auditors for 2013 and 2012

     64   

Pre-Approval of Audit and Non-Audit Services

     64   

PROPOSAL 4 — INCREASE IN MAXIMUM NUMBER OF DIRECTORS

     65   

PROPOSAL 5 — STOCKHOLDER PROPOSAL – SENIOR EXECUTIVE STOCK RETENTION REQUIREMENT

     66   

OTHER MATTERS

     69   

Cost of Solicitation

     69   

Submission of Stockholder Proposals

     69   

Section 16 Beneficial Ownership Reporting Compliance

     69   

Supplemental Information about Financial Measures

     69   

 

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PROXY STATEMENT SUMMARY

Meeting:

   Annual Meeting of Stockholders

Date:

   Friday, June 27, 2014

Time:

   7:30 a.m Eastern Daylight Time

Location:

   Offices of Cravath, Swaine & Moore LLP, 825 Eighth Avenue, New York, New York 10019 (located in Midtown Manhattan between 49th and 50th Streets)

Record Date:

   May 2, 2014

Voting:

   Stockholders as of the record date are entitled to vote. Each outstanding share of common stock is entitled to one vote.
Meeting Agenda and Board Recommendations
Matter    Board Recommendation    Page Reference

Management Proposals

         

Item 1: Election of Directors

   FOR each director nominee    15

Item 2: Advisory Vote on Executive Compensation

   FOR    63

Item 3: Ratification of the Appointment of Independent Auditors

   FOR    64

Item 4: Increase in the Maximum Number of Directors

   FOR    65

Stockholder Proposal

         

Item 5: Senior Executive Stock Retention Requirement

   AGAINST    66

ITEM 1.    Election of Directors: We ask you to elect 14 directors. Each of the directors listed in the chart below is standing for election to hold office until the next annual meeting of stockholders or until his or her successor is elected and qualified. The following chart provides summary information about each director nominee. Additional information may be found beginning on page 15.

 

Director   Age     Director
Since
    Occupation   Independent     Other
Public
Boards
    Delta
Committees

Richard H. Anderson

    58        2007      CEO of Delta             1      n/a

Edward H. Bastian

    56        2010      President of Delta             1      n/a

Roy J. Bostock

    73        2008      Principal, Sealedge Investments; Former Chairman and CEO of McManus Group     X        0      CG, S&S

John S. Brinzo

    72        2007      Former Chairman, President and CEO of Cliffs Natural Resources     X        1      A, P&C

Daniel A. Carp

    65        2007      Former Chairman and CEO of Eastman Kodak     X        2      CG*, S&S

David G. DeWalt

    49        2011      Chairman and CEO of FireEye     X        1      F, P&C*

William H. Easter III

    64        2012      Former Chairman, President and CEO of DCP Midstream     X        1      CG, F

Mickey P. Foret

    68        2008      Former CFO of Northwest Airlines     X        2      A, S&S

Shirley C. Franklin

    68        2011      CEO of Purpose Built Communities; Former Mayor of the City of Atlanta     X        1      A, P&C

David R. Goode

    73        1999      Former Chairman and CEO of Norfolk Southern     X        0      F, P&C

George N. Mattson

    48        2012      Private Equity Investor; Former Partner of Goldman Sachs     X        0      F, P&C

Paula Rosput Reynolds

    57        2004      President and CEO of PreferWest; Former President and CEO of Safeco     X        3      A*, CG

Kenneth C. Rogers

    53        2008      Pilot B767ER, Delta             0      F, S&S*

Kenneth B. Woodrow

    69        2004      Former Vice Chairman and President of Target     X        0      F*, P&C

 

A - Audit Committee

CG - Corporate Governance Committee

F - Finance Committee

PC - Personnel & Compensation Committee

SS - Safety and Security Committee

* - Chair

 

 

DELTA AIR LINES, INC.   1   PROXY STATEMENT SUMMARY


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PROXY STATEMENT SUMMARY

 

ITEM 2: Advisory Vote on Executive Compensation

We ask you to approve, on an advisory basis, compensation awarded to our named executive officers. Additional information regarding executive compensation may be found in the summary section below and on page 63.

 

ITEM 3: Ratification of the Appointment of Independent Auditors

We ask you to ratify the appointment of Ernst & Young LLP as independent auditor for 2014. Additional information may be found on page 64.

 

ITEM 4: Increase in the Maximum Number of Directors

We ask you to approve an amendment to the company’s certificate of incorporation that would allow for an increase in the maximum number of directors from 15 to 18. Additional information may be found on page 65.

 

ITEM 5: Senior Executive Stock Retention Requirement

We ask you to vote against a stockholder proposal requesting the Board of Directors adopt a stock retention policy in which senior executives would be required to retain at least seventy-five percent of net after-tax shares received through Delta’s equity compensation plans until retirement age is reached or employment is terminated. Additional information may be found beginning on page 66.

 

2013 Performance Highlights

We had a successful 2013, a year in which we re-joined the S&P 500 and reported record financial performance. Delta’s performance was recognized when we were named one of the top 50 world’s most admired companies for 2014 and the most admired airline in 2013 and 2014 by Fortune magazine. Our closing stock price at December 31, 2013 increased more than 130% over the year-end 2012 price and was the fourth best stock price performance in the S&P 500 in 2013. Key accomplishments in 2013 include:

Strong Financial Results*

 

•       Excluding special items, earned net income of $2.7 billion, a $1.1 billion increase over 2012 and Delta’s fourth consecutive year of solid profitability.

   LOGO

•       Returned $350 million to shareholders through a combination of quarterly cash dividends and stock repurchases; reduced adjusted net debt to $9.4 billion, a $2.3 billion reduction from 2012

   LOGO

 

 

* See “Supplemental Information about Financial Measures” at the end of this proxy statement for a reconciliation of non-GAAP financial measures to the corresponding GAAP financial measures, and the reasons we use non-GAAP financial measures. On a GAAP basis for 2013, net income was $8.5 billion; and debt and capital lease obligations were $11.3 billion as of December 31, 2013. Our Annual Report on Form 10-K for 2013 is available at http://ir.delta.com/shareholder-resources/annual-meetings/default.aspx but is not incorporated into this Proxy Statement.

 

PROXY STATEMENT SUMMARY   2   DELTA AIR LINES, INC.


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PROXY STATEMENT SUMMARY

Continued Revenue Momentum

 

•      Expanded operating revenue by $1.1 billion to $37.8 billion, a 3% increase over 2012.

 

•      Increased unit passenger revenue 2.7% and generated a unit revenue premium to the industry for the third year in a row.

   LOGO

Excellent Operating Performance

 

•      Continued improvement in operating performance, resulting in an on-time arrival rate of 85%, a flight completion factor of 99.7%, and a 20% decline in Department of Transportation customer complaints compared to 2012.

   LOGO

 

Executive Compensation Program

Pay for performance is the foundation of our executive compensation philosophy, as the following highlights reflect:

 

   

Under our pay for performance philosophy, our executive compensation program places a substantial portion of total compensation at risk (i.e., value received is contingent upon Delta’s financial, operational and stock performance), emphasizing variable over fixed compensation. Ninety-four percent of Delta’s Chief Executive Officer’s compensation for 2013 was at risk. Eighty-three percent of Mr. Anderson’s total compensation is concentrated in equity-based opportunities and his cash-based compensation (base salary and annual bonus) is below the 25th percentile of Delta’s custom peer group.

 

   

Our annual and long-term incentive plans utilize stretch financial, operational and customer service-related performance goals to drive Delta’s business strategy, deliver value to our stockholders and align the interests of management with frontline employees.

 

   

We continue to focus on long-term compensation opportunities. The Personnel & Compensation Committee of the Board of Directors increased the duration of all awards granted under future long-term incentive plans to three years beginning in 2013, compared to two years in 2012. For further information see the “Compensation Discussion and Analysis” section of the proxy statement under “Elements of Compensation — Long-Term Incentives.”

 

   

We do not provide any supplemental executive retirement plans to our executive officers. They participate in the same on-going retirement plans as our frontline employees.

 

DELTA AIR LINES, INC.   3   PROXY STATEMENT SUMMARY


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PROXY STATEMENT SUMMARY

 

Governance Highlights

Our values and culture are the foundation of our success. We regularly assess our governance practices and highlights include:

 

   

Independent chairman

 

   

Directors elected annually

 

   

Majority voting for directors in uncontested elections

 

   

11 of 14 director-nominees are independent

 

   

Executive sessions without management directors at Board of Directors and Board Committee meetings

 

   

Stock ownership and retention guidelines for members of the Board of Directors

 

   

Strengthened stock ownership and retention guidelines for executive officers in 2013

 

   

Active Board oversight of risk management

 

   

Regular succession planning

 

   

All members of the Audit Committee of the Board of Directors are designated financial experts under the rules of the Securities and Exchange Commission

 

   

Anti-hedging and anti-pledging policy for all employees and Board members

 

   

No stockholder rights plan (poison pill) or super majority voting

 

   

Commitment to sustainability (inclusion in Dow Jones Sustainability Index)

 

   

Annual advisory vote to approve executive compensation

 

   

Regular outreach to institutional stockholders

 

   

Clawback policy

 

   

No employment contracts, supplemental executive retirement plans, company cars or other significant perquisites

 

PROXY STATEMENT SUMMARY   4   DELTA AIR LINES, INC.


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GENERAL INFORMATION

Internet Availability of Proxy Materials

Under rules adopted by the Securities and Exchange Commission (“SEC”), we are furnishing proxy materials (including our 2013 Form 10-K) to our stockholders on the Internet, rather than mailing paper copies to each stockholder. If you received a Notice Regarding the Availability of Proxy Materials (the “Notice”) by U.S. or electronic mail, you will not receive a paper copy of these proxy materials unless you request one. Instead, the Notice tells you how to access and review the proxy materials and vote your shares on the Internet. If you would like to receive a paper copy of our proxy materials free of charge, follow the instructions in the Notice. The Notice will be distributed to our stockholders beginning on or about May 13, 2014.

Stockholders Entitled to Vote

The Board of Directors set May 2, 2014 as the record date for determining the stockholders entitled to notice of and to vote at the annual meeting. On the record date, [] shares of Delta common stock, par value $0.0001 per share, were outstanding. The common stock is the only class of securities entitled to vote at the meeting. Each outstanding share entitles its holder to one vote.

Voting Shares of Common Stock Registered in Your Name or Held under Plans

The control number you receive in your Notice covers shares of common stock in any of the following forms:

 

   

common stock registered in your name (“registered shares”);

 

   

common stock held in your account under the Delta Pilots Savings Plan (“Pilot Plan”);

 

   

common stock allocated to your account under the Delta Family-Care Savings Plan (“Savings Plan”); or

 

   

unvested restricted common stock granted under the Delta Air Lines, Inc. 2007 Performance Compensation Plan.

The control number you receive in your Notice does not cover shares of common stock purchased pursuant to the Employee Stock Purchase Plan. Those shares are held for your benefit by Fidelity in street name. For information about voting those shares, see “Voting Shares Held in ‘Street Name’” below.

Your submission of voting instructions for registered shares results in the appointment of a proxy to vote those shares. In contrast, your submission of voting instructions for common stock held in your Pilot Plan account or allocated to your Savings Plan account, or for unvested restricted common stock granted under the Delta Air Lines, Inc. 2007 Performance Compensation Plan, instructs the applicable plan trustee or administrator how to vote those shares, but does not result in the appointment of a proxy. You may submit your voting instructions regarding all shares covered by the same control number before the meeting by using our Internet or telephone system or by completing and returning a proxy card, as described below:

 

   

Voting by the Internet or Telephone. You may vote using the Internet or telephone by following the instructions in the Notice to access the proxy materials and then following the instructions provided to allow you to record your vote. After accessing the proxy materials, to vote by telephone, call 1-800-690-6903 or to vote by the Internet, go to www.proxyvote.com and follow the instructions. The Internet and telephone voting procedures are designed to authenticate votes cast by using a personal identification number. These procedures enable stockholders to confirm their instructions have been properly recorded.

 

   

Voting by Proxy Card. If you obtained a paper copy of our proxy materials, you may also vote by signing, dating and returning your instructions on the proxy card in the enclosed postage-paid envelope. Please sign the proxy card exactly as your name appears on the card. If shares are owned jointly, each joint owner should sign the proxy card. If a stockholder is a corporation or partnership, the proxy card should be signed in the full corporate or partnership name by a duly authorized person. If the proxy card is signed pursuant to a power of attorney or by an executor, administrator, trustee or guardian, state the signer’s full title and provide a certificate or other proof of appointment.

 

DELTA AIR LINES, INC.   5   GENERAL INFORMATION


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To be effective, instructions regarding shares held in your Pilot Plan account or allocated to your Savings Plan account must be received by 5:00 p.m. Eastern Daylight Time on June 25, 2014. Instructions regarding registered shares or unvested restricted common stock must be received by 5:00 p.m. Eastern Daylight Time on June 26, 2014.

You may also vote registered shares by attending the annual meeting and voting in person by ballot; this will revoke any proxy you previously submitted.

Note that you may not vote shares of unvested restricted common stock, shares held in your Pilot Plan account or shares allocated to your Savings Plan account in person at the meeting. If you do not submit voting instructions in a timely manner regarding shares of unvested restricted common stock, shares held in your Pilot Plan account or shares allocated to your Savings Plan account, they will not be voted.

All properly submitted voting instructions, whether submitted by the Internet, telephone or U.S. mail, will be voted at the annual meeting according to the instructions given, provided they are received prior to the applicable deadlines described above. All properly submitted proxy cards not containing specific instructions will be voted in accordance with the Board of Directors’ recommendations set forth on page 1. The members of Delta’s Board of Directors designated to vote the proxies returned pursuant to this solicitation are Richard H. Anderson, Roy J. Bostock and Daniel A. Carp.

Revoking a Proxy or Voting Instructions

If you hold registered shares, unvested restricted common stock, shares in your Pilot Plan account or shares allocated to your Savings Plan account, you may revoke your proxy or voting instructions prior to the meeting by:

 

   

providing written notice to Delta’s Legal Department at Delta Air Lines, Inc., Dept. No. 981, 1030 Delta Boulevard, Atlanta, Georgia 30354, Attention: Assistant Corporate Secretary; or

 

   

submitting later-dated instructions by the Internet, telephone or U.S. mail.

To be effective, revocation of instructions regarding shares held in your Pilot Plan account or allocated to your Savings Plan account must be received by 5:00 p.m. Eastern Daylight Time on June 25, 2014. Revocation of instructions regarding registered shares or unvested restricted common stock must be received by 5:00 p.m. Eastern Daylight Time on June 26, 2014.

You may also revoke your proxy covering registered shares by attending the annual meeting and voting in person by ballot. Attending the meeting will not, by itself, revoke a proxy. Note that you may not vote shares of unvested restricted common stock, shares held in your Pilot Plan account or shares allocated to your Savings Plan account in person at the meeting.

Voting Shares Held in “Street Name”

If your shares are held in the name of a broker, bank or other record holder (that is, in “street name”), refer to the instructions provided by the record holder regarding how to vote your shares or to revoke your voting instructions. This includes any shares purchased through the Employee Stock Purchase Plan. You may also obtain a proxy from the record holder permitting you to vote in person at the annual meeting. Without a proxy from the record holder, you may not vote shares held in street name by returning a proxy card or by voting in person at the annual meeting. If you hold your shares in street name, it is critical that you provide instructions to, or obtain a proxy from, the record holder if you want your shares to count in the election of directors (Proposal 1), the advisory vote on executive compensation (Proposal 2), the proposal to increase the maximum number of directors (Proposal 4), and the stockholder proposal (Proposal 5). As described in the next section of this proxy statement, regulations prohibit your bank or broker from voting your shares in the election of directors (Proposal 1) and Proposals 2, 4 and 5 if you do not provide voting instructions.

