UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______ to _______
Commission file number
(Exact name of registrant as specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: |
||
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
The aggregate market value of the registrant’s Common Stock held by non-affiliates based upon the closing price of Common Stock as reported on The Nasdaq Global Select Market as of June 30, 2022 was approximately $
Documents Incorporated by Reference:
None.
Auditor name:
Auditor Location:
Auditor Firm ID:
This Amendment No. 1 on Form 10-K/A (this “Amendment”) amends our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, originally filed with the Securities and Exchange Commission (the “SEC”) on February 23, 2023 (the “Original Filing”). We are filing this Amendment pursuant to General Instruction G(3) of Form 10-K to include the information required by Part III of Form 10-K that we did not include in the Original Filing, as we do not intend to file a definitive proxy statement for an annual meeting of shareholders within 120 days of the end of our fiscal year ended December 31, 2022 in light of the Merger (as defined below). In addition, in connection with the filing of this Amendment and pursuant to the rules of the SEC, we are including with this Amendment new certifications of our principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Item 15 of Part IV has also been amended to reflect the filing of these new certifications. Except as described above, no other changes have been made to the Original Filing. The Original Filing continues to speak as of the date of the Original Filing, and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Filing.
Atlas Air Worldwide Holdings, Inc. (“AAWW”), a Delaware corporation, is a holding company with a wholly owned operating subsidiary, Atlas Air, Inc. (“Atlas”). We also have a 51% economic interest and a 75% voting interest in Polar Air Cargo Worldwide, Inc. (“Polar”). In addition, we are the parent company of several wholly owned subsidiaries related to our dry leasing services (collectively referred to as “Titan”). Except as otherwise noted, AAWW, Atlas and Titan (along with all other entities included in AAWW’s consolidated financial statements in the Original Filing) are collectively referred to herein as the “Company,” “AAWW,” “we,” “us,” or “our.”
As disclosed in AAWW’s Current Report on Form 8-K filed with the SEC on March 17, 2023 (the “Closing Date”), the previously announced merger transaction, pursuant to the terms and subject to the conditions set forth in the Agreement and Plan of Merger (the “Merger Agreement”), dated as of August 4, 2022, by and among AAWW, Rand Parent, LLC (“Parent”), a company affiliated with certain funds managed by affiliates of Apollo Global Management, Inc., J.F. Lehman & Company, Inc. and Hill City Capital L.P. (collectively, the “Buyers”) and Rand Merger Sub, Inc., a wholly owned subsidiary of Parent (“MergerCo”), was completed. Upon the filing of the Certificate of Merger with the Secretary of State of the State of Delaware (the “Effective Time”), MergerCo merged with and into AAWW (the “Merger”), and AAWW survived the Merger as a wholly owned subsidiary of Parent. At the Effective Time, each share of common stock, par value $0.01 per share, of AAWW (the “Common Stock”), issued and outstanding immediately prior to the Effective Time (other than shares of Common Stock (a) owned directly by Parent or MergerCo, (b) held by AAWW as treasury shares or (c) owned by any person who has properly demanded and not withdrawn a demand for appraisal rights under Delaware law) converted into the right to receive an amount in cash equal to $102.50 per share, without interest (the “Merger Consideration”).
As disclosed in the Form 8-K described above, as a result of the Merger, changes were made to AAWW’s certificate of incorporation, bylaws, board of directors and officers. In addition, upon consummation of the Merger, as a wholly owned subsidiary of Parent, AAWW could be subject to Parent’s policies and procedures.
Except as described herein, this Amendment does not address events occurring after the date of the Original Filing, speaks only as of the date of the Original Filing and the disclosures contained herein, including, without limitation, with respect to the board of directors of AAWW (including committees thereof), the officers of AAWW and AAWW’s governing documents and policies and procedures, are presented without giving effect to the closing of the Merger. This Amendment should be read in conjunction with the Original Filing and with our filings with the SEC subsequent to the Original Filing.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Amendment, together with other reports, releases and written and oral communications issued or made from time to time by or on behalf of AAWW, contain statements that may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Those statements are based on management’s beliefs, plans, expectations and assumptions, and on information currently available to management. Generally, the words “will,” “may,” “should,” “could,” “would,” “expect,” “anticipate,” “intend,” “plan,” “continue,” “believe,” “seek,” “project,” “estimate” and similar expressions used in this Amendment that do not relate to historical facts are intended to identify forward-looking statements.
The forward-looking statements in this Amendment are not representations or guarantees of future performance and involve certain risks, uncertainties and assumptions. Such risks, uncertainties and assumptions include, but are not limited to, those described in Item 1A, “Risk Factors” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Original Filing. Many of such factors are beyond AAWW’s control and are difficult to
2
predict. Readers are therefore cautioned not to place undue reliance on forward-looking statements. Such forward-looking statements speak only as of the date of this Amendment. AAWW does not intend to publicly update any forward-looking statements that may be made from time to time by, or on behalf of, AAWW, whether as a result of new information, future events or otherwise, except as required by law and expressly disclaims any obligation to revise or update publicly any forward-looking statement to reflect future events or circumstances.
3
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Board of Directors
Each member of the AAWW Board of Directors (the “Board”) is elected each year at the Company’s annual meeting of shareholders to hold office until the next annual meeting of shareholders. As of December 31, 2022, the Board consisted of ten directors.
The Nominating and Governance Committee evaluates the size and composition of the Board and reviews each member’s skills, characteristics, and independence. The Board believes that each director brings strong skills, background, experience, and industry expertise to the boardroom, giving the Board as a group the appropriate balance of skills needed to exercise its oversight responsibilities and composition that aligns with our long-term strategy. The Board further believes that diversity with respect to gender, race and ethnicity, background, professional experiences and perspectives are important elements in the Board review process. To underscore its commitment to Board diversity, the Nominating and Governance Committee charter provides that such diversity (including gender, race, and ethnicity) should be a factor in assessing the Board’s core competencies as a whole. Both the Nominating and Governance Committee and the full Board will therefore consider attributes such as race, ethnicity, gender, cultural background and professional experience when assessing the Board’s overall composition.
Duncan J. McNabb Chairman of the Board Age: 70 Director since: 2012
Other Public Company Directorships: AAR Corp.
Previous Public Company Directorships (last 5 years): None.
Other Activities: Chairman of the Airlift/Tanker Association Chairman of Government Security Committee of AT Kearney Public Sector & Defense Services Co-Founder and Managing Partner of Ares Mobility Solutions, Inc. Former Director of Elbit Systems of America Former Director of AdvanTac Technologies |
|
Background: General Duncan J. McNabb, U.S. Air Force (retired), served as Commander of the United States Air Mobility Command from 2005 to 2007 and Commander of the United States Transportation Command (USTRANSCOM) from 2008 until his retirement from the Air Force in December 2011. USTRANSCOM is the single manager for air, land, and sea transportation for the Department of Defense (DOD). He also served as DOD’s Distribution Process Owner, overseeing DOD’s end-to-end supply chain, transportation, and distribution to U.S. armed forces worldwide. General McNabb commanded more than $56 billion in strategic transportation assets, over 150,000 service personnel and a worldwide command-and-control network. A graduate of the United States Air Force Academy and Air Force pilot, he flew more than 5,600 hours in transport and rotary aircraft. General McNabb has held command and staff positions at squadron, group, wing, major command, and DOD levels. During his over 37-year military career, General McNabb also served as the Air Force Deputy Chief of Staff for Plans and Programs with responsibility for all Air Force programs and over $500 billion in funding over the Air Force’s Five-Year Defense Plan (FYDP). He later served as Director of Logistics on the Joint Staff and was responsible for operational logistics and strategic mobility support. Before his final command at USTRANSCOM, General McNabb served as the 33rd Vice Chief of Staff of the Air Force. Following retirement, General McNabb has served on a number of public, private, and not-for-profit boards and has provided strategic consulting services. |
|
|
|
|
Board Skills and Qualifications: Civil and Governmental Aviation; Corporate Governance; Cybersecurity and Information Technology; Global Operations; International Trade; Legal, Regulatory and Government Affairs; Military Affairs; Supply Chain and Procurement; Public-Company Board Experience; Strategic Planning; Transportation and Security |
4
Charles F. Bolden, Jr. Independent Director Age: 76 Director since: 2017
Committees: Audit and Finance Compensation
Other Public Company Directorships: Aerojet Rocketdyne Holdings, Inc.
Previous Public Company Directorships (last 5 years): None
Other Activities: Director of Blue Cross/Blue Shield of South Carolina Director of Ligado Networks LLC
|
|
Background: Major General Charles F. Bolden, Jr., U.S. Marine Corps (retired), served as the 12th Administrator of the National Aeronautics and Space Administration (NASA) from July 2009 to January 2017. As Administrator, he led a nationwide NASA team to advance the missions and goals of the U.S. space program. General Bolden’s 34-year career with the U.S. Marine Corps also included 14 years as a member of NASA’s Astronaut Office. After joining the Office in 1980, General Bolden traveled to orbit four times aboard the space shuttle between 1986 and 1994, commanding two of the missions and piloting two others. His flights included deployment of the Hubble Space Telescope and the first joint U.S.-Russian shuttle mission, which featured a cosmonaut as a member of his crew. General Bolden left NASA in 1994 and returned to the operating forces of the Marine Corps. His final duty was as Commanding General of the 3rd Marine Aircraft Wing, Miramar, Calif. |
|
|
|
|
Board Skills and Qualifications: Civil and Governmental Aviation; Corporate Governance; Cybersecurity and Information Technology; Global Operations; Military Affairs; Public-Company Board Experience; Strategic Planning; Transportation and Security |
Walter G. Borst Independent Director Age: 61 Director since: 2022
Committees: Audit and Finance
Other Public Company Directorships: None
Previous Public Company Directorships (last 5 years): Navistar International Corporation
Other Activities: Director, Navistar International Corporation Chairman of the Board of Trustees of Kettering University |
|
Background: Mr. Borst served as Executive Vice President and Chief Financial Officer of Navistar International Corporation (“Navistar”) from 2013 to 2021. Prior to joining Navistar, Mr. Borst served as Chairman, Chief Executive Officer and President of General Motors Asset Management, as well as in a number of other positions of increasing responsibility with General Motors Company, including Assistant Treasurer from 1997 to 2000, Chief Financial Officer and Executive Director of its Adam Opel AG subsidiary from 2000 to 2002, Treasurer from 2003 to 2009, and Vice President and Treasurer from 2009 to 2010. |
|
|
|
|
Board Skills and Qualifications: Capital Structure; Corporate Governance; Current/Previous Senior Executive Experience; Cybersecurity and Information Technology; Finance, Accounting and Risk Management; Global Operations; International Trade; Legal, Regulatory and Government Affairs; Mergers and Acquisitions; Military Affairs; Public-Company Board Experience; Strategic Planning; Supply Chain and Procurement; Transportation and Security
|
Raymond L. Conner Independent Director Age: 67 Director since: 2022
Committees: Compensation
Other Public Company Directorships: Alaska Air Group, Inc.
|
|
Background: Mr. Conner is operating advisor to Clayton, Dubilier & Rice, a private investment firm, since September 2018. He served as the former Vice Chairman of the Boeing Company from 2013 to 2017. Prior to his appointment to Vice Chairman, Mr. Conner served in a number of positions of increasing responsibility with Boeing Commercial Airplanes since 1977, including a variety of roles within the sales, finance and material divisions. Most recently, he served as Vice President and General Manager of the 777 program from 2001 to 2003, Vice President of Sales for the Americas from 2003 to 2007, Vice President and General Manager of Supply Chain Management and Operations from 2008 to 2011, Vice President Sales, Marketing and Commercial Aviation Services in 2012 and President and Chief Executive Officer from 2012 to 2016. |
5
Previous Public Company Directorships (last 5 years): Adient plc
Other Activities: Board of Trustees, Central Washington University |
|
|
|
|
|
|
Board Skills and Qualifications: Capital Structure; Civil and Governmental Aviation; Corporate Governance; Current/Previous Senior Executive Experience; Cybersecurity and Information Technology; Finance, Accounting and Risk Management; Global Operations; International Trade; Legal, Regulatory and Government Affairs; Mergers and Acquisitions; Military Affairs; Public-Company Board Experience; Sales and Marketing; Strategic Planning; Supply Chain and Procurement; Transportation and Security |
John W. Dietrich President and CEO Age: 58 Director since: 2020
Other Public Company Directorships: None
Previous Public Company Directorships (last 5 years): None
Other Activities: Chairman of the National Defense Transportation Association Director of Airlines for America Director of the National Air Carrier Association Member of the Board of Governors of International Air Transport Association |
|
Background: Mr. Dietrich became our President and Chief Executive Officer in January 2020. He was also elected to our Board of Directors at such time. Prior to January 2020, he served as our President and Chief Operating Officer from July 2019 and our Executive Vice President and Chief Operating Officer from September 2006. During the period of March 2003 to September 2006, Mr. Dietrich held a number of senior executive positions in the Company, including Senior Vice President, General Counsel, Chief Human Resources Officer, Corporate Secretary, and head of IT and Corporate Communications functions. Mr. Dietrich joined Atlas in 1999 as Associate General Counsel. Prior to joining us, he was a litigation attorney at United Airlines from 1992 to 1999, where he focused on employment and commercial litigation issues. He also serves as Chairman of the National Defense Transportation Association, a director of Airlines for America, and a director of the National Air Carrier Association. Mr. Dietrich earned a Bachelor’s of Science degree from Southern Illinois University and received his Juris Doctorate, cum laude, from the University of Illinois at Chicago John Marshall Law School. He is a member of the New York, Illinois and Colorado Bars. |
|
|
|
|
Board Skills and Qualifications: Capital Structure; Civil and Governmental Aviation; Corporate Governance; Current/Previous Senior Executive Experience; Global Operations; International Trade; Legal Regulatory and Government Affairs; Mergers and Acquisitions; Military Affairs; Strategic Planning; Supply Chain and Procurement; Transportation and Security
|
Beverly K. Goulet Independent Director Age: 68 Director since: 2021
Committees: Compensation (Chair)
Other Public Company Directorships: Xenia Hotels & Resorts, Inc.
Other Activities: Director, Rolls-Royce Holdings plc |
|
Background: Ms. Goulet served as Senior Vice President and Chief Integration Officer of American Airlines Group Inc. (“American”) from 2013 through November 2015 and Executive Vice President and Chief Integration Officer from December 2015 until her retirement from American in June 2017. Ms. Goulet was also the Chief Restructuring Officer of American from 2011 to 2013 and Vice President – Corporate Development and Treasurer from 2002 to 2013. Prior to joining American, Ms. Goulet practiced corporate and securities law for 13 years. She received a Bachelor’s degree and a Juris Doctor from the University of Michigan. |
|
|
|
|
Board Skills and Qualifications: Capital Structure; Civil and Governmental Aviation; Corporate Governance; Current/Previous Senior Executive Experience; Finance, Accounting and Risk Management; Global Operations; Legal, Regulatory and Government Affairs; Mergers and Acquisitions; Public-Company Board Experience; Strategic Planning; Transportation and Security |
6
Bobby J. Griffin Independent Director Age: 74 Director since: 2016
Committees: Nominating and Governance (Chair) Compensation
Other Public Company Directorships: Hanesbrands Inc. United Rentals, Inc. WESCO International, Inc.
