-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OM+58VHitHGmh2mJmQ7FYiT6KqcoO+/ESTqZTv2RrcZTKacVHFeijFmOGsyHq3vL gOCG77F8hHmmC6cUGMryVA== 0000950123-99-003958.txt : 19990503 0000950123-99-003958.hdr.sgml : 19990503 ACCESSION NUMBER: 0000950123-99-003958 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990609 FILED AS OF DATE: 19990430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATLAS AIR INC CENTRAL INDEX KEY: 0000941552 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, NONSCHEDULED [4522] IRS NUMBER: 841207329 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-13569 FILM NUMBER: 99606290 BUSINESS ADDRESS: STREET 1: 538 COMMONS DR CITY: GOLDEN STATE: CO ZIP: 80401 BUSINESS PHONE: 3035265050 DEF 14A 1 NOTICE AND PROXY STATEMENT 1 SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12 ATLAS AIR, INC. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------ (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------ (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------ (5) Total fee paid: ------------------------------------------------------------------------ [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------ (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------ (3) Filing Party: ------------------------------------------------------------------------ (4) Date Filed: ------------------------------------------------------------------------ 2 [ATLAS AIR LOGO] 538 COMMONS DRIVE GOLDEN, COLORADO 80401 May 7, 1999 Dear Stockholder: On behalf of the Board of Directors, I cordially invite you to attend the Annual Meeting of Stockholders of Atlas Air, Inc. The Annual Meeting will be held at 10:00 a.m. Denver time on Wednesday, June 9, 1999, at the Westin Tabor Center Denver, 1672 Lawrence Street, Denver, Colorado 80202. The business to be conducted at the meeting is outlined in the attached Notice of Annual Meeting and Proxy Statement. In addition, members of management will report on the Company's operations and answer stockholder questions. It is important that your shares be represented at the meeting whether or not you plan to attend. Accordingly, we request your cooperation by promptly signing, dating and mailing the enclosed proxy in the envelope provided for your convenience. If you attend the meeting and wish to vote in person, you may revoke your proxy at that time. Sincerely, /s/ MICHAEL A. CHOWDRY -------------------------------------- MICHAEL A. CHOWDRY Chairman of the Board, Chief Executive Officer and President 3 ATLAS AIR, INC. 538 COMMONS DRIVE GOLDEN, COLORADO 80401 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS May 7, 1999 To the Stockholders of ATLAS AIR, INC.: The Annual Meeting of Stockholders of Atlas Air, Inc. (the "Company") will be held on Wednesday, June 9, 1999 at 10:00 a.m. Denver time, at the Westin Tabor Center Denver, 1672 Lawrence Street, Denver, Colorado 80202, for the following purposes: (i) to elect a Board of Directors to serve until the next Annual Meeting of Stockholders and until their successors are elected and qualified; (ii) to approve the appointment of Arthur Andersen LLP as independent auditors of the Company for fiscal year 1999; and (iii) to transact such other business as may properly come before the meeting. The record date for stockholders entitled to notice of, and to vote at, the Annual Meeting or at any adjournment thereof is the close of business on April 27, 1999. A copy of the Company's Annual Report on Form 10-K (the "Form 10-K"), as filed with the Securities and Exchange Commission (the "Commission") for the year ended December 31, 1998, is enclosed. Your vote is important. If you do not expect to be present at the meeting and wish your stock to be voted, please sign and date the enclosed Proxy and mail it promptly in the enclosed reply envelope addressed to American Securities Transfer, Inc., Attention: Proxy Department, 938 Quail Street, Suite 101, Lakewood, Colorado, 80215. By Order of the Board of Directors, /s/ DAVID BRICTSON -------------------------------------- DAVID BRICTSON Secretary 4 ATLAS AIR, INC. 538 COMMONS DRIVE GOLDEN, COLORADO 80401 PROXY STATEMENT FOR THE 1999 ANNUAL MEETING OF STOCKHOLDERS ------------------------ SOLICITATION AND REVOCATION OF PROXIES The accompanying proxy, being mailed to stockholders on or about May 7, 1999, is solicited by the Board of Directors of Atlas Air, Inc. (the "Company") for use at the Annual Meeting of Stockholders (the "Meeting") to be held on Wednesday, June 9, 1999. A copy of the Company's Annual Report on Form 10-K for the year ended December 31, 1998 is being furnished to each stockholder with this Proxy Statement. If a proxy is received before the Meeting, the shares represented by it will be voted unless the proxy is revoked by written notice prior to the Meeting or by voting by ballot at the Meeting. If matters other than those set forth in the accompanying Notice of Annual Meeting are presented at the Meeting for action, which is not currently anticipated, the proxy holders will vote the proxies in accordance with their best judgment. The cost of soliciting proxies in the form enclosed will be borne by the Company. In addition to the solicitation by mail, proxies may be solicited personally, or by telephone, or by employees of the Company. The Company may reimburse brokers holding Common Stock in their names or in the names of their nominees for their expenses in sending proxy material to the beneficial owners of such Common Stock. STOCKHOLDERS ENTITLED TO VOTE AND SHARES OUTSTANDING Only stockholders of record at the close of business