-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MoR8rC8wfc3bcliR8UleSS+aMehkAT0PpdyZwimM51LKpPj8Usse4+44a1yqN1ph lLPjqsAg28MC8t5891zoEw== 0001047469-98-032954.txt : 19980828 0001047469-98-032954.hdr.sgml : 19980828 ACCESSION NUMBER: 0001047469-98-032954 CONFORMED SUBMISSION TYPE: PRE 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981022 FILED AS OF DATE: 19980827 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DELTA AIR LINES INC /DE/ CENTRAL INDEX KEY: 0000027904 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 580218548 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: PRE 14A SEC ACT: SEC FILE NUMBER: 000-20319 FILM NUMBER: 98699095 BUSINESS ADDRESS: STREET 1: HARTSFIELD ATLANTA INTL AIRPORT STREET 2: 1030 DELTA BLVD CITY: ATLANTA STATE: GA ZIP: 30320-6001 BUSINESS PHONE: 4047152600 MAIL ADDRESS: STREET 1: 1030 DELTA BLVD STREET 2: DEPT 971 CITY: ATLANTA STATE: GA ZIP: 30320-6001 FORMER COMPANY: FORMER CONFORMED NAME: DELTA AIR CORP DATE OF NAME CHANGE: 19660908 PRE 14A 1 PRE 14A SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: /X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) / / Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to Section240.14a-11(c) or Section240.14a-12 DELTA AIR LINES, INC. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): /X/ No fee required. / / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: ----------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ----------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ----------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ----------------------------------------------------------------------- (5) Total fee paid: ----------------------------------------------------------------------- / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ----------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ----------------------------------------------------------------------- (3) Filing Party: ----------------------------------------------------------------------- (4) Date Filed: ----------------------------------------------------------------------- PRELIMINARY COPY [LOGO] To Our Shareowners: On behalf of the Board of Directors, it is our pleasure to invite you to attend the 1998 Annual Meeting of Shareowners of Delta Air Lines, Inc. The meeting will be held at The Waldorf-Astoria, 301 Park Avenue, New York, New York 10022, on Thursday, October 22, 1998, at 9:00 a.m., local time. The purpose of the meeting is to act on the matters listed in the attached Notice and to report on the Company's activities during fiscal 1998. There will be an opportunity to discuss matters of interest to you as a shareowner. Please let us know whether you plan to attend the meeting by marking the appropriate box on your proxy card. If you use our new telephone or internet voting system, please indicate your plans when prompted. If you are a shareowner of record, you should bring the enclosed admission ticket to the meeting. If you are planning to attend the meeting and your shares are held in street name (by a bank or broker, for example), you should ask the record owner for a legal proxy or bring your most recent account statement to the meeting so that we can verify your ownership of Delta stock. If you will need special assistance at the meeting because of a disability, please contact Ms. Suzanne Rolon, Coordinator -- Investor Relations, Department 829, Delta Air Lines, Inc., P.O. Box 20706, Atlanta, Georgia 30320-6001. Your vote is important. We encourage you to sign and return your proxy card in the enclosed envelope, or to use our new telephone or internet voting system, to ensure that your shares are represented at the meeting. Cordially, /s/ GERALD GRINSTEIN -------------------------------------- Gerald Grinstein CHAIRMAN OF THE BOARD /s/ LEO F. MULLIN -------------------------------------- Leo F. Mullin PRESIDENT AND CHIEF EXECUTIVE OFFICER Atlanta, Georgia September 16, 1998 PRELIMINARY COPY [LOGO] NOTICE OF ANNUAL MEETING OF SHAREOWNERS To the Shareowners of Delta Air Lines, Inc.: The Annual Meeting of Shareowners of Delta Air Lines, Inc. ("Annual Meeting") will be held at The Waldorf-Astoria, 301 Park Avenue, New York, New York 10022, on Thursday, October 22, 1998, at 9:00 a.m., local time, to consider and vote on: 1. The election of directors for the ensuing year. 2. The ratification of the appointment of Arthur Andersen LLP as independent auditors for fiscal year 1999. 3. The proposed amendment to Article Fourth of the Certificate of Incorporation to increase the authorized Common Stock of the Company from 150 million shares, par value $3.00 per share, to 450 million shares, par value $1.50 per share, and to effect a two-for-one split of the issued Common Stock of the Company. 4. The shareowner proposal relating to cumulative voting for directors, if the proposal is presented at the meeting. 5. The shareowner proposal relating to the CERES Principles for Public Environmental Accountability, if the proposal is presented at the meeting. 