Previous Public Company Directorships (last 5 years): None |
|
Background: Mr. Griffin served as President – International Operations for Ryder System, Inc., a global provider of transportation, logistics and supply chain management solutions from 2005 to 2007. Beginning in 1986, Mr. Griffin served in various other management positions with Ryder, including as Executive Vice President – International Operations from 2003 to 2005 and Executive Vice President – Global Supply Chain Operations from 2001 to 2003. Prior to Ryder, Mr. Griffin was an executive at ATE Management and Service Company, Inc., which was acquired by Ryder in 1986. |
|
|
|
|
Board Skills and Qualifications: Corporate Governance; Current/Previous Senior Executive Experience; Global Operations; International Trade; Mergers and Acquisitions; Public-Company Board Experience; Supply Chain and Procurement; Strategic Planning; Transportation and Security
|
7
Sheila A. Stamps Independent Director Age: 65 Director since: 2018
Committees: Audit and Finance (Chair) Nominating and Governance
Other Public Company Directorships: IQVIA Inc. MFA Financial, Inc. Pitney Bowes Inc.
Previous Public Company Directorships (last 5 years): CIT Group, Inc. and its wholly owned subsidiary, CIT Bank N.A. Forest Road Acquisition Corp
Other Activities: Director of IES Abroad Former Commissioner and Audit Committee Chair of the New York State Insurance Fund Board Advisory Services Faculty Member of the National Association of Corporate Directors (NACD) NACD Board Leadership Fellow |
|
Background: Ms. Stamps has a diversity of strategic and financial experience, including governance oversight of aviation businesses. She previously served as Executive Vice President at DBI, LLC, a private mortgage investment company, from 2011 to 2012. She served from 2008 to 2011 as Director of Pension Investments and Cash Management at New York State Common Retirement Fund, and from 2004 to 2005 as a Fellow at the Weatherhead Center for International Affairs at Harvard University. Prior to this, Ms. Stamps served as a Managing Director and Head of Relationship Management, Financial Institutions at Bank of America. From 1982 to 2003, she held a number of executive positions both domestic and international with Bank One Corporation (now JPMorgan), including Managing Director and Head of European Asset-Backed Securitization and a member of the EMEA Strategic Operating Committee. Ms. Stamps holds an MBA from the University of Chicago, a CERT Certificate in Cybersecurity from Carnegie Mellon, and an ESG Certificate and Designation from Competent Boards. |
|
|
|
|
Board Skills and Qualifications: Capital Structure; Corporate Governance; Cybersecurity and Information Technology; Finance, Accounting and Risk Management; Mergers and Acquisitions; Regulatory and Government Affairs; Sales and Marketing; Strategic Planning; Current/Previous Senior Executive Experience; Public-Company Board Experience
|
George A. Willis Independent Director Age: 58 Director since: 2022
Committees: Nominating and Governance
Other Public Company Directorships: Vulcan Materials Company
Previous Public Company Directorships (last 5 years): None
Other Activities: Director, JM Huber Corporation |
|
Background: Mr. Willis has extensive experience in logistics and operations, including in managing a diverse transportation product portfolio in a range of domestic and international markets. During his 36-year career with United Parcel Service (“UPS”), he served the company in many executive level positions. In his most recent role as President of U.S. Operations, he was responsible for all package delivery services, as well as UPS Airlines, for the world’s largest economy. Mr. Willis was also a member of the UPS Executive Leadership Team, which is responsible for long-term strategy and operating execution. From 2015-2018, he served as UPS President, West Region, and from 2013-2015, he was UPS President for the UK, Ireland and Nordics Region, serving as Managing Director for nine countries. Mr. Willis was Vice President of U.S. Operations and Senior Vice President of UPS Store Franchise from 2012-2013. Prior to that assignment, he served as regional President in Southern California and North Carolina. From 1984-1988, Mr. Willis served in the U.S. Marine Corps Reserves, where he managed logistics and just-in-time network for warehousing. He was honorably discharged as a non-commissioned officer. |
|
|
|
|
Board Skills and Qualifications: Capital Structure; Civil and Governmental Aviation; Corporate Governance; Current/Previous Senior Executive Experience; Cybersecurity and Information Technology; Global Operations; International Trade; Mergers and Acquisitions; Public-Company Board Experience; Sales and Marketing; Strategic Planning; Supply Chain and Procurement; Transportation and Security
|
8
Carol J. Zierhoffer Independent Director Age: 62 Director since: 2021
Committees: Audit and Finance Nominating and Governance
Other Public Company Directorships: Allscripts Healthcare Solutions, Inc.
Previous Public Company Directorships (last 5 years): None
Other Activities: Executive Advisory Board Member, OpsCruise Founding Board Member, A Little Compassion |
|
Background: Ms. Zierhoffer has over 35 years of experience in the information technology industry. Most recently and until her retirement in October 2019, Ms. Zierhoffer served as the Senior Vice President and Global Chief Information Officer at Bechtel Corporation (“Bechtel”), where she oversaw Bechtel’s Global Information Systems & Technology organization with responsibility for Bechtel’s business and technology solutions, cybersecurity, infrastructure and operations, big data and analytics, innovation, emerging technology and knowledge management for Bechtel’s business lines and projects worldwide. Additionally, Ms. Zierhoffer served as Vice President and Global Chief Information Officer of Xerox Corporation from 2012 through 2013, Vice President and Global Chief Information Officer of ITT Corporation from 2008 through 2011 and Vice President and Chief Information Officer of three Northrop Grumman Corporation sectors — Electronics, Information Technology and Mission Systems — from 2002 through 2008. |
|
|
|
|
Board Skills and Qualifications: Civil and Governmental Aviation; Corporate Governance; Current/Previous Senior Executive Experience; Cybersecurity and Information Technology; Finance, Accounting and Risk Management; Global Operations; International Trade; Mergers and Acquisitions; Public-Company Board Experience; Strategic Planning; Supply Chain and Procurement
|
We view each of the skillsets discussed in the Director biographies above to be essential to the effective oversight of the Company, as discussed further below:
9
Board and Committee Information
Our Board maintains three standing Committees, an Audit and Finance Committee, Compensation Committee, and Nominating and Governance Committee, each of which has a charter that details the Committee’s responsibilities. The charters for all the standing Committees of the Board of Directors are available on our website located at
www.atlasairworldwide.com under the “About Us — Corporate Responsibility — Governance” section. The charters are also available in print and free of charge to any shareholder who sends a written request to the Secretary at Atlas Air Worldwide Holdings, Inc., 2000 Westchester Avenue, Purchase, NY 10577.
Audit and Finance Committee
The Audit and Finance Committee of the Board of Directors currently consists of four outside Directors: Mses. Stamps (Chair) and Zierhoffer, and Messrs. Bolden and Borst, each of whom is an independent Director within the meaning of the applicable rules and regulations of the SEC and Nasdaq (see also “Director Independence” below). The Board has determined that Ms. Stamps and Mr. Borst are “audit committee financial experts” as defined under applicable SEC rules.
The Audit and Finance Committee’s primary function, as set forth in its written charter (available on our website at
www.atlasairworldwide.com in the “About Us — Corporate Responsibility — Governance” section) is to assist the Board in overseeing the:
The Audit and Finance Committee is also responsible for overseeing the Company’s Code of Ethics (see also “Code of Ethics” below) and related party transactions. The Audit and Finance Committee reviews and reassesses the adequacy of its charter on an annual basis and recommends proposed changes to the Board of Directors for approval. The Audit and Finance Committee held eight meetings in 2022.
10
Executive Officers
John W. Dietrich. Mr. Dietrich, age 58, has been our President and Chief Executive Officer and a member of our Board of Directors since January 2020. Prior to January 2020, he served as our President and Chief Operating Officer from July 2019 and our Executive Vice President and Chief Operating Officer from September 2006. In addition, he was President and Chief Operating Officer of Atlas Air, Inc. from October 2014 to December 2019. During the period from March 2003 to September 2006, Mr. Dietrich held a number of senior executive positions in the Company, including Senior Vice President, General Counsel, Chief Human Resources Officer, Corporate Secretary and head of the IT and Corporate Communications functions. Mr. Dietrich joined Atlas in 1999 as Associate General Counsel. Prior to joining us, he was a litigation attorney at United Airlines from 1992 to 1999, where he provided legal counsel to all levels of management, particularly on employment and commercial litigation issues. He also serves as Chairman of the National Defense Transportation Association, a director of the National Air Carrier Association and Member of the Board of Governors of International Air Transport Association ("IATA"). Mr. Dietrich earned a Bachelor’s of Science degree from Southern Illinois University and received his Juris Doctorate, cum laude, from the University of Illinois at Chicago John Marshall Law School. He is a member of the New York, Illinois and Colorado Bars.
James A. Forbes. Mr. Forbes, age 65, has been our Executive Vice President and Chief Operating Officer since January 2020. He also serves as Executive Vice President and Chief Operating Officer of Atlas Air, Inc. Prior to January 2020, he was Senior Vice President and Chief Operating Officer of Southern Air, Inc. since April 2016. Mr. Forbes has over 40 years of aviation operating experience, including more than 20 years with the Company. He joined us in 1997 as Senior Director of Ground Operations, where he helped construct the global infrastructure upon which we have grown. He became Vice President, Worldwide Ground Operations in 2001, overseeing station operations for all of Atlas Air, Inc. and Polar Air Cargo, Inc. In 2008, Mr. Forbes was named Senior Vice President for System Performance and Quality for Polar, where he led the transformation of an all-cargo network into a leading on-time express operation that supports DHL’s worldwide air network. He held that position until April 2016, when he was promoted to lead Southern Air, Inc. operations.
Adam R. Kokas. Mr. Kokas, age 51, has been our General Counsel and Secretary since October 2006, and Executive Vice President since January 2014. Mr. Kokas is responsible for directing all of the Company’s legal and regulatory affairs, as well as overseeing government affairs and public policy matters. In November 2007, Mr. Kokas assumed responsibility for the Company’s Human Resources Department. He served as our Chief Human Resources Officer until March 2018. Mr. Kokas joined us from Ropes & Gray LLP, where he was a partner in their Corporate Department, focusing on general corporate, securities, transactions and business law matters. Mr. Kokas also serves as the Chair of the IATA’s Legal Advisory Council and is a member of the board of directors and Audit and Finance Committee of the Society of Corporate Governance. He also served as the Chairman of the Board of the Cargo Airlines Association from 2011 to 2019. Mr. Kokas earned a Bachelor of Arts degree from Rutgers University and is a cum laude graduate of the Boston University School of Law, where he was an Edward M. Hennessey scholar. Mr. Kokas is a member of the New York and New Jersey Bars.
Michael T. Steen. Mr. Steen, age 56, has been Executive Vice President and Chief Commercial Officer since November 2010. In addition, he was named President and Chief Executive Officer of Titan Aviation Holdings, Inc. effective October 2014. Prior to November 2010, he was our Senior Vice President and Chief Marketing Officer from April 2007. Mr. Steen joined us from Exel plc where he served as Senior Vice President of Sales and Marketing. Mr. Steen led the sales and marketing activities for Exel Freight’s management and technology sector. Following Exel’s acquisition by Deutsche Post World Net, he held senior-level positions with the merged company in global supply chain logistics. Prior to joining Exel, he served in a variety of roles with KLM Cargo over 11 years, including Vice President of the Americas, Head of Global Sales and Marketing for the Logistics Unit and Director of Sales for EMEA. Mr. Steen has been a Director for CHC Helicopter since May 2017 and is the Chairman of IATA’s Cargo Committee. Mr. Steen earned a degree in economic science from Katrinelund in Gothenburg, Sweden, and is an alumnus of the Advanced Executive Program at the Kellogg School of Management at Northwestern University.
Spencer Schwartz. Mr. Schwartz, age 56, has been Executive Vice President since January 2014 and Chief Financial Officer since June 2010. Prior to January 2014, he was Senior Vice President from June 2010. Prior to June 2010, he was our Vice President and Corporate Controller from November 2008. Mr. Schwartz joined us from Mastercard, where he was employed for over 12 years and served as Group Head of Global Risk Management; Senior Vice President and Business Financial Officer; Senior Vice President, Corporate Controller and Chief Accounting Officer; and Vice President of Taxation. Prior to joining Mastercard, Mr. Schwartz held financial positions of increasing responsibility with Price Waterhouse LLP (now PricewaterhouseCoopers LLP) and Carl Zeiss, Inc. Mr. Schwartz earned a Bachelor’s degree in Accounting from The Pennsylvania State University and a Master’s degree in Business Administration, with a concentration in management, with honors, from New York University’s Leonard N. Stern School of Business. He is a certified public accountant.
11
Keith H. Mayer. Mr. Mayer, age 58, has been Senior Vice President and Chief Accounting Officer since January 2018 and Corporate Controller since November 2010. Prior to January 2018, he was Vice President since November 2010. Mr. Mayer joined us from PepsiCo, Inc. In his most recent role at PepsiCo, he served as Chief Financial Officer of an international coffee partnership between PepsiCo and Starbucks Corporation. Mr. Mayer also served PepsiCo in a variety of roles since 1999, including Director of External Reporting, Assistant Controller for PepsiCo International, Senior Group Manager of Financial Accounting for Frito-Lay North America, and Group Manager of Technical Accounting. Prior to joining PepsiCo, Mr. Mayer held financial positions of increasing responsibility with Coopers & Lybrand LLP (now PricewaterhouseCoopers LLP). Mr. Mayer earned a Bachelor’s degree in Accounting from the University of Bridgeport where he graduated magna cum laude. He is a certified public accountant.
Pursuant to our Amended and Restated By-Laws (the “By-Laws”), each officer serves until their successors are elected or appointed by the Board, and qualified, or until his or her earlier resignation or removal.
Code of Ethics
Our Audit and Finance Committee monitors our Code of Conduct Applicable to the Chief Executive Officer, Senior Financial Officers and Members of the Board of Directors (the “Code of Ethics”). The Code of Ethics includes certain provisions regarding disclosure of violations and waivers of, and amendments to, the Code of Ethics by covered parties. The Code of Ethics is reviewed on an annual basis by our Audit and Finance Committee. Any person who wishes to obtain a copy of our Code of Ethics may do so by writing to the Secretary, Atlas Air Worldwide Holdings, Inc., 2000 Westchester Avenue, Purchase, NY 10577. A copy of the Code of Ethics is available in the “About Us — Corporate Responsibility — Governance” section of our website at www.atlasairworldwide.com.
Compensation of Non-Employee Directors
The compensation of our non-employee Directors is reviewed by the Compensation Committee on a periodic basis. Compensation for our non-employee Directors in 2022 consisted of the following:
Cash Retainer
Equity Compensation — Restricted Stock Units
Chairman
Meeting Fees
12
Medical, Dental and Vision Care Insurance (frozen and only available to those Directors who joined the Board in or prior to 2011)
2022 Total Compensation of Non-Employee Directors
The following table shows (i) the cash amount paid to each non-employee Director for his or her service as a non-employee Director in 2022, and (ii) the grant date fair value of RSUs awarded to each non-employee Director in 2022, calculated in accordance with the accounting guidance on share-based payments. Mr. Dietrich did not receive any additional compensation for his service as a Director in 2022.