Limitation on Brokers’ Authority to Vote Shares

Under New York Stock Exchange (“NYSE”) rules, brokerage firms may vote in their discretion on certain matters on behalf of clients who do not provide voting instructions at least 15 days before the date of the annual meeting. Generally, brokerage firms may vote to ratify the appointment of independent auditors and on other

 

GENERAL INFORMATION   6   DELTA AIR LINES, INC.


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“discretionary” items, but brokers are not permitted to vote your shares for the election of directors (Proposal 1) and Proposals 2, 4 and 5 unless you provide voting instructions. Accordingly, if your shares are held in a brokerage account and you do not return voting instructions to your broker by its deadline, your shares may be voted by your broker on Proposal 3, but not the other proposals described in this proxy statement. Broker non-votes will not be considered in connection with Proposals 1, 2 and 5 and will have the same effect as a vote against Proposal 4. Therefore, we urge you to give voting instructions to your broker on all proposals.

Quorum for the Annual Meeting

The quorum at the annual meeting will consist of a majority of the votes entitled to be cast by the holders of all shares of common stock that are outstanding and entitled to vote. Abstentions from voting and broker non-votes, if any, will be counted in determining whether a quorum is present. The meeting will not commence if a quorum is not present.

Votes Necessary to Act on Proposals

At an annual meeting at which a quorum is present, the following votes will be necessary on each of the proposals:

 

   

Each director shall be elected by the vote of a majority of the votes cast with respect to the director. For purposes of this vote, a majority of the votes cast means that the number of shares voted “for” a director must exceed 50% of the votes with respect to that director (excluding abstentions).

 

   

The advisory vote to approve executive compensation (“say on pay”) requires the affirmative vote of the majority of shares present and entitled to vote at the meeting. Abstentions have the same effect as votes against the proposal. Even though the outcome of the vote is advisory and therefore will not be binding on Delta, the Personnel & Compensation Committee of the Board of Directors will review and consider the voting results when making future decisions regarding executive compensation.

 

   

Ratification of the appointment of Ernst & Young LLP as independent auditors for the year ending December 31, 2014 requires the affirmative vote of the majority of shares present and entitled to vote at the meeting. Abstentions have the same effect as votes against the proposal.

 

   

Approval of an amendment to our certificate of incorporation to allow an increase in the maximum number of directors requires the affirmative vote of a majority of the outstanding shares of our common stock. Abstentions have the same effect as votes against the proposal.

 

   

Approval of the stockholder proposal described in this proxy statement requires the affirmative vote of the majority of shares present and entitled to vote. Abstentions have the same effect as votes against the proposal.

Broker non-votes, if any, will be handled as described under “Limitation on Brokers’ Authority to Vote Shares.”

Recommendations of the Board of Directors

The Board of Directors recommends that you vote:

 

   

FOR the election of the director-nominees named in this proxy statement;

 

   

FOR the approval, on an advisory basis, of the compensation of Delta’s named executive officers;

 

   

FOR the ratification of the appointment of Ernst & Young LLP as Delta’s independent auditors for the year ending December 31, 2014;

 

   

FOR the approval of an increase in the maximum number of directors; and

 

   

AGAINST the stockholder proposal described in this proxy statement.

All properly submitted proxy cards not containing specific instructions will be voted in accordance with the Board’s recommendations.

 

DELTA AIR LINES, INC.   7   GENERAL INFORMATION


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Presentation of Other Business at the Meeting

Delta is not aware of any business to be transacted at the annual meeting other than as described in this proxy statement. If any other item or proposal properly comes before the meeting (including, but not limited to, a proposal to adjourn the meeting in order to solicit votes in favor of any proposal contained in this proxy statement), the proxies received will be voted at the discretion of the directors designated to vote the proxies.

Attending the Meeting

To attend the annual meeting, you will need to show you are either a Delta stockholder as of the record date, or hold a valid proxy from such a Delta stockholder.

 

   

If your shares are registered in “street name,” or are held in your Pilot Plan account or your Savings Plan account, please bring evidence of your stock ownership, such as your most recent account statement.

 

   

If you own unvested restricted common stock, please bring your Delta-issued identification card; we will have a list of the holders of unvested restricted common stock at the meeting.

All stockholders should also bring valid picture identification; employees may use their Delta-issued identification card. If you do not have valid picture identification and proof that you own Delta stock, you may not be admitted to the meeting.

 

GENERAL INFORMATION   8   DELTA AIR LINES, INC.


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GOVERNANCE MATTERS

Governance Overview

Delta believes that sound governance practices are essential to enhance long-term value for our stockholders. We operate under governance practices that are transparent and consistent with best practices.

You may view the charters of the Audit, Corporate Governance, Finance, Personnel & Compensation and Safety and Security Committees, the Certificate of Incorporation, the Bylaws, Delta’s corporate governance principles, our codes of ethics and business conduct, and our director independence standards on our Corporate Governance website at http://ir.delta.com/governance/governance-documents/default.aspx. You may obtain a copy of these materials by contacting Delta’s Assistant Corporate Secretary at the address on the next page.

Director Independence

Independence of Audit, Corporate Governance, and Personnel & Compensation Committee Members

For many years, Delta’s Board of Directors has been composed of a substantial majority of independent directors. Delta’s Board established the Audit Committee, the Corporate Governance Committee, the Finance Committee, the Personnel & Compensation Committee and the Safety and Security Committee to focus on particular Board responsibilities.

The Board of Directors has affirmatively determined that all current directors are independent under the NYSE listing standards and Delta’s director independence standards, except Richard Anderson and Ed Bastian, who are not independent because each is an executive officer of Delta, and Ken Rogers, who is not independent because he is a Delta pilot. In making these independence determinations, the Board of Directors considered information submitted by the directors in response to questionnaires, information obtained from Delta’s internal records and advice from counsel.

The Audit, Corporate Governance and Personnel & Compensation Committees consist entirely of non-employee directors who are independent, as defined in the NYSE listing standards and Delta’s director independence standards. The members of the Audit Committee also satisfy the additional independence requirements set forth in rules under the Securities Exchange Act of 1934 (the “1934 Act”). In addition, each member has been designated an Audit Committee Financial Expert. The members of the Personnel & Compensation Committee also satisfy the additional independence requirements set forth in rules under the 1934 Act.

Directors Elected Annually; Majority Voting for Directors

Delta’s Certificate of Incorporation and Bylaws provide that all directors are elected annually. Under the Bylaws, a director in an uncontested election is elected by a majority of votes cast (excluding abstentions) at a stockholders’ meeting at which a quorum is present. In an election for directors where the number of nominees exceeds the number of directors to be elected — a contested election — the directors are elected by the vote of a plurality of the shares represented at the meeting and entitled to vote on the matter.

Identification and Selection of Nominees for Director

The Corporate Governance Committee recommends to the Board of Directors nominees for election to the Board who have the skills and experience to assist management in the operation of Delta’s business. In accordance with Delta’s corporate governance principles, the Corporate Governance Committee and the Board of Directors assess potential nominees (including incumbent directors) based on factors such as the individual’s business experience, character, judgment, diversity of experience, international background and other matters relevant to the Board’s needs and objectives at the particular time. Independence, financial literacy and the ability to devote significant time to Board activities and to the enhancement of the nominee’s knowledge of Delta’s business are also factors considered for Board membership. The Corporate Governance Committee retains third-party search firms from time to time to assist in identifying and preliminarily screening potential Board members.

The Corporate Governance Committee evaluates potential nominees suggested by stockholders on the same basis as all other potential nominees. To recommend a potential nominee, you may:

 

   

e-mail nonmgmt.directors@delta.com or

 

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send a letter addressed to Delta’s Legal Department at Delta Air Lines, Inc., Dept. No. 981, 1030 Delta Boulevard, Atlanta, Georgia 30354, Attention: Assistant Corporate Secretary.

Each potential nominee is reviewed and screened by the Corporate Governance Committee, which decides whether to recommend a candidate for consideration by the full Board.

Audit Committee Financial Experts

The Board of Directors has designated Ms. Reynolds, Mr. Brinzo, Mr. Foret and Ms. Franklin as Audit Committee Financial Experts.

Compensation Committee Interlocks and Insider Participation

None of the members of the Personnel & Compensation Committee is a former or current officer or employee of Delta or has any interlocking relationships as set forth in applicable SEC rules.

Communications with Directors

Stockholders and other interested parties may communicate with our non-management directors by sending an e-mail to nonmgmt.directors@delta.com. We have established a link to this address on our Investor Relations website. Communications with directors may also be mailed to Delta’s Legal Department at the address listed above. Communications will be sent directly to the non-executive Chairman of the Board, as representative of the non-management directors, other than communications pertaining to customer service, human resources, accounting, auditing, internal control and financial reporting matters. Communications regarding customer service and human resources matters will be forwarded for handling by the appropriate Delta department. Communications regarding accounting, auditing, internal control and financial reporting matters will be brought to the attention of the Audit Committee Chair.

Board of Directors

During 2013, the Board of Directors met nine times. Each director who served on the Board during 2013 attended at least 75% of the meetings of the Board of Directors and the committees on which he or she served held during his or her tenure on the Board. It is the Board’s policy that directors are encouraged to attend the annual meeting. All of Delta’s directors except one attended the annual meeting in 2013.

The Board routinely holds executive sessions without the Chief Executive Officer or any other management director. Mr. Carp, who serves as the non-executive Chairman of the Board, presides at these executive sessions. In his role as Chairman of the Board, Mr. Carp’s responsibilities also include those described below under “Board of Directors Leadership Structure.”

Board of Directors Leadership Structure

Because we believe operating pursuant to sound governance practices benefits the long-term interests of our stockholders, since 2003 we have chosen to elect an independent, non-executive chairman separate from our Chief Executive Officer. Governance commentators, proxy voting advisory firms, and institutional stockholders generally conclude the separation of the two roles is a “best practice.” We believe the non-executive Chairman of the Board plays an important governance leadership role that enhances long-term stockholder value. His responsibilities include:

 

   

chairing meetings of non-management directors (executive sessions);

 

   

presiding at the Annual Stockholders Meeting;

 

   

briefing the Chief Executive Officer on issues raised in executive sessions;

 

   

in collaboration with the Corporate Governance Committee of the Board, committee chairs and the Chief Executive Officer, scheduling Board meetings, setting Board agendas and strategic discussions and providing a review of pre-meeting materials delivered to directors;

 

   

overseeing Board, committee and senior management evaluations and succession planning;

 

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managing the Board’s oversight of risks;

 

   

recommending appropriate governance policies and practices;

 

   

overseeing the avoidance of conflicts of interests;

 

   

recommending Board committee and committee chair assignments;

 

   

facilitating director discussions inside and outside the boardroom, managing the relationship between the Chief Executive Officer and the Board, consulting with the Chief Executive Officer and serving as a counterweight as appropriate;

 

   

overseeing the process for selecting new Board members;

 

   

calling meetings of the Board and stockholders;

 

   

chairing the Corporate Governance Committee;

 

   

conducting/overseeing the annual evaluation of the Committees and the Board; and

 

   

carrying out other duties requested by the Chief Executive Officer and the Board as a whole.

Governance commentators, proxy advisory firms and institutional stockholders advise companies without a separation of the Chief Executive Officer and chairman to elect a lead director having the very same specific responsibilities as our non-executive chairman listed above. The goal of both the non-executive chairman and the lead director is the same — to provide engaged directors with the appropriate resources and structure to enhance stockholder value, without delegating all responsibilities to the Chief Executive Officer.

Board Committees

The Board of Directors has established the following committees to assist it in discharging its responsibilities:

Audit Committee

The Audit Committee members are Ms. Reynolds, Chair, Mr. Brinzo, Mr. Foret and Ms. Franklin. The Committee met nine times in 2013. Among other matters, the Committee:

 

   

Appoints (subject to stockholder ratification) our independent auditors;

 

   

represents and assists the Board in its oversight of:

 

   

the integrity of our financial statements

 

   

legal and regulatory matters, including compliance with applicable laws and regulations

 

   

our independent auditors’ qualifications, independence and performance

 

   

the performance of our internal audit department;

 

   

reviews audits and other work product of the independent auditors and internal audit department;

 

   

discusses the adequacy and effectiveness of our internal control over financial reporting;

 

   

oversees our compliance with procedures and processes pertaining to corporate ethics and standards of business conduct;

 

   

reviews and, if appropriate, approves or ratifies:

 

   

possible conflicts of interest involving members of the Board or executive officers

 

   

transactions that would be subject to disclosure under Item 404 of SEC Regulation S-K;

 

   

considers complaints concerning accounting, auditing, internal control and financial reporting matters;

 

   

reviews the enterprise risk management process by which management identifies, assesses and manages Delta’s exposure to risk; discusses major risk exposures with management; apprises the Board of Directors of risk exposures and management’s actions to monitor and manage risk; and reviews the Company’s insurance programs; and

 

   

focuses on tone at the top and chooses key topics for detailed review.

 

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Corporate Governance Committee

The Corporate Governance Committee members are Mr. Carp, Chairman, Mr. Bostock, Mr. Easter and Ms. Reynolds. The Committee met three times and took action by unanimous written consent in lieu of a meeting once in 2013. Among other matters, the Committee:

 

   

leads the search and recruiting process for new outside directors and identifies and recommends qualified individuals to the Board of Directors for nomination as directors; considers stockholder nominations of candidates for election as directors; and

 

   

considers, develops and makes recommendations to the Board regarding matters related to corporate governance, including:

 

   

governance standards

 

   

qualifications and eligibility requirements for Board members, including director independence standards

 

   

the Board’s size, composition, organization and processes

 

   

the type, function, size, membership and chairs of Board committees

 

   

evaluation of the Board’s performance

 

   

legal and regulatory changes in corporate governance.

Finance Committee

The Finance Committee members are Mr. Woodrow, Chairman, Mr. DeWalt, Mr. Goode, Mr. Mattson and Mr. Rogers. The Committee met seven times in 2013. Among other matters, the Committee:

 

   

reviews and makes recommendations, where appropriate, to the Board regarding:

 

   

financial planning and financial structure

 

   

financings and guarantees

 

   

capital expenditures, including fleet acquisition

 

   

annual and longer-term operating plans

 

   

capital structure, including issuances and repurchases of capital stock and other securities

 

   

risk management practices and policies concerning investments and hedging, both financial and non-financial, including swaps

 

   

balance sheet strategies

 

   

derivatives management, fuel hedging and oversight of Delta’s oil and fuel management; and

 

   

approves commitments, capital expenditures and debt financings and re-financings, subject to certain limits.

Personnel & Compensation Committee

The Personnel & Compensation Committee members are Mr. DeWalt, Chairman, Mr. Brinzo, Ms. Franklin, Mr. Goode, Mr. Mattson and Mr. Woodrow. The Committee met five times and took action by unanimous written consent in lieu of a meeting once in 2013. Among other matters, the Committee:

 

   

establishes general compensation philosophy and oversees the development and implementation of compensation programs;

 

   

performs an annual performance evaluation of the Chief Executive Officer and determines and approves the Chief Executive Officer’s compensation;

 

   

reviews and approves compensation programs for executive officers and recommends to the Board the compensation of non-employee directors;

 

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reviews and regularly approves the management succession plan;

 

   

makes recommendations to the Board regarding election of officers; and

 

   

selects, retains, terminates, and approves fees of compensation advisors to the Committee.