on April 27, 1999, will be entitled to vote at the Annual Meeting. On that date there were 34,289,156 shares of the Common Stock of the Company (the "Common Stock") outstanding and entitled to vote at the Annual Meeting. Each share is entitled to one vote. The presence at the Meeting in person or by proxy of the holders of a majority of the outstanding shares of Common Stock entitled to vote shall constitute a quorum for the transaction of business. Proxies marked as abstaining (including proxies containing broker non votes) on any matter to be acted upon by stockholders will be treated as present at the meeting for purposes of determining a quorum but will not be counted as votes cast on such matters. ITEM 1. ELECTION OF DIRECTORS Seven directors are to be elected at the Meeting, each director to hold office until the next Annual Meeting of Stockholders and until his successor is elected and qualified. The persons named as proxies on the enclosed proxy have been designated by the Board of Directors and intend to vote, unless otherwise directed, for the nominees listed below. The Board of Directors has no reason to believe that any of the nominees for the office of director will be unavailable for election as a director. However, if at the time of the Meeting any of the nominees should be unable or decline to serve, the persons named in the proxy will vote for such substitute nominees, vote to allow the vacancy created thereby to remain open until filled by the Board of Directors, or vote to reduce the number of directors for the ensuing year, as the Board of Directors recommends. In no event, however, can the proxy be voted to elect more than seven directors. The election of the nominees to the Board of Directors requires the affirmative vote of a plurality of the shares held by stockholders present at the Meeting in person or by proxy. INFORMATION WITH RESPECT TO NOMINEES The following information sets forth the name and age of each nominee, all other positions or offices, if any, now held by him with the Company and his principal occupation during the past five years. 5 Berl Bernhard, 69, has been a member of our Board of Directors since October 28, 1997. He has been a member of the Washington based law firm of Verner, Liipfert, Bernhard, McPherson and Hand since 1960 and has served as its Chairman since 1982. He was nominated by President Kennedy and confirmed by the Senate in 1961 to serve as Staff Director of the U.S. Commission on Civil Rights. He was Special Advisor to Secretary of State Dean Rusk and Under Secretary of State W. Averell Harriman (1963-65), and was Senior Advisor to Secretary of State Edmund S. Muskie (1980-81). He also served as a Trustee of Dartmouth College (1974-1984). He acted as special counsel to the Trustees of Eastern Airlines and special counsel to the Chairman of Northwest Airlines, and served as Trustee of the Federal City Council from 1988-1992. Mr. Bernhard served as Chairman of the Aspen Institute from 1991-1996 as well as Chairman of its Executive Committee. He was a director of Uniroyal Chemical Company, Inc. and UNC Inc. Michael A. Chowdry, 44, has been Chairman of the Board of Directors and Chief Executive Officer since our inception in August 1992, and served as President from July 1995 to May 1996 and September 1997 to the present. He is also Chairman of the Board (and has served in that role since its inception in April 1985) of Aeronautics Leasing, Inc., an affiliate of the Company ("ALI"). Prior to his founding of ALI, he formed a Colorado-based certificated commuter air carrier in 1981, and was the principal stockholder of Skybus, Inc., the certificated air carrier successor to Frontier Horizon Airlines, from 1984 to 1985. He has been involved in the operation, acquisition, financing and disposition of aircraft and aviation assets since 1978. Lawrence W. Clarkson, 61, has been a member of our Board of Directors since May 13, 1997. He was President of Boeing Enterprises from February 1997 until his retirement on February 1, 1999, where he was responsible for establishing and directing new airplane-related business acquisitions, joint ventures and other relationships outside of the traditional business scope of The Boeing Company ("Boeing"). Since April 1992 until his retirement on February 1, 1999, he was also a Senior Vice President of Boeing. He previously held various management and executive positions with Boeing since he joined in 1987. Prior to that, for twenty years he held various management and executive positions with Pratt & Whitney. He serves as Vice Chairman of the National Bureau of Asian Research, Chairman of U.S.-Pacific Economic Cooperation Council and Chairman of the National Center for APEC, and as a Director of the U.S.-China Business Council, the National Association of Manufacturers and the Atlantic Council. He also serves on the U.S.