Name |
Fee Earned Or Paid in Cash |
|
Stock Awards |
|
Total |
|
|
|||
|
($) |
|
($)(1) |
|
($) |
|
|
|||
Timothy J. Bernlohr(2) |
|
67,000 |
|
|
- |
|
|
67,000 |
|
|
Charles F. Bolden, Jr. |
|
125,000 |
|
|
110,002 |
|
|
235,002 |
|
|
Walter G. Borst |
|
58,591 |
|
|
110,002 |
|
|
168,593 |
|
|
Raymond L. Conner |
|
58,591 |
|
|
110,002 |
|
|
168,593 |
|
|
Beverly K. Goulet |
|
126,500 |
|
|
110,002 |
|
|
236,502 |
|
|
Bobby Griffin |
|
135,500 |
|
|
110,002 |
|
|
245,502 |
|
|
Carol B. Hallett(2) |
|
58,000 |
|
|
- |
|
|
58,000 |
|
|
Duncan McNabb |
|
287,000 |
|
|
110,002 |
|
|
397,002 |
|
|
Sheila A. Stamps |
|
143,500 |
|
|
110,002 |
|
|
253,502 |
|
|
John K. Wulff(2) |
|
61,000 |
|
|
- |
|
|
61,000 |
|
|
George A. Willis |
|
58,591 |
|
|
110,002 |
|
|
168,593 |
|
|
Carol J Zierhoffer |
|
108,500 |
|
|
110,002 |
|
|
218,502 |
|
|
(1) These units vest on the one-year anniversary of the grant date. The grant date fair value was $69.71 per share.
(2) Each of Messrs. Bernlohr and Wulff and Ms. Hallett retired from the Board on May 31, 2022.
Non-Employee Directors’ Outstanding Equity Awards at Fiscal Year-End 2022
The table below shows outstanding equity awards for our non-employee Directors as of December 31, 2022.
Name |
Grant Date |
Number of Shares or Units of Stock That Have Not Vested |
|
Market Value of Shares or Units of Stock That Have Not Vested |
|
|
||
|
|
(#)(1) |
|
($)(2) |
|
|
||
Charles F. Bolden, Jr. |
5/31/2022 |
|
1,578 |
|
|
159,062 |
|
|
Walter G. Borst |
5/31/2022 |
|
1,578 |
|
|
159,062 |
|
|
Raymond L. Conner |
5/31/2022 |
|
1,578 |
|
|
159,062 |
|
|
Beverly K. Goulet |
5/31/2022 |
|
1,578 |
|
|
159,062 |
|
|
Bobby Griffin |
5/31/2022 |
|
1,578 |
|
|
159,062 |
|
|
Duncan McNabb |
5/31/2022 |
|
1,578 |
|
|
159,062 |
|
|
Sheila A. Stamps |
5/31/2022 |
|
1,578 |
|
|
159,062 |
|
|
George A. Willis |
5/31/2022 |
|
1,578 |
|
|
159,062 |
|
|
Carol J Zierhoffer |
5/31/2022 |
|
1,578 |
|
|
159,062 |
|
|
(1) The grant date fair value of units granted on May 31, 2022 was $69.71 per share.
(2) The market values reflect the closing price of our Common Stock on the Nasdaq Global Market on December 30, 2022 (the last trading day of 2022), which was $100.80 per share.
13
ITEM 11. EXECUTIVE COMPENSATION.
Compensation Discussion and Analysis
Our Compensation Discussion and Analysis (“CD&A”) describes Atlas Air’s executive compensation program, including total 2022 compensation, for our named executive officers (“NEOs” or “Named Executive Officers”) listed below:
John W. Dietrich |
President and Chief Executive Officer |
James Forbes |
Executive Vice President and Chief Operating Officer |
Adam R. Kokas |
Executive Vice President, General Counsel and Secretary |
Spencer Schwartz |
Executive Vice President and Chief Financial Officer |
Michael T. Steen |
Executive Vice President and Chief Commercial Officer |
Overview of the CARES Act and Related 2022 Executive Compensation Matters
As we discussed in last year’s Proxy Statement, in May 2020, the Company entered into a Payroll Support Agreement (“PSP Agreement”) with the United States Department of Treasury in connection with the funding made available to cargo air carriers under the CARES Act. In connection with the PSP Agreement and the CARES Act, the Company was subject to restrictions on the amount of total compensation that could be provided to certain employees, including each of the Company’s NEOs, from March 24, 2020 through March 24, 2022 (the “CARES Limitation Period”).
In general, the CARES Act restrictions provided that a covered employee may not receive, in any 12 consecutive month period during the CARES Limitation Period, compensation that exceeded the amount such employee received in calendar year 2019, in each case as calculated under applicable guidance. In the case of employees who received more than $3 million in total compensation in 2019, the employees could not receive, in any 12 consecutive month period during the CARES Limitation Period, compensation that exceeded the sum of (i) $3 million and (ii) 50% of the total compensation in excess of $3 million received by such employee in calendar year 2019, in each case as calculated under applicable guidance. Due to the timing of the CARES Act restrictions and the time period with respect to which they are calculated, the compensation earned by our Chief Executive Officer and Chief Operating Officer during the CARES Limitation Period was further limited because the CARES Act restrictions were applied to their lower pre-promotion compensation levels. The CARES Act and PSP Agreement also contain restrictions on severance and similar payments. Company management, in consultation with the Compensation Committee’s independent consultant and outside counsel, designed processes to ensure compliance with the CARES Act compensation limitations.
Throughout 2020, 2021, and 2022 the actions of both our Compensation Committee and senior management team remained principles-based and aligned with the Company’s compensation philosophy. Our Compensation Committee understood the importance of developing a compensation program that would allow us to motivate and retain our management team, incentivize a high level of operational performance and reliability during this challenging global period when airfreight has been of critical importance, and reward the hard work and high performance of our executives as they operate a global airline during a pandemic. It was also important that our compensation program allowed us to incentivize and maintain the loyalty of our executives, recognize the potential overall reductions in their respective incentive compensation opportunities due to the CARES Act, and comply with the compensation limitations of the CARES Act during the CARES Limitation Period.
As described in greater detail in last year’s Proxy Statement, all 2021 long-term incentive compensation granted to our NEOs was in the form of performance-based cash awards that, in certain cases, had extended vesting and performance periods. As we exited the CARES Limitation Period in 2022, we returned to our traditional practice of providing long-term incentive compensation paid to our NEOs in the form of performance share units (“PSUs”) and RSUs.
14
Executive Compensation Philosophy and Objectives
The short- and long-term incentive compensation design and award decisions made by our Compensation Committee were made to incentivize and retain our executives, including our NEOs, and comply with the executive compensation restrictions imposed by the CARES Act during the CARES Limitation Period. This section describes the design and intent of those programs based on the context of the environment in which those decisions were made, and provides insight as to how the Committee has re-aligned the structure of our executive compensation program now that the CARES Limitation Period has ended.
Primary Components of NEO Compensation
The below table summarizes the three primary components of our NEOs’ compensation for fiscal 2022:
Elements of Pay |
Form |
Links to Performance |
Purposes |
Base Salary |
Cash |
Fixed annual compensation |
• Reviewed regularly to consider changes in responsibility, experience, market competitiveness, and contributions to Company success |
Short-Term Incentive |
Cash |
Adjusted Net Income (“ANI”) On-time performance / customer service reliability metric (“OTP”) Individual performance objectives |
• Derived from our annual operating plan and results (Adjusted Net Income) • Close alignment with shareholder interests • Strictly performance-based against measurable metrics • No payout if performance results is below threshold |
Long-Term Incentives |
PSUs and Performance Cash Awards |
Growth in Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA growth”) Return on Invested Capital (“ROIC”) Relative total shareholder return (“TSR”) |
• Links NEO and long-term shareholder interests • Serves as a key retention tool and a strong long-term performance driver • Performance-based against measurable metrics; no payout guaranteed (all metrics) • Close alignment to shareholder returns via a relative metric (TSR) • Specifically responsive to shareholder feedback |
|
RSUs |
Alignment with shareholder returns |
• Multiyear long-term retention • Value tied to share price |
Base Salary
Base salary levels for NEOs are generally reviewed annually by the CEO and the Compensation Committee in the first quarter, which is when the Compensation Committee reviewed each NEO’s performance for the prior year. On April 1, 2022, Mr. Dietrich’s base salary was increased from $850,000 to $950,000 and Mr. Forbes’ base salary was increased from $450,000 to $550,000. No other NEOs received a base salary increase in 2022.
Short-Term Incentive Programs
As described in last year’s Proxy Statement, due to the CARES Act Limitations, in 2021 the Company established a Strategic Bonus Plan (“SBP”) with an extended performance and service period that began on January 1, 2021 and ended at the end of the first fiscal quarter of 2022 (a 15-month program as opposed to our traditional 12-month program). In 2022, we returned to our traditional structure in the form of our Annual Incentive Program for Senior Executives (“AIP”). As a
15
result, due to these timing considerations, the Summary Compensation Table in this Form 10-K/A reports both bonus payments. For both programs, bonuses were payable based on the achievement of the ANI, OTP/customer service reliability, and individual business objectives, as further described below.
In 2020, the AIP payment for each of our NEOs was reduced to maintain compliance with the CARES Act and the PSP Agreement. The Compensation Committee, with advice from its independent compensation consultant and outside counsel, approved a one-time increase in the 2021 target bonus opportunity under the SBP for each of our NEOs to provide our NEOs with an opportunity to “earn back” the reduced 2020 compensation based on Company and individual performance.
SBP Payouts
In 2021, short term incentive awards to our NEOs were granted pursuant to the SBP, which had an extended 15-month performance period beginning January 1, 2021 through March 31, 2022 as compared to our traditional annual incentive program. The formulaic result of our ANI, OTP/customer reliability, and achievement of individual performance objectives resulted in an SBP payout opportunity of 200% of target. Due to the extended performance period, the SBP is reported in the Summary Compensation Table for fiscal 2022. As such, the actual bonus amounts paid to Messrs. Dietrich, Forbes, Kokas, Schwartz, and Steen under the SBP are included in the Summary Compensation Table for Fiscal 2022 under the “Non-Equity Incentive Plan Compensation” column.
Performance metrics under our SBP were similar to those measured for our traditional AIP. Set forth below are the metrics used under our SBP.
Company Financial Performance Metrics |
Weighting |
Link to Company |
Adjusted Net Income |
60% |
Aligned with the creation of shareholder value and the achievement of objective relevant financial performance targets |
On-time performance / customer service reliability |
20% |
Objective, measurable goals that provide an incentive to management to meet or exceed challenging standards set by our customers in the applicable service agreements (maintaining superior on-time customer reliability is essential to differentiating AAWW from its competitors and strengthening long-term customer relationships) |
Individual Performance Metrics |
||
Individual performance objectives |
20% |
Tied directly to the annual and long-term goals set in our Board-approved annual operating budget and long-term strategic plan, including continuous improvement and cost savings, diversifying our business, human capital management, and enhancing our financial results |
Adjusted Net Income* — Objective Metric. Similar to the Company’s traditional annual incentive plan, the most heavily weighted performance factor in the 2021 SBP was ANI, which was measured for the 15-month performance period. For purposes of the SBP, the ANI performance range was (1) a threshold amount of $218.2 million, (2) $290.9 million for the target amount, and (3) $320.0 million representing maximum achievement. The Company’s final ANI achievement under the SBP was $639.8 million.
* ANI is a non-GAAP measure. A reconciliation to the most directly comparable GAAP measure may be found on pages 38 and 39 of the Original Filing.
On-Time Performance/Customer Service Reliability — Objective Metric. An additional performance metric used to determine the 2021 SBP payments was our OTP/customer service reliability metric. For the 2021 SBP, our weighted overall OTP was achieved at 200% of target.
2021 Individual Performance Objectives. Individual short-term performance objectives for our NEOs were reviewed with and approved by the Compensation Committee as part of the process when the Company’s annual operating plan is being reviewed and approved by the Board of Directors.
Our Compensation Committee reviewed each NEO’s accomplishments with respect to the SBP in detail and certified that each of our NEOs achieved their individual performance objectives at the maximum level.
16
To assess individual performance under the SBP, the Committee considered achievements against each NEO’s individual goals:
2022 AIP Payouts
During 2022, our NEOs participated in the AIP. The formulaic result of our ANI, OTP/customer reliability, and achievement of individual performance objectives resulted in an AIP payout opportunity of 132.97% of target to our NEOs. Actual bonus amounts paid to Messrs. Dietrich, Steen, Kokas, Schwartz, and Forbes under the AIP are included in the Summary Compensation Table for Fiscal 2022 under the “Non-Equity Incentive Plan Compensation” column. Below are further details on each element of the AIP.
AIP Payouts |
||
Company Financial Performance Metrics |
Weighting |
Link to Company |
Adjusted Net Income |
60% |
Aligned with the creation of shareholder value and the achievement of objective relevant financial performance targets |
OTP/customer service reliability |
20% |
Objective, measurable goals that provide an incentive to management to meet or exceed challenging standards set by our customers in the applicable service agreements (maintaining superior on-time customer reliability is essential to differentiating AAWW from its competitors and strengthening long-term customer relationships) |
Individual Performance Metrics |
||
Individual performance objectives |
20% |
Tied directly to the annual and long-term goals set in our Board-approved annual operating budget and long-term strategic plan, including continuous improvement and cost savings, diversifying our business, human capital management, and enhancing our financial results |
Adjusted Net Income* — Objective Metric. The most heavily weighted performance factor in the 2022 AIP is ANI, which was measured for the 12-month performance period. For purposes of the AIP, the ANI performance range was (1) a threshold amount of $335.2 million, (2) $446.9 million for the target amount, and (3) $491.6 million representing maximum
17
achievement. The Company’s ANI achievement for fiscal 2022 was $418.0 million and resulted in achievement of performance between the threshold and target performance levels.
* ANI is a non-GAAP measure. A reconciliation to the most directly comparable GAAP measure may be found on pages 38 and 39 of the Original Filing.
On-Time Performance/Customer Service Reliability — Objective Metric. An additional performance metric used to determine the 2022 AIP payments was our OTP/customer service reliability metric. Our 2022 OTP/customer service reliability goals are objective, measurable goals that are set to meet or exceed challenging standards set forth in our ACMI, CMI and AMC/Military customer contracts. In 2022, our weighted overall OTP was achieved at 184.2% of target despite the regulatory challenges and general business disruptions caused by the COVID-19 pandemic. While such goals are customer-specific and proprietary, they are all very aggressive and denote a high level of OTP. OTP is a key element to our Company’s success and our NEOs each have a role in ensuring that such performance metrics are met.
2022 Individual Performance Objectives. Individual performance objectives are based in large part on our annual business plan and our long-term strategic plan, including enhancing our financial results and diversifying our business, among others.
Our Compensation Committee reviewed each NEO’s 2022 accomplishments in detail and certified that each of our NEOs achieved their individual performance objectives at the maximum level.
To assess individual performance under our AIP, the Committee considered achievements against each NEO’s individual goals:
Long-Term Incentive Compensation
18
For 2022, the LTI award consisted of PSUs and performance-based cash awards, both of which are subject to a three-year performance period, and RSUs that vest ratably over a three-year period, all as more fully described below. The weighting mix of the LTI components was (1) PSUs 25% (target level), (2) Performance Cash 25% (target level), and (3) time-vesting RSUs 50%.