6. Such other matters as may properly come before the Annual Meeting. The close of business on August 31, 1998, has been fixed as the record date for determination of shareowners entitled to notice of, and to vote at, the Annual Meeting. During the ten-day period preceding the meeting, a list of shareowners entitled to vote at the Annual Meeting will be maintained at the offices of First Chicago NBD Corporation, 153 W. 51st Street, New York, New York 10019. Your attention is directed to the proxy statement accompanying this notice. By Order of the Board of Directors, /s/ ROBERT S. HARKEY -------------------------------------- Robert S. Harkey SENIOR VICE PRESIDENT -- GENERAL COUNSEL AND SECRETARY Atlanta, Georgia September 16, 1998 PRELIMINARY COPY DELTA AIR LINES, INC. GENERAL OFFICES/HARTSFIELD ATLANTA INTERNATIONAL AIRPORT POST OFFICE BOX 20706 ATLANTA, GEORGIA 30320-6001 PROXY STATEMENT ------------------------ ANNUAL MEETING OF SHAREOWNERS TO BE HELD OCTOBER 22, 1998 This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors of Delta Air Lines, Inc. ("Delta" or the "Company") to be voted at the 1998 Annual Meeting of Shareowners ("Annual Meeting"). The Annual Meeting will be held at The Waldorf-Astoria, 301 Park Avenue, New York, New York 10022, on Thursday, October 22, 1998, at 9:00 a.m., local time. The proxies may also be voted at any adjournment or postponement of the Annual Meeting. The approximate date of mailing of this proxy statement and the accompanying proxy card is September 16, 1998. VOTING PROCEDURES VOTING STOCK The Board of Directors set August 31, 1998, as the record date for the determination of shareowners entitled to notice of, and to vote at, the Annual Meeting. On the record date, there were outstanding [XX,XXX,XXX] shares of common stock, par value $3 per share ("Common Stock"), and [X,XXX,XXX] shares of Series B ESOP Convertible Preferred Stock, par value $1 per share ("ESOP Preferred Stock"). These securities constitute the only classes of securities entitled to vote at the Annual Meeting. Each outstanding share of Common Stock and ESOP Preferred Stock entitles its holder to one vote, subject in the case of the ESOP Preferred Stock to adjustment in certain circumstances. Holders of the Common Stock and ESOP Preferred Stock will vote together as a single class on all matters presented at the Annual Meeting. In addition, the Common Stock will vote separately as a class on the proposal to amend Article Fourth of the Certificate of Incorporation. The ESOP Preferred Stock is held of record by Fidelity Management Trust Company, as trustee of the Delta Family-Care Savings Plan ("Savings Plan"), and may not be sold or distributed outside the Savings Plan except for resale to the Company. VOTING BY PROXY GENERAL INFORMATION All properly executed written proxy cards, and all properly completed proxies voted by telephone or the internet, which are delivered pursuant to this solicitation (and not later revoked) will be voted at the meeting in accordance with the instructions given in the proxy. If a written proxy card is signed by a registered shareowner and returned without instructions, the shares will be voted (1) "FOR" the election of the director-nominees listed herein; (2) "FOR" the ratification of the appointment of Arthur Andersen LLP as independent auditors for fiscal year 1999; (3) "FOR" the proposed amendment to Article Fourth of the Certificate of Incorporation; (4) "AGAINST" the shareowner proposal relating to cumulative voting for directors; and (5) "AGAINST" the shareowner proposal relating to the CERES Principles for Public Environmental Accountability. Voting your proxy by mail, telephone or the internet will not limit your right to vote at the Annual Meeting if you later decide to attend in person. If your shares are held in the name of a broker, bank or other record holder, you must either direct the record holder as to how to vote your shares or obtain a proxy from the record holder to vote at the Annual Meeting. VOTING BY WRITTEN PROXY CARD If a shareowner is a corporation or partnership, the accompanying proxy card must be signed in the full corporate or partnership name by a duly authorized person. If the proxy card is signed pursuant to a power of attorney or by an executor, administrator, trustee or guardian, the signer's full title must be given and a certificate or other evidence of appointment must be furnished. If shares are owned jointly, each joint owner must sign the proxy card. If a shareowner would like to give a proxy to someone other than the persons designated by the Board of Directors, the three names appearing on the enclosed proxy card should be crossed out and the name of another person inserted. A properly executed proxy card must be presented at the meeting by the person representing the shareowner. The person named as proxy must have proper identification. VOTING BY TELEPHONE OR THE INTERNET Instructions for a shareowner of record to vote by telephone or the internet are set forth on the enclosed proxy card. The telephone and internet voting procedures are designed to authenticate votes cast by use of a personal identification number. The procedures, which comply with Delaware law, allow shareowners to appoint a proxy to vote their shares and to