Safety and Security Committee

The Safety and Security Committee members are Mr. Rogers, Chairman, Mr. Bostock, Mr. Carp and Mr. Foret. The Committee met five times in 2013. Among other matters, the Committee:

 

   

oversees and consults with management regarding customer, employee and aircraft operating safety and security, including related goals, performance and initiatives by:

 

   

reviewing current and proposed safety and security-related programs, policies and compliance matters

 

   

reviewing matters with a material effect on Delta’s flight safety operations and security

 

   

establishing and approving annual safety and security goals

 

   

reviewing the safety and security programs and performance of the Delta Connection carriers

 

   

reviewing the security of the Company’s information technology systems and operations, including defenses against cyber threats to the airline.

Board Oversight of Risk Management

The Board of Directors has ultimate responsibility to oversee Delta’s enterprise risk management program (“ERM”). The Board discusses risk throughout the year, particularly when reviewing operating and strategic plans and when considering specific actions for approval. Depending on the nature of the risk, the responsibility for oversight of selected risks may be delegated to appropriate Committees of the Board of Directors, with material findings reported to the full Board. Delegations of risk oversight by the Board include:

 

   

The Audit Committee reviews the ERM framework at the enterprise level; reviews management’s process for identifying, managing and assessing risk; and oversees the management of risks related to the integrity of the consolidated financial statements, internal control over financial reporting, the internal audit function and related matters.

 

   

The Finance Committee oversees the management of risks related to aircraft fuel price and fuel hedging; foreign currency and interest rate hedging; Delta’s financial condition and capital structure; its financing, acquisition and investment transactions and related matters.

 

   

The Personnel & Compensation Committee reviews risks related to management succession and Delta’s executive compensation program.

 

   

The Corporate Governance Committee reviews risks related to Board of Directors’ succession and Delta’s corporate governance matters.

 

   

The Safety and Security Committee oversees the management of risks related to customer, employee, aircraft and airport operating safety and security and information technology safety and security.

The Board of Directors receives reports from the Committee Chairs at regularly scheduled Board meetings. Management reports to the Board and the Committees with oversight of specific risks concerning matters such as compliance with regulations, business strategies, proposed changes in laws and regulations and any other matter deemed appropriate by the Board or the Committees.

Under Delta’s ERM process, management is responsible for setting risk tolerance levels; defining organizational responsibilities for risk management; determining the significant risks to Delta; developing risk mitigation and management strategies, based on Delta’s risk tolerance levels; and monitoring the business to determine that risk mitigation activities are in place and operating. Management periodically updates its assessment of risks to Delta as emerging risks are identified.

 

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Delta’s internal audit function, which is led by the Vice President — Corporate Audit and Enterprise Risk Management, is responsible for supporting and coordinating management’s ERM process and activities; documenting risk assessments using a consistent approach; identifying and validating controls to mitigate risk; and reporting on results of risk evaluations. The Vice President — Corporate Audit and Enterprise Risk Management reports to the Audit Committee regarding ERM activities.

The Board of Directors believes that Delta’s leadership structure, combined with the roles of the Board and its Committees, provides the appropriate leadership for effective risk oversight.

 

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PROPOSAL 1 — ELECTION OF DIRECTORS

All Delta Directors are elected annually. At the annual meeting, each director will be elected by the vote of a majority of the votes cast. This means the number of votes cast “for” a director must exceed 50% of the votes with respect to that director (excluding abstentions). Each director elected will hold office until the next annual meeting of stockholders and the election of his or her successor.

Delta’s Bylaws provide that any director not elected by a majority of the votes cast at the annual meeting must offer to tender his or her resignation to the Board of Directors. The Corporate Governance Committee will make a recommendation to the Board of Directors whether to accept the resignation. The Board of Directors will consider the recommendation and publicly disclose its decision within 90 days after the certification of the election results.

The Board of Directors recommends a vote FOR the following nominees:

 

(1)        Richard H. Anderson

  

(8)        Mickey P. Foret

(2)        Edward H. Bastian

  

(9)        Shirley C. Franklin

(3)        Roy J. Bostock

  

(10)     David R. Goode

(4)        John S. Brinzo

  

(11)     George N. Mattson

(5)        Daniel A. Carp

  

(12)     Paula Rosput Reynolds

(6)        David G. DeWalt

  

(13)     Kenneth C. Rogers

(7)        William H. Easter III

  

(14)     Kenneth B. Woodrow

All of the nominees are currently serving on the Board of Directors. The Board of Directors believes each nominee for director will be able to stand for election. If any nominee becomes unable to stand for election, the Board may name a substitute nominee or reduce the number of directors. If a substitute nominee is chosen, the directors designated to vote the proxies will vote FOR the substitute nominee.

Delta, the Air Line Pilots Association, International, the collective bargaining representative for Delta pilots (“ALPA”), and the Delta Master Executive Council, the governing body of the Delta unit of ALPA (“Delta MEC”), have an agreement whereby Delta agrees (1) to cause the election to the Board of Directors of a Delta pilot designated by the Delta MEC who is not a member or officer of the Delta MEC or an officer of ALPA (“Pilot Nominee”); (2) at any meeting of stockholders at which the Pilot Nominee is subject to election, to re-nominate the Pilot Nominee or nominate another qualified Delta pilot designated by the Delta MEC to be elected to the Board of Directors and to use its reasonable best efforts to cause such person to be elected to the Board; and (3) in the event of the Pilot Nominee’s death, disability, resignation, removal or failure to be elected, to elect promptly to the Board a replacement Pilot Nominee designated by the Delta MEC to fill the resulting vacancy. Pursuant to this provision, Mr. Rogers was elected to the Board of Directors by the Board in 2008 and by the stockholders in each year since then.

Mr. Rogers’ compensation as a Delta pilot is determined under the collective bargaining agreement between Delta and ALPA. During 2013, Mr. Rogers received $284,268 in compensation (which includes: $234,966 in flight earnings, $15,802 in shared rewards/profit sharing payments and $33,500 in Delta contributions to defined contribution plans). As a Delta pilot, Mr. Rogers is not separately compensated for his service as a director.

Certain Information About Nominees

Delta believes each nominee has a reputation for integrity, honesty and adherence to high ethical standards; demonstrated business acumen and the exercise of sound judgment; and a track record of service as a leader in business or governmental settings. Delta also believes it is important for directors and nominees for director to have experience in one or more of the following areas:

 

   

As a chief executive or member of senior management of a large public or private company or in a leadership position in a governmental setting

 

   

Airline or other transportation industries

 

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Marketing

 

   

Financial and/or accounting

 

   

Risk management

 

   

Energy industry

 

   

International business

 

   

Information technology expertise

 

   

As a board member of a large public or private company

The Board of Directors fixed the size of the Board at fourteen members effective at the annual meeting. The following section provides information about each nominee for director, including the experience that led the Board of Directors to conclude the nominee should serve as a director of Delta.

 

Richard H. Anderson    Age 58    Joined Delta’s Board April 30, 2007

Mr. Anderson has been Chief Executive Officer of Delta since 2007.

 

Experience:

  

The qualifications that led the Board of Directors to conclude that Mr. Anderson should serve as a director include Mr. Anderson’s experience serving as the Chief Executive Officer of Delta and Northwest Airlines, Inc. and over 20 years of business and operational experience in the airline industry. He has also served as a senior executive of a Fortune 20 healthcare company, as well as on the board of directors of public companies other than Delta.

 

Directorships:

  

Medtronic, Inc.; Cargill, Inc.

 

Affiliations:

   Member, Board of Airlines for America; Chair, Board of International Air Transport Association; Chair, Board of Metro Atlanta Chamber

 

Edward H. Bastian    Age 56    Joined Delta’s Board February 5, 2010

Mr. Bastian has been President of Delta since 2007. He was President of Delta and Chief Executive Officer of Northwest Airlines, Inc. from 2008 to 2009. Mr. Bastian was President and Chief Financial Officer of Delta from 2007 to 2008; Executive Vice President and Chief Financial Officer of Delta from 2005 to 2007; Chief Financial Officer of Acuity Brands from June 2005 to July 2005; Senior Vice President — Finance and Controller of Delta from 2000 to 2005 and Vice President and Controller of Delta from 1998 to 2000.

 

Experience:

  

The qualifications that led the Board of Directors to conclude that Mr. Bastian should serve as a director include Mr. Bastian’s over ten years of experience as a Delta executive, including serving as Delta’s President, Delta’s Chief Restructuring Officer during its Chapter 11 bankruptcy proceeding and Northwest Airlines, Inc.’s Chief Executive Officer after the merger. Mr. Bastian’s accounting and finance background provides financial and strategic expertise to the Board of Directors.

 

Directorships:

  

GOL Linhas Aéreas Inteligentes S.A.; Grupo Aeroméxico, S.A.B. de C.V.

 

Affiliations:

   Member, Board of Woodruff Arts Center

 

Roy J. Bostock    Age 73    Joined Delta’s Board October 29, 2008

Mr. Bostock has served as non-executive Vice Chairman of Delta’s Board of Directors since 2008 and was Chairman of the Board of Yahoo! Inc. from 2008 through 2012. He has also served as a principal of Sealedge Investments, LLC, a diversified private investment company, since 2002. Mr. Bostock was Chairman of B/Com3 from 2000 to 2002, and Chairman and Chief Executive Officer of the McManus Group from 1996 to 2000. Prior to 1996, Mr. Bostock served in a variety of senior executive positions in the advertising agency business, including Chairman and Chief Executive Officer of D’Arcy Masius Benton & Bowles, Inc. from 1990 to 1996.

 

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Experience:

  

The qualifications that led the Board of Directors to conclude that Mr. Bostock should serve as a director include the business and marketing expertise that Mr. Bostock brings to the Board of Directors, having served in senior executive positions in the advertising industry for many years. He has also served on boards of directors of public companies in the airline, financial services and internet services industries, including as chairman of the board of two companies. At other public companies, Mr. Bostock has experience as a member of the governance committees of two boards and the risk committee of another board.

 

Committees:

  

Corporate Governance; Safety and Security

 

Directorships:

   Morgan Stanley (2005-2013); Northwest Airlines Corporation (2005-2008); Yahoo! Inc. (2003-2012)

 

John S. Brinzo    Age 72    Joined Delta’s Board April 30, 2007

Mr. Brinzo was Chairman of the Board of Directors of Cliffs Natural Resources, Inc. (formerly known as Cleveland-Cliffs Inc.) from 2000 until his retirement in 2007. He also served as President and Chief Executive Officer of Cliffs Natural Resources, Inc. from 1997 until 2005, and as Chairman and Chief Executive Officer from 2000 until his retirement as Chief Executive Officer in 2006, and as Chairman in 2007.

 

Experience:

  

The qualifications that led the Board of Directors to conclude that Mr. Brinzo should serve as a director include Mr. Brinzo’s service as the Chairman, Chief Executive Officer and Chief Financial Officer of a public company, where his career spanned more than 35 years, as well as his extensive background in finance and his experience serving on the audit committees of the boards of directors of three other public companies and the compensation committee of one other public company.

 

Committees:

  

Audit; Personnel & Compensation

 

Directorships:

  

AK Steel Holding Corporation; Brink’s Home Security Holdings, Inc. (2008-2010); Alpha Natural Resources, Inc. (2006-2009); The Brinks Company (2005-2008)

 

Affiliations:

   Chairman, Business Advisory Council, School of Business, Kent State University

 

Daniel A. Carp    Age 65    Joined Delta’s Board April 30, 2007

Mr. Carp has served as non-executive Chairman of Delta’s Board of Directors since 2007. He was Chief Executive Officer and Chairman of the Board of Eastman Kodak Company from 2000 to 2005. Mr. Carp was President of Eastman Kodak Company from 1997 to 2003.

 

Experience:

  

The qualifications that led the Board of Directors to conclude that Mr. Carp should serve as a director include Mr. Carp’s substantial business experience as Chairman and Chief Executive Officer of a multinational public company in the consumer goods and services sector, where he was employed for over 35 years. As a member of the board of directors of large public companies other than Delta, Mr. Carp has experience on audit, compensation, finance and governance committees.

 

Committees:

  

Corporate Governance (Chair); Safety and Security

 

Directorships:

   Norfolk Southern Corporation; Texas Instruments Inc.; Liz Claiborne Inc. (2006-2009)

 

David G. DeWalt    Age 49    Joined Delta’s Board November 22, 2011

Mr. DeWalt has been the Chief Executive Officer of FireEye, Inc., a global network cyber security company, since November 2012 and Chairman of its board since June 2012. Mr. DeWalt was President and Chief Executive Officer of McAfee, Inc., a security technology company, from 2007 until 2011 when McAfee, Inc. was acquired by Intel Corporation. From 2003 to 2007, Mr. DeWalt held executive positions with EMC Corporation, a provider of information infrastructure technology and solutions, including serving as Executive Vice President and President-Customer Operations and Content Management Software.

 

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Experience:

  

The qualifications that led the Board of Directors to conclude that Mr. DeWalt should serve as a director include Mr. DeWalt’s substantial expertise in the information technology security industry and his strategic and operational experience as the former Chief Executive Officer of McAfee, Inc. As a member of the board of directors of public companies other than Delta, Mr. DeWalt has served on the audit and compensation committees.

 

Committees:

  

Personnel & Compensation (Chair); Finance

 

Directorships:

  

FireEye, Inc.; Jive Software, Inc. (2011-2013); Polycom Inc. (2005-2013)

 

Affiliations:

   National Security & Technology Advisory Committee

 

William H. Easter III    Age 64    Joined Delta’s Board December 3, 2012

Mr. Easter was Chairman, President and CEO of DCP Midstream LLC (formerly Duke Energy Field Services, LLC) from 2004 until his retirement in 2008. During Mr. Easter’s 30 year career at ConocoPhillips, he served as Vice President of State Government Affairs from 2002 to 2004 and as General Manager of the Gulf Coast Refining, Marketing and Transportation Business Unit from 1998 to 2002. Since his retirement from DCP Midstream, LLC, Mr. Easter has been involved in private investments.

 

Experience:

  

The qualifications that led the Board of Directors to conclude that Mr. Easter should serve as a director include over 35 years experience in natural gas, crude oil and refined product supply, transportation, refining and marketing with ConocoPhillips and DCP Midstream LLC. Mr. Easter has experience as a member of the board of directors of other public companies where he served on the audit, corporate governance, compensation and finance committees.

 

Committees:

  

Corporate Governance; Finance

 

Directorships:

  

Concho Resources, Inc.; Sunoco, Inc. (2011-2012)

 

Affiliations:

   Member, Board of Memorial Hermann Hospital System, Houston, Texas

 

Mickey P. Foret    Age 68    Joined Delta’s Board October 29, 2008

Mr. Foret was Executive Vice President and Chief Financial Officer of Northwest Airlines, Inc. from 1998 to 2002, and also served as Chairman and Chief Executive Officer of Northwest Cargo from 1999 to 2002. Mr. Foret served as President and Chief Operating Officer of Atlas Air, Inc. from 1996 to 1997 and as Executive Vice President and Chief Financial Officer of Northwest Airlines, Inc. from 1993 to 1996.

 

Experience:   

The qualifications that led the Board of Directors to conclude that Mr. Foret should serve as a director include Mr. Foret’s experience in the airline industry, where he held numerous senior executive positions for over 35 years, particularly in the finance area. He served as Chief Financial Officer of Northwest Airlines, Inc. for seven years. Mr. Foret has also served on the audit, compensation, finance and governance committees of the board of directors of other public companies.