-Japan Joint High Level Advisory Panel and is a member of the Council on Foreign Relations, the Pacific Council on International Policy and the National Research Council -- Committee on Japan. David K.P. Li, 60, has been a member of our Board of Directors since April 16, 1998. He has been Chairman of the Bank of East Asia, Limited since 1997 and a Director and Chief Executive of the Bank of East Asia, Limited since 1981. He is a Director of Campbell Soup Company, CATIC Shenzhen Holdings Limited, CBS Corporation, Chelsfield Plc., China Merchants China Direct Investments Limited, China Overseas Land & Investment Limited, Dow Jones & Company, Inc., Guangnan (Holdings) Limited, The Hong Kong and China Gas Company Limited, The Hong Kong and Shanghai Hotels, Limited, Hong Kong Interbank Clearing Limited, The Hong Kong Mortgage Corporation Limited, Hong Kong Telecommunications Limited (Deputy Chairman), KTP Holdings Limited, New World Infrastructure Limited, PowerGen Plc., San Miguel Brewery Hong Kong Limited, Sime Darby Berhad and Sime Darby Hong Kong Limited, South China Morning Post (Holdings) Limited and Vitasoy International Holdings Limited. Mr. Li also serves on the international advisory boards of Avon Products Inc., Bank Austria, Bank of Montreal, Carlos P. Romulo Foundation for Peace and Development, Daimler-Benz AG, Federal Reserve Bank of New York's International Capital Markets Advisory Committee, Gulfstream Aerospace, IBM, Jardine Fleming Asian Property Company, Lafarge, PowerGen and Rolls-Royce Plc. David T. McLaughlin, 67, has been a member of our Board of Directors since September 1995. Since 1988, Mr. McLaughlin has served as Chairman and Chief Executive Officer of Orion Safety Products (formerly Standard Fusee Corporation). From 1987 to 1988, Mr. McLaughlin was Chairman of the Aspen Institute and was appointed President and Chief Executive Officer in 1988. Upon his retirement from The Aspen Institute in 1997, he was named President Emeritus. From 1981 to 1987, Mr. McLaughlin served as President of Dartmouth College. From 1970 to 1981, Mr. McLaughlin served in various management positions at The Toro Company, being named Chairman and Chief Executive Officer in 1977. Mr. McLaughlin is Chairman of the Board of CBS Inc. and a Director of Atlantic Richfield Company and PartnerRe Ltd. 2 6 Brian Rowe, 67, has been a member of our Board of Directors since March 1995. He retired as Chairman of the General Electric Aircraft Engines division of the General Electric Company in January 1995, a position he held since September 1993, where he was in charge of world-wide sales of GE engines. Prior to that, he held various management and executive positions with General Electric, which he joined in 1957, including President of General Electric Aircraft Engines (from 1979 to 1993), Vice President and General Manager of the Aircraft Engineering Division (from 1976 to 1979), Vice President and General Manager of the Airline Programs Division (from 1974 to 1976) and Vice President and General Manager of the Commercial Engine Projects Division (from 1972 to 1974). Richard H. Shuyler, 52, has been a member of our Board of Directors since March 1995 and was Senior Vice President -- Finance, Chief Financial Officer and Treasurer from June 1994 to February 1998. As of February 1998, Mr. Shuyler became Executive Vice President -- Strategic Planning and also retained his position as Treasurer. From January 1993 to June 1994, he was Senior Vice President -- Finance and Chief Financial Officer at Trans World Airlines, Inc. From 1975 to 1992, he held various management and executive positions with Continental Airlines, Inc., and various of its affiliates and corporate predecessors, including Texas International Airlines, Inc., Texas Air Corporation and New York Air, serving as Senior Vice President -- Finance and Chief Financial Officer at those entities. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH NOMINEE FOR DIRECTOR NAMED ABOVE. EXECUTIVE OFFICERS The following table sets forth as of the date hereof the executive officers of the Company.
NAME POSITION(S) - ---- ----------- Michael A. Chowdry.............................. Chairman of the Board, Chief Executive Officer and President Richard H. Shuyler.............................. Executive Vice President -- Strategic Planning and Treasurer James T. Matheny................................ Executive Vice President -- Operations Development R. Terrence Rendleman........................... Senior Vice President -- Operations Stanley G. Wraight.............................. Senior Vice President -- Marketing Stephen C. Nevin................................ Vice President and Chief Financial Officer Thomas G. Scott................................. Senior Vice President and General Counsel
For biographical information about Messrs. Chowdry and Shuyler see "Information With Respect to Nominees." James T. Matheny, 59, has been Executive Vice President -- Operations Development since February 1999. He previously served as Senior Vice President -- Operations since December 1992. From 1991 to 1992, he was Director -- Quality Assurance and subsequently, Vice President -- Maintenance and Engineering for Eastern Airlines, Inc. From 1961 to 1991, he served in the United States Navy, rising to Commanding Officer of an aircraft squadron, two air wings and an aircraft carrier, and Operations Officer of the Seventh Fleet based in Japan. R. Terrence Rendleman, 54, has been Senior Vice President -- Operations since February 1999. He previously served as Senior Vice President -- Technical Services and Flight Operations since January 1997. From June 1993 to October 1996, he was Senior Vice President for Maintenance Operations at United Airlines. Prior to that, he served as Senior Vice President -- Technical Operations at Northwest Airlines from 3 7 April 1985 to June 1993. From January 1983 to April 1985, he served as Vice President of Engineering and Maintenance at Braniff Airlines, where he was a Boeing 727 pilot from 1979 to 1983. Stanley G. Wraight, 52, has been Senior Vice President -- Marketing since May 1997. From 1995 to 1997, he led KLM's worldwide sales efforts. From 1965 to 1995, he was employed by KLM in various capacities, including Vice President of KLM's sales, marketing and