confirm that their instructions have been properly recorded. REVOKING A PROXY A proxy given pursuant to this solicitation may be revoked by the shareowner, at any time prior to the voting of the proxy, by written notice to the Secretary of the Company, by a later-dated vote by proxy either signed and returned by mail or by using the telephone or internet voting procedures, or by attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not in and of itself constitute a revocation of a proxy. QUORUM AND VOTING REQUIREMENTS A quorum at the Annual Meeting will consist of a majority of the votes entitled to be cast by the holders of all shares of Common Stock and ESOP Preferred Stock that are outstanding and entitled to vote. A majority of the votes entitled to be cast by the holders of all shares of Common Stock and ESOP Preferred Stock, voting together as a single class, that are present, or represented, at the meeting and entitled to vote will be necessary (1) to elect the director-nominees listed herein; (2) to ratify the appointment of Arthur Andersen LLP as independent auditors; (3) to approve the shareowner proposal relating to cumulative voting for directors; and (4) to approve the shareowner proposal relating to the CERES Principles for Public Environmental Accountability. Votes "withheld" from director-nominees, as well as abstentions on these proposals, will have the same effect as negative votes. Broker non-votes on these proposals will not be included in calculating the number of votes necessary for approval. The proposed amendment to Article Fourth of the Certificate of Incorporation requires the approval of a majority of the votes entitled to be cast by the holders of all outstanding shares of (1) Common Stock and ESOP Preferred Stock voting together as a single class; and (2) Common Stock voting as a separate class. Abstentions and broker non-votes on this proposal will have the same effect as negative votes. 2 GENERAL INFORMATION BOARD OF DIRECTORS The Board of Directors is responsible for establishing broad corporate policies and for the overall performance of the Company. Members of the Board receive information about the Company's business through reports and documents given to them on a regular basis, as well as by operating, financial and other reports made at meetings of the Board of Directors and its Committees. Regular meetings of the Board of Directors are held six times per year and special meetings are scheduled when required. The Board held 14 meetings in fiscal 1998. COMMITTEES ESTABLISHED BY THE BOARD The Committees established by the Board of Directors to assist it in discharging its responsibilities are described below. The biographical information concerning the directors, set forth elsewhere in this proxy statement, identifies the Committee memberships held by each director. The Audit Committee reviews the scope, conduct and results of the audits conducted by the independent auditors, the major non-audit services provided to the Company by the independent auditors and the adequacy of the Company's system of internal controls. It also recommends to the Board the engagement of independent auditors for the Company. The Committee, which consists of four non- employee directors, met five times in fiscal 1998. The Benefit Funds Investment Committee acts as the fiduciary for managing the investment policies and assets of certain of the Company's benefit plans. The Committee, which consists of four non-employee directors, met four times in fiscal 1998. The Corporate Governance Committee reviews and make recommendations to the Board of Directors concerning its composition, organization and processes; the type, function, size and membership of Board committees; qualifications and eligibility requirements for Board members; evaluation of the Board; Board compensation; and other corporate governance issues. The Committee, which consists of four non-employee directors, met four times in fiscal 1998. The Corporate Governance Committee also recommends to the Board candidates for election as directors, and will consider nominees recommended by shareowners. Shareowner recommendations should be submitted in writing to the Secretary of the Company with a description of the proposed nominee's qualifications and other relevant biographical information, as well as the nominee's consent to serve as a director. See "Submission of Shareowner Proposals and Nominations" on page [28] of this proxy statement. The Corporate Strategy Committee, which was established in October 1997, reviews the Company's long-term strategic goals, objectives and plans, and makes recommendations to management and the Board of Directors on these subjects. The Committee, which consists of four non-employee directors, met once in fiscal 1998. The Executive Committee exercises certain powers of the Board of Directors between Board meetings. The Committee, which consists of the chairmen of each of the Board's committees, did not meet in fiscal 1998. The Finance Committee reviews the Company's financial planning and financial structure, funds requirements, and borrowing and dividend policies. The Committee, which consists of four non-employee directors, met four times in fiscal 1998. The Personnel & Compensation Committee reviews and makes recommendations to the Board concerning the election of the Company's officers, the compensation for and evaluation of the Chief Executive Officer, management succession planning and the overall policy of the Company's benefit plans for non-executive personnel. It also sets the salaries for officers above the level of Senior Vice President except the Chief Executive Officer, and administers the Company's Incentive Compensation Plan and 1989 Stock Incentive Plan. The Committee, which consists of four non-employee directors, met six times in fiscal 1998. 