 

Committees:

  

Audit; Safety and Security

 

Directorships:

   SpartanNash; URS Corporation; Nash Finch Company (2005-2013); ADC Telecommunications, Inc. (2003-2010); Northwest Airlines Corporation (2007-2008)

 

Shirley C. Franklin    Age 68    Joined Delta’s Board July 20, 2011

Ms. Franklin has been Chair of the Board and Chief Executive Officer of Purpose Built Communities, Inc., a national non-profit organization established to transform struggling neighborhoods into sustainable communities, since 2011. Ms. Franklin also currently serves as a visiting professor at the University of Texas, LBJ School of Public Affairs. From 2010 to 2011, Ms. Franklin was on the faculty of Spelman College. Ms. Franklin served as Mayor of the City of Atlanta from 2002 to 2010.

 

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Experience:

  

The qualifications that led the Board of Directors to conclude that Ms. Franklin should serve as a director include Ms. Franklin’s extensive executive leadership experience, business experience and financial expertise. She has over 38 years of leadership experience in various positions in city government and other organizations, including her eight years as Mayor of Atlanta. She has also served on the audit committee of a board of directors of a public company other than Delta.

 

Committees:

  

Audit; Personnel & Compensation

 

Directorships:

  

Mueller Water Products, Inc.

 

Affiliations:

   Atlanta Regional Commission on Homelessness (Co-Chair); National Center for Civil and Human Rights (Co-Chair); United Way of Metropolitan Atlanta Endowment Foundation; The Volcker Alliance

 

David R. Goode    Age 73    Joined Delta’s Board April 22, 1999

Mr. Goode was Chairman of the Board of Norfolk Southern Corporation from 1992 until his retirement in 2006; Chairman and Chief Executive Officer of that company from 2004 through 2005; and Chairman, President and Chief Executive Officer of that company from 1992 to 2005. He held other executive officer positions with Norfolk Southern Corporation from 1985 to 1992.

 

Experience:

  

The qualifications that led the Board of Directors to conclude that Mr. Goode should serve as a director include Mr. Goode’s over 25 years of experience in the transportation industry, including many years as Chairman, Chief Executive Officer and President of a large public railroad company. As a member of the board of directors of other public companies, Mr. Goode served on compensation committees.

 

Committees:

  

Finance; Personnel & Compensation

 

Directorships:

  

Caterpillar Inc. (1993-2013); Texas Instruments Inc. (1996-2011)

 

Affiliations:

   Member, The Business Council

 

George N. Mattson    Age 48    Joined Delta’s Board October 1, 2012

Mr. Mattson is a private equity investor focused on acquiring middle market industrial businesses. Mr. Mattson was a partner and co-head of the Global Industrials Group in Investment Banking at Goldman, Sachs & Co. from 2002 through August 2012, where he served in a variety of positions from 1994 to 2002. Mr. Mattson was an Associate at Credit Suisse First Boston from 1993 to 1994, and he held various sales and marketing positions at IBM from 1987 to 1993.

 

Experience:

  

The qualifications that led the Board of Directors to conclude that Mr. Mattson should serve as a director include Mr. Mattson’s experience in the areas of mergers and acquisitions, corporate finance and capital markets. In addition, Mr. Mattson has knowledge of the airline industry and other global industries acquired during his 18 years at Goldman, Sachs & Co., including as co-head of the Global Industrials Group in Investment Banking, which had responsibility for a diverse set of industry sectors, including companies in the transportation industry.

 

Committees:

  

Finance; Personnel & Compensation

 

Affiliations:

   Member, Board of The Boys’ Club of New York; Member, Board of Visitors of the Pratt School of Engineering at Duke University

 

Paula Rosput Reynolds    Age 57    Joined Delta’s Board August 17, 2004

Ms. Reynolds has been President and Chief Executive Officer of PreferWest, LLC, a business advisory group, since 2009. She was Vice Chairman and Chief Restructuring Officer of American International Group, Inc. from October 2008 to September 2009, the period that followed the U.S. government’s acquisition of ownership of that company. She served as President and Chief Executive Officer of Safeco Corporation from 2006 to 2008 when Safeco was acquired by another company. Ms. Reynolds was Chairman of AGL Resources from 2002 to

 

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2005, and President and Chief Executive Officer from 2000 to 2005. She was President and Chief Operating Officer of Atlanta Gas Light Company, a wholly-owned subsidiary of AGL Resources, from 1998 to 2000.

 

Experience:

  

The qualifications that led the Board of Directors to conclude that Ms. Reynolds should serve as a director include Ms. Reynolds’ significant experience as Vice Chairman of a large public company and as Chairman and Chief Executive Officer of two other large public companies, including a public utility. In these roles, she has experience in risk management and energy trading. As a member of the boards of directors of public companies other than Delta, Ms. Reynolds served on the audit, executive, finance, human resources and governance committees.

 

Committees:

  

Audit (Chair); Corporate Governance

 

Directorships:

   Anadarko Petroleum Corporation; BAE Systems plc; TransCanada Corporation; Safeco (2006-2008)

 

Kenneth C. Rogers    Age 53    Joined Delta’s Board April 14, 2008

Mr. Rogers has been a Delta pilot since 1990 and is currently a pilot of a Boeing 767ER aircraft. He served as a nonvoting associate member of Delta’s Board of Directors, designated by the Delta MEC, from 2005 to 2008. Mr. Rogers was a pilot in the United States Air Force from 1983 to 1990. Mr. Rogers was designated by the Delta MEC as the Pilot Nominee and was elected to the Board in each year from 2008 to 2013.

 

Experience:

  

As a pilot designated by the Delta MEC to serve on the Board of Directors, Mr. Rogers provides a unique perspective into the airline industry and related labor relations matters.

 

Committees:

   Safety and Security (Chair); Finance

 

Kenneth B. Woodrow    Age 69    Joined Delta’s Board July 1, 2004

Mr. Woodrow was Vice Chairman of Target Corporation from 1999 until his retirement in December 2000. He served as President of Target Corporation from 1994 until 1999 and held other management positions in that company from 1971 until 1994.

 

Experience:

  

The qualifications that led the Board of Directors to conclude that Mr. Woodrow should serve as a director include Mr. Woodrow’s nearly 30 years of experience in marketing, operations and finance at a public company with a large number of general merchandise retail stores throughout the United States. Mr. Woodrow held positions during that time that included Vice Chairman, President and Chief Financial Officer. Mr. Woodrow has experience as a member of the board of directors of another public company where he served on the audit, finance and governance committees.

 

Committees:

  

Finance (Chair); Personnel & Compensation

 

Directorships:

   Visteon Corporation (2004-2010)

 

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BENEFICIAL OWNERSHIP OF SECURITIES

Directors, Nominees for Director and Executive Officers

The following table sets forth the number of shares of Delta common stock beneficially owned as of May 2, 2014, by each director and director-nominee, each person named in the Summary Compensation Table in this proxy statement, and all directors and executive officers as a group. Unless otherwise indicated by footnote, the owner exercises sole voting and investment power over the shares.

 

Name of Beneficial Owner

   Amount and Nature of
Beneficial Ownership (1)
 

Directors:

  

Richard H. Anderson

     3,607,871  (2)

Edward H. Bastian

     1,307,3506  (2)

Roy J. Bostock

     90,444  (2)(3) 

John S. Brinzo

     55,343    

Daniel A. Carp

     49,263    

David G. DeWalt

     33,170    

William H. Easter III

     23,120    

Mickey P. Foret

     65,248  (2)

Shirley C. Franklin

     32,120    

David R. Goode

     65,343    

George N. Mattson

     28,110    

Paula Rosput Reynolds

     70,343    

Kenneth C. Rogers

     4,159    

Kenneth B. Woodrow

     65,343    

Named Executive Officers:

  

Stephen E. Gorman

     556,906  (2)(4) 

Glen W. Hauenstein

     491,423  (2)

Paul A. Jacobson

     521,366  (2)

Directors and Executive Officers as a Group (20 Persons)

     7,900,606  (2)

 

  (1) Each of the individuals listed in the table and the directors and executives officers as a group beneficially owned less than 1% of the shares of common stock outstanding on May 2, 2014.

 

  (2) Includes the following number of shares of common stock which a director or named executive officer has the right to acquire upon the exercise of stock options that were exercisable as of May 2, 2014, or that will become exercisable within 60 days after that date:

 

Name

   Number of Shares  

Richard H. Anderson

     2,206,344   

Edward H. Bastian

     861,917   

Roy J. Bostock

     9,146   

Mickey P. Foret

     9,146   

Stephen E. Gorman

     455,280   

Glen W. Hauenstein

     204,100   

Paul A. Jacobson

     241,000   

Directors & Executive Officers as a Group

     4,077,376   

 

  (3) Includes 13,718 shares held by a foundation, of which Mr. Bostock, his wife and children and their spouses are directors.

 

  (4) Mr. Gorman retired as Executive Vice President & Chief Operating Officer on March 1, 2014.

 

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Beneficial Owners of More than 5% of Voting Stock

The following table provides information about the following entity known to Delta to be the beneficial owner of more than five percent of Delta’s outstanding common stock.

 

Name and Address of Beneficial Owner

   Amount and Nature
of Beneficial
Ownership
    Percentage of
Class on
May 2, 2014
 

The Vanguard Group

     49,674,722  (1)     [ •]%

100 Vanguard Blvd

    

Malvern, PA 19355

    

 

  (1) Based on Schedule 13G filed February 14, 2014, in which The Vanguard Group reported that, as of December 31, 2013, it had sole voting power over 1,171,283 of these shares, sole dispositive power over 48,525,839 of these shares, and shared dispositive power over 1,148,883 of these shares.

 

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This section of the proxy statement provides an overview and analysis of our executive compensation program. It discusses our executive compensation philosophy and objectives, the administration of the executive compensation program, and the material elements of the program. It also reviews the actions taken by the Personnel & Compensation Committee of the Board of Directors (the “P&C Committee”) in 2013 and the compensation of our named executive officers, who were:

 

   

Richard H. Anderson — Chief Executive Officer

 

   

Edward H. Bastian — President

 

   

Stephen E. Gorman — Executive Vice President & Chief Operating Officer

 

   

Glen W. Hauenstein — Executive Vice President & Chief Revenue Officer

 

   

Paul A. Jacobson — Executive Vice President & Chief Financial Officer

Mr. Gorman retired from his position effective March 1, 2014, and remained with the Company until his separation on March 16, 2014.

Executive Summary

Our performance in 2013.    Delta had a successful 2013, with strong financial results, continued revenue momentum, excellent operational performance, and investments in network, airports, fleet and technology. The following key accomplishments in 2013 helped make Delta the carrier of choice for passengers and position the Company for further success in 2014:

 

   

Strong financial results*

 

   

Excluding special items, earned net income of $2.7 billion, an increase of more than 70% over 2012 and Delta’s fourth consecutive year of solid profitability, with 2.8 points of pre-tax margin expansion.

 

   

Free cash flow of $2.1 billion and the return of $350 million to stockholders through dividends and share repurchases.

 

   

Reduced adjusted net debt to $9.4 billion, a $2.3 billion reduction from 2012 and an overall $7.6 billion reduction from 2009.

 

   

Generated a 15.1% return on invested capital, the fourth year in a row we had returns that met or exceeded our cost of capital.

 

   

Continued revenue momentum

 

   

Expanded operating revenue by $1.1 billion to $37.8 billion, a 3% increase over 2012.

 

   

Grew unit passenger revenue 2.7% and generated a unit revenue premium relative to the industry for the third year in a row.

 

   

Excellent operating performance

 

   

Maintained strong operating performance with an on-time arrival rate of 84.7%, a flight completion factor of 99.7% — achieving a record 72 days of zero cancellations — and a 20% decline in Department of Transportation (“DOT”) customer complaints compared to 2012.

 

   

Based on DOT measures, these results put Delta at the top of the industry in operational reliability and customer service for major network carriers.

 

* See “Supplemental Information about Financial Measures” at the end of this proxy statement for a reconciliation of non-GAAP financial measures to the corresponding GAAP financial measures, and the reasons we use non-GAAP financial measures. On a GAAP basis for 2013, net income was $8.5 billion and debt and capital lease obligations were $11.3 billion as of December 31, 2013.

 

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Investments in network, airports, fleet and technology

 

   

Made a strategic investment in and received government approval for our relationship with Virgin Atlantic, which will increase our presence at London’s Heathrow Airport.

 

   

In New York, we are renovating and expanding our facilities at LaGuardia to support our expanded domestic operations and we opened the expanded and thoroughly enhanced Terminal 4 at New York’s JFK International Airport and announced an additional expansion of Terminal 4.

 

   

Focused on growing Seattle into a major international gateway, with expanded service and investments in airport facilities.

 

   

Continued our fleet restructuring to replace 50-seat regional jets and other older, less cost effective aircraft with newer, more efficient Boeing 737-900, Boeing 717 and CRJ-900 aircraft; announced plans to purchase 40 new Airbus aircraft for both international and domestic use.

 

   

Continued to make significant functionality and performance improvements to delta.com and upgraded our award-winning mobile applications to add more customer-focused functions, such as baggage tracking and enhanced mobile check-in.

 

   

Other Company highlights

 

   

Received recognition from leading organizations and publications, including being named Air Transport World’s 2014 Airline of the Year and, for the third time in four years, Fortune’s Most Admired Airline; won numerous airline industry awards sweeping the major corporate travel surveys, including Business Travel News, Travel Weekly, TravelAge West and Travel+Leisure.

 

   

Recognized as a national leader in our commitment to anti-human trafficking efforts and provided training to all customer-facing employees to help identify and report suspected instances of human trafficking.

Our Employee Commitment.    Delta’s employees are critical to the Company’s success. Our strong financial, operational and customer service results in 2013 would not have been possible without the dedication and determination of our employees. During 2013, we continued our commitment to promoting a culture of open, honest and direct communications, making Delta a great place to work, and building an environment that encourages diversity, integrity and respect. Key actions in 2013 include:

 

   

Paying $506 million under Delta’s broad-based profit sharing program (the “Profit Sharing Program”) in recognition of the achievements of our employees in meeting Delta’s financial targets for the year, providing each eligible employee with a payout of 8.2% of eligible earnings.

 

   

Awarding $92 million under Delta’s broad-based shared rewards program (the “Shared Rewards Program”) based on the hard work of our employees in meeting on-time arrival, baggage handling and flight completion factor performance goals during 2013.

 

   

Contributing almost $1.4 billion to Delta’s broad-based defined contribution and defined benefit retirement plans, including $250 million in excess contributions to our defined benefit plans.

 

   

Implementing base salary increases for our frontline and merit employees in January 2013.

 

   

Investing about $8 billion in our people, which includes salaries, pension funding, health insurance, 401(k) contributions, Profit Sharing Program, Shared Rewards Program, life insurance, disability and survivor benefits, travel benefits and training.

Pay for performance.    Pay for performance is the foundation of our executive compensation philosophy. Our executive compensation program places a substantial portion of total compensation for 2013 at risk: 94% of our Chief Executive Officer’s and 90% of our other named executive officers’ total compensation. Furthermore, the majority of total compensation is paid in the form of Delta stock, which, together with our stock ownership guidelines, aligns the interests of management to those of stockholders. We believe our stockholders recognize this alignment as shown by the significant approval of our executive compensation program through an advisory vote at our 2012 and 2013 annual meetings.

 

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2013 Compensation Mix (at target)

 

LOGO

 

  * Represents At-Risk Compensation

The P&C Committee sets stretch performance goals under our annual and long-term incentive plans to drive Delta’s business strategy and to deliver value to our stockholders. Consistent with these principles:

 

   

The vast majority of the compensation opportunity for our executive officers is earned contingent upon Delta’s achieving its financial, operational and customer services goals and stock price performance.

 

   

Based on our strong performance in 2013, we paid out 168.75% of target under our annual incentive plan and 200% of target under our 2012 long-term incentive plan.