Performance Share Units, or PSUs, are paid in shares of Common Stock upon vesting. Key characteristics of the PSUs granted in 2022 are as follows:
Performance-Based Cash Awards are generally subject to the same key characteristics as PSUs granted in 2022, except that they are reported in the Summary Compensation Table in the year of payment. The reported value of Performance-Based Cash awards that were paid in 2022 is higher than typical due to the fact that all LTI awards granted in 2021 were granted in the form of performance-based cash awards, as described in detail in our Proxy Statement filed in 2022.
Restricted Stock Units, or RSUs, are paid in shares of Common Stock, vest in equal installments on each anniversary of the grant date over a three-year period, and align the economic interests of management with those of our long-term shareholders. RSUs are designed to attract and retain executives by providing them with (1) stock ownership during the applicable vesting period, and (2) a strong incentive to remain with the Company until at least the applicable vesting period ends. In addition, our stock ownership guidelines, as described below, encourage continued alignment between NEOs and other executives and our shareholders.
Goal Setting — How We Set Our Traditional LTI Incentive Metrics:
In designing the long-term incentive awards for our executives, the Compensation Committee considers the annual Board-approved business plan, as well as long-term strategic goals, and designs the long-term incentive targets, including Average ROIC and EBITDA growth. We believe that most of our executives’ total compensation should be at-risk. The Committee also believes that a significant portion of our executives’ total compensation should be equity-based, which provides a strong alignment between the senior executives’ compensation and our shareholders’ interests.
Our long-term business strategy contemplates initiatives that enhance our organizational and operating capabilities, generate additional operating efficiencies, broaden our portfolio of assets and services, and diversify our business mix.
Link between Our Performance, Our Strategy and Our LTI Incentive Metrics:
Set forth below are the metrics used under our performance-based long-term incentive awards granted in 2022, which provide appropriate rewards for key financial performance and objective results in support of our business strategy and do not promote imprudent or excessive risk-taking. In addition, we believe that our performance metrics align and underscore the link between incentive compensation and the successful execution of our long-term business strategy, and reflect our ongoing commitment to a pay-for-performance compensation philosophy.
19
Performance Metrics |
Weighting |
Rationale |
EBITDA growth |
50% |
• Encourages management to pursue long-term profit potential and cash flow opportunities and is consistent with achievement of the Company’s long-term strategic goals |
• Used for companies in industries like ours that require significant upfront financial investments. EBITDA growth is an appropriate measure of underlying profit potential and an indicator of operating cash flow |
||
Average ROIC |
50% |
• Drives growth and profitability through the efficient use of capital and encourages prudent risk-taking |
• Used because the Company’s strategic plan involves a significant investment program in its aircraft fleet, and the ability of the Company to manage its balance sheet to generate returns is an important measure to investors |
||
Relative TSR modifier |
+/- 20% adjustment |
• Implemented as a direct result of shareholder feedback |
• Adds relative metric to our LTI (Company three-year share performance compared to S&P SmallCap 600 Index companies) |
||
• Further aligns compensation with shareholder returns and value |
||
• No upward modification in the event the absolute total shareholder return is negative, even if the Relative TSR performance achieved would have provided for an upward adjustment |
We have not disclosed the Company’s specific EBITDA growth and Average ROIC targets for the three-year performance period (2022-2024) because they represent confidential, commercially sensitive information that we do not disclose to the public and that could cause competitive harm if known in the marketplace.
Both the Company’s EBITDA growth and Average ROIC targets for the 2022-2024 performance period, as well as the factors that influence these measures, such as revenue and efforts to control costs, are inherently competitive and, if disclosed, would provide valuable insight into areas of focus for the Company. The Compensation Committee sets the EBITDA growth and Average ROIC goals at a level that it believes would be challenging but possible for the Company to achieve. In the interest of providing as much disclosure as appropriate to aid shareholders in assessing the rigor of our LTI metrics, below is a detailed description of our LTI goal-setting process. In addition, we have included the threshold, target, and maximum levels as well as the actual performance level of each LTI metric for completed performance periods.
Our long-term incentive performance metrics relate to key Company long-term strategies and provide substantial payouts only upon achievement of exceptional performance.
At the end of the three-year performance measurement period, the awards vest based on a performance matrix ranging from no payout if the Company’s performance is in the bottom quintile of both EBITDA Growth and Average ROIC metrics to 2x target vesting if performance on both metrics is in the top quintile. Target vesting (100% of the award) is achieved if the Company’s performance is at the target level. Our traditional PSUs and performance-based cash awards are further subject to a relative TSR modifier, based on AAWW share price performance during the three-year performance period relative to the component companies of the S&P 600 SmallCap Index. The Relative TSR modifier will be applied to the vesting percentage determined based on the achievement of the EBITDA Growth and Average ROIC metrics and could increase or decrease that vesting percentage by up to 20%. However, no upward modification would be made in the event the absolute total shareholder return is negative, even if the Relative TSR performance achieved would have provided for an upward adjustment.
20
OTP Performance Awards
In 2021 we granted to our NEOs a special performance-based cash award subject to an OTP/customer service reliability performance metric (the “OTP Performance Award”). Our 2021 OTP/customer service reliability goals are objective, measurable goals that were set to meet or exceed challenging standards set forth in our ACMI, CMI and AMC/Military customer contracts. While such goals were customer-specific and proprietary, they were all very aggressive and denote a high level of OTP. OTP is a key element to our Company’s success and our NEOs each have a role in ensuring that such performance metrics are met.
For each of our NEOs, except Mr. Forbes, a third of their respective OTP Performance Award vests at the end of the following three performance periods: (i) January 1, 2021 through and including March 31, 2022; (ii) January 1, 2022 through and including December 31, 2022; and (iii) January 1, 2023 through and including December 31, 2023. With respect to Mr. Forbes, his OTP Performance Award was weighted more heavily toward the first of the three performance periods, such that approximately 55% (as opposed to 33%) of his OTP Performance Award vested on April 1, 2022 based on the calculation of the Company’s achievement of its OTP/customer service reliability goal through March 31, 2022, in consideration of the disproportionate degree to which Mr. Forbes’ performance-based LTI payments in 2021 were decreased as a result of the CARES Act executive compensation limitations and to further incentivize and reward Mr. Forbes as our Chief Operating Officer for his efforts in maintaining the Company’s exceptional service reliability for our customers in light of the unprecedented demands of our crews during this period.
Payouts to our NEOs with respect to (i) the first performance period ending March 31, 2022 were paid out at 110% of target and (ii) the second performance period ending December 31, 2022 were paid out at 104% of target, and in each case are included in the Summary Compensation Table.
2022 Payout of Performance LTI Awards (2020-2022 Performance Period). In the first quarter of 2023, the Compensation Committee reviewed AAWW’s long-term performance over the three-year performance period ended December 31, 2022 for grants made in 2020. The performance metrics for these awards were EBITDA Growth, which is based on a three-year average, and three-year Average ROIC applied on an absolute basis.
For the 2020-2022 performance period, our actual EBITDA Growth was 26.0% and our Average ROIC was 16.6%. This performance was not favorably impacted by the funds received pursuant to the CARES Act and PSP Agreement. The Company’s three-year cumulative TSR was 274.0% for the 2020-2022 performance period, which translated into a final TSR modifier of 120%. By applying the TSR modifier, the final payout of the 2020-2022 performance LTI awards was 240%. Payouts with respect to the performance awards for the 2020-2022 performance period were made in early 2023 for our NEOs, except for Mr. Forbes, as described below in the section entitled “280G Mitigation Actions.” The table set forth below shows the threshold, target, max as well as actual performance levels of each performance metric.
|
Threshold |
Target |
Max |
Actual |
EBITDA |
>4.5% |
>5.5% |
>9% |
26.0% |
Average ROIC |
>6% |
>7% |
>9% |
16.6% |
As described below in the section entitled “280G Mitigation Actions,” in order to mitigate certain potential adverse tax consequences to Mr. Forbes and to the Company, the Compensation Committee, after considering the actual performance of the Company, accelerated settlement and payment of 2020-2022 PSUs and 2020-2022 traditional performance-based cash awards for Mr. Forbes, in each case that would otherwise vest in the first quarter of 2023, at the maximum level of performance so that they were paid in 2022. Furthermore, the Compensation Committee accelerated the payment of the OTP Performance Cash that would have otherwise vested in the first quarter of 2023 at the target level of performance and the OTP Performance Cash that would have otherwise vested in the first quarter of 2024 at the threshold level of performance.
280G Mitigation Actions Related to Acquisition
Based on an analysis conducted in connection with the Merger, both the Company and Mr. Forbes would potentially have been subject to the adverse tax consequences imposed by Section 280G of the U.S. Internal Revenue Code of 1986, as amended, in connection with the Acquisition. Therefore, to mitigate the expected impact of these adverse tax consequences, the Compensation Committee approved the payment to Mr. Forbes of certain amounts he was entitled to receive in connection with the Merger slightly in advance of the closing of the Acquisition and in December 2022. These actions were made subject to a clawback in favor of the Company, whereby Mr. Forbes was required to reimburse the Company if it is subsequently determined that the amounts accelerated would not have been earned (i.e., due to the failure to satisfy any service- or, if applicable, performance-based vesting criteria).
21
Peer Group
Our Compensation Committee, together with its independent compensation consultant, periodically reviews relevant competitive market pay data for executives in our industry and similar industries. The Compensation Committee identifies a core group of companies, used to periodically assess the Company’s compensation levels and practices, as one factor in the compensation-setting process. Our Compensation Committee has worked closely with its independent compensation consultant over the years to hone our peer group.
The Compensation Committee believes that identification of peers using a broad industry sector code is inadequate and does not establish similarity of operations and business models, nor adequately represent past, current and future competitors for managerial talent, each of which are factors that the Compensation Committee considers in the selection of companies for these purposes.
Our peer group was comprised of the following companies:
|
|
Revenue for FY2022 |
|
|
Company |
Description |
($ in millions) |
|
|
AAR Corp. |
Provider of aviation services to the worldwide commercial aerospace and government/defense industries |
$ |
1,820 |
|
Aerojet Rocketdyne |
Aerospace and defense manufacturer |
$ |
2,238 |
|
Holdings, Inc. |
|
$ |
2,137 |
|
Air Lease Corporation |
Trading Companies and Distributors |
$ |
2,137 |
|
Air Transport Services Group, Inc. |
Provider of air cargo transportation and related services |
$ |
2,046 |
|
Alaska Air Group, Inc. |
Airlines |
$ |
9,646 |
|
BWX Technologies, Inc. |
Supplier of nuclear components and products |
$ |
2,233 |
|
Crane Holding Co. |
Industrial Machinery |
$ |
3,375 |
|
Curtiss-Wright Corporation |
Engineered, technologically advanced products and services |
$ |
2,557 |
|
Expeditors International of Washington, Inc. |
Air Freight and Logistics |
$ |
17,071 |
|
Hexcel Corporation |
Manufacturer of advanced composite materials |
$ |
1,578 |
|
Hub Group, Inc. |
Air Freight and Logistics |
$ |
5,431 |
|
ITT Inc. |
Industrial Machinery |
$ |
2,988 |
|
Spirit AeroSystems Holdings, Inc. |
Aerospace and Defense |
$ |
5,030 |
|
The Brink’s Company |
Security and Alarm Service |
$ |
4,536 |
|
Triumph Group Inc. |
Manufacturer of aerospace structures, systems and components |
$ |
1,460 |
|
Woodward, Inc. |
Industrial Machinery |
$ |
2,383 |
|
Median Revenue of Peers |
|
$ |
2,470 |
|
Atlas Air Worldwide Holdings, Inc. |
|
$ |
4,549 |
|
Other Elements of Compensation
Limited Other Benefits and Limited Perquisites
We provide our executives with common benefits, which include health insurance (including certain limited retiree health benefits), severance benefits commensurate with position, 401(k) plan participation, and a retirement restoration program. The Compensation Committee believes that perquisites should be limited. These perquisites are limited principally to financial counseling, including limited tax reimbursement payments related thereto. Details concerning these perquisites can be found in the footnotes to the “2022 Summary Compensation Table” below.
22
Retirement Plans
In addition to the Company’s 401(k) plan, the Company maintains the 401(k) Restoration and Voluntary Deferral Plan (the “Retirement Restoration Plan”) for employees holding the title of Executive Vice President or higher. This plan is a nonqualified deferred compensation plan intended to make eligible employees whole for compensation limits imposed under our 401(k) plan. Under the Retirement Restoration Plan, a participant is eligible to make elective deferrals and to receive employer credits equal to 5% of eligible compensation in excess of the limits described in Sections 401(a)(17) and 402(g) of the Internal Revenue Code. Initial employer credits vest upon the third anniversary of the executive’s initial eligibility for the plan, and all employer credits after such anniversary are fully vested. Deferrals and employer credits are credited with notional earnings equal to the prime interest rate until distributed on the earliest of (i) the participant becoming disabled, (ii) the participant’s separation from service (including retirement and death), or (iii) a change in control of the Company.
Under our Benefits Program for Senior Executives, Executive Vice Presidents or above would become retirement-eligible on or after (i) attaining age 55 and completing 10 years of service and (ii) giving no less than three months’ advance written notice of such proposed retirement to the then-current CEO, or in the event of the CEO’s retirement such notice must be given to the Chairman of the Board of Directors.
Additional Compensation Policies
Executive Stock Ownership
In support of the Board philosophy that performance and equity incentives provide the best incentives for our NEOs and other members of management and promote increases in shareholder value, the Board monitors compliance with the Guidelines covering all Directors, NEOs, and certain other executives. Such guidelines include both stock ownership and recommended stock holding periods as described below. The Guidelines require executives to achieve certain levels of share ownership over a five-year period based on the lesser of a percentage of annual base salary or a fixed number of shares.
Target share ownership levels for the Directors and the NEOs under the Guidelines were generally based on the lesser of: (i) 4x annual base cash retainer, or 7,500 shares, for independent Directors, (ii) 6x base salary, or 120,000 shares, for the CEO, (iii) 3.5x base salary, or 40,000 shares, for the Chief Executive Officer of Titan (Mr. Steen), and (iv) 3x base salary, or 30,000 shares, for other Executive Vice Presidents.
In 2022, all of our NEOs were in full compliance with the requisite Common Stock ownership levels set forth in the Guidelines.
Tax Considerations
Section 162(m) of the U.S. Internal Revenue Code of 1986, as amended, limits deductibility of compensation in excess of $1 million paid to our covered employees. Until the Tax Cut and Jobs Act was enacted on December 22, 2017, subject to certain requirements, performance-based compensation was deductible even if it caused the covered employee to receive compensation in excess of $1 million. However, the Tax Cut and Jobs Act eliminated this performance-based compensation exception going forward, subject to limited transition relief for compensation paid pursuant to a contract in effect as of November 2, 2017 that was not materially modified after such date. The Tax Cut and Jobs Act also expanded who a covered employee is under Section 162(m). Effective for 2017 and thereafter, a covered employee under Section 162(m) is the CEO, the CFO (who previously was not included), and each of the other three highest-paid executive officers.