3 COMPENSATION OF DIRECTORS Non-employee members of the Board of Directors (i.e., directors who are not employed by the Company on a full-time basis) receive an annual retainer of $25,000, of which $5,000 is paid in shares of Common Stock; and a meeting fee of $1,000 plus expenses for each Board and Committee meeting attended. The Chairmen of each of the Committees also receive an annual fee of $7,500. Full-time employees of the Company who serve as directors receive only reimbursement of expenses incurred in attending meetings. Directors and their spouses are eligible for complimentary transportation privileges on Delta. Directors may defer all or any part of their cash compensation earned as a director until a date specified by the director (which date shall be at least one year, but no more than ten years, following the end of the calendar year in which the compensation was earned). A participating director may choose, on a prospective basis, an investment return on the deferred amount from among certain of the investment return choices available under the Savings Plan, including a fund invested primarily in Common Stock (the "Delta Common Stock Fund"). Directors who served on the Board on or before October 24, 1996, and who retire from the Board may be elected advisory directors for a term which varies depending upon the director's term of service and age at retirement. Advisory directors receive an annual retainer equal to the annual retainer paid to non- employee directors at the time of their retirement. On October 24, 1996, the Board terminated the Advisory Director Program for all future directors who were not members of the Board on that date. Non-employee directors who join the Board after October 24, 1996, will receive, in addition to their other fees, a deferred payment of $6,300 during each year in which they serve as a director. The deferred payment will earn an investment return equivalent to the investment return on the Delta Common Stock Fund under the Savings Plan, and will be paid to the director after he completes his service as a member of the Board. Lifetime advisory directors, and directors who retire from the Board at their mandatory retirement age, are eligible during their lifetime for complimentary transportation privileges on Delta for themselves and their spouses. In May 1997, the Board of Directors established a search committee, consisting of Messrs. Artzt, Cartledge and Grinstein, to conduct a search for a new chief executive officer of the Company, and to recommend one or more candidates for this position to the Board. For their services on the search committee, Messrs. Artzt, Cartledge and Grinstein received $7,000, $6,000 and $11,000, respectively. These amounts are based on the number of interviews and other search committee activities in which each member participated. On October 23, 1997, the Board of Directors granted Mr. Grinstein 3,500 shares of Common Stock and related dividend equivalents which are reinvested in additional shares of Common Stock at current market prices. This award is in recognition of Mr. Grinstein's valuable service to the Company on various matters, including the Company's hiring of Mr. Mullin; the Company's review of its strategic alternatives; and Mr. Grinstein's service as Non-Executive Chairman of the Board and his agreement to continue to serve in that capacity during fiscal 1998. The shares of Common Stock will be issued to Mr. Grinstein after he completes his Board service. On October 23, 1997, the closing price of the Common Stock on the New York Stock Exchange was $106.875. CHARITABLE AWARD PROGRAM The Company's charitable contribution program permits an eligible director to recommend up to five tax-exempt organizations to receive donations totaling $1 million after the director's death. Recommended donations will be made by The Delta Air Lines Foundation, a tax-exempt charitable foundation funded by the Company. On July 28, 1994, the Board discontinued this program for all future directors who were not members of the Board on that date. 4 PROPOSAL 1 ELECTION OF DIRECTORS A Board of nine directors is to be elected at the Annual Meeting, each director so elected to hold office for a term of one year and until the election and qualification of a successor. In the event any nominee for director declines or is unable to serve, a substitute nominee or nominees may be chosen by the persons authorized by the Board of Directors to vote the proxies. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING NOMINEES: Edwin L. Artzt, Henry A. Biedenharn, III, James L. Broadhead, Edward H. Budd, R. Eugene Cartledge, Mary Johnston Evans, Gerald Grinstein, Leo F. Mullin and Andrew J. Young. All of the nominees were elected by the shareowners at the last Annual Meeting. During fiscal 1998, each nominee attended at least 75% of the meetings of the Board of Directors and the Committees on which he or she served. The Company's By-Laws establish mandatory retirement ages for directors. Pursuant to these provisions, Mr. Jesse Hill, Jr. will retire from the Board of Directors on October 22, 1998. Mr. Hill, who has been a director of the Company since 1975, is Chairman of the Benefit Funds Investment Committee, and a member of the Audit Committee and the Executive Committee. The members of the Board of Directors provide the Company with a wide and valuable range of judgment and experience from such diverse fields as air and ground transportation, banking, consumer products, government and international affairs, insurance, international trade, utilities, and paper and paperboard production. Certain information about the nominees follows: EDWIN L. ARTZT was Chairman of the Board and Chief Executive Officer of The Procter & Gamble Company from January 1990 until his retirement in July 1995, when he became Chairman of the Executive Committee of the Board of Directors of The Procter & Gamble Company. From June 1984 to January 1990, Mr. Artzt served as Vice Chairman of The Procter & Gamble Company and as President of Procter & Gamble International. He has been a director of Delta since 1991, is Chairman of the Finance Committee, and is a member of the Corporate Strategy Committee and the Executive Committee. Mr. Artzt is also a director of American Express Company, Barilla S.p.A. (Italy), Evenflo & Spalding Holdings Corporation and GTE Corporation, and a member of The Business Council. Age 68. HENRY A. BIEDENHARN, III was President, Chief Executive Officer and a director of Ouachita Coca-Cola Bottling Company, Inc., and four other Coca-Cola bottling companies located in Arkansas, Louisiana and Mississippi, from 1981 until his retirement in February 1996. He also served as Chairman of the Board of Ouachita Coca-Cola Bottling Company, Inc. from 1991 to February 1996. He has been a director of Delta since 1986, and is a member of the Audit Committee and the Benefit Funds Investment Committee. Mr. Biedenharn is a director of Hudson, Inc. and Biedco Corporation. Age 56. JAMES L. BROADHEAD has been Chairman of the Board and Chief Executive Officer of FPL Group, Inc., and its principal subsidiary, Florida Power & Light Company, since May 1990. From January 1989 to May 1990, he was President and Chief Executive Officer of FPL Group, Inc. From 1986 to October 1988, Mr. Broadhead served as President, Telephone Operating Group of GTE Corporation. He has been a director of Delta since 1991, is Chairman of the Audit Committee, and is a member of the Benefit Funds Investment Committee, the Corporate Governance Committee and the Executive Committee. Mr. Broadhead is also a director of New York Life Insurance Company and The Pittston Company, a trustee of Cornell University and a member of The Business Council and The Business Roundtable. Age 62. 5 EDWARD H. BUDD was Chairman of the Board and Chief Executive Officer of The Travelers Corporation from 1982 until his retirement in 1993, and was an executive officer of that company from 1974 through 1993. He has been a director of Delta since 1985, is Chairman of the Corporate Strategy Committee, and is a member of the Executive Committee, the Finance Committee and the Personnel & Compensation Committee. Mr. Budd is also a director of GTE Corporation, a member of the American Academy of Actuaries and The Business Council, and a Trustee of Tufts University. Age 65. R. EUGENE CARTLEDGE was Chairman of the Board of Savannah Foods & Industries, Inc. from April 1996 until December 1997. He was Chairman of the Board and Chief Executive Officer of Union Camp Corporation from January 1986 until his retirement in June 1994. Mr. Cartledge has been a director of Delta since 1990, is Chairman of the Personnel & Compensation Committee, and is a member of the Corporate Strategy Committee, the Executive Committee and the Finance Committee. He is also a director of Blount, Inc., Chase Brass Industries, Inc., Sun Company, Inc., UCAR International Inc. and Union Camp Corporation. Age 69. MARY JOHNSTON EVANS is a director of Baxter International Inc., Dun & Bradstreet Corp., Household International, Inc., New Europe Fund and Sun Company, Inc. She has been a director of Delta since 1982, is Chairman of the Corporate Governance Committee and the Executive Committee, and is a member of the Audit Committee and the Personnel & Compensation Committee. She served as non-executive Acting Chairman of the Company's Board of Directors from August 1, 1997 to August 14, 1997. Mrs. Evans is also a senior member of the Conference Board and a member of the Advisory Board of Morgan Stanley, Inc. She was a director of AMTRAK from 1974 to 