 

   

The P&C Committee designs our incentive plans to closely align the interests of management with frontline employees by using many of the same financial and operational performance measures in both our executive and broad-based employee compensation programs. If there is no payout under Delta’s broad-based employee Profit Sharing Program for the year:

 

   

There will be no payment under the annual incentive plan’s financial performance measure.

 

   

Any payment to executive officers for other performance measures may not exceed the target level.

 

   

All payments will be made in restricted stock rather than in cash, which will not vest until there is a subsequent profit sharing payment.

The Profit Sharing Program paid out a record $506 million for 2013.

2013 Compensation Decisions.    The P&C Committee reviews our executive compensation program annually. In 2013, few changes were made to the program. These changes are described in this Compensation Discussion and Analysis.

Corporate governance and compensation initiatives.    Our executive compensation program reflects corporate governance policies and compensation practices that are transparent, consistent with best practices and aligned with the interests of our stockholders, customers and employees. In 2013, Delta revised its stock ownership guidelines for executive officers to:

 

   

Significantly increase the stock ownership requirements — by 100% for the CEO; over 250% for the President; and 300% for Executive Vice Presidents.

 

   

Address the heightened volatility associated with airline stock prices by allowing the ownership requirement to be measured either as a multiple of base salary or by number of shares.

 

   

Add a retention feature requiring executives to retain at least 50% of net shares granted under equity compensation plans until the ownership requirement is met.

 

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These revised stock ownership guidelines, as shown in the chart on page 40, place Delta above market median practices as compared to other companies in our peer group.

This policy change supplements the executive compensation practices we consider instrumental in driving Company performance while mitigating risk, as well as practices we avoid, as illustrated in the following chart:

 

Corporate Governance Policies and Other Practices:   Compensation Programs Not Offered:

 

•      Compensation clawback policy applicable to all officers

 

•      Stock ownership guidelines for executive officers and directors

 

•      Equity award grant policy that establishes objective, standardized criteria for the timing of the grant of equity awards

 

•      “Double trigger” vesting of incentive awards upon a change in control

 

•      Anti-hedging and anti-pledging policy

 

•      Equity compensation policy that prohibits repricing or cash buyouts of stock options and stock appreciation rights and requires a one-year minimum vesting period for performance-based awards

 

•      Full disclosure of incentive plan performance measures

 

•      Engagement with institutional investors regarding our executive compensation program

 

 

 

•      Excise tax reimbursement for payments made in connection with a change in control

 

•      Tax reimbursement for several officer benefits, including supplemental life insurance and home security services

 

•      Loss on sale on residence relocation protection for named executive officers

 

•      Employment contracts

 

•      Supplemental executive retirement plans, company cars, club memberships, private jet travel for personal use or other significant perquisites

Executive Compensation Philosophy and Objectives

Our executive compensation philosophy and objectives are directly related to our business strategy. In 2013, our primary business goals included maintaining top-tier financial and operational performance; reducing our non-fuel costs; controlling our fuel expense; increasing profitable revenue; and earning and maintaining customer loyalty.

To achieve these goals, the P&C Committee continued the executive compensation philosophy and objectives from the previous year, concluding this approach remained important to deliver value to stockholders, customers and employees. Our principle objectives are to promote a pay for performance culture which:

 

   

Places a substantial majority of total compensation at risk and utilizes stretch performance measures that provide incentives to deliver value to our stockholders. As discussed below, the payout opportunities for executive officers under our annual and long-term incentive plans depend on Delta’s financial, operational and customer service performance as well as the price of our common stock.

 

   

Closely aligns the interests of management with frontline employees by using many of the same performance measures in both our executive and broad-based compensation programs. Consistent with this objective, the goals that drive payouts to frontline employees under our broad-based Profit Sharing and Shared Rewards Programs are some of the metrics included in our annual incentive plan.

 

   

Provides compensation opportunities that assist in motivating and retaining existing talent and attracting new talent to Delta when needed.

 

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Say on Pay Voting Results

At our 2013 annual meeting, we asked stockholders for a non-binding advisory vote to approve the 2012 compensation of our named executive officers as disclosed in the prior year’s proxy statement, which we referred to as a “say on pay” advisory vote.

Similar to the previous year, the holders of over 99% of the shares represented and entitled to vote at the 2013 annual meeting voted for approval of the compensation of our named executive officers. We believe our stockholders continue to confirm our executive compensation philosophy, policies and programs. The P&C Committee took these results into account by continuing to emphasize our pay for performance philosophy by utilizing stretch performance measures that provide incentives to deliver value to our stockholders.

Administration of the Executive Compensation Program

The following table summarizes the roles and responsibilities of the key participants related to the executive compensation program.

 

Key Participants    Role and Responsibilities

P&C Committee

  

The P&C Committee oversees the development of, reviews and approves the executive compensation program. In this role, the P&C Committee:

 

•     Approves Delta’s executive compensation philosophy and objectives

 

•     Ensures that Delta’s executive compensation program is designed to link pay with Company performance

 

•     Approves the peer group used to assess the executive compensation program

 

•     Determines the design and terms of the annual and long-term incentive compensation plans

 

•     Establishes the compensation of the CEO and other executive officers

    

•     Performs an annual evaluation of the CEO

 

•     Reviews and advises the Board of Directors regarding management succession planning

 

•     Operates under a written charter that requires the P&C Committee to consist of three or more directors. Each member must:

 

•     be “independent” under NYSE listing standards and Delta’s independence standards

 

•     qualify as a “non-employee” director under SEC rules

 

•     be an “outside director” under Section 162(m) of the Internal Revenue Code

 

•     Retains, terminates and approves the fees of executive compensation consultant and conducts independence assessments of all executive compensation advisors

 

•     Meets regularly in executive session without management

 

 

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Key Participants    Role and Responsibilities

Compensation Consultant

  

In 2013, after considering the six factors provided under the NYSE listing standards and Item 407(e)(3)(iii) of SEC Regulation S-K, the P&C Committee retained Meridian Compensation Partners, LLC (“Meridian”) as its executive compensation consultant. In this role, Meridian:

 

•     Provides advice regarding:

 

•     Delta’s executive compensation strategy and programs

 

•     the compensation of the CEO and other executive officers

 

•     the selection of the peer group used to assess the executive compensation program

 

•     general compensation program design

 

•     the impact of regulatory, tax, and legislative changes on Delta’s executive compensation program

 

•     executive compensation trends and best practices

 

•     the compensation practices of competitors

 

•     Conducts risk assessments with respect to the executive compensation program

 

•     Meets regularly with the P&C Committee in executive session without management

 

•     Provides no other services to Delta

 

•     May work directly with management on behalf of the P&C Committee but this work is always under the control and supervision of the P&C Committee

 

The P&C Committee considered Meridian’s advice when determining executive compensation plan design and award levels in 2013.

 

Management

  

Under the supervision of the P&C Committee, Delta’s human resources department is responsible for the ongoing administration of the executive compensation program.

 

•     The Executive Vice President-HR & Labor Relations and his staff serve the P&C Committee and, in cooperation with the compensation consultant, prepare proposed compensation programs and policies for review by the P&C Committee at the request of the P&C Committee and the CEO

 

The following individuals also are involved in the administration of our executive compensation program:

 

•     The CEO makes recommendations to the P&C Committee regarding the compensation of executive officers other than himself

 

•     The Chief Financial Officer and his staff evaluate the financial implications of executive compensation proposals and financial performance measures in incentive compensation arrangements

 

•     The Chief Legal Officer and his staff evaluate the legal implications of executive compensation proposals and prepare plan and program documents

 

•     The Vice President — Corporate Audit and Enterprise Risk Management confirms the proposed payouts to executive officers under our annual and long-term incentive plans are calculated correctly and comply with the terms of the applicable performance-based plan

 

 

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Compensation Decision Factors

The P&C Committee considers a number of factors, including competitive market data, internal equity, role and responsibilities, business and industry conditions and individual experience and performance in determining executive compensation. When making compensation decisions, the P&C Committee also reviews compensation “tally sheets” prepared by the compensation consultant. The tally sheets detail the total compensation and benefits for each executive officer, including the compensation and benefits the officer would receive under hypothetical termination of employment scenarios.

Comparative Market Data; Peer Group

In 2011, the P&C Committee modified the peer group it uses for executive compensation purposes to reflect Delta’s increased size, complexity, global presence and business. This custom peer group consists of four major U.S. airlines and eighteen other companies with revenue and other business characteristics similar to Delta in the hotel/leisure, transportation/distribution, machinery/aerospace/defense, and retail industries. The industries selected have aspects of operations that are similar to Delta. In expanding the peer group beyond the airline industry, the P&C Committee had considered the ongoing merger activity in the industry and recognized that the number of comparably-sized airlines is too small to provide stable and reliable market data for executive compensation purposes. In addition, Delta competes for management talent with companies both inside and outside the airline industry, and the other major airlines use broader industry peer groups to assess their executive compensation programs. The P&C Committee continued to be satisfied with the composition of the custom peer group and made no changes to it in 2013.

 

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The companies in the custom peer group are:

 

Company Name   

Revenue1

($)

    

Market Capitalization2

($)

    

International
Operations as
Percentage  of
Revenue3

(%)

 

Airlines

  

American Airlines, Inc.4

     25,760         5,537         40   

Southwest Airlines Co./AirTran Airways

     17,699         13,126         N/A   

United Continental Holdings, Inc.

     38,279         13,690         43   

US Airways, Inc.5

     14,607         N/A         24   

Hotel/Leisure

  

Carnival Corporation

     15,456         23,778         50   

Marriott International, Inc.

     12,784         14,783         12   

Transportation/Distribution

                          

The Coca-Cola Company

     46,854         182,422         58   

FedEx Corporation

     44,815         44,889         29   

Norfolk Southern Corporation

     11,245         28,676         N/A   

PepsiCo, Inc.

     66,415         127,197         49   

Sysco Corporation

     45,480         21,036         12   

Union Pacific Corporation

     21,963         77,376         10   

United Parcel Service, Inc.

     55,438         75,213         25   

Machinery/Aerospace/Defense

  

The Boeing Company

     86,623         102,566         57   

Honeywell International Inc.

     39,055         71,696         41   

L-3 Communications Corporation

     12,629         9,470         22   

Textron Inc.

     12,104         10,335         38   

United Technologies Corporation

     62,626         104.421         43   

Retail

  

Best Buy Co., Inc.

     42,410         13,799         26   

The Home Depot, Inc.

     78,812         115,953         11   

Lowe’s Companies, Inc.

     53,417         51,821         N/A   

Target Corporation

     72,596         39,992         N/A   
                

75th Percentile

     54,933         77,376         43   

Median

     40,733         39,992         33   

25th Percentile

     16,017         13,799         23   
                

Delta Air Lines

     37,773         23,502         35   

Source: Standard & Poors Research Insight®

 

  (1) Last 12 months from most recent quarter ended on or before December 31, 2013. In millions.

 

  (2) As of December 31, 2013. In millions.

 

  (3) As of the most recent fiscal year end. N/A indicates either data was not available or no significant foreign revenues were reported.

 

  (4) Revenues include those attributed to US Airways from December 9, 2013 through December 31, 2013 (post-merger).

 

  (5) US Airways merged with American Airlines as of December 9, 2013 and was no longer a free-standing publicly traded entity.

 

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We believe peer group data should be used as a point of reference, not as the sole factor in our executive officers’ compensation. In general, the P&C Committee’s objective is to bring target total direct compensation opportunities to be competitive with the custom peer group median, with individual variation based on the individual’s role within Delta, performance and experience. Delta does not have a specific compensation target for each element of compensation, but historically has emphasized long-term incentive opportunities over base salaries, which are a fixed cost.

When compared to these businesses, Delta’s total compensation opportunities in 2013 for the named executive officers group in aggregate, approximate the median of our custom peer group. As stated above, the P&C Committee uses this data as a point of reference, not as the determining factor in setting compensation.

Elements of Compensation

Compensation elements for our executive officers include:

 

Component   Objective   Characteristics

         Base Salary

 

•    Provides a fixed amount of cash compensation for performing day-to-day functions based on level of responsibility, experience and individual performance

 

•    Most companies target base salary at market median; however, the base salaries of our executive officers are below the median of base salaries of those in our peer group

 

•    There is no set schedule for base salary increases. Base salary increases are periodically provided based on competitive concerns or in connection with an increase in responsibilities

         Annual Incentive Plan

 

•    Rewards short-term financial, operational and revenue performance

 

•    Aligns with the broad-based Profit Sharing and Shared Rewards Programs in which our employees participate

 

•    Annual incentive awards for our executive officers are based on objective, pre-established performance criteria that aligns with corporate business strategy

 

•    Award targets are set as a percentage of base salaries

 

•    Award payment amounts will be limited if no profit sharing is paid to Delta employees; plus any amounts payable to executive officers will be paid in restricted stock (rather than in cash) with restrictions that do not lapse until a profit sharing payment is made (with certain exceptions)

 

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         Long-Term Incentive Plan

 

•    Rewards long-term Company performance based on internal performance goals and those relative to airline peers

 

•    Aligns with interests of stockholders

 

•    Facilitates executive officer stock ownership

 

•    Encourages retention of our management employees

 

•    Except for the CEO and President, awards are provided through equal portions of performance awards and restricted stock

 

•    Performance awards are earned based on achievement of objective, pre-established performance measures, including average annual operating income margin, customer service and return on invested capital over a three-year performance period payable to executive officers in stock

 

•    Restricted stock is subject to a three-year vesting period

 

•    In addition to performance awards and restricted stock, awards to the CEO and President also include performance stock options which vest over a three-year period upon the achievement of performance measures linked to employees receiving a payout under the Profit Sharing Program

 

         Benefits

 

•    Attracts and retains highly qualified executives with competitive benefit plans

 

•    Participation in health, welfare and retirement benefit plans on the same terms as all Delta employees

 

•    Certain additional benefits are provided to our executive officers, such as financial planning and supplemental disability and life insurance coverage

As shown previously in the compensation mix charts on page 25, at-risk compensation is the largest portion of the total compensation opportunity for the CEO and the other named executive officers. The P&C Committee believes this is the appropriate approach for aligning the interests of our named executive officers and stockholders.

Base Salary. The base salaries of our executive officers remain below the median of similarly situated executives at companies in our custom peer group as described above.

None of the named executive officers received a salary increase in 2013, except Mr. Hauenstein, whose salary was increased to $515,000 to reflect his expanded responsibilities as Chief Revenue Officer, and Mr. Jacobson, whose salary was increased to $475,000 due to his promotion to Executive Vice President.

Annual Incentives. The 2013 Management Incentive Plan (the “2013 MIP”) links pay and performance by providing approximately 2,200 management employees with a compensation opportunity based on Delta’s achieving key business plan goals in 2013 (which includes the same goals for the CEO, executive officers and substantially all management employees). It also aligns the interests of Delta management and employees because the goals that drive payouts under Delta’s broad-based Profit Sharing and Shared Rewards Programs are some of the metrics included in the 2013 MIP.