Although this tax deduction for performance-based compensation has been eliminated for awards granted after November 2, 2017, we continue to believe that a strong link between pay and performance is critical to align executive and stockholder interests. The Compensation Committee will continue to ensure that a meaningful portion of pay for NEOs is at-risk and subject to the attainment of performance goals. The Compensation Committee reserves the right to provide compensation to our executives that is not deductible, including but not limited to when necessary to comply with contractual commitments, or to maintain the flexibility needed to attract talent, promote retention, or recognize and reward desired performance.
23
Equity Grant Practices
The Compensation Committee generally grants equity awards to NEOs in the first quarter of each year. The Compensation Committee does not have any programs, plans or practices of timing these awards in coordination with the release of material nonpublic information. In fact, such awards historically have been granted a week or more following the filing of the Company’s 10-K and the related issuance of its earnings release.
Anti-Hedging Policy
Under our insider trading policy, our NEOs were prohibited from engaging in hedging or other monetization transactions involving our securities, including through the use of financial instruments. In addition, our NEOs could not act on investment decisions with respect to Company securities, except during applicable trading window periods. To our knowledge, all of our senior officers, including our NEOs, were in compliance with our anti-hedging policy.
Clawback Policy
We maintained our compensation clawback policy to enhance the alignment of our compensation program features with best practices and consistent with feedback received from our shareholders. Our clawback policy permits us to seek to recover certain amounts of annual cash incentive compensation awarded to any executive officers if payment of such compensation was based on the achievement of financial results that were subsequently the subject of a substantial restatement of our financial statements due to material noncompliance and the executive officer’s intentional misconduct that contributed to a higher amount of cash incentive compensation received.
Compensation Committee Report
As noted in the Explanatory Note to this Amendment, the closing of the transactions contemplated by the Merger Agreement occurred on March 17, 2023. Following such date, the members of the Compensation Committee prior to the acquisition ceased to serve on the Board of Directors of the Company and, as a result, did not review the Compensation Discussion and Analysis with management or recommend that such disclosure be included in this Amendment.
Compensation Tables and Explanatory Notes
2022 Summary Compensation Table
The following table provides information concerning compensation for our NEOs:
Name and |
Year |
Salary |
|
Bonus |
|
Stock |
|
Option |
Non-Equity |
|
All Other |
|
Total |
|
|
||||||
Principal |
(b) |
($) |
|
($) |
|
Awards |
|
Awards |
Incentive |
|
Compensation |
|
($) |
|
|
||||||
Position |
|
(c) |
|
(d) |
|
($) |
|
($) |
Plan |
|
($) |
|
(j) |
|
|
||||||
(a) |
|
|
|
|
|
(e) |
|
(f) |
Compensation |
|
(i) |
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
($) |
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
(g) |
|
|
|
|
|
|
||||||
John W. Dietrich |
2022 |
|
920,869 |
|
— |
|
|
2,681,358 |
|
— |
|
5,909,167 |
|
|
387,208 |
|
|
9,898,601 |
|
|
|
Chief Executive Officer |
2021 |
|
850,032 |
|
— |
|
— |
|
— |
|
1,441,520 |
|
|
240,679 |
|
|
2,532,231 |
|
|
||
|
2020 |
|
850,032 |
|
— |
|
|
2,414,528 |
|
— |
|
2,636,820 |
|
|
198,171 |
|
|
6,099,551 |
|
|
|
Michael T. Steen |
2022 |
|
675,026 |
|
— |
|
|
1,713,667 |
|
— |
|
4,115,684 |
|
|
317,624 |
|
|
6,822,002 |
|
|
|
Chief Commercial Officer |
2021 |
|
675,026 |
|
|
1,000,000 |
|
— |
|
— |
|
1,441,520 |
|
|
257,840 |
|
|
3,374,386 |
|
|
|
|
2020 |
|
675,026 |
|
|
500,000 |
|
|
1,789,566 |
|
— |
|
2,230,670 |
|
|
192,823 |
|
|
5,388,085 |
|
|
Adam R. Kokas |
2022 |
|
625,024 |
|
— |
|
|
1,563,963 |
|
— |
|
3,557,653 |
|
|
282,731 |
|
|
6,029,371 |
|
|
|
General Counsel |
2021 |
|
625,024 |
|
|
1,000,000 |
|
— |
|
— |
|
1,275,760 |
|
|
249,885 |
|
|
3,150,669 |
|
|
|
|
2020 |
|
625,024 |
|
|
500,000 |
|
|
1,633,346 |
|
— |
|
2,042,160 |
|
|
181,511 |
|
|
4,982,041 |
|
|
Spencer Schwartz |
2022 |
|
625,024 |
|
— |
|
|
1,563,963 |
|
— |
|
3,557,653 |
|
|
292,560 |
|
|
6,039,200 |
|
|
|
Chief Financial Officer |
2021 |
|
625,024 |
|
|
1,000,000 |
|
— |
|
— |
|
1,275,760 |
|
|
251,509 |
|
|
3,152,293 |
|
|
|
|
2020 |
|
625,024 |
|
|
500,000 |
|
|
1,633,346 |
|
— |
|
2,047,785 |
|
|
185,203 |
|
|
4,991,358 |
|
|
James A. Forbes |
2022 |
|
520,853 |
|
— |
|
|
1,022,189 |
|
— |
|
2,486,179 |
|
|
223,781 |
|
|
4,253,002 |
|
|
|
Chief Operating Officer |
2021 |
|
450,018 |
|
— |
|
— |
|
— |
|
391,472 |
|
|
47,082 |
|
|
888,572 |
|
|
||
|
2020 |
|
450,018 |
|
— |
|
|
681,710 |
|
— |
|
259,250 |
|
|
106,804 |
|
|
1,497,782 |
|
|
|
24
2022 Summary Compensation Table Notes
Column (d) — Bonus
The amounts reflect the retention bonus opportunity granted in 2019 and paid to each of Messrs. Kokas, Schwartz and Steen in 2021, which related to the Company’s transition of CEOs.
Column (e) — Stock Awards
The amounts reflect the grant date fair value of stock awards, computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures and with performance awards valued based on the probable outcome of performance conditions. For more information about the assumptions used in valuing these awards, see Note 16 in the Original Filing and footnote (5) to the Grants of Plan-Based Awards table below. Stock awards for 2022 reflect the aggregate grant date fair value of (i) time-based RSUs that vest ratably over three years and (ii) PSUs for the three-year performance period ending December 31, 2024 (see pages18-22 for a discussion of the methodology followed by the Compensation Committee to determine the number of PSUs awarded) assuming target level performance. PSUs are settled in shares of Common Stock at 0% to 240% of target based upon AAWW’s EBITDA growth and Average ROIC performance relative to internal targets and Relative TSR over the three-year performance period. Assuming that the PSUs are paid at the maximum level, including the maximum impact of the TSR modifier, the aggregate dollar values in respect of PSU awards for 2022 (based on the closing price of our Common Stock on the date of grant) would be $2,703,698 for Mr. Dietrich; $1,680,860 for Mr. Steen; $1,534,015 for Messrs. Kokas and Schwartz; and $1,076,060 for Mr. Forbes.
Column (g) — Non-Equity Incentive Plan Compensation
Reflects (i) cash payments made under the SBP granted in 2021 with a performance period ending March 31, 2022, (ii) cash payments made under the 2022 AIP with respect to the performance period ending December 31, 2022, (iii) the value of the NEOs’ performance-based long-term incentive cash awards for the 2020-2022 performance period, and (iv) portions of the OTP Performance Awards earned with respect to the performance periods ending March 31, 2022 and December 31, 2022. The performance-based cash long-term incentive awards granted in 2020 for the 2020-2022 performance period were paid at 240% of target, as described on pages 21-22. The OTP Performance Awards for the performance period ending March 31, 2022 were paid at 110% of target, and the OTP Performance Awards for the performance period ending December 31, 2022 were paid at 104% of target.
Column (i) — All Other Compensation
“All Other Compensation” includes Company matching contributions under our 401(k) plan, financial counseling services, and de minimis travel related expenses. For 2022, the 401(k) match totaled $13,500 for Messrs. Dietrich, Kokas, Schwartz and Forbes and $10,250 for Mr. Steen.
We provide a limited number of perquisites to our senior executives, primarily financial counseling. We believe this benefit is reasonable, competitive and consistent with our overall executive compensation program and philosophy and with comparable programs maintained by the companies with which we compete for executive talent. The costs of these benefits constitute only a small percentage of each NEO’s total compensation. For 2022, these personal benefits included financial counseling and tax-preparation fees ($37,601 for Messrs. Dietrich and Steen, $46,024 for Messrs. Kokas and Schwartz and $27,918 for Mr. Forbes) and limited travel-related expenses ($33,439 for Mr. Dietrich, $18,653 for Mr. Steen, $6,732 for Mr. Kokas, $15,430 Mr. Schwartz and $9,116 for Mr. Forbes). Reimbursement of taxes due for all such benefits for 2022 totaled $27,954 for Mr. Dietrich; $22,136 for Mr. Steen; $26,625 for Mr. Kokas; $31,004 for Mr. Schwartz; and $14,572 for Mr. Forbes. These amounts are included in the “All Other Compensation” column.
As described above in the section entitled “Other Elements of Compensation – Retirement Plans,” our NEOs are entitled to receive employer credit under the Retirement Restoration Plan. The portion of account balances attributable to such employer credit made under the Retirement Restoration Plan to each of our NEOs during 2022 totaled $299,088 for Mr. Dietrich; $247,541 for Mr. Steen; $214,216 for Mr. Kokas; $214,026 for Mr. Schwartz; and $166,140 for Mr. Forbes. These amounts are included in the “All Other Compensation” column. See “Nonqualified Deferred Compensation” below for additional information about the Retirement Restoration Plan. The “All Other Compensation” column also includes de minimis amounts for group term life insurance and long-term disability insurance.
25
2022 Grants of Plan-Based Awards
The grants set forth in the following table were made pursuant to (i) the Company’s 2018 Incentive Plan, as amended and restated (the “Incentive Plan”), and related award agreements and (ii) our AIP, each of which is described in more detail in the section entitled “Compensation Discussion and Analysis” above.
26
Name |
Grant Date |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards |
|
Estimated Future Payouts Under Equity Incentive Plan Awards |
|
All Other Stock Awards: Number of Shares of Stock or |
|
All Other Option Awards: Number of Securities Underlying |
|
Exercise or Base Price of Option |
|
Grant Date Fair Value of Stock and Option |
|
|
||||||||||||||||||
|
|
Threshold |
|
Target |
|
Maximum |
|
Threshold |
|
Target |
|
Maximum |
|
Units |
|
Options |
|
Awards |
|
Awards |
|
|
||||||||||
|
|
($) |
|
($) |
|
($) |
|
(#) |
|
(#) |
|
(#) |
|
(#) |
|
(#) |
|
($) |
|
($) |
|
|
||||||||||
(a) |
(b) |
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
|
(j) |
|
(k) |
|
(l) |
|
|
||||||||||
John W. Dietrich |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
AIP(1) |
|
|
759,000 |
|
|
1,012,000 |
|
|
2,024,000 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
LTIP-LTC(2) |
4/1/22 |
|
- |
|
|
796,875 |
|
|
1,912,500 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
LTIP-LTC(2) |
4/13/22 |
|
- |
|
|
153,125 |
|
|
367,500 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
LTIP-PSUs(3) |
4/1/22 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
9,375 |
|
|
22,500 |
|
|
- |
|
|
- |
|
|
- |
|
|
770,719 |
|
|
LTIP-PSUs(3) |
4/13/22 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
1,801 |
|
|
4,322 |
|
|
- |
|
|
- |
|
|
- |
|
|
123,044 |
|
|
LTIP-RSUs(4) |
4/1/22 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
18,750 |
|
|
- |
|
|
- |
|
|
1,541,438 |
|
|
LTIP-RSUs(4) |
4/13/22 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
3,603 |
|
|
- |
|
|
- |
|
|
246,157 |
|
|
Michael Steen |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
AIP(1) |
|
|
455,625 |
|
|
607,500 |
|
|
1,215,000 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
LTIP-LTC(2) |
4/1/22 |
|
- |
|
|
590,625 |
|
|
1,417,500 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
LTIP-PSUs(3) |
4/1/22 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
6,948 |
|
|
16,675 |
|
|
- |
|
|
- |
|
|
- |
|
|
571,195 |
|
|
LTIP-RSUs(4) |
4/1/22 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
13,897 |
|
|
- |
|
|
- |
|
|
1,142,472 |
|
|
Adam R. Kokas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
AIP(1) |
|
|
398,438 |
|
|
531,250 |
|
|
1,062,500 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
LTIP-LTC(2) |
4/1/22 |
|
- |
|
|
539,062 |
|
|
1,293,749 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
LTIP-PSUs(3) |
4/1/22 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
6,341 |
|
|
15,218 |
|
|
- |
|
|
- |
|
|
- |
|
|
521,294 |
|
|
LTIP-RSUs(4) |
4/1/22 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
12,683 |
|
|
- |
|
|
- |
|
|
1,042,669 |
|
|
Spencer Schwartz |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
AIP(1) |
|
|
398,438 |
|
|
531,250 |
|
|
1,062,500 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
LTIP-LTC(2) |
4/1/22 |
|
- |
|
|
539,062 |
|
|
1,293,749 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
LTIP-PSUs(3) |
4/1/22 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
6,341 |
|
|
15,218 |
|
|
- |
|
|
- |
|
|
- |
|
|
521,294 |
|
|
LTIP-RSUs(4) |
4/1/22 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
12,683 |
|
|
- |
|
|
- |
|
|
1,042,669 |
|
|
James Forbes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
AIP(1) |
|
|
331,500 |
|
|
442,000 |
|
|
884,000 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
LTIP-LTC(2) |
4/1/22 |
|
- |
|
|
225,000 |
|
|
540,000 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
LTIP-LTC(2) |
4/13/22 |
|
- |
|
|
118,750 |
|
|
285,000 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
LTIP-LTC(2) |
4/15/22 |
|
- |
|
|
34,375 |
|
|
82,500 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
LTIP-PSUs(3) |
4/1/22 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
2,647 |
|
|
6,353 |
|
|
- |
|
|
- |
|
|
- |
|
|
217,610 |
|
|
LTIP-PSUs(3) |
4/13/22 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
1,397 |
|
|
3,353 |
|
|
- |
|
|
- |
|
|
- |
|
|
95,443 |
|
|
LTIP-PSUs(3) |
4/15/22 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
404 |
|
|
970 |
|
|
- |
|
|
- |
|
|
- |
|
|
27,654 |
|
|
LTIP-RSUs(4) |
4/1/22 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
5,294 |
|
|
- |
|
|
- |
|
|
435,220 |
|
|
LTIP-RSUs(4) |
4/13/22 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
2,794 |
|
|
- |
|
|
- |
|
|
190,886 |
|
|
LTIP-RSUs(4) |
4/15/22 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
809 |
|
|
- |
|
|
- |
|
|
55,376 |
|
|
(1) Represents the range of potential cash payouts under the AIP for 2022. The actual AIP payouts for 2022 are included in the Summary Compensation Table.
27
(2) Represents the grant of long-term performance cash awards (under the Incentive Plan) that are settled in cash and vest and are payable only if certain pre-established performance criteria for the period beginning on January 1, 2022 and ending December 31, 2024 are achieved.