operations in Asia, Australia and the Middle East. Stephen C. Nevin, 49, has been Vice President and Chief Financial Officer since February 1998. From May 1994 to January 1998, he was Senior Vice President of Finance and Chief Financial Officer at AirTran Holdings, Inc. From December 1982 to April 1994, he served as a Vice President at McDonnell Douglas Finance Corporation. Thomas G. Scott, 49, has been Senior Vice President and General Counsel since July 1998. Prior to his employment with us and since 1980, Mr. Scott was employed with United Parcel Service Co. where he served in a variety of positions, including Vice President and Chief Legal Officer, with primary responsibility for managing the airline legal department including aircraft acquisitions, airport projects and international expansion. SHARE OWNERSHIP OF DIRECTORS, OFFICERS AND CERTAIN BENEFICIAL OWNERS Set forth in the following table is the beneficial ownership of Common Stock as of April 15, 1999 for (i) each person (or group of affiliated persons) known to the Company to be the beneficial owner of more than 5% of Common Stock, (ii) all Directors, (iii) each of the Company's five most highly compensated executive officers, including the Company's Chief Executive Officer and President (the "Named Executive Officers"), and (iv) all Directors and Named Executive Officers as a group. Amounts are restated to reflect the 3-for-2 stock split which occurred on January 25, 1999.
NUMBER OF SHARES PERCENT OF OF COMMON STOCK OUTSTANDING NAME BENEFICIALLY OWNED(1) SHARES - ---- --------------------- ----------- Michael A. Chowdry(2)....................................... 19,993,895 58.1% Richard H. Shuyler.......................................... 279,225 * James T. Matheny............................................ 36,180 * R. Terrence Rendleman....................................... 46,898 * Stanley G. Wraight.......................................... 8,169 * Berl Bernhard............................................... 11,559 * Lawrence W. Clarkson........................................ 7,993 * David K.P. Li............................................... 8,261 * David T. McLaughlin......................................... 20,114 * Brian Rowe.................................................. 31,324 * All Directors and Executive Officers as a Group............. 20,439,618 58.9%
- --------------- * Represents less than 1% beneficial ownership. (1) Unless otherwise indicated, ownership means sole voting and investment power. As to each person or group named in the table, the table includes the following shares issuable upon the exercise of options that are exercisable within 60 days from April 15, 1999: Mr. Chowdry -- 109,690 shares; Mr. Shuyler -- 195,368 shares; Mr. Matheny -- 34,282 shares; Mr. Rendleman -- 45,000 shares; Mr. Wraight -- 6,000 shares; Mr. Bernhard -- 4,500 shares; Mr. Clarkson -- 6,000 shares; Mr. Li -- 6,000 shares; Mr. McLaughlin -- 7,500 shares; Mr. Rowe -- 7,500 shares; and all directors and executive officers as a group -- 421,840 shares. (2) The number of shares of Common Stock listed for Mr. Chowdry includes 10,726,501 shares held by Chowdry, Inc., 8,971,501 shares of which are held by Chowdry Limited Partnership (a limited partnership, the general partner of which is Chowdry, Inc. and whose limited partner is a trust for the 4 8 benefit of Mr. Chowdry's children). Mr. Chowdry is the sole stockholder and director of Chowdry, Inc. Mr. Chowdry has the sole voting and disposition powers with respect to these shares. The Chowdry Family Foundation (the "Foundation"), a non-profit corporation, owns 292,500 shares of Common Stock. Mr. Chowdry is one of the Foundation's directors and officers, and as such he may be deemed to share the power to vote and the power to dispose of these shares. However, one person other than Mr. Chowdry has been given authority by the Foundation's Board of Directors to determine whether any disposition of these shares is to be made. BOARD OF DIRECTORS' MEETINGS, COMMITTEES AND FEES The Board of Directors held four meetings during 1998. Each incumbent director attended at least 75% of the aggregate of the total number of meetings of the Board of Directors and the total number of meetings held by all committees of the Board of Directors on which the Director served during 1998 (including in the case of each director for purposes of this calculation only such committee and Board meetings as occurred after such Director commenced service on the Board of Directors) except Mr. Li who attended two of the three Board meetings held after he became a Director. The Board of Directors has a standing Compensation Committee and a standing Audit Committee. The membership of these committees is determined from time to time by the Board. The Compensation Committee, which in 1998 consisted of Michael A. Chowdry, Brian Rowe and Lawrence W. Clarkson (who joined the Compensation Committee on April 16, 1998), held four meetings during 1998. The Compensation Committee administers our executive compensation programs, which includes determining the bonuses, if any, given to officers, and also administers the Employee Stock Purchase Plan and the portion of our 1995 Long Term Incentive and Share Award Plan (the "1995 Stock Option Plan") applicable to employees. The Audit Committee, which consists of Brian Rowe and David T. McLaughlin, held one meeting during 1998. In addition, it has been our practice to provide detailed financial information at each meeting of the Board of Directors. The principal functions of the Audit Committee are