 

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The 2013 MIP annual incentive opportunity for executive officers is based on Delta’s performance in the following areas, which remain unchanged from 2012:

 

Performance

Category

  Weighting   Performance Measure   Performance Measure
Objectives
  Characteristics

Financial

  50%   

•     Delta’s 2013 pre-tax income* based on 2013 business plan targets approved by the Board of Directors as part of the Annual Operating Plan

 

•     Measures Delta’s profitability

 

•     Aligns executive incentives with Profit Sharing Program

 

•     Same measure used in the Profit Sharing Program for Delta employees

 

•     No payment may be made for this performance metric unless there is a payout for 2013 under the Profit Sharing Program

 

Operational  

  25%   

•     Number of monthly goals met under Shared Rewards Program (75% weighting)

 

•     Number of monthly goals met by Delta Connection Carriers (25% weighting)

 

•     Supports strategic focus on operational performance and therefore customer experience

 

•     Aligns executive incentives with Shared Rewards Program

 

•     Same measure used in the Shared Rewards Program for Delta employees

 

•     Measures operational performance against internal goals and DOT rankings among other airlines

 

Revenue

  25%   

•     Achievement of Total Revenue per Available Seat Mile (“TRASM”) goals year-over-year relative to an Industry Group† average TRASM for the same period

 

•     Supports strategic focus on profitable growth in revenue

 

•     Reflects capacity discipline and successful implementation of 2013 revenue growth initiatives, including growth of Delta’s ancillary businesses

 

•     Payment of this revenue performance measure will not be less than target level if the financial performance measure equals or exceeds the maximum level

 

  * “Pre-tax income” as defined in Delta’s broad-based Profit Sharing Program, means Delta’s annual consolidated pre-tax income calculated in accordance with GAAP and as reported in Delta’s SEC filings, but excluding (a) asset write downs related to long-term assets; (b) gains or losses with respect to employee equity securities; (c) gains or losses with respect to extraordinary, one-time or non-recurring events; and (d) expense accrued with respect to the broad-based employee Profit Sharing Program and the 2013 MIP.

 

  For purposes of the 2013 MIP, the Industry Group consists of: Alaska Airlines, American Airlines, JetBlue Airlines, Southwest Airlines, United Airlines and US Airways.

 

 

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To ensure that executive officers are aligned with our employees, the executive officer’s 2013 MIP awards are subject to the following conditions if there is no Profit Sharing Program payout to employees for 2013:

 

   

The actual MIP award, if any, is capped at the target award opportunity, even if Delta’s performance for operational and revenue meets or exceeds the maximum level.

 

   

Any awards earned by executive officers under the 2013 MIP are made in restricted stock (“MIP Restricted Stock”)

The MIP Restricted Stock will vest when (1) there is a payout under the Profit Sharing Program or (2) the executive officer’s employment is terminated by Delta without cause, or due to the officer’s death or disability. If the executive officer voluntarily resigns or retires, the MIP Restricted Stock will vest when there is a payout under the Profit Sharing Program, as if the officer’s employment continued. The MIP Restricted Stock will be forfeited if, prior to vesting, the executive officer’s employment is terminated by Delta for cause. Since there was a payout under the Profit Sharing Program for 2013, the executive officers received their 2013 MIP award in cash.

The following chart shows the performance measures for executive officers under the 2013 MIP and the actual performance for each measure in 2013.

 

Performance
Measure
  Performance
Measure
Weighting
  Performance Levels   2013 Actual
Performance
  Percentage of
Target
Earned*
 
   

Threshold

(50% of Target
Payout)

 

Target

(100% of Target
Payout)

 

Maximum

(200% of Target
Payout)

   

Financial

  50%                        
2013 Pre-tax income     $1,184 million   $2,367 million   $3,148 million   $3,420 million     100%   

Operational

  25%                        
Number of monthly goals met under Shared Rewards Program   75%   16 Shared
Rewards goals
achieved
  21 Shared
Rewards goals
achieved
  26 Shared
Rewards goals
achieved
  36 Shared
Rewards goals
achieved
    37.5%   
Number of monthly goals met by Delta Connection Carriers   25%   9 Delta
Connection goals
achieved
  14 Delta
Connection goals
achieved
  19 Delta
Connection goals
achieved
  14 Delta
Connection goals
achieved
    6.25%   

Revenue

  25%                        
Improvement
of TRASM year-over-year relative to Industry Group average TRASM for the same period
      109.1%   109.6%   110.1%   108.2%     25%   
   

*        This column reflects the percentage of target earned after application of the performance measure weightings.

 

†        As provided under the terms of the 2013 MIP, because the financial performance results exceeded the maximum performance level, payouts under the revenue performance measure were made at the target level.

  Total Percentage
of Target Award
Earned
    168.75

 

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The target award opportunities under the 2013 MIP are expressed as a percentage of the participant’s base salary. The P&C Committee determined the target award opportunities taking into consideration the custom peer group comparison, the CEO’s recommendations for executive officers other than himself and input from the compensation consultant. The P&C Committee maintained the 2012 target award opportunities (as shown in the table below) for each of the named executive officers, except for Mr. Hauenstein, whose 2013 target award opportunity was increased from 125% to 150% to deliver a more competitive total target cash compensation opportunity (base salary plus target 2013 MIP award) based on his expanded responsibilities as Chief Revenue Officer. The target cash compensation opportunities for our named executive officers remain below the custom peer group median.

Payments under the 2013 MIP could have ranged from zero to 200% of the target award opportunity depending on the performance achieved. The P&C Committee sets performance targets at threshold, target and maximum levels for each performance measure, with (1) no payment for performance below the threshold level and (2) a potential payment of 50% of target for threshold performance, 100% of target for target performance and 200% of target for maximum performance.

Summarized in the table below are the 2013 MIP awards earned by each named executive officer:

 

 Named Executive
 Officer
   Base Salary      Target Award
(as % of base
salary)
    Target Award
(in dollars)
     Percentage of
Target Award
Earned
    Total 2013 
MIP Award 
 

 Mr. Anderson

   $ 725,000         200   $ 1,450,000         168.75   $ 2,446,875    

 Mr. Bastian

   $ 575,000         175   $ 1,006,250         168.75   $ 1,698,047    

 Mr. Gorman

   $ 525,000         150   $ 787,500         168.75   $ 1,328,906    

 Mr. Hauenstein*

   $ 515,000         150   $ 675,520         168.75   $ 1,139,941    

 Mr. Jacobson

   $ 475,000         125   $ 593,750         168.75   $ 1,001,953    

 

* The increase to Mr. Hauenstein’s base salary and target award opportunity became effective as of August 1, 2013. Accordingly, his total 2013 MIP Award was calculated based on the 125% target percentage and his then-current base salary for the period of January 1, 2013 — July 31, 2013 and 150% and the base salary shown above for the remainder of 2013.

Because Delta was profitable in 2013, there was a $506 million payout under the Profit Sharing Program to approximately 80,000 employees. Accordingly, payments earned by named executive officers under the 2013 MIP were made in cash.

Long-Term Incentives.

2013 Long-Term Incentive Program. Beginning with awards made in 2013, the P&C Committee increased the length of the performance and vesting periods of our long-term incentive plan from two years to three years to further align the interests of management and stockholders over a longer period.

The 2013 Long-Term Incentive Program (“2013 LTIP”) links pay and performance by providing approximately 300 management employees with a compensation opportunity that aligns the interest of management and stockholders, with a large portion contingent upon Delta’s financial, customer service and stock performance over a three-year period. The performance measures and goals are the same for the CEO, executive officers and all other participants in this plan.

Under the 2013 LTIP, Mr. Anderson and Mr. Bastian received an award opportunity consisting of approximately 39% performance awards, 39% restricted stock and 22% performance stock options, and our other executive officers received an award opportunity consisting of 50% performance awards and 50% restricted stock. These allocations were selected to balance the incentive opportunity between Delta’s financial performance relative to other airlines, internal Company performance and its stock price performance. The inclusion of performance-based stock options for the CEO and President was intended to further enhance the alignment of their compensation opportunities with stockholders. This mix and the other terms of the 2013 LTIP are intended to balance the performance and retention incentives with the high volatility of airline stocks.

 

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Performance awards are a dollar-denominated long-term incentive opportunity payable in common stock to executive officers and in cash to other participants. The payout, if any, of the performance award is based on the following three measures over the three-year period ending December 31, 2015:

 

Performance Measure    Weighting   Measurement

 Average Annual Operating Income Margin

   50%    Delta relative to composite performance of an Industry Group*

 Customer Service Performance (Net Promoter Score) Domestic

   15%    Delta’s absolute performance

 Customer Service Performance (Net Promoter Score) International

   10%    Delta’s absolute performance

 Return on Invested Capital (ROIC)

   25%    Delta’s absolute performance

 

* For purposes of the 2013 LTIP, the Industry Group consists of: Alaska Airlines, American Airlines, JetBlue Airlines, Southwest Airlines, United Airlines, and US Airways.

The P&C Committee retained these performance measures from 2012 because superior rankings in these areas should, over time, produce positive stockholder returns.

The following chart shows the range of potential payments of the performance awards based on the 2013 LTIP’s three performance measures. The potential payments may range from zero to 200% of the target award.

 

            Performance Measures
Performance Level   Percentage
of Target
Earned
    Average Annual
Operating Income
Margin
  Customer Service Performance (Net
Promoter Score)
  Return on Invested
Capital
                 Domestic   International     

Maximum

    200   33.0% above Composite Performance of Industry Group   +4.5 percentage
points or higher
  +7.0 percentage
points or higher
  12.0% or Higher

Target

    100   Composite Performance of Industry Group   +2.0 percentage
points
  +3.5 percentage
points
  10.0%

Threshold

    50   33.0% below Composite Performance of Industry Group   +0 percentage
points
  +2.0 percentage
points
  8.0%

Restricted stock is common stock that may not be sold or otherwise transferred for a period of time, and is subject to forfeiture in certain circumstances. The 2013 LTIP generally provides that restricted stock will vest (which means the shares may then be sold) in three equal installments on February 1, 2014, February 1, 2015 and February 1, 2016. Restricted stock is eligible for dividends, but such dividends will not become payable until such time as the restrictions lapse. The value of a participant’s restricted stock award will depend on the price of Delta common stock when the award vests.

 

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A performance stock option is the right to purchase our common stock at a certain price per share during a designated period, but only if certain performance measures are achieved. The 2013 LTIP generally provides that the performance stock options will become exercisable on the vesting dates described in the chart below, subject to the achievement of the following performance measures:

 

Performance Measure   Vesting Dates
Employees receive a payout under the Profit Sharing Program for 2013    1/3 of performance stock option award   February 1, 2014
   1/3 of performance stock option award   February 1, 2015
   1/3 of performance stock option award   February 1, 2016
If there is no Profit Sharing Program payout for 2013, but employees receive a payout under the Profit Sharing Program for 2014    2/3 of performance stock option award   February 1, 2015
   1/3 of performance stock option award   February 1, 2016
Employees receive no Profit Sharing Program payout for either 2013 or 2014   The entire performance stock option award will be forfeited (regardless of whether employees receive a payout under the Profit Sharing Program for 2015)

These performance stock options have an exercise price of $14.86, which is equal to the closing price of our common stock on the grant date and will expire on February 6, 2023.

Because employees received a payout under the Profit Sharing Program for 2013, one-third of Mr. Anderson’s and Mr. Bastian’s performance stock options vested and became exercisable on February 6, 2014 (the date on which the P&C Committee certified the performance measure was satisfied), and the remaining two-thirds will vest in equal installments on each of February 1, 2015 and February 1, 2016, subject to forfeiture in certain circumstances.

The 2013 LTIP target awards are the largest component of each executive officer’s compensation opportunity, reflecting the P&C Committee’s focus on longer-term compensation, Delta’s financial results relative to peer airlines, return on invested capital and customer service performance, as well as on Delta’s common stock price performance. The P&C Committee determined the target award opportunities so the participant’s total direct compensation opportunity is competitive with our custom peer group.

The One-Time Transition Award Program. In order to ensure consistency of award opportunity levels during the transition from a two-year to three-year long-term incentive program, management employees who participated in the 2013 LTIP (other than Mr. Anderson) received a one-time transition award (the “One-Time Transition Award”). Like the 2013 LTIP, the One-Time Transition Award is designed to link pay and performance and for executive officers consists of 50% performance award and 50% restricted stock. The One-Time Transition Award performance award component utilizes the same performance measures as the 2013 LTIP, but with a two-year performance period ending on December 31, 2014. The restricted stock component will fully vest on February 1, 2015, subject to forfeiture in certain circumstances.

Mr. Anderson was also awarded a One-Time Transition Award consisting of 50% performance award and 50% restricted stock. However, unlike the other named executive officers, he received half of the value of his total One-Time Transition Award opportunity in 2013, with the remaining half incorporated with his award under the 2014 long-term incentive plan. Under this arrangement, the portion of the One-Time Transition Award granted to Mr. Anderson in 2013 is subject to the same performance and vesting periods described in the previous paragraph.

For additional information about the vesting and possible forfeiture of the 2013 LTIP awards and the One-Time Transition Awards, see “Post Employment Compensation — Other Benefits — The 2013 Long-Term Incentive Program and the One-Time Transition Award Program” in this proxy statement.

 

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2012 Long-Term Incentive Program. In 2012, the P&C Committee granted executive officers performance awards and, with respect to Mr. Anderson and Mr. Bastian, performance stock option awards under the 2012 Long-Term Incentive Program (the “2012 LTIP”). Delta reported these award opportunities in its proxy statement for the applicable year.

The performance awards were denominated in cash but paid in shares of common stock to executive officers. The payout of these award opportunities is based on the average annual operating income margin relative to the composite performance of an industry peer group and Delta’s customer service performance and return on invested capital over the two-year performance period ending December 31, 2013. The potential payout ranged from zero to 200% of the target award.

Summarized in the chart below are the performance results certified by the P&C Committee for the performance awards under the 2012 LTIP and the resulting percentage of target award opportunity earned:

 

Performance
Measure
  Performance
Measure
Weighting
  Performance Levels   Actual
Performance  for
Performance
Period ending
December 31, 2013
  Percentage
of Target
Earned*
   

Threshold

(50% of Target
Payout)

 

Target

(100% of Target
Payout)

 

Maximum

(200% of Target
Payout)

   
Average Annual Operating Income Margin   50%   4.0%  

5.9%

(Composite Performance of Industry Group)

  7.9%   9.4%   100%
Customer Service   Performance (Net Promoter Score)    
Domestic   15%   +0
percentage
points
  +1.5 percentage points   +3.0
percentage points or higher
  +9.1
percentage points
  30%
International   10%   +0
percentage
points
  +1.5 percentage points   +3.0
percentage points or higher
  +6.4
percentage points
  20%
Return on Invested Capital   25%   6.0%   8.0%   10.0% or Higher   17.0%   50%
   

*        This column reflects the percentage of target earned after application of the performance measure weightings

  Total Percentage of Target Award Earned   200%

Under the terms of the performance stock options granted to Mr. Anderson and Mr. Bastian under the 2012 LTIP, such awards vest and become exercisable in three equal installments (on the vesting dates described in the chart below), subject to the achievement of the following performance measures:

 

Performance Measure   Vesting Date

Achievement of Threshold or better performance for at least two of the three performance measures under the 2011 Long-Term Incentive Program (“2011 LTIP”)

 

The date the P&C Committee certifies the 2011 LTIP results Time Warner CableTime Warner Cable(which occurred on February 2, 2013)

Achievement of Threshold or better performance for at least two of the three performance measures under the 2012 LTIP

 

The date the P&C Committee certifies the 2012 LTIP results (which occurred on February 6, 2014)

Achievement of the performance measure described in the row above

 

February 1, 2015

 

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Based on the P&C Committee’s certification of the 2012 LTIP results whereby all three performance measures exceeded Threshold performance (as described above), one-third of the performance stock options awarded to Mr. Anderson and Mr. Bastian under the 2012 LTIP vested and became exercisable on February 6, 2014 and the remaining one-third of the performance stock options will vest and become exercisable on February 1, 2015.