(3) Represents the grant (under the Incentive Plan) of PSUs that vest and are payable only if certain pre-established performance criteria for the period beginning on January 1, 2022 and ending December 31, 2024 are achieved.
(4) Represents award of time-based RSUs that vest ratably over a three-year period.
(5) The fair value of the RSUs and PSUs shown in the table is based on the closing market price of our Common Stock as of the date of the particular award, computed in accordance with GAAP, excluding the effect of estimated forfeitures and with performance awards valued based on the probable outcome of performance conditions. See footnote (e) to the Summary Compensation table for the assumptions used in valuing these awards and for the grant date fair value of awards if maximum levels of performance are achieved.
28
2022 Outstanding Equity Awards
The table below shows outstanding equity awards for our NEOs as of December 31, 2022. Market values reflect the closing price of our common stock on the Nasdaq Global Market on December 30, 2022 (the last trading day of 2022), which was $100.80 per share.
Name |
Number of Securities Underlying Unexercised Options Exercisable |
|
Number of Securities Underlying Unexercised Options Exercisable |
|
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options |
|
Option Exercise Price |
|
Option Expiration Date |
|
Number of Shares or Units of Stock That Have Not Vested |
|
|
Market Value of Shares or Units of Stock That Have Not Vested |
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested |
|
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested |
|
|
|||||||||
|
(#) |
|
(#) |
|
(#) |
|
($) |
|
|
|
(#) |
|
|
($) |
|
(#) |
|
|
($) |
|
|
|||||||||
(a) |
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
|
(h) |
|
(i) |
|
|
(j) |
|
|
|||||||||
John W. Dietrich |
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
|
20,433 |
|
(1) |
|
2,059,646 |
|
|
30,649 |
|
(2) |
|
3,089,419 |
|
|
||
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
18,750 |
|
(3) |
|
1,890,000 |
|
|
9,375 |
|
(4) |
|
945,000 |
|
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
3,603 |
|
(5) |
|
363,182 |
|
|
1,801 |
|
(6) |
|
181,541 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Michael Steen |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
15,144 |
|
(1) |
|
1,526,515 |
|
|
22,716 |
|
(2) |
|
2,289,773 |
|
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
13,897 |
|
(3) |
|
1,400,818 |
|
|
6,948 |
|
(4) |
|
700,358 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Adam R. Kokas |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
13,822 |
|
(1) |
|
1,393,258 |
|
|
20,733 |
|
(2) |
|
2,089,886 |
|
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
12,683 |
|
(3) |
|
1,278,446 |
|
|
6,341 |
|
(4) |
|
639,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Spencer Schwartz |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
13,822 |
|
(1) |
|
1,393,258 |
|
|
20,733 |
|
(2) |
|
2,089,886 |
|
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
12,683 |
|
(3) |
|
1,278,446 |
|
|
6,341 |
|
(4) |
|
639,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
James Forbes |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
- |
|
|
2,647 |
|
(4) |
|
266,818 |
|
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
- |
|
|
1,397 |
|
(6) |
|
140,818 |
|
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
- |
|
|
404 |
|
(7) |
|
40,723 |
|
|
(1) RSUs awarded on February 25, 2020 vest 33.3% ratably on each anniversary date of grant, and the remaining tranche vested on February 25, 2023.
(2) PSUs awarded on February 25, 2020 vest and are payable on attainment of certain pre-established performance criteria during the three-year performance period ended December 31, 2022. The amounts reflect target level performance.
(3) RSUs awarded on April 1, 2022 vest 33.3% ratably on each anniversary of the date of grant, with remaining outstanding vesting dates of April 1, 2023, 2024, and 2025, subject to earlier vesting in connection with the Merger, as described below.
(4) PSUs awarded on April 1, 2022 vest and are payable on attainment of certain pre-established performance criteria during the three-year performance period ended December 31, 2024, subject to earlier vesting in connection with the Merger, as described below. The amounts reflect target level performance.
(5) RSUs awarded on April 13, 2022 vest 33.3% ratably on each anniversary date of grant, with remaining outstanding vesting dates of April 13, 2023, 2024, and 2025, subject to earlier vesting in connection with the Merger, as described below.
(6) PSUs awarded on April 13, 2022 vest and are payable on attainment of certain pre-established performance criteria during the three-year performance period ended December 31, 2024, subject to earlier vesting in connection with the Merger, as described below. The amounts reflect target level performance.
(7) PSUs awarded on April 15, 2022 vest and are payable on attainment of certain pre-established performance criteria during the three-year performance period ended December 31, 2024, subject to earlier vesting in connection with the Merger, as described below. The amounts reflect target level performance.
29
2022 Stock Vestings
The following table sets forth information relating to stock vesting during fiscal 2022 for each of our NEOs:
Name |
Number of Shares Acquired On Exercise |
|
Value Realized on Exercise |
|
Number of Shares Acquired on Vesting |
|
Value Realized on Vesting |
|
|
||||
(a) |
(b) |
|
(c) |
|
(d) |
|
(e) |
|
|
||||
|
|
|
|
|
|
|
($)(1) |
|
|
||||
John W. Dietrich |
|
- |
|
|
- |
|
|
54,163 |
|
|
4,218,901 |
|
|
Michael Steen |
|
- |
|
|
- |
|
|
48,874 |
|
|
3,811,013 |
|
|
Adam R. Kokas |
|
- |
|
|
- |
|
|
43,674 |
|
|
3,405,157 |
|
|
Spencer Schwartz |
|
- |
|
|
- |
|
|
43,674 |
|
|
3,405,157 |
|
|
James Forbes |
|
- |
|
|
- |
|
|
45,444 |
|
|
4,344,330 |
|
|
(1) The value is calculated based on the closing market price of our Common Stock as of the vesting date of the applicable award.
Nonqualified Deferred Compensation
As described above in the section entitled “Other Elements of Compensation — Retirement Plans,” our NEOs are entitled to receive an annual employer contribution under the Retirement Restoration Plan.
The table below sets forth the amount of employer contributions made under the Retirement Restoration Plan to each of our NEOs during 2022. Each Named Executive Officer is 100% vested in his aggregate account balance.
Name |
Executive |
|
Registrant |
|
Aggregate |
|
Aggregate |
|
Aggregate |
|
|
|||||
|
Contributions |
|
Contributions |
|
Earnings |
|
Withdrawals/ |
|
Balance |
|
|
|||||
|
in Last FY |
|
in Last FY |
|
in Last FY |
|
Distributions |
|
at Last FYE |
|
|
|||||
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
|
|||||
(a) |
(b) |
|
(c)(1) |
|
(d) |
|
(e) |
|
(f) |
|
|
|||||
John W. Dietrich |
|
- |
|
|
243,255 |
|
|
55,833 |
|
|
- |
|
|
1,043,523 |
|
|
Michael Steen |
|
- |
|
|
191,268 |
|
|
56,273 |
|
|
- |
|
|
997,838 |
|
|
Adam R. Kokas |
|
- |
|
|
163,733 |
|
|
50,483 |
|
|
- |
|
|
887,327 |
|
|
Spencer Schwartz |
|
- |
|
|
163,733 |
|
|
50,293 |
|
|
- |
|
|
884,607 |
|
|
James Forbes |
|
- |
|
|
161,440 |
|
|
4,970 |
|
|
- |
|
|
232,674 |
|
|
(1) The amounts reported in this column for each NEO are reflected in the “All Other Compensation” column of the Summary Compensation Table.
Employment Agreements
John W Dietrich. In connection with his promotion to President and Chief Executive Officer, Mr. Dietrich entered into a new employment agreement with Atlas Air, effective as of July 1, 2019, as amended on September 16, 2022 (as amended, the “Dietrich Agreement”). Pursuant to the Dietrich Agreement, Mr. Dietrich received an annual base salary of $775,000 through the end of 2019 and, effective as of his promotion date of January 1, 2020, an annual base salary of $850,000. In addition, as of July 1, 2019, Mr. Dietrich’s target bonus opportunity increased to 100% of his annual base salary. Beginning in 2020, he became eligible for a long-term incentive award with a target value of 375% of his then-current base salary. Effective April 1, 2022, Mr. Dietrich received an annual base salary increase to $950,000 and a target bonus opportunity increase to 110% of his annual base salary.
Pursuant to the Dietrich Agreement, Mr. Dietrich is entitled to severance benefits in connection with certain terminations of employment that are generally consistent with the entitlements under his prior employment agreement. In the event Mr. Dietrich’s employment is terminated by the Company without “Cause,” by Mr. Dietrich for “good reason,” or due to death or “disability” (each as defined in the Dietrich Agreement), subject to him executing a general release of claims, Mr. Dietrich will be entitled to a lump sum payment equal to twenty-four months of his then-current base salary. Due to his tenure with the Company, Mr. Dietrich will also be eligible to participate in the Company’s health plans until he becomes eligible for Medicare or is eligible to be covered by the health plan of a subsequent employer. In the event Mr. Dietrich’s employment is terminated by the Company without “cause” or by Mr. Dietrich for “good reason” within 18 months following a “change in control” of the Company (as defined in the Dietrich Agreement), Mr. Dietrich will be entitled to receive a lump sum payment equal to thirty-six months of his then-current base salary. If, within the six-month period
30
immediately following a termination by the Company without “cause” or by Mr. Dietrich for “good reason,” a “change in control” of the Company occurs, then, in addition to the severance equal to twenty-four months of base salary described above, Mr. Dietrich will receive an additional lump sum payment equal to twelve months of his then-current base salary.
The Dietrich Agreement additionally provides that Mr. Dietrich will be subject to perpetual confidentiality provisions, as well as two-year post-termination non-solicitation and one-year post-termination non-competition provisions. The Dietrich Agreement superseded the prior employment agreement by and between Mr. Dietrich and Atlas Air that was amended and restated effective September 15, 2006 and was further amended at year-end 2008 and in 2011.
None of our other NEOs are party to an employment agreement.
Potential Payments upon Termination or Change in Control
Our AIP, long-term incentive plans and related award agreements, the Dietrich Agreement, and the Benefits Program for Senior Executives (the “Benefits Program”) provide for payments and benefits to our executive officers upon certain terminations of employment, including retirement, and upon a change of control of the Company.
For purposes of these plans and arrangements, a “change in control” of the Company generally includes (i) the acquisition by any person or group of more than 50% of the total fair market value or total voting power of the Common Stock, (ii) the acquisition by any person or group, during any 12-month period of ownership, of stock possessing 30% or more of the total voting power of the Company, (iii) the replacement of a majority of the membership of the Company’s Board of Directors during any 12-month period by directors whose appointment or election is not endorsed by a majority of the Company’s then Board of Directors, (iv) the acquisition by a person or group during any 12-month period of assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all assets of the Company, or (v) the consummation of a complete liquidation or dissolution of the Company.
Based on our extensive shareholder outreach and related feedback, equity and other long-term incentive award agreements under our long-term incentive plan are subject to “double-trigger” provisions that require a change in control to be accompanied by a qualifying termination of employment in order for any such award to vest on an accelerated basis.
Payments upon Termination of Employment or Retirement (Without a Change in Control)
Severance Entitlements
Mr. Forbes, Mr. Kokas, Mr. Schwartz, and Mr. Steen participate in the Benefits Program for Senior Executives (the “Benefits Program”) as does Mr. Dietrich to the extent severance benefits and related matters are not specifically covered in his employment agreement or are more beneficial in the Benefits Program (which, for the avoidance of doubt, shall not result in the duplication of benefits for Mr. Dietrich). The Benefits Program provides for the following severance payments and benefits in the event the executive is terminated by the Company without “cause” (as defined below), due to disability, or the executive resigns for “good reason” (as defined below), in the absence of a change in control of the Company: (i) 24 months’ continued base salary; (ii) provided that COBRA continuation coverage is timely elected, twelve months of reimbursement of the portion of COBRA premiums attributable to employer cost share on an after-tax basis, provided that any such reimbursement will cease if the executive obtains comparable coverage in connection with subsequent employment or becomes eligible for Medicare coverage; and (iii) a short-term bonus payment under the short-term incentive plan for the year of termination, as described below. If an executive dies while receiving severance payments, his or her personal representative will be entitled to receive such unpaid severance payments. All severance payments are subject to the executive executing and not revoking a timely release of claims.
If an executive is terminated (i) without cause, (ii) due to executive’s permanent disability, (iii) by the executive for good reason, or (iv) due to executive’s “retirement” (as defined below), the executive and his or her eligible dependents, if any, will continue to be eligible to participate in the Company’s health insurance plans until such executive is Medicare eligible. For the avoidance of doubt, each of the named executive officers are entitled to continued participation in the Company’s health insurance plans until such executive is Medicare eligible notwithstanding his age and years of service at the time a qualifying termination occurs.
With respect to the Benefits Program and our AIP, “retirement” means a termination of an executive’s employment by the executive on or after such executive (i) attains age fifty-five and has completed ten years of service with the Company or a related employer, and (ii) has given not less than three months’ advanced written notice of such proposed retirement to the then current Chief Executive Officer of the Company or, in the event of a proposed retirement of the then current Chief Executive Officer such notice must be given to the Chairman of our Board of Directors; provided, however, that if such executive is terminated for cause after providing such advanced written notice, such termination will not be considered a
31
retirement. Notwithstanding the foregoing, for purposes of our AIP, the Dietrich Agreement requires that Mr. Dietrich (i) attain age sixty and complete ten years of service and (ii) give not less than six months’ advance written notice to the Chairman of the Board of Directors.
With respect to our employment, incentive and benefits plans and agreements (other than the Dietrich Agreement), “good reason” generally means (i) a material reduction in the executive’s annual base salary, percentage target bonus opportunity under our short-term incentive plan, or target long-term incentive award opportunity (or, for purposes of certain such plans and arrangements, following a change in control, a reduction of such compensation in the aggregate), in each case as then in effect, or other material benefits provided to officers of the Company, except where such reduction is part of a general reduction in salary or benefits by the Company, (ii) a material reduction in the executive’s title or job responsibilities, or (iii) following a change in control of the Company, an attempted relocation of the executive to a position that is located greater than forty miles from the location of such executive’s most recent principal location of employment with the Company; provided, however, that the executive will be treated as having resigned due to good reason only if he or she provides the Company with a notice of termination within ninety days of the initial existence of one of the conditions described above, following which the Company shall have thirty days from the receipt of the notice of termination to cure the event specified in the notice of termination and, if the Company fails to so cure the event, the Executive must terminate his or her employment not later than thirty days following the end of such cure period.
In addition, “cause” means (i) an executive’s refusal or failure (other than during periods of illness or disability) to perform his material duties and responsibilities, (ii) the executive’s conviction or plea of guilty or nolo contendere in respect of any felony, other than a motor vehicle offense, (iii) the commission of any act which causes material injury to the reputation, business or business relationships of the Company or any of its subsidiaries including, without limitation, any breach of written policies of the Company with respect to trading in securities, (iv) any other act of fraud, including, without limitation, misappropriation, theft or embezzlement, or (v) a violation of any applicable material policy of the Company or any of its subsidiaries, including, without limitation, a violation of the laws against workplace discrimination.
Mr. Dietrich’s severance benefits under his individual employment agreement in the event of certain terminations in the absence of a change in control of the Company are described above under the section entitled “Employment Agreements.”