to review the scope of the annual audit and the annual audit report of the independent auditors, recommend the firm of independent auditors to perform such audits, consider non-audit functions proposed to be performed by the independent auditors, review the functions performed by the internal audit staff, ascertain whether the recommendations of auditors are satisfactorily implemented and recommend such special studies or actions which the Committee deems desirable. Our non-employee directors receive $12,500 on a quarterly basis for their services, and receive $2,500 for each Board meeting attended in person. We reimburse non-employee directors for out-of-pocket travel expenditures relating to their service on the Board. Under our Director Stock Plan (the "Director Plan"), non-employee directors previously have had the option to receive all or a portion of their quarterly renumeration in Common Stock instead of cash. Pursuant to a February 1998 amendment to the Director Plan, however, 25% of the quarterly compensation of non-employee directors is to be paid in Common Stock and the balance is payable in Common Stock or cash (or a combination of Common Stock and cash) at the non-employee director's election. If a non-employee director elects at the commencement of any quarter to receive his quarterly remuneration, or a portion thereof, in Common Stock, the number of shares received is determined by dividing the average price for the date immediately preceding the first meeting of directors of each quarter (or if no meeting is held in the quarter, then the last day of such quarter) into the amount of compensation earned for the quarter which the non-employee director chooses not to receive in cash. In addition, pursuant to a February 1998 amendment to our 1995 Stock Option Plan, non-employee directors receive options to purchase 2,000 shares of Common Stock upon their initial election or appointment to the Board at an exercise price equal to the fair market value of the Common Stock at the time of such election or appointment, and all non-employee directors receive options to purchase 2,000 shares of Common Stock on August 16 of each year. 5 9 COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file initial reports of ownership and changes in ownership with the SEC and to furnish copies of these reports to the Company. Based on a review of these reports and written representations from our directors and officers regarding the necessity of filing a report, we believe that during 1998 all filing requirements were met on a timely basis, except that Mr. Bernhard failed to timely file two Form 4's and Mr. McLaughlin failed to timely file one Form 4. COMPENSATION COMMITTEE INTERLOCKS, INSIDER PARTICIPATION AND CERTAIN TRANSACTIONS The members of the Compensation Committee in 1998 were Messrs. Rowe, Chowdry and Clarkson. Mr. Chowdry is the Chairman of the Board, Chief Executive Officer and President of the Company. Mr. Clarkson joined the Compensation Committee on April 16, 1998. A loan of up to $750,000, bearing interest at approximately 5.9%, was extended in June 1996 to one officer for the purpose of constructing a residence. In May 1998, the Company forgave $500,000 of the principal, plus accrued interest on the loan. In February 1998, the Company extended a two year loan for approximately $147,000, bearing interest at a rate of approximately 5.5%, to a Vice President of the Company. In June 1998, an interest-free demand loan of $100,000 was extended to a Senior Vice President of the Company, which loan will be forgiven if such employee remains in Atlas' employ through June 15, 2003 . As of December 31, 1998 the outstanding balance of officer demand loans, including accrued interest, was approximately $516,000. Mr. Clarkson was President of Boeing Enterprises and Senior Vice President of Boeing until his retirement on February 1, 1999. During 1998, the Company paid Boeing approximately $167.6 million for pre-delivery deposits for the purchase of new aircraft, conversion of certain aircraft into freighter configuration, purchase of parts and other related services. Mr. Bernhard is a partner of the law firm Verner, Liipfert, Bernhard, McPherson and Hand, which rendered legal services to the Company in 1998 for which the Company paid approximately $380,000. Mr. Li is Chairman and Chief Executive of The Bank of East Asia, Limited. Pursuant to a consulting agreement entered into between the Company and The Bank of East Asia, Limited, The Bank of East Asia, Limited received a retainer of approximately $127,000 in 1998. In May 1998, the Company agreed to purchase a Boeing Business Jet ("BBJ") from Boeing for approximately $32 million. At the end of January 1999, the Company took delivery of the BBJ from Boeing and immediately delivered the aircraft to a third party for installation of the interior business configuration. This aircraft will be used to transport the Company's executives on business trips throughout the world. The Company intends to sell its current corporate aircraft (currently owned by one of its subsidiaries), upon delivery of the BBJ from the third party, and the Company's Chairman, President and CEO has agreed to share in the acquisition costs and capital improvement costs of the BBJ. 6 10 EXECUTIVE COMPENSATION The following table sets forth, for 1998, 1997 and 1996, the compensation of the Named Executive Officers. Share amounts and per share amounts are restated to reflect the 3-for-2 stock split which occurred on January 25, 1999. SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION AWARDS ANNUAL COMPENSATION ------------ --------------------------------------------- SECURITIES OTHER ANNUAL UNDERLYING ALL OTHER NAME AND POSITION YEAR SALARY(1) BONUS COMPENSATION(2) OPTIONS COMPENSATION - ----------------- ---- --------- -------- --------------- ------------ ------------ Michael A. Chowdry............ 