Benefits. The named executive officers receive the same health, welfare and other benefits provided to all Delta employees, except Delta requires officers to regularly complete a comprehensive physical examination. Delta pays the cost of this examination, which is limited to a prescribed set of preventive procedures based on the person’s age and gender. Mr. Anderson is eligible to receive certain medical benefits under a 2001 agreement with his former employer, Northwest Airlines, but Mr. Anderson has voluntarily waived these benefits while employed by Delta. For additional information regarding the 2001 agreement, see “Post-Employment Compensation – Other Benefits – Pre-existing Medical Benefits Agreement with Northwest” in this proxy statement.

The named executive officers are also eligible for supplemental life and disability insurance, financial planning services (capped at a maximum annual amount), home security services and flight benefits (for the executive officer, immediate family members and other designees and, in certain circumstances, the executive officer’s surviving spouse or domestic partner). Delta provides certain flight benefits to all employees and eligible retirees and survivors. These benefits are a low-cost, highly valued tool for attracting and retaining talent, and are consistent with industry practice. The perquisites received by named executive officers represent a small part of the overall compensation for executives and are offered to provide competitive compensation. See the Summary Compensation Table and the related footnotes for information regarding benefits received in 2013 by the named executive officers.

We do not provide any supplemental executive retirement plans (officers participate in the same on-going retirement plans as our frontline employees), club memberships, company cars or private jet travel for personal use for any named executive officer.

Risk Assessment

The P&C Committee requested Meridian conduct a risk assessment of Delta’s executive compensation program. Based on this review, Meridian determined that Delta’s executive compensation program does not incent unnecessary risk taking, and the P&C Committee and Delta management agree with this assessment. In this regard, the P&C Committee notes the executive compensation program includes:

 

   

a compensation clawback policy for officers;

 

   

stock ownership guidelines for executive officers;

 

   

incentive compensation capped at specified levels;

 

   

an emphasis on longer-term compensation;

 

   

use of multiple performance measures, both annual and long-term; and

 

   

an anti-hedging and anti-pledging policy for all employees.

These features are designed to align executives with preserving and enhancing stockholder value. The clawback policy, the stock ownership guidelines and anti-hedging and anti-pledging policy are discussed below.

Executive Compensation Policies

The P&C Committee monitors the continuing dialogue among corporate governance experts, securities regulators and related parties regarding best practices for executive compensation. Over the last few years, the P&C Committee has refined the corporate governance features of the executive compensation program to better align the program with stockholder interests and incent responsible behavior by adopting a compensation clawback policy for officers, stock ownership guidelines for executive officers, an equity award grant policy and a supplemental equity compensation plan policy to reflect current best practices. Additionally, Delta’s compliance program under the federal securities laws prohibits all employees from engaging in securities hedging and pledging transactions. A brief discussion of these policies follows.

 

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Clawback Policy. The compensation clawback policy holds officers accountable should any of them ever engage in wrongful conduct. Under this policy, if the P&C Committee determines an officer has engaged in fraud or misconduct that requires a restatement of Delta’s financial statements, the P&C Committee may recover all incentive compensation awarded to or earned by the officer for fiscal periods materially affected by the restatement. For these purposes, incentive compensation includes annual and long-term incentive awards and all forms of equity compensation.

Stock Ownership Guidelines. Delta’s stock ownership guidelines strengthen the alignment between executive officers and stockholders. Under these guidelines, which were significantly enhanced in 2013 as explained on page 25 of this proxy statement, the current executive officers are required to own the shares of Delta common stock equal or greater to:

 

      Shares Equal to a
Multiple of Base
Salary
     OR        Shares  

CEO

     8x              400,000   

President

     6x              200,000   

Executive Vice Presidents

     4x              150,000   

In addition, each executive officer must hold at least 50% of all net shares received through restricted stock vesting or realized through stock option exercises until the stock ownership guidelines applicable to the executive officer are achieved. For these purposes, net shares means all shares retained after applicable withholding of any shares for tax purposes and stock ownership includes shares (including restricted stock) owned directly or held in trust by the executive officer or an immediate family member who resides in the same household. It does not include shares an executive officer has the right to acquire through the exercise of stock options. The stock ownership of our executive officers is measured based on the three-month average of the closing price of Delta common stock on the NYSE. As of December 31, 2013, all of our executive officers exceeded their required stock ownership level.

Equity Award Grant Policy. Delta’s equity award grant policy provides objective, standardized criteria for the timing, practices and procedures used in granting equity awards. Under this policy, the P&C Committee will consider approval of annual equity awards for management employees in the first quarter of the calendar year. Once approved, the grant date of these awards will be the later of (1) the date the P&C Committee approves the awards and (2) the third business day following the date on which Delta publicly announces its financial results for the most recently completed fiscal year. Equity awards for new hires, promotions or other off-cycle grants may be approved as appropriate and, once approved, these awards will be made on the later of (1) the date on which the grant is approved and (2) the third business day following the date on which Delta publicly announces its quarterly or annual financial results if this date is in the same month as the grant.

Supplemental Equity Compensation Plan Policy. The P&C Committee adopted this policy to supplement the Delta 2007 Performance Compensation Plan. The policy reaffirms the prohibition against the repricing of stock options and stock appreciation rights under the Delta 2007 Performance Compensation Plan without stockholder approval, except in connection with certain corporate events; and clarifies that this repricing prohibition includes cash buyouts. In addition, the policy provides that all performance-based awards granted under the plan must be subject to a one year minimum vesting period, with certain limited exceptions.

Anti-Hedging and Anti-Pledging Policy. As part of an update to its insider trading policy in 2012, Delta expanded and clarified prohibitions related to transactions in short-term or highly leveraged transactions. Under the updated policy, Delta prohibits employees from engaging in transactions in Delta securities involving publicly traded options, short sales and hedging transactions because they may create the appearance of unlawful insider trading and, in certain circumstances, present a conflict of interest. In addition, Delta expanded its insider trading policy to prohibit employees from holding Delta securities in a margin account or otherwise pledging Delta securities as collateral for a loan.

 

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Compensation for Mr. Anderson

The P&C Committee determines the compensation of Mr. Anderson consistent with the approach used for our other executive officers. In accordance with our executive compensation philosophy and to further align the interests of Mr. Anderson and our stockholders, the vast majority of Mr. Anderson’s compensation opportunity is at risk and dependent on Company and stock price performance.

The P&C Committee made no changes to Mr. Anderson’s base salary or annual and long-term incentive plan target opportunities for 2013. However, Mr. Anderson did receive an award under the One-Time Transition Award Program consisting of 50% performance awards and 50% restricted stock. As explained in the One-Time Transition Award Program description above, Mr. Anderson received half of the value of his total One-Time Transition Award opportunity in 2013, with the remaining half to be incorporated with his award under 2014’s long-term incentive plan.

Mr. Anderson’s total compensation approximates the median when compared to the CEOs at the 100 largest U.S. public companies and to the CEOs at companies with revenues comparable to Delta, as reported by the New York Times on April 13, 2014.

See the Summary Compensation Table and the related footnotes in this proxy statement for additional information about Mr. Anderson’s compensation. The amounts reported in the columns for Stock Awards include the 2013 LTIP and the One-Time Transition Award Program and represent the aggregate fair value of the awards computed in accordance with FASB ASC Topic 718 on the applicable grant date. The amounts do not reflect the risk there will be no payout of the performance awards or, in the case of performance stock options, there is no vesting, because the performance conditions are not met.

The P&C Committee designed Mr. Anderson’s compensation arrangements to provide incentive for him to focus on long-term improvements in Company performance that will lead to greater stockholder value. For example, the following chart illustrates that a substantial percentage of Mr. Anderson’s total compensation is concentrated in equity-based award opportunities.

 

LOGO

Taken in total with the other elements of Delta’s executive compensation program, the P&C Committee believes the right balance is struck between annual operating performance and long-term investments in the Company’s operations.

Post-Employment Compensation

Our executive officers do not have employment contracts, supplemental executive retirement plans, deferred compensation plans or change in control agreements. They are eligible to receive certain benefits in the event of specified terminations of employment, including as a consequence of a change in control. See “Post-Employment Compensation – Other Benefits – The 2013 Long-Term Incentive Program and the One-Time Transition Award Program” for changes to the forfeiture provisions under our long-term incentive plans for certain executive officers. The P&C Committee believes these provisions strengthen the alignment of the executives’ compensation with future company performance.

 

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The severance benefits for our named executive officers are also described in “Post-Employment Compensation  — Potential Post-Employment Benefits upon Termination or Change in Control” in this proxy statement.

Tax and Accounting Impact and Policy

The financial and tax consequences to Delta of the elements of the executive compensation program are important considerations for the P&C Committee when analyzing the overall design and mix of compensation. The P&C Committee seeks to balance an effective compensation program with an appropriate impact on reported earnings and other financial measures.

In making compensation decisions, the P&C Committee considers that Internal Revenue Code Section 162(m) limits deductions for certain compensation to any covered executive to $1 million per year. Under Section 162(m), compensation may be excluded from the $1 million limit if required conditions are met. The 2013 MIP and the performance awards under the 2013 LTIP meet the conditions for exclusion. From time to time, in order to ensure competitive levels of compensation for our executive officers, the P&C Committee may approve compensation, including base salary and benefits that are not deductible under Section 162(m).

Equity awards granted under our executive compensation program are expensed in accordance with Statement of Financial Accounting Standards Codification Topic 718, Stock Compensation.

Compensation Committee Report

The P&C Committee has reviewed and discussed with Delta management the Compensation Discussion and Analysis and, based on such review and discussion, the P&C Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

THE PERSONNEL & COMPENSATION COMMITTEE

David G. DeWalt, Chairman

John S. Brinzo

Shirley C. Franklin

David R. Goode

George N. Mattson

Kenneth B. Woodrow

 

EXECUTIVE COMPENSATION   42   DELTA AIR LINES, INC.


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Information about Summary Compensation Table and Related Matters

The table below contains information about the compensation of the following executive officers during 2013: (1) Mr. Anderson, Delta’s principal executive officer; (2) Mr. Jacobson, Delta’s principal financial officer; and (3) Mr. Bastian, Mr. Gorman and Mr. Hauenstein, who were Delta’s three other most highly compensated executive officers on December 31, 2013.

Summary Compensation Table

 

Name and Principal Position

  Year     Salary
($)
    Bonus
($)
    Stock
Awards
($)
(1)(2)(3)
    Option
Awards
($)(1)(4)
    Non-
Equity
Incentive
Plan
Compen-
sation
($)(5)
    Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(6)
    All Other
Compensation
($)(7)
    Total
($)(8)
 

Richard H. Anderson

    2013        725,000        0        8,910,176        2,000,000        2,446,876        0        293,850        14,375,902   

Chief Executive Officer

    2012        652,083        0        7,000,052        2,000,054        2,749,926        0        173,457        12,575,572   
    2011        600,000        0        7,000,047        0        1,062,900        0        191,607        8,854,554   

Edward H. Bastian

President

    2013        575,000        0        5,340,193        1,000,000        1,698,047        0        231,966        8,845,206   
    2012        531,250        0        3,500,026        1,000,027        1,908,354        43,405        139,435        7,122,497   
    2011        500,000        0        3,500,023        0        885,750        34,948        140,711        5,061,432   

Stephen E. Gorman

    2013        525,000        0        3,870,218        0        1,328,906        0        117,608        5,841,732   

Executive Vice President &

    2012        481,250        0        3,550,167        0        1,493,494        0        74,037        5,598,948   

Chief Operating Officer

    2011        450,000        0        2,200,077        0        664,313        0        62,734        3,377,124   

Glen W. Hauenstein

Executive Vice President &

Chief Revenue Officer

    2013        487,292        0        3,340,264        0        1,139,942        0        156,018        5,123,516   
    2012        420,833        0        3,150,145        0        1,066,781        0        104,272        4,742,032   
    2011        400,000        0        1,800,032        0        472,400        0        109,595        2,782,027   

Paul A. Jacobson

    2013        467,708        0        2,820,065        0        1,001,953        0        118,781        4,408,507   

Executive Vice President &

Chief Financial Officer

    2012        408,333        0        800,044        0        1,066,781        19,136        57,183        2,351,477   

 

(1) The amounts in the “Stock Awards” and “Option Awards” columns do not represent amounts the named executive officers received or are entitled to receive. Rather, the reported amounts represent the aggregate fair value of awards computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Stock Compensation (“FASB ASC Topic 718”), on the applicable grant date or, if earlier, the service inception date. The reported amounts do not reflect the risk the stock awards may be forfeited in certain circumstances; for awards subject to performance conditions, the risk there is no payout; or in the case of performance stock options, that there is no vesting because the performance conditions are not met. The fair value of restricted stock awards is based on the closing price of Delta common stock on the grant date.

The reported amounts for 2013, 2012 and 2011 in the “Stock Awards” column reflect award opportunities under Delta’s long-term incentive plans. For additional information, see footnotes 2 and 3 below. Delta did not grant stock options to any named executive officer in 2011.

 

(2) The 2013 Long-Term Incentive Program (“2013 LTIP”) and the One-Time Transition Award Program (“One-Time TAP”) link pay and performance and align the interests of Delta management and stockholders. As discussed in “Compensation Discussion and Analysis – Elements of Compensation,” the long-term incentive opportunity for executive officers under these programs consists of performance awards and restricted stock, and with respect to Mr. Anderson and Mr. Bastian, performance stock options under the 2013 LTIP.

The performance awards under the 2013 LTIP and the One-Time TAP are denominated in dollars. The payouts, if any, earned by a named executive officer will be made in stock based on Delta’s average annual operating income margin relative to other airlines, on Delta’s return on invested capital and Delta’s customer service performance based on the percentage point improvement in Delta’s net promoter scores.

The restricted stock granted under the 2013 LTIP vests in equal installments on February 1, 2014, 2015 and 2016. The restricted stock granted under the One-Time TAP vests on February 1, 2015. All restricted stock is subject to forfeiture in certain circumstances.

 

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The reported amounts for 2013 in the “Stock Awards” column include the fair value of the performance awards and restricted stock under the 2013 LTIP and the One-Time TAP, all computed in accordance with FASB ASC Topic 718 on February 7, 2013 the date the 2013 LTIP and One-Time TAP awards became effective.

See footnote 4 below for additional information regarding the performance stock options.

 

(3) For awards in the “Stock Awards” column that are subject to performance conditions, the fair value is computed in accordance with FASB ASC Topic 718 based on the probable outcome of the performance condition as of the applicable grant date or, if earlier, the service inception date. For these purposes, the fair value of the performance awards under the 2013 LTIP and the One-Time TAP is computed based on performance at the target level.

If the performance awards were assumed to pay out at the maximum level, the aggregate fair value of such awards, which does not include the restricted stock component of the 2013 LTIP or the One-Time TAP, for the named executive officers would be as follows:

 

Name    2013($)      2012($)      2011($)  

Richard H. Anderson

     8,910,000         7,000,000         7,000,000   

Edward H. Bastian

     5,340,000         3,500,000         3,500,000   

Stephen E. Gorman

     3,870,000         2,550,000         2,200,000   

Glen W. Hauenstein

     3,340,000         2,150,000         1,800,000   

Paul A. Jacobson

     2,820,000         800,000           

 

(4) The stock options granted to Mr. Anderson and Mr. Bastian under the 2013 LTIP are subject to performance conditions. Because the conditions for vesting have been met, the stock options vest in equal installments on each of February 6, 2014 and February 1, 2015 and 2016. We determined the grant date fair value of stock options based on achievement of the target level under an option pricing model using the following assumptions: (1) a 1.09% risk-free interest rate, (2) a 58% expected volatility of common stock and (3) a six year expected life.