Annual Incentive Program for Senior Executives
In the event an executive’s employment is terminated by the Company without cause, due to death, disability, retirement, or the participant resigns for good reason, he will be entitled to receive a bonus under the AIP in an amount equal to, (A) in the event such termination occurs after June 30 of the applicable program year, the greater of (1) the amount he would have received if he were employed on the last day of such program year based upon actual company performance measured pursuant to the AIP (and assuming for such purpose that his individual business objectives have been achieved at target), and (2) his target bonus (such amount, the “Full Termination Bonus Amount”) or (B) in the event the termination occurs prior to July 1 of the applicable program year, the Full Termination Bonus Amount multiplied by a fraction, the numerator of which is the number of days from the commencement of the program year until such termination and the denominator of which is 365.
Long-Term Incentive Awards
In the event an executive’s employment is terminated by the Company without cause, due to death or disability, or due to the executive’s resignation for good reason, in each case in the absence of a change in control of the Company, a pro-rata portion of our executive’s outstanding PSUs and performance-based long-term incentive cash awards would vest, based on the portion of the performance period elapsed prior to such termination, with all applicable performance goals determined at the end of the performance period based on actual Company performance. Our executive’s outstanding RSUs would immediately vest upon such executive’s termination by the Company without cause, due to death or disability, or due to the executive’s resignation for good reason.
In addition, upon Mr. Dietrich’s retirement his outstanding performance cash awards will vest based on actual Company performance and be paid in the normal course at the end of the applicable performance period. The long-term performance-based cash program requires that Mr. Dietrich (i) attain age sixty and complete ten years of service, (ii) give not less than six months’ advance written notice to the Chairman of the Board of Directors, and (iii) a majority of the members of the Board (disregarding Mr. Dietrich’s Board membership for these purposes) approve such retirement in order for a termination to be deemed a “retirement” under program.
Nonqualified Deferred Compensation
32
As described above in the section entitled “Other Elements of Compensation — Retirement Plans,” our NEOs are entitled to receive an annual employer credit under our Retirement Restoration Plan. Each of our executive officers is fully vested in his account balance under the Retirement Restoration Plan. All account balances under the plan would become immediately payable upon an executive’s separation from service (within the meaning of Section 409A of the Internal Revenue Code), death, or disability (as defined in the Retirement Restoration Plan).
Payments upon a Change in Control (Without Termination of Employment)
Annual Incentive Program for Senior Executives
In the event of a change in control of the Company, a participant would remain eligible to receive a bonus under our AIP following the completion of the program year in which the change in control occurs, based on the greater of target level performance and actual performance determined at the end of the performance period.
Long-Term Incentive Awards
In the event of a change in control of the Company, immediately following such change in control, unless the award is assumed or substituted, all outstanding PSUs and performance-based long-term incentive cash awards would become payable and deemed satisfied based on achievement at the maximum performance levels, other than any applicable relative TSR modifier, which would be deemed satisfied based upon actual performance as of the date of the change in control. If, however, a performance-based award is assumed or substituted by the acquirer in a transaction, then such award would become payable at the levels described above subject to the participant’s continued employment through the applicable performance period or in the event of certain terminations of employment prior to the end of the applicable performance period pursuant to the terms set forth in the applicable award agreement, as described in the section entitled “Payments Upon Termination of Employment (With a Change in Control) — Long-Term Incentive Awards” below.
All outstanding RSUs would immediately vest in connection with the change in control if the awards are not assumed or substituted by the acquiror in the transaction. If, however, the awards are assumed or substituted by the acquiror in the transaction, then the awards would remain outstanding subject to the executive officer’s continued employment, and would immediately vest in the event of certain terminations of employment following the change in control, as described in the section entitled “Payments Upon Termination of Employment (With a Change in Control) — Long-Term Incentive Awards” below.
Nonqualified Deferred Compensation
As noted above, each executive’s vested account balance under the Retirement Restoration Plan would become immediately payable in the event of a change in control.
Payments upon Termination of Employment (With a Change in Control)
Severance Entitlements
As noted above, each of Messrs. Forbes, Kokas, Schwartz and Steen participate in the Benefits Program, which provides for the severance payments and benefits described in the section entitled “Payments upon Termination of Employment or Retirement (Without a Change in Control)” above. If, within the 18-month period immediately following a change in control of the Company, an executive’s employment is terminated for reasons other than cause or if he resigns for good reason, and subject to his timely execution of a general release of claims, then such executive will be entitled to the severance benefits described above, except that such severance payments will be in the form of a single lump-sum payment in an amount equal to thirty-six months of the executive’s then-current annual base salary.
If, within the six-month period immediately following an executive’s termination of employment by the Company without cause or by the executive for good reason, a change in control of the company occurs, then, in addition to the severance payments described in the section entitled “Payments Upon Termination of Employment or Retirement (Without a Change in Control) — Severance Entitlements” above, and subject to the executive satisfying the aforementioned release requirements, the Executive will be entitled to receive a lump-sum payment equal to twelve months of his then-current base salary.
Receipt of the separation payments and benefits described above is conditioned upon the applicable executive complying with the terms and conditions of a restrictive covenant agreement.
33
Mr. Dietrich’s severance benefits under his individual employment agreement in the event of certain terminations following a change in control are described under the section entitled “Employment Agreements” above.
Annual Incentive Plan for Senior Executives
In the event that a participant's employment is terminated during a program year in which a change in control occurs (i) following such change in control by reason of (A) an involuntary termination by the Company without cause, (B) the participant's resignation for good reason, (C) retirement, or (D) death or disability; or (ii) within six months prior to such change in control, by the Company without cause or by the participant for change in control good reason, such participant is entitled to receive a non-prorated AIP bonus payment calculated based on the greater of (A) target level performance and (B) the Company’s actual performance determined at the end of the performance period pursuant to the terms of the plan.
Long-Term Incentive Awards
In the event of an executive’s termination by the Company without cause, due to death or disability, or the executive’s resignation for good reason, in each case following a change in control of the Company, all outstanding performance-based long-term incentive awards that were not substituted or assumed by the acquirer in connection with the transaction would immediately vest, with any applicable performance goals deemed satisfied at maximum performance levels, other than any applicable Relative TSR modifier, which would be deemed satisfied based upon actual performance as of the date of the change in control.
POST-TERMINATION AND CHANGE IN CONTROL TABLE
The table below sets forth the estimated dollar value of the payments and other benefits our NEOs would receive in the event of his termination of employment or a change in control that are in addition to amounts previously earned and accrued by the executive, in each case assuming that such termination is without cause and such termination or change in control occurred on December 31, 2022.
Name |
Payments on Termination of Employment Due to Disability(1) |
|
Payments on Termination of Employment Due to Death(2) |
|
Payments on Termination of Employment Without Cause or for Good Reason(3) |
|
Payments on Termination of Employment Due to Retirement(4) |
|
Payments in Connection with a Change of Control Without Qualifying Termination of Employment(5) |
|
Payments in Connection with a Change of Control With a Qualifying Termination of Employment(6) |
|
|
||||||
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
|
||||||
John W. Dietrich |
|
10,524,134 |
|
|
10,283,283 |
|
|
10,524,134 |
|
|
240,851 |
|
|
21,337,383 |
|
|
24,131,790 |
|
|
Michael Steen |
|
7,693,268 |
|
|
6,033,602 |
|
|
7,693,268 |
|
|
309,665 |
|
|
15,222,398 |
|
|
17,281,805 |
|
|
Adam R. Kokas |
|
6,798,998 |
|
|
5,506,883 |
|
|
6,798,998 |
|
|
42,115 |
|
|
13,893,320 |
|
|
15,810,435 |
|
|
Spencer Schwartz |
|
7,135,918 |
|
|
5,506,883 |
|
|
7,135,918 |
|
|
379,035 |
|
|
13,893,320 |
|
|
15,810,435 |
|
|
James A. Forbes |
|
1,564,486 |
|
|
524,486 |
|
|
1,564,486 |
|
|
0 |
|
|
3,731,060 |
|
|
5,325,467 |
|
|
These estimates were valued based on the closing price of our Common Stock as quoted on the Nasdaq Global Market on December 30, 2022 (the last trading day of 2022), which was $100.80 per share. The actual amounts to be paid can only be determined at the time of such events.
These estimates assume that the NEO (a) executes a release of claims, (b) does not violate the executive’s noncompetition or nonsolicitation agreements or any other restrictive covenants with us following termination, (c) does not receive medical and life insurance coverage from another employer within twelve months of the termination of his employment, (d) does not have any unused vacation time, and (e) does not incur legal fees requiring reimbursement from us.
In addition, the estimates are based on each NEO’s compensation as of December 31, 2022 as well as the terms and conditions of the underlying Company Plans and programs.
(1) Represents (a) salary continuation for twenty-four months at the NEO’s then-current base salary, but in the case of Mr. Dietrich such amount is paid in a lump-sum payment, (b) the estimated cost of reimbursement of the portion of COBRA health and welfare continuation coverage premiums attributable to employer cost-share on an after-tax basis, until he would become Medicare eligible, (c) prorated vesting of outstanding PSUs and performance-based long-term incentive cash
34
awards calculated based on the portion of the performance period elapsed prior to December 31, 2022 and assuming target level performance, and (d) full vesting of all outstanding RSUs.
(2) Represents (a) prorated vesting of outstanding PSUs and performance-based long-term incentive cash awards calculated based on the portion of the performance period elapsed prior to December 31, 2022 and assuming target level performance, (b) full vesting of all outstanding RSUs, and (c) with respect to Mr. Dietrich, a lump-sum payment equal to twenty-four months of his then-current base salary.
(3) Represents (a) salary continuation for twenty-four months at the NEO’s then-current base salary, but in the case of Mr. Dietrich such amount is paid in a lump-sum payment, (b) the estimated cost of reimbursement of the portion of COBRA health and welfare continuation coverage premiums attributable to employer cost-share on an after-tax basis, until he would become Medicare eligible, (c) prorated vesting of outstanding PSUs and performance-based long-term incentive cash awards calculated based on the portion of the performance period elapsed prior to December 31, 2022 and assuming target level performance, and (d) full vesting of all outstanding RSUs.
(4) Messrs. Dietrich, Schwartz, Steen, and Kokas are entitled to receive reimbursement of the portion of their respective COBRA health and welfare continuation coverage premiums attributable to employer cost-share on an after-tax basis until each becomes Medicare eligible. Mr. Forbes is currently Medicare eligible.
(5) Because our equity awards have a “double-trigger” vesting requirements, full vesting would only occur upon certain terminations of the NEO’s employment subsequent to the change in control or such awards are not assumed or substituted for equity of a comparable value in connection with such change in control. All long-term incentive awards vested upon the closing of the Merger, with performance-based awards vesting at the maximum performance level.
(6) Represents (a) thirty-six months of the NEO’s annual base salary payable in a lump sum, (b) the estimated cost of 12 months of reimbursement of the portion of COBRA health and welfare continuation coverage premiums attributable to employer cost-share on an after-tax basis, (c) full vesting of all outstanding performance-based long-term incentive awards with any applicable performance goals (including any applicable Relative TSR modifier) deemed satisfied at maximum performance levels, and (d) full vesting of all outstanding RSUs. The amounts in this column do not reflect any reductions for federal excise tax levied on certain excess termination payments under Section 4999 of the Code. All long-term incentive awards will vest upon the closing of the Merger, with performance-based awards vesting at the maximum performance level.
PAY RATIO
Pursuant to Item 402(u) of Regulation S-K and Section 953(b) of the Dodd-Frank Act (together with any SEC guidance issued thereunder, the “pay ratio rules”), presented below is the ratio of annual total compensation of our CEO to the annual total compensation to our median employee (excluding our CEO). The employee who received this median annual total compensation is referred to below as our median employee.
SEC rules permit the identification of our median employee once every three years provided there has been no change in our employee population or employee compensation arrangements that we believe would significantly impact our pay ratio disclosure. Accordingly, we have calculated our disclosure based on the median employee identified as of December 31, 2021. For details on our process for identifying the median employee, please see “Pay Ratio” in our annual Proxy Statement filed with the SEC on April 15, 2022.
We determined the annual total compensation for 2022 for the median employee identified as of December 31, 2021 based on annual total compensation of each of our employees and our consolidated subsidiaries for the 12-month period that ended December 31, 2021. Total compensation for these purposes included base wages or salary, any applicable bonuses or profit sharing plan payouts and any other taxable elements of compensation and was calculated using IRS Form W-2 data supplemented with internal payroll and HR records.
The 2022 annual total compensation as determined in accordance with the applicable pay ratio rules for our CEO was $9,898,601. The 2022 annual total compensation as determined under the pay ratio rules for our median employee was $208,757. The ratio of our CEO’s annual total compensation to our median employee’s total compensation (“CEO Pay Ratio”) for fiscal year 2022 is 47 to 1.
Compensation Committee Interlocks and Insider Participation
35
None of the members of the Compensation Committee during 2022 (Ms. Goulet, Mr. Bolden, Mr. Conner, and Mr. Griffin) has ever been an officer or employee of the Company or had any relationship requiring disclosure by the Company under Item 404 of Regulation S-K. None of our executive officers served as a member of the board of directors or the compensation committee of any entity that had one or more of its executive officers serving as a member of the Board or Compensation Committee.
36
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Stock Ownership
The following table sets forth, as of March 1, 2023, information regarding beneficial ownership of our Common Stock by:
Unless otherwise indicated, each shareholder has sole voting and dispositive power with respect to the shares of Common Stock beneficially owned by that shareholder. The number of shares of Common Stock beneficially owned is determined under rules issued by the SEC. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power and any shares as to which the individual or entity has the right to acquire beneficial ownership within 60 days of March 1, 2023, through the exercise of any stock option or other right. The inclusion in the following table of those shares, however, does not constitute an admission that the named shareholder is a direct or indirect beneficial owner. The number of shares of our Common Stock issued and outstanding as of March 1, 2023 was 28,885,574. Except as otherwise indicated in the table below, addresses of named beneficial owners are c/o Atlas Air Worldwide Holdings, Inc., 2000 Westchester Avenue, Purchase, NY 10577.