1998 $644,226 $193,125 $ 51,523 337,500 $ 0 Chairman of the Board, 1997 549,569 242,500 75,941 0 0 Chief Executive Officer 1996 670,414 363,750(3) 50,888 0 0 and President Richard H. Shuyler............ 1998 283,626 93,750 17,099 135,000 524,654(5) Executive Vice 1997 192,500 87,500 15,248 0 0 President -- Strategic 1996 240,897 131,250(3) 1,021,318 0 0 Planning, Treasurer and Director(4) James T. Matheny.............. 1998 220,521 72,188 9,767 90,000 0 Executive Vice 1997 192,500 87,500 8,758 0 0 President -- Operations 1996 180,207 131,250(3) 1,671,822 0 0 Development(6) R. Terrence Rendleman......... 1998 217,303 72,188 376,828 90,000 0 Senior Vice President -- 1997 151,250 75,000 570 0 0 Operations(7) 1996 18,750 300,000 0 75,000 0 Stanley G. Wraight............ 1998 227,468 82,500 23,384 90,000 0 Senior Vice President -- 1997 58,333 55,000 41,148 30,000 0 Marketing(8) 1996 0 0 0 0 0
- --------------- (1) Includes amounts paid under the Profit Sharing Plan. (2) Represents compensation derived from the exercise of stock options, the furnishing of Company-owned automobiles, relocation cost reimbursements and other personal benefits. (3) The Compensation Committee determined that, in lieu of cash, a portion of the annual bonuses for Messrs. Chowdry, Shuyler and Matheny would be paid in stock options having a value based upon the Black-Scholes pricing method equal to the dollar amount of such bonuses. Such stock options have a term of five years and were immediately exercisable at $17.3333 per share. Mr. Chowdry received 53,440 options; Mr. Shuyler received 19,282 options; and Mr. Matheny received 19,282 options. (4) Mr. Shuyler commenced employment with the Company on June 26, 1994. Mr. Shuyler served as Chief Financial Officer and Senior Vice President -- Finance until February 17, 1998, at which time he assumed his current position. (5) In May 1998 the Company forgave $500,000 of the principal, plus accrued interest, of a $750,000 loan extended to Mr. Shuyler. (6) Mr. Matheny served as Senior Vice President -- Operations until February 22, 1999, at which time he assumed his current position. (7) Mr. Rendleman commenced employment with the Company on November 18, 1996. Mr. Rendleman served as Senior Vice President -- Technical Services and Flight Operations until February 22, 1999, at which time he assumed his current position. (8) Mr. Wraight commenced employment with the Company on September 1, 1997. 7 11 The following table sets forth information with respect to grants of stock options to each of the Named Executive Officers during the year ended December 31, 1998. Amounts are restated to reflect the 3-for-2 stock split which occurred on January 25, 1999. OPTION GRANTS IN 1998
POTENTIAL REALIZABLE VALUE AT ASSUMED NUMBER OF PERCENTAGE OF ANNUAL RATES OF STOCK SECURITIES TOTAL OPTIONS PRICE APPRECIATION UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(1) OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------ NAME GRANTED FISCAL 1998 PER SHARE DATE 5% 10% - ---- ---------- ------------- --------- ---------- ---------- ----------- Michael A. Chowdry............ 56,250 4.2% $16.31 2/10/08 $ 577,086 $ 1,462,455 281,250 20.8 24.11 4/16/08 4,263,919 10,805,597 Richard H. Shuyler............ 22,500 1.7 16.31 2/10/08 230,834 584,982 112,500 8.3 24.11 4/16/08 1,705,568 4,322,239 James T. Matheny.............. 15,000 1.1 16.31 2/10/08 153,890 389,988 75,000 5.6 24.11 4/16/08 1,137,045 2,881,493 Stanley G. Wraight............ 15,000 1.1 16.31 2/10/08 153,890 389,988 75,000 5.6 24.11 4/16/08 1,137,045 2,881,493 R. Terrence Rendleman......... 15,000 1.1 16.31 2/10/08 153,890 389,988 75,000 5.6 24.11 4/16/08 1,137,045 2,881,493
- --------------- (1) The potential realizable value uses the hypothetical rates specified by the Securities and Exchange Commission and is not intended to forecast future appreciation, if any, of the Company's stock price. The Company did not use an alternative formula for this valuation as the Company is not aware of any formula which will determine with reasonable accuracy a present value based on future unknown or volatile factors. In fact, the Company disavows the ability of this or any other valuation model to predict or estimate the Company's future stock price or to place a reasonably accurate present value on the stock options because all models depend on assumptions about the stock's future price movement, which is unknown. The value indicated is a net amount, as the aggregate exercise price has been deducted from the final appreciated value. The following table sets forth information with respect to each of the Named Executive Officers concerning the value of all exercised and unexercised stock options of such individuals at December 31, 1998. Amounts are restated to reflect the 3-for-2 stock split which occurred on January 25, 1999. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS ACQUIRED VALUE --------------------------- --------------------------- NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ---- ----------- -------- ----------- ------------- ----------- ------------- Michael A. Chowdry............ 0 $0 53,440 337,500 $ 758,180 $2,940,666 Richard H. Shuyler............ 0 0 172,868 135,000 3,750,977 1,176,267 James T. Matheny.............. 0 0 77,407 90,000 1,485,714 784,178 R. Terrence Rendleman......... 0 0 30,000 135,000 180,628 1,055,120 Stanley G. Wraight............ 0 0 6,000 114,000 76,625 1,090,678