 

(5) The 2013 Management Incentive Plan (“2013 MIP”) is an annual incentive plan that links pay and performance, and aligns the interest of Delta management and employees. As discussed in “Compensation Discussion and Analysis — Elements of Compensation,” the annual incentive opportunity for executive officers under the 2013 MIP is based on Delta’s financial, operational and revenue performance relative to key business plan goals.

Payments, if any, earned by the named executive officers under the 2013 MIP are made (a) in cash if there is a payout under Delta’s broad-based employee profit sharing program (“Profit Sharing Program”) for 2013; and (b) in restricted stock if there is no such payout (“MIP Restricted Stock”).

Because Delta was profitable in 2013, 2012 and 2011, there were payouts to Delta employees under the Profit Sharing Program in each of those years. Accordingly, payments earned by executive officers under the 2013 MIP, 2012 MIP and 2011 MIP were made in cash. These cash payments are reported for 2013, 2012 and 2011 in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. See “Compensation Discussion and Analysis — Elements of Compensation — Annual Incentives” for details on Delta’s 2013 MIP performance.

 

(6) Delta does not sponsor a supplemental executive retirement plan for any named executive officer.

The Delta Retirement Plan is a broad-based, non-contributory tax qualified defined benefit pension plan for nonpilot employees. Effective December 31, 2005, the Delta Retirement Plan was amended to freeze service, earnings and pay credits for all participants, including any participating named executive officers. See “Post-Employment Compensation — Defined Benefit Pension Benefits” for a description of this plan.

The reported amounts for 2013 reflect the aggregate change in the actuarial present value of each applicable named executive officer’s accumulated benefit under the Delta Retirement Plan measured from December 31, 2012 to December 31, 2013. The actuarial present value of the accumulated benefits decreased during this period by $20,013 for Mr. Bastian and $12,235 for Mr. Jacobson. This decrease is the result of an increase in the discount rate assumption in calculating these values.

Mr. Anderson, Mr. Gorman and Mr. Hauenstein are not eligible to participate in the Delta Retirement Plan because they did not complete 12 months of service before the plan was frozen on December 31, 2005.

 

DELTA AIR LINES, INC.   44   EXECUTIVE COMPENSATION


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(7) The reported amounts of all other compensation for 2013 include the following items:

 

Name

   Contributions
to Qualified
Defined
Contribution
Retirement
Plan

($)(a)
     Payments due to
Internal Revenue

Code Limits
Applicable to
Qualified Defined
Contribution Plan
($)(b)
     Life
Insurance
Premiums
($)(c)
     Reimbursement
of Taxes
($)(d)
     Perquisites
and Other
Personal
Benefits
($)(e)
 

Richard H. Anderson

     17,850         225,395         1,915         28,190         20,500   

Edward H. Bastian

     17,850         155,985         1,519         32,796         23,816   

Stephen E. Gorman

     17,850         70,540         1,386         14,555         13,277   

Glen W. Hauenstein

     10,200         90,935         1,277         25,704         27,902   

Paul A. Jacobson

     17,850         89,564         1,233         10,134         —     

 

  (a) Represents Delta’s contributions to the Delta Family-Care Savings Plan, a broad-based tax qualified defined contribution plan, based on the same fixed and matching contribution formula applicable to all participants in this plan.

 

  (b) Represents amounts paid directly to the named executive officer that Delta would have contributed to the officer’s account under the Delta Family-Care Savings Plan absent limits applicable to such plans under the Internal Revenue Code. These payments are based on the same fixed and matching contribution formula applicable to all participants in this plan and are available to any plan participant affected by such limits.

 

  (c) Represents the annual premium on supplemental life insurance coverage equal to two times base salary that Delta provides to named executive officers.

 

  (d) Represents tax reimbursements for flight benefits as described below.

 

  (e) The amounts for Mr. Anderson, Mr. Gorman and Mr. Hauenstein consist of financial planning services; home security services; the cost of an annual physical examination for officers; and flight benefits as described below. The amount for Mr. Bastian includes the cost of home security services, the cost of an annual physical examination for officers and flight benefits. Mr. Jacobson did not receive perquisites or other personal benefits with a total incremental cost of $10,000 or more, the threshold for reporting under SEC rules. From time to time, the named executive officers attend events sponsored by Delta at no incremental cost to Delta.

As is common in the airline industry, Delta provides complimentary travel and certain Delta Sky Club privileges for named executive officers; the officer’s spouse, domestic partner or designated companion; the officer’s children and parents; and, to a limited extent, other persons designated by the officer.

Complimentary travel for such other persons is limited to an aggregate imputed value of $20,000 per year for the CEO and President and $15,000 per year for executive vice presidents. Delta reimburses the officer for associated taxes on complimentary travel with an imputed tax value of up to $25,000 per year for the CEO and President and $20,000 per year for executive vice presidents. Unused portions of the annual allowances described in the previous two sentences accumulate and may be carried into succeeding years during employment. Complimentary travel is provided to the surviving spouse or domestic partner of eligible officers after the eligible officer’s death. Delta will not reimburse surviving spouses or domestic partners for associated taxes on complimentary travel under the survivor travel benefit. Delta’s incremental cost of providing flight benefits includes incremental fuel expense and the incremental cost on a flight segment basis for customer service expenses such as meals, onboard expenses, baggage handling, insurance, airport security and aircraft cleaning. In addition, certain named executive officers have flight benefits on another airline at no incremental cost to Delta.

 

(8) As required by SEC rules, the amount in the “Total” column for each named executive officer represents the sum of the amounts in all the other columns. As discussed in footnote (1) above, the amounts in the “Stock Awards” and “Option Awards” columns do not represent amounts the named executive officers received or are entitled to receive. Rather, these amounts represent the aggregate fair value of awards computed in accordance with FASB ASC Topic 718 on the applicable grant date or, if earlier, the service inception date. The amounts do not reflect the risk the awards may be forfeited in certain circumstances, for awards subject to performance conditions, the risk there is no payout or in the case of performance stock options, there is no vesting, because the performance conditions are not met.

 

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Grants of Plan-Based Awards Table

The following table provides information about annual and long-term award opportunities granted to the named executive officers during 2013 under the 2013 MIP, the 2013 LTIP and the One-Time TAP. These award opportunities are described in the “Compensation Discussion and Analysis” section of the proxy statement under “Elements of Compensation — Annual Incentives” and “Elements of Compensation — Long-Term Incentives.”

 

Name/Type of Award

  Grant
Date(1)
    Date of
Personnel
& Compen-
sation
Committee
or Board
Action
   

 

 

Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards(2)

    Estimated Future Payouts Under
Equity Incentive Plan  Awards(3)
    All
Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)(4)
    All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(5)
    Exercise
or Base
Price of
Option
Awards
($/Sh)(6)
    Grant
Date Fair
Value of
Stock and
Option
Awards
($)(7)
 
      Threshold
($)
    Target
($)
    Maximum
($)
    Threshold
($)
    Target
($)
    Maximum
($)
         

Richard H. Anderson

                       

2013 MIP

    1/1/2013        12/12/2012        725,000        1,450,000        2,900,000                                                    

2013 LTIP —Performance Award

    2/7/2013        2/7/2013                             1,750,000        3,500,000        7,000,000                             3,500,000   

2013 LTIP —Restricted Stock

    2/7/2013        2/7/2013                                                  235,540            3,500,124   

2013 LTIP —Performance Stock Options

    2/7/2013        2/7/2013                                                         250,000        14.86        2,000,000   

One-Time TAP- Performance Award

    2/7/2013        2/7/2013                             477,500        955,000        1,910,000                             955,000   

One-Time TAP- Restricted Stock

    2/7/2013        2/7/2013                                                  64,270                      955,052   

Edward H. Bastian

                       

2013 MIP

    1/1/2013        12/12/2012        503,125        1,006,250        2,012,500                                                    

2013 LTIP —Performance Award

    2/7/2013        2/7/2013                             875,000        1,750,000        3,500,000                             1,750,000   

2013 LTIP —Restricted Stock

    2/7/2013        2/7/2013                                                  117,770                      1,750,062   

2013 LTIP —Performance Stock Options

    2/7/2013        2/7/2013                                                         125,000        14.86        1,000,000   

One-Time TAP- Performance Award

    2/7/2013        2/7/2013                             460,000        920,000        1,840,000                             920,000   

One-Time TAP- Restricted Stock

    2/7/2013        2/7/2013                                                  61,920                      920,131   

Stephen E. Gorman

                       

2013 MIP

    1/1/2013        12/12/2012        393,750        787,500        1,575,000                                                    

2013 LTIP —Performance Award

    2/7/2013        2/7/2013                             637,500        1,275,000        2,550,000                             1,275,000   

2013 LTIP —Restricted Stock

    2/7/2013        2/7/2013                                                  85,810                      1,275,137   

One-Time TAP- Performance Award

    2/7/2013        2/7/2013                             330,000        660,000        1,320,000                             660,000   

One-Time TAP- Restricted Stock

    2/7/2013        2/7/2013                                                  44,420                      660,081   

Glen W. Hauenstein

                       

2013 MIP

    1/1/2013        12/12/2012        337,760        675,520        1,351,040                                                    

2013 LTIP —Performance Award

    2/7/2013        2/7/2013                             537,500        1,075,000        2,150,000                             1,075,000   

2013 LTIP —Restricted Stock

    2/7/2013        2/7/2013                                                  72,350                      1,075,121   

One-Time TAP- Performance Award

    2/7/2013        2/7/2013                             297,500        595,000        1,190,000                             595,000   

One-Time TAP- Restricted Stock

    2/7/2013        2/7/2013                                                  40,050                      595,143   

Paul A. Jacobson

                       

2013 MIP

    1/1/2013        12/12/2012        296,875        593,750        1,187,500                                                    

2013 LTIP —Performance Award

    2/7/2013        2/7/2013                             462,500        925,000        1,850,000                             925,000   

2013 LTIP —Restricted Stock

    2/7/2013        2/7/2013                                                  62,250                      925,035   

One-Time TAP- Performance Award

    2/7/2013        2/7/2013                             242,500        485,000        970,000                             485,000   

One-Time TAP- Restricted Stock

    2/7/2013        2/7/2013                                                  32,640                      485,030   

 

(1) For purposes of this column, the grant date for the 2013 MIP is the date the performance period began. The grant date for the 2013 LTIP is the grant date or, if earlier, the service inception date determined under FASB ASC Topic 718.

 

(2) These columns show the annual award opportunities under the 2013 MIP. For additional information about the 2013 MIP, see footnote 5 to the Summary Compensation Table and the “Compensation Discussion and Analysis” section of the proxy statement under “Elements of Compensation — Annual Incentives.”

 

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(3) These columns show the long-term award opportunities under the performance award component of the 2013 LTIP and the One-Time TAP. For additional information about the 2013 LTIP and the One-Time TAP, see footnotes 2 and 3 to the Summary Compensation Table and the “Compensation Discussion and Analysis” section of this proxy statement under “Elements of Compensation — Long-Term Incentives.”

 

(4) This column shows the restricted stock component of the 2013 LTIP and the One-Time TAP.

 

(5) This column shows the performance stock option component of the 2013 LTIP. For additional information about the performance stock option component of the 2013 LTIP, see footnote 4 to the Summary Compensation Table.

 

(6) The exercise price is equal to the closing price of Delta common stock on the NYSE on the date of grant.

 

(7) The amounts in this column do not represent amounts the named executive officers received or are entitled to receive. Rather, the reported amounts represent the fair value of the awards computed in accordance with FASB ASC Topic 718 on the applicable grant date or, if earlier, the service inception date. For awards subject to performance conditions, the value shown is based on the probable outcome of the performance condition as of the applicable grant date or, if earlier, the service inception date. The amounts do not reflect the risk that the awards may be forfeited in certain circumstances or, in the case of performance awards, that there is no payout, or in the case of performance stock options, that there is no vesting, if the required performance measures are not met.

 

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Outstanding Equity Awards at Fiscal Year-End Table

The following table provides information regarding the outstanding equity awards on December 31, 2013 for each of the named executive officers.

 

Name

  Grant
Date(1)
    Option Awards     Stock Awards  
    Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
    Number of
Securities
Underlying
Unexercised
Options (#)

Unexercisable
    Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)(2)
    Option
Exercise
Price
($)(3)
    Option
Expiration
Date
    Number
of Shares
or Units
of Stock
That
Have
Not
Vested
(#)(4)
    Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(5)
    Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)(6)
    Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)
 

Richard H. Anderson

                   

2012 LTIP-Restricted Stock

    2/2/2012                                           157,660        4,330,920                 

2013 LTIP- Restricted Stock

    2/7/2013                                           235,540        6,470,284                 

One-Time TAP-Restricted Stock

    2/7/2013                                           64,270        1,765,497                 

Stock Options

    9/1/2007        264,300                      16.88        8/31/2017                               

2008 LTIP- Stock Options

    4/3/2008        126,390                      8.81        4/2/2018                               

Merger Award-Stock Options

    10/29/2008        1,520,000                      7.99        10/28/2018                               

2012 LTIP- Performance Stock Options

    2/2/2012        106,160               212,320        11.10        2/1/2022                               

2013 LTIP- Performance Stock Options

    2/7/2013                      250,000        14.86        2/6/2023                               

Edward H. Bastian

                   

2012 LTIP-Restricted Stock

    2/2/2012                                           78,830        2,165,460                 

2013 LTIP- Restricted Stock

    2/7/2013                                           117,770        3,235,142                 

One-Time TAP-Restricted Stock

    2/7/2013                                           61,920        1,700,942                 

Stock Options

    6/4/2007        142,900                      18.84        4/29/2017                               

Stock Options

    9/1/2007        60,100                      16.88        8/31/2017                               

2008 LTIP-Stock Options

    4/3/2008        71,090                      8.81        4/2/2018                               

Merger Award-Stock Options

    10/29/2008        440,000                      7.99        10/28/2018                               

2012 LTIP- Performance Stock Options

    2/2/2012        53,080               106,160        11.10        2/1/2022                               

2013 LTIP- Performance Stock Options

    2/7/2013                      125,000        14.86        2/6/2023                               

Stephen E. Gorman

                   

2012 LTIP-Restricted Stock

    2/2/2012                                           57,435        1,577,739                 

2012 LTIP-Restricted Stock Retention Award

    2/2/2012                                           90,100        2,475,047                 

2013 LTIP- Restricted Stock

    2/7/2013                                           85,810        2,357,201                 

One-Time TAP-Restricted Stock

    2/7/2013                                           44,420        1,220,217                 

2008 LTIP-Stock Options

    4/3/2008        25,280                      8.81        4/2/2018                               

Merger Award-Stock Options

    10/29/2008        430,000                      7.99        10/28/2018                               

Glen W. Hauenstein

                   

2012 LTIP-Restricted Stock

    2/2/2012                                           48,425        1,330,235                 

2012 LTIP-Restricted Stock Retention Award

    2/2/2012                                           90,100        2,475,047                 

2013 LTIP- Restricted Stock

    2/7/2013                                           72,350        1,987,455                 

One-Time TAP-Restricted Stock

    2/7/2013                                           40,050        1,100,174                 

Stock Options

    6/4/2007        105,500                      18.84        4/29/2017                               

Stock Options

    11/1/2007        67,000                      20.20        10/31/2017                               

2008 LTIP-Stock Options

    4/3/2008        31,600                      8.81        4/2/2018                               

Paul A. Jacobson

                   

2012 LTIP-Restricted Stock

    2/2/2012                                           18,020        495,009                 

2013 LTIP- Restricted Stock

    2/7/2013                                           62,250        1,710,008                 

One-Time TAP-Restricted Stock

    2/7/2013                                           32,640        896,621                 

Merger Award-Stock Options

    10/29/2008        193,000                    $ 7.99        1