1980, serving as Vice Chairman from 1974 until 1979. Age 68. GERALD GRINSTEIN has been non-executive Chairman of the Company's Board of Directors since August 14, 1997. Mr. Grinstein was Chairman of Burlington Northern Santa Fe Corporation (successor to Burlington Northern Inc.) from September 1995 until his retirement in December 1995. He was Chairman and Chief Executive Officer of Burlington Northern Inc. and Burlington Northern Railroad Company from July 1991 until consummation of the merger of Burlington Northern Inc. and Santa Fe Corporation in September 1995. Mr. Grinstein was Chairman, President and Chief Executive Officer of Burlington Northern Inc. from October 1990 to July 1991, and President and Chief Executive Officer of that company from January 1989 to October 1990. From May 1989 to July 1991, Mr. Grinstein also served as Chairman, President and Chief Executive Officer, and from February 1989 to May 1989, President and Chief Executive Officer, of Burlington Northern Railroad Company. Mr. Grinstein was Vice Chairman of Burlington Resources Inc. from May 1988 to December 1988; Vice Chairman of Burlington Northern Inc. from April 1987 to December 1988; and Chief Executive Officer of Western Air Lines, Inc. from 1985 through March 1987. He has been a director of Delta since 1987, is a member of the Corporate Governance Committee, the Corporate Strategy Committee, the Finance Committee and the Personnel & Compensation Committee. He is also a director of Browning-Ferris Industries, Inc., Imperial Holly Corporation, PACCAR Inc., Sundstrand Corporation and Vans, Inc. Age 66. LEO F. MULLIN has been President and Chief Executive Officer of Delta since August 14, 1997. Mr. Mullin was Vice Chairman of Unicom Corporation and its principal subsidiary, Commonwealth Edison Company, from 1995 to August 13, 1997. He was an executive of First Chicago Corporation from 1981 to 1995, serving as that company's President and Chief Operating Officer from 1993 to 1995, and as Chairman and Chief Executive Officer of American National Bank, a subsidiary of First Chicago Corporation, from 1991 to 1993. He has been a director of Delta since August 14, 1997. Mr. Mullin is also a director of BellSouth Corporation and Inland Steel Industries, Inc. He is a member of the board of the Air Transport Association of America, the Atlanta Chamber of Commerce, the Robert W. Woodruff Arts Center and Northwestern University. Age 55. 6 ANDREW J. YOUNG has been Co-Chairman and a senior partner of GoodWorks International, Inc. since January 1997. He was Vice Chairman of Law Companies Group, Inc. from 1993 through January 1997, and a director of that company from August 1995 through January 1997. He was Chairman of Law Companies International Group, Inc. (a former subsidiary of Law Companies Group, Inc.) from 1990 to 1993. Mr. Young was Mayor of the City of Atlanta, Georgia from 1982 to 1990, United States Ambassador to the United Nations from 1977 to 1979, and a member of the House of Representatives of the United States Congress from 1973 to 1977. He has been a director of Delta since 1994, and is a member of the Benefit Funds Investment Committee and the Corporate Governance Committee. Mr. Young is a director of Archer Daniels Midland Company, Cox Communications, Inc., Film Fabricators, Inc., Host Marriott Corporation, The Argus Board (The International Advisory Board of Independent Newspapers Holdings Limited) and Thomas Nelson, Inc. He is Chairman of the Southern Africa Enterprise Development Fund, a member of the Georgia Tech Advisory Board, and a director of the Martin Luther King, Jr. Center. He was Co-Chairman of the Atlanta Committee for the Olympic Games and a member of the Board of the United States Olympic Committee. Age 66. 7 BENEFICIAL OWNERSHIP OF SECURITIES [TABLE SUBJECT TO COMPLETION 8/31/98] DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth the number of shares of Common Stock and, if applicable, ESOP Preferred Stock beneficially owned as of August 31, 1998, by each director of the Company, each executive officer named in the Summary Compensation Table in this proxy statement, and all directors and executive officers of the Company as a group. Unless otherwise indicated by footnote, the owner exercises sole voting and investment power over the shares.
SHARES BENEFICIALLY NAME OF BENEFICIAL OWNER TITLE OF SECURITIES OWNED(1) - -------------------------------------------------------------------------- ------------------------- ----------- DIRECTORS Edwin L. Artzt............................................................ Common Stock Henry A. Biedenharn, III.................................................. Common Stock James L. Broadhead........................................................ Common Stock Edward H. Budd............................................................ Common Stock R. Eugene Cartledge....................................................... Common Stock Mary Johnston Evans....................................................... Common Stock Gerald Grinstein.......................................................... Common Stock Jesse Hill, Jr............................................................ Common Stock Leo F. Mullin............................................................. Common Stock ESOP Preferred Stock Andrew J. Young........................................................... Common Stock EXECUTIVE OFFICERS Maurice W. Worth.......................................................... Common Stock ESOP Preferred Stock Harold C. Alger........................................................... Common Stock ESOP Preferred Stock Robert S. Harkey.......................................................... Common Stock ESOP Preferred Stock Paul G. Matsen............................................................ Common Stock ESOP Preferred Stock Ronald W. Allen........................................................... Common Stock ESOP Preferred Stock Directors and Executive Officers as a Group (18 Persons).................. Common Stock ESOP Preferred Stock
- ------------------------ (1) No person or group listed in the table, individually or in the aggregate, beneficially owned 1% or more of the issued and outstanding shares of Common Stock or ESOP Preferred Stock. (2) Includes 12,856 shares of Common Stock owned by the Emma Lou Biedenharn Foundation, of which Mr. Biedenharn is a director and trustee; and 7,524 shares of Common Stock owned by Hudson, Inc., over which Mr. Biedenharn has shared voting and investment power. (3) Includes [ ] shares, [ ] shares, [ ] shares and [ ] shares of Common Stock attributable to Mr. Biedenharn, Mr. Budd, Mrs. Evans and Mr. Grinstein, respectively, due to their selection of the Delta Common Stock Fund investment return choice under the directors' deferred compensation arrangement, described on page [4] of this proxy statement. (4) Excludes 3,500 shares which the Board of Directors granted to Mr. Grinstein during fiscal 1998, which will be issued to Mr. Grinstein when he completes his Board service. Also excludes 5 additional shares earned through the reinvestment of dividend equivalents on such deferred shares. Mr. Grinstein will not have the power to vote or dispose of these shares until they are issued. See page [4] of this proxy statement for information regarding this grant. 8 (5) Excludes 400 shares of Common Stock held by Mr. Hill's spouse as custodian for their minor grandchildren. Mr. Hill disclaims beneficial ownership of these shares. (6) Includes the following number of shares of Common Stock which the following persons or group have the right to acquire within 60 days upon the exercise of stock options: Mr. Mullin -- 200,000; Mr. Worth -- 21,000; Mr. Alger -- 5,000; Mr. Harkey -- 31,000; Mr. Matsen -- 21,500; Mr. Allen -- 209,000; and directors and executive officers as a group -- 487,500. (7) Excludes 13 shares of Common Stock and 22 shares of ESOP Preferred Stock beneficially owned by Mr. Alger's spouse. Mr. Alger disclaims beneficial ownership of these shares. (8) Excludes 200 shares of Common Stock held by Mr. Allen's spouse as custodian for her minor children, and 400 shares held by Mr. Allen's adult children and adult stepchildren. Mr. Allen disclaims beneficial ownership of these shares. (9) Excludes 1,013 shares of Common Stock and 22 shares of ESOP Preferred Stock beneficially owned by family members of directors and executive officers as to which shares they disclaim beneficial ownership. BENEFICIAL OWNERS OF MORE THAN 5% OF VOTING STOCK The following table sets forth the holdings of the only persons known to the Company to beneficially own more than five percent of any class of the Company's outstanding voting securities. [TABLE SUBJECT TO COMPLETION 8/31/98]
AMOUNT AND NATURE PERCENT OF OF BENEFICIAL CLASS ON NAME AND ADDRESS OF BENEFICIAL OWNER TITLE OF CLASS OWNERSHIP AUGUST 31, 1998 - --------------------------------------------- ------------------------- ------------------ ----------------- Wellington Management Company, LLP........... Common Stock 6,443,330(1) 75 State Street Boston, MA 02109 Vanguard/Windsor Funds, Inc.................. Common Stock 5,780,961(2) Post Office Box 2600 Valley Forge, PA 19482-2600 Primecap Management Co....................... Common Stock 4,226,000(3) 225 South Lake Ave., Suite 400 Pasadena, CA 91101-3005 Fidelity Management Trust Company............ ESOP Preferred Stock [6,654,686(4)] 100.0% 82 Devonshire Street Common Stock [3,364,205(4)] Boston, MA 02109
- ------------------------ (1) Based on a Schedule 13G dated January 13, 1998, in which Wellington Management Company, LLP reported that it had sole voting power over none of such shares, shared voting power over 434,600 of such shares and shared dispositive power over all 6,443,330 of such shares. (2) Based on a Schedule 13G dated February 2, 1998, in which Vanguard/Windsor Funds, Inc. reported that it had sole voting power and shared dispositive power over all 5,780,961 of such shares. (3) Based on a Schedule 13G dated January 31, 1998, in which Primecap Management Co. reported that it had sole voting power and sole dispositive power over all 4,226,000 of such shares. (4) These shares are held by Fidelity Management Trust Company as the trustee of the Delta Family-Care Savings Plan. THE