EMPLOYMENT AGREEMENTS Mr. Michael A. Chowdry has entered into an employment agreement with the Company that provides for a base salary of $515,000 per annum and discretionary annual bonuses to be determined by the Compensation Committee of the Board of Directors of the Company. The employment agreement will expire June 30, 2002 8 12 and is subject to termination by either party with or without cause. If the employment agreement is terminated by the Company without cause, Mr. Chowdry would be entitled to receive a termination payment equal to twelve months of his base compensation. The Company has also entered into employment agreements with Messrs. Shuyler and Matheny, each of which will expire on June 30, 2000, subject to annual renewal thereafter. The Company entered into an employment agreement with Mr. Rendleman on November 18, 1996, which will expire on November 18, 2001. The Company entered into an employment agreement with Mr. Wraight in May 1997, which became effective on September 1, 1997 and will expire on May 18, 2002. The Company entered into an employment agreement with Mr. Nevin as of February 16, 1998, which will expire on February 15, 2001. The Company entered into an employment agreement with Mr. Scott on June 22, 1998, which will expire on July 1, 2003. Each such agreement will be subject to termination by the Company with or without cause. If such employment agreements are terminated by the Company without cause, the employees are entitled to receive a termination payment equal to twelve months of their base compensation and all the options granted to such employees under the 1995 Stock Option Plan will vest on the date of such termination, except Mr. Rendleman will receive a termination payment equal to twice his base annual compensation. The employment agreements with Messrs. Shuyler and Matheny provide for annual base salaries of $250,000 and $225,000, respectively. The employment agreements with Messrs. Rendleman and Wraight each provide for an annual salary of $200,000. The employment agreements with Messrs. Nevin and Scott each provide for an annual base salary of $175,000. In addition to the annual salary, each employee may receive an annual bonus at the discretion of the Compensation Committee. Mr. Rendleman was guaranteed a bonus of no less than 50% of his base annual compensation for 1997 and 1998. Pursuant to Mr. Nevin's employment agreement, in February 1998, the Company extended to Mr. Nevin a two year loan, bearing interest at approximately 5.5%. The employment agreements require that the employees devote substantially all of their time to the Company. REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION COMPENSATION PHILOSOPHY The Company's executive compensation philosophy has been to align the interests of the Company's stockholders and executive officers, while promoting teamwork among the Company's executive officers. The Board of Directors and the Compensation Committee, which administers the Company's executive compensation programs, have implemented this philosophy through a compensation program which combines four components: base salary, profit sharing, stock options and, in certain circumstances, bonuses. Base Salary. The base salaries of the Company's senior vice presidents and vice presidents were set at the time such executives were hired, and have remained constant, except for promotions and in some cases for certain market adjustments. Such salaries as determined at the time of hire were based on several factors, including comparisons with industry compensation levels and the individual executive's prior salary. In addition, base salary determinations were made in conjunction with the other components of executive compensation discussed herein, to assure proper attention to the Company's goals. Mr. Chowdry's base salary was premised on the salaries of major airline executives, adjusted to reflect in small portion the risk capital which he committed to the start up of the Company. Profit Sharing. The Company's Profit Sharing Plan provides for payments to eligible employees in semiannual distributions based upon the Company's pretax profits. The Company is obligated to make an annual profit sharing contribution of ten percent of the Company's pretax profits, which is defined to mean net income before taxes, but excluding (i) any income or loss related to charges or credits for unusual or infrequently occurring items and (ii) extraordinary items reported on separate line items in the Company's income statement. For the years 1997, 1998 and 1999, beginning with an employee's thirteenth month of employment, an employee is entitled to receive a guaranteed profit sharing payment of 10% of salary, except for captains, who receive a guarantee of 20%. In 1998, every officer of the Company who had completed one year of service received the same profit sharing distribution as all other eligible employees. In April, 1999, 9 13 Atlas flight crews elected to be represented by a union, and they are therefore no longer eligible for profit sharing. Stock Options. The Company's 1995 Stock Option Plan was adopted in March 1995, as a means to attract, retain and motivate selected employees of the Company. The 1995 Stock Option Plan provides for the grant to eligible employees of incentive stock options, non-qualified stock options, stock appreciation rights, restricted shares, performance shares and performance