37
Beneficial Ownership Table
Name and Address of Beneficial Owner |
Number of shares Beneficially Owned |
|
Percentage of Outstanding Shares Beneficially Owned |
|
|
||
5% Shareholders: |
|
|
|
|
|
||
BlackRock, Inc.(a) |
|
4,234,721 |
|
|
14.7 |
% |
|
55 East 52nd Street |
|
|
|
|
|
||
New York, NY 10055 |
|
|
|
|
|
||
The Vanguard Group(b) |
|
3,084,767 |
|
|
10.7 |
% |
|
100 Vanguard Blvd. |
|
|
|
|
|
||
Malvern, PA 19355 |
|
|
|
|
|
||
Dimensional Fund Advisors LP(c) |
|
2,011,121 |
|
|
7.0 |
% |
|
Building One |
|
|
|
|
|
||
6300 Bee Cave Road |
|
|
|
|
|
||
Austin, TX 78746 |
|
|
|
|
|
||
Hill City Capital(d) |
|
1,434,268 |
|
|
5.0 |
% |
|
121 High Street, 3rd Floor |
|
|
|
|
|
||
Boston, MA 02110 |
|
|
|
|
|
||
Directors: |
|
|
|
|
|
||
Charles F. Bolden, Jr.(e) |
|
15,621 |
|
* |
|
|
|
Walter G. Borst(e) |
|
1,578 |
|
* |
|
|
|
Raymond L. Conner(e) |
|
1,578 |
|
* |
|
|
|
Beverly K. Goulet(e) |
|
3,080 |
|
* |
|
|
|
Bobby J. Griffin(e) |
|
14,930 |
|
* |
|
|
|
Duncan J. McNabb(e) |
|
21,118 |
|
* |
|
|
|
Sheila A. Stamps(e) |
|
7,972 |
|
* |
|
|
|
George A. Willis(e) |
|
1,578 |
|
* |
|
|
|
Carol J. Zierhoffer(e) |
|
3,080 |
|
* |
|
|
|
|
|
|
|
|
|
||
Director and NEO: |
|
|
|
|
|
||
John W. Dietrich |
|
121,993 |
|
* |
|
|
|
|
|
|
|
|
|
||
Other NEO: |
|
|
|
|
|
||
James A. Forbes |
|
31,145 |
|
* |
|
|
|
Adam R. Kokas |
|
67,472 |
|
* |
|
|
|
Michael T. Steen |
|
140,341 |
|
* |
|
|
|
Spencer Schwartz |
|
70,270 |
|
* |
|
|
|
All Directors and executive officers as a group (15 persons, including the persons listed above) |
|
515,206 |
|
|
1.8 |
% |
|
* Represents less than 1% of the outstanding shares of Common Stock.
38
39
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Certain Relationships and Related Transactions
Our Code of Ethics provides that the Chief Executive Officer, Senior Financial Officers and Directors should follow the guidelines outlined in our Employee Handbook and Code of Conduct and communicate any potential or actual conflicts of interest (however immaterial) to the Chairman of the Board, the Chair of the Audit and Finance Committee of the Board of Directors, and the General Counsel so that an objective, third-party review can be made of the matter. Pursuant to our Audit and Finance Committee Charter, which is also available on our website at www.atlasairworldwide.com, the Audit and Finance Committee reviews reports and disclosures of insider and affiliated party transactions and/or conflicts of interest or potential conflicts of interest involving corporate officers and members of the Board of Directors. The Audit and Finance Committee, when appropriate, will also review and approve any involvement of corporate officers and members of the Board of Directors in matters that might constitute a conflict of interest or that may otherwise be required to be disclosed as a related person transaction under SEC regulations. Our Nominating and Governance Committee separately determines Director Independence as summarized in “Director Independence” below.
Related Person Transactions since January 1, 2022
The following is a summary of material provisions of certain transactions we entered into with our executive officers, directors or 5% or greater shareholders. We believe the terms and conditions set forth in such agreements were reasonable and customary for transactions of this type.
Merger Agreement
On March 17, 2023, AAWW was acquired by Parent, a company affiliated with certain funds managed by affiliates of Apollo Global Management, Inc., J.F. Lehman & Company, Inc. and Hill City Capital L.P., the latter of which was a beneficial owner of 5% of AAWW’s common stock as of March 1, 2023, pursuant to the terms set forth in the Merger Agreement. At the Effective Time, and in accordance with the Merger Agreement, (i) Parent completed its acquisition of AAWW, (ii) AAWW became a wholly owned subsidiary of Parent and (iii) each share of Common Stock issued and outstanding immediately prior to the Effective Time (other than shares of Common Stock (a) owned directly by Parent or MergerCo, (b) held by AAWW as treasury shares or (c) owned by any person who has properly demanded and not withdrawn a demand for appraisal rights under Delaware law) converted into the right to receive the Merger Consideration.
Acquisition Financing
In connection with the consummation of the Merger, on the Closing Date, Parent, Wilmington Trust, National Association, as trustee (the “Trustee”), AAWW and certain of AAWW’s subsidiaries entered into the first supplemental indenture (the “Supplemental Indenture”) to the indenture, dated as of February 17, 2023, between Parent and the Trustee (the “Parent Indenture”), governing Parent’s issuance of 8.500% Senior Secured Notes due 2030 with an initial aggregate principal amount of $850 million (the “2030 Notes”), pursuant to which AAWW and certain of its subsidiaries (the “Subsidiary Guarantors”) agreed to guarantee Parent’s obligations under the Parent Indenture and the 2030 Notes. The 2030 Notes and the related guarantees are secured on a first priority basis by substantially all assets of the Subsidiary Guarantors (subject to certain exclusions and exceptions). The Parent Indenture and the 2030 Notes include restrictive covenants, events of default and other provisions that are customary for obligations of this type.
In addition, on the Closing Date, Parent entered into the First Lien Credit Agreement among Rand Midco LLC, Parent, as borrower, Goldman Sachs Bank USA, as Administrative Agent and the Lenders and Issuing Banks party thereto (the “Credit Agreement”), governing Parent’s senior secured credit facilities, which include (i) a term loan facility in an aggregate principal amount of $800 million, maturing on the seventh anniversary of the Closing Date and (ii) a revolving credit facility in an aggregate committed principal amount of $300 million, including both a letter of credit sub facility and a swingline loan sub facility, maturing on the fifth anniversary of the Closing Date. The obligations under the Credit Agreement are secured on a first priority basis by substantially all assets of Parent and the Subsidiary Guarantors (subject to certain exclusions and exceptions). The Credit Agreement includes representations and warranties, covenants, events of default and other provisions that are customary for facilities of this type.
40
Director Independence
The Nominating and Governance Committee has determined that all Directors, excluding Mr. Dietrich, are independent under Company standards and SEC and Nasdaq rules.
Our Nominating and Governance Committee Charter includes categorical standards to assist the Nominating and Governance Committee in making its determination of Director independence within the meaning of the rules of the SEC and the Marketplace Rules of Nasdaq. The Nominating and Governance Committee will not consider a Director to be independent if, among other things, he or she:
Pursuant to the Nominating and Governance Committee Charter and as further required by Nasdaq rules, the Nominating and Governance Committee made a subjective determination as to each nonemployee Director that no relationship exists which, in the opinion of the Board, would interfere with such individual’s exercise of independent judgment in carrying out his or her responsibilities as a Director. As part of such determination, the Nominating and Governance Committee examined, among other things, whether there were any transactions or relationships between AAWW and an organization of which a nonemployee Director or Director Nominee has been a partner, shareholder, or officer within the last fiscal year. The purpose of this review was to determine whether any such relationships or transactions were inconsistent with a determination that a Director is independent.
41
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Services provided to us by PricewaterhouseCoopers LLP (“PwC”), AAWW’s independent registered public accounting firm, for each of the last two fiscal years are described below (dollars in thousands):
|
2022 |
2021 |
Audit Fees |
$2,585 |
$2,516 |
Audit-Related Fees |
10 |
8 |
Tax Fees |
|
|
Tax Compliance Fees |
208 |
218 |
Tax Advice and Planning Fees |
1,360 |
1,528 |
Total |
$4,163 |
$4,270 |
The Audit and Finance Committee preapproves audit and permissible nonaudit services provided by the independent registered public accounting firm in accordance with the Committee’s preapproval policy. These services may include audit services, audit-related services, tax services, and other services. Necessary approvals required between Audit and Finance Committee meetings must be preapproved by the Audit and Finance Committee Chair, or such other Audit and Finance Committee member who has been delegated this authority by the Audit and Finance Committee Chair. For any such approvals between meetings, a description is provided to the Audit and Finance Committee for discussion at its next regularly scheduled meeting. The Audit and Finance Committee has concluded that the provision of the nonaudit services described above are compatible with maintaining the independence of PwC.
42
EXHIBIT INDEX
|
|
|
Exhibit No. |
|
Description |
31.1 |
|
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer |
|
|
|
31.2 |
|
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer |
|
|
|
104 |
|
Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document (included in Exhibit 101). |
|
|
|
|
|
|
43
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Amendment to be signed on its behalf by the undersigned, thereunto duly authorized on March 28, 2023.
|
ATLAS AIR WORLDWIDE HOLDINGS, INC. |
|
|
(Registrant) |
|
|
By: |
/s/ John W. Dietrich |
|
|
John W. Dietrich |
|
|
President and Chief Executive Officer |
44
Exhibit 31.1
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer
I, John W. Dietrich, certify that:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
d) Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: March 28, 2023 |
|
/s/ John W. Dietrich |
|
|
John W. Dietrich |
|
|
President and Chief Executive Officer |
Exhibit 31.2
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer
I, Spencer Schwartz, certify that:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
d) Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: March 28, 2023 |
|
/s/ Spencer Schwartz |
|
|
Spencer Schwartz |
|
|
Executive Vice President and Chief Financial Officer |
Document and Entity Information - USD ($) $ in Millions |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Mar. 01, 2023 |
Jun. 30, 2022 |
|
| Cover [Abstract] | |||
| Document Type | 10-K/A | ||
| Document period end date | Dec. 31, 2022 | ||
| Amendment flag | true | ||
| Document Fiscal Period Focus | FY | ||
| Document Fiscal Year Focus | 2022 | ||
| Current fiscal year end date | --12-31 | ||
| Entity central index key | 0001135185 | ||
| Document Annual Report | true | ||
| Document Transition Report | false | ||
| Entity File Number | 001-16545 | ||
| Entity Registrant Name | Atlas Air Worldwide Holdings, Inc. | ||
| Entity Incorporation, State or Country Code | DE | ||
| Entity Address, Address Line One | 2000 Westchester Avenue | ||
| Entity Address, Address Line Two | Purchase | ||
| Entity Address, State or Province | NY | ||
| Entity Address, City or Town | New York | ||
| Entity Address, Postal Zip Code | 10577 | ||
| City Area Code | 914 | ||
| Local Phone Number | 701-8000 | ||
| Entity Tax Identification Number | 13-4146982 | ||
| Title of 12(b) Security | Common Stock, $0.01 Par Value | ||
| Trading Symbol | AAWW | ||
| Security Exchange Name | NASDAQ | ||
| Entity Well-known Seasoned Issuer | Yes | ||
| Entity Voluntary Filers | No | ||
| Entity Current Reporting Status | Yes | ||
| Entity Interactive Data Current | Yes | ||
| Entity filer category | Large Accelerated Filer | ||
| Entity Small Business | false | ||
| Entity Emerging Growth Company | false | ||
| ICFR Auditor Attestation Flag | true | ||
| Entity Shell Company | false | ||
| Entity common stock shares outstanding | 28,885,574 | ||
| Entity Public Float | $ 1,263.8 | ||
| Auditor Name | PricewaterhouseCoopers LLP | ||
| Auditor Location | New York, New York | ||
| Auditor Firm ID | 238 | ||
| Documents Incorporated by Reference | Documents Incorporated by Reference: None. |
||
| Amendment Description | EXPLANATORY NOTE This Amendment No. 1 on Form 10-K/A (this “Amendment”) amends our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, originally filed with the Securities and Exchange Commission (the “SEC”) on February 23, 2023 (the “Original Filing”). We are filing this Amendment pursuant to General Instruction G(3) of Form 10-K to include the information required by Part III of Form 10-K that we did not include in the Original Filing, as we do not intend to file a definitive proxy statement for an annual meeting of shareholders within 120 days of the end of our fiscal year ended December 31, 2022 in light of the Merger (as defined below). In addition, in connection with the filing of this Amendment and pursuant to the rules of the SEC, we are including with this Amendment new certifications of our principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Item 15 of Part IV has also been amended to reflect the filing of these new certifications. Except as described above, no other changes have been made to the Original Filing. The Original Filing continues to speak as of the date of the Original Filing, and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Filing. Atlas Air Worldwide Holdings, Inc. (“AAWW”), a Delaware corporation, is a holding company with a wholly owned operating subsidiary, Atlas Air, Inc. (“Atlas”). We also have a 51% economic interest and a 75% voting interest in Polar Air Cargo Worldwide, Inc. (“Polar”). In addition, we are the parent company of several wholly owned subsidiaries related to our dry leasing services (collectively referred to as “Titan”). Except as otherwise noted, AAWW, Atlas and Titan (along with all other entities included in AAWW’s consolidated financial statements in the Original Filing) are collectively referred to herein as the “Company,” “AAWW,” “we,” “us,” or “our.” As disclosed in AAWW’s Current Report on Form 8-K filed with the SEC on March 17, 2023 (the “Closing Date”), the previously announced merger transaction, pursuant to the terms and subject to the conditions set forth in the Agreement and Plan of Merger (the “Merger Agreement”), dated as of August 4, 2022, by and among AAWW, Rand Parent, LLC (“Parent”), a company affiliated with certain funds managed by affiliates of Apollo Global Management, Inc., J.F. Lehman & Company, Inc. and Hill City Capital L.P. (collectively, the “Buyers”) and Rand Merger Sub, Inc., a wholly owned subsidiary of Parent (“MergerCo”), was completed. Upon the filing of the Certificate of Merger with the Secretary of State of the State of Delaware (the “Effective Time”), MergerCo merged with and into AAWW (the “Merger”), and AAWW survived the Merger as a wholly owned subsidiary of Parent. At the Effective Time, each share of common stock, par value $0.01 per share, of AAWW (the “Common Stock”), issued and outstanding immediately prior to the Effective Time (other than shares of Common Stock (a) owned directly by Parent or MergerCo, (b) held by AAWW as treasury shares or (c) owned by any person who has properly demanded and not withdrawn a demand for appraisal rights under Delaware law) converted into the right to receive an amount in cash equal to $102.50 per share, without interest (the “Merger Consideration”). As disclosed in the Form 8-K described above, as a result of the Merger, changes were made to AAWW’s certificate of incorporation, bylaws, board of directors and officers. In addition, upon consummation of the Merger, as a wholly owned subsidiary of Parent, AAWW could be subject to Parent’s policies and procedures. Except as described herein, this Amendment does not address events occurring after the date of the Original Filing, speaks only as of the date of the Original Filing and the disclosures contained herein, including, without limitation, with respect to the board of directors of AAWW (including committees thereof), the officers of AAWW and AAWW’s governing documents and policies and procedures, are presented without giving effect to the closing of the Merger. This Amendment should be read in conjunction with the Original Filing and with our filings with the SEC subsequent to the Original Filing. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This Amendment, together with other reports, releases and written and oral communications issued or made from time to time by or on behalf of AAWW, contain statements that may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Those statements are based on management’s beliefs, plans, expectations and assumptions, and on information currently available to management. Generally, the words “will,” “may,” “should,” “could,” “would,” “expect,” “anticipate,” “intend,” “plan,” “continue,” “believe,” “seek,” “project,” “estimate” and similar expressions used in this Amendment that do not relate to historical facts are intended to identify forward-looking statements. The forward-looking statements in this Amendment are not representations or guarantees of future performance and involve certain risks, uncertainties and assumptions. Such risks, uncertainties and assumptions include, but are not limited to, those described in Item 1A, “Risk Factors” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Original Filing. Many of such factors are beyond AAWW’s control and are difficult to predict. Readers are therefore cautioned not to place undue reliance on forward-looking statements. Such forward-looking statements speak only as of the date of this Amendment. AAWW does not intend to publicly update any forward-looking statements that may be made from time to time by, or on behalf of, AAWW, whether as a result of new information, future events or otherwise, except as required by law and expressly disclaims any obligation to revise or update publicly any forward-looking statement to reflect future events or circumstances. |