DELTA FAMILY-CARE SAVINGS PLAN Fidelity Management Trust Company is the trustee of the Delta Family-Care Savings Plan, a qualified defined contribution pension plan under which eligible Delta personnel may contribute a portion of their earnings on a pre-tax or after-tax basis to various investment funds, including the Delta Common Stock Fund. 9 Subject to certain federal tax limitations, during fiscal 1998, Delta contributed 50 cents to a participant's Savings Plan account for every $1 contributed by that participant, up to 2% of the participant's annual earnings. The Savings Plan contains an employee stock ownership plan ("ESOP") feature pursuant to which a specified amount of the Company's contributions to a participant's account during each Savings Plan year is invested in ESOP Preferred Stock and Common Stock ("Preferred Stock Fund"). At June 30, 1998, there were approximately 57,800 participants in the Savings Plan. The Savings Plan provides that shares of ESOP Preferred Stock and Common Stock allocated to a participant's account in the Preferred Stock Fund ("Allocated Shares") will be voted by the trustee in accordance with the participant's confidential voting instructions or, if no voting instructions are received by the trustee, these shares will be voted by the trustee in its discretion. The Savings Plan further provides that shares of ESOP Preferred Stock not yet allocated to any participant's account will be voted by the trustee in proportion to the votes cast with respect to Allocated Shares for which voting instructions are received. The Savings Plan provides that shares of Common Stock attributable to a participant's account in the Delta Common Stock Fund will be voted by the trustee in accordance with the participant's confidential voting instructions or, if no instructions are received by the trustee, these shares will be voted by the trustee in its discretion. CERTAIN OTHER BENEFICIAL OWNERS In fiscal 1990, the Company entered into separate equity cross-purchase agreements with Singapore Airlines Limited ("Singapore Airlines") and SAirGroup (formerly Swissair, Swiss Air Transport Company Ltd.). Pursuant to these agreements, the Company sold 2.5 million shares of Common Stock to each of Singapore Airlines and SAirGroup, and purchased an equity interest in both of these airlines. In their equity cross-purchase agreements with Delta, Singapore Airlines and SAirGroup have agreed to vote their shares of the Company's voting stock in proportion to the votes cast by the Company's other shareowners or, at Singapore Airlines' or SAirGroup election, as recommended by the Company's Board of Directors, until (1) in the case of Singapore Airlines, the earlier of October 25, 1999 or such time as Singapore Airlines ceases to own 2% or more of the Company's outstanding voting power, or (2) in the case of SAirGroup, July 9, 1999. Singapore Airlines and SAirGroup have also agreed to certain restrictions on their right to transfer their shares of Common Stock, to acquire additional shares of the Company's voting stock and to seek to affect or influence the control of the Company's management, Board of Directors or business. The Company has agreed to similar voting and other restrictions with respect to its ownership of the voting stock of Singapore Airlines and SAirGroup. PERSONNEL & COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Personnel & Compensation Committee of the Board of Directors (the "Committee") is pleased to present this report on Delta's executive compensation program. This report describes the executive compensation policies under which the Committee makes decisions about executive pay, and discusses each principal component of the current program. It also explains the basis on which the Committee made fiscal 1998 compensation determinations for the Chief Executive Officer and other executive officers of the Company, including those named in the Summary Compensation Table shown elsewhere in this proxy statement. COMPENSATION STRATEGY AND OVERALL OBJECTIVES OF EXECUTIVE COMPENSATION PROGRAM The Committee's foremost objective is to have an executive compensation program that attracts, retains and motivates talented executives to work for the long-term advantage of the Company's primary stakeholder groups--Delta shareowners, Delta customers and the people employed by Delta. The Committee believes that an executive compensation program designed and administered with clear and strong 10 linkages to the Company's business strategy and long-term goals, particularly the creation of shareowner value, will accomplish this objective. Consistent with this philosophy, the Committee has structured the executive compensation program to achieve the following: - Enable Delta to attract and retain a group of highly qualified and experienced executives by providing a competitive total compensation package; - Focus Delta's executives on achieving aggressive financial and operating goals tied to the Company's near- and long-term business objectives; - Emphasize at risk pay by having a substantial portion of total pay consist of incentive pay components that tie executives' rewards