units, dividend equivalents and other share based awards. Bonuses. The Compensation Committee's policy is to provide a significant portion of executive officers' total compensation through annual bonuses as incentives to achieve the Company's financial and operational goals and increase shareholder value. The Company's bonus arrangements for its executive officers are intended to make a major portion of each executive officer's compensation dependent on the Company's overall performance. Such bonuses are also intended to link executive compensation to shareholder value and to encourage the executives to act as a team. Bonuses are also intended to recognize the executive's individual contributions to the Company. After reviewing the performance of the Company's executive officers during 1998 against Board approved financial plans of the Company, along with certain industry comparisons, the Committee determined to grant cash bonuses to executive officers in amounts based on a range of 37.5% to 41.3% of such officers' base salaries. Michael A. Chowdry Brian Rowe Lawrence W. Clarkson 10 14 PERFORMANCE GRAPH The following graph compares the performance of the Company's Common Stock to the S&P 500 Index and the S&P Airlines Index for the dates indicated. TOTAL RETURN TO SHAREHOLDERS+ [ATLAS AIR, INC. PERFORMANCE GRAPH]
ATLAS AIR** S&P 500* S&P AIRLINES* ----------- -------- ------------- 8/9/95 100.00 100.00 100.00 12/29/95 104.69 111.14 97.39 12/31/96 298.44 136.66 107.04 12/31/97 150.00 182.26 180.34 12/31/98 305.86 234.35 174.93
* Based on Close Price on August 9, 1995. ** Based on IPO of $16 on August 10, 1995. + Assumes $100 invested on August 10, 1995 in each of the Company's Common Stock, the S&P 500 Stock Index and the S&P Airlines Index. ITEM 2. APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS The Board of Directors has appointed Arthur Andersen LLP ("Arthur Andersen") as independent auditors of the Company for the year 1999. Arthur Andersen has performed this function since May 22, 1995. Representatives of Arthur Andersen will be present at the Meeting with the opportunity to make a statement, if they wish, and to respond to appropriate questions from stockholders. The affirmative vote of a majority of the shares present and entitled to vote at the Meeting is necessary for the approval of the appointment of Arthur Andersen as independent auditors. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE YEAR 1999. 11 15 STOCKHOLDER PROPOSALS The Company will not consider including a stockholder's proposal for action at its 2000 Annual Meeting of Stockholders in the proxy material to be mailed to its stockholders in connection with such meeting unless such proposal is received at the principal office of the Company no later than January 1, 2000. Any such proposal, including any accompanying supporting statement, may not exceed 500 words. By Order of the Board of Directors, /s/ DAVID BRICTSON -------------------------------------- DAVID BRICTSON Secretary Dated: May 7, 1999 Your vote is important. Stockholders who do not expect to be present at the Annual Meeting and who wish to have their stock voted are requested to sign and date the enclosed proxy and return it in the enclosed envelope. No postage is required if mailed in the United States. 16 ATLAS AIR, INC. 538 Commons Drive, Golden, Colorado 80401 Proxy Solicited on Behalf of the Board of Directors of the Company for the Annual Meeting of Stockholders - June 9, 1999 The undersigned hereby constitutes and appoints Michael A. Chowdry and Richard H. Shuyler, and each of them, his true and lawful agents and proxies with full power of substitution in each, to represent the undersigned at the Annual Meeting of Stockholders of Atlas Air, Inc. to be held at the Westin Tabor Center Denver, 1672 Lawrence Street, Denver, Colorado 80202, on Wednesday, June 9, 1999 at 10:00 a.m. Denver time and at any adjournments thereof, on all matters coming before said meeting. 1. Election of Directors. Nominees: [ ] For [ ] Withheld Berl Bernhard, Michael A. Chowdry, Lawrence W. Clarkson, David K.P. Li, David T. McLaughlin, Brian Rowe and Richard H. Shuyler. (To withhold vote for any individual nominee write that name below.) - ------------------------------------------------------------------------------- 2. Ratification of appointment of Arthur Andersen LLP as independent auditors. [ ] For [ ] Against [ ] Abstain 3. In their discretion, upon other matters as they may properly come before the meeting. (Continued and to be signed on the other side.) - ------------------------------------------------------------------------------- 17 -2- - ------------------------------------------------------------------------------- (Continued from other side.) You are encouraged to specify your choices by marking the appropriate boxes, see reverse side, but you need not mark any boxes if you wish to vote in accordance with the Board of Directors' recommendations. The persons named on the reverse side as agents and proxies cannot vote your shares unless you sign and return this card. This proxy when properly executed will be voted in the manner directed herein by the undersigned. If no direction is made, this proxy will be voted FOR Proposals 1 and 2. Dated , 1999 -------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- Signature(s) Please mark, sign and return promptly using the enclosed envelope. Executors, administrators, trustees, etc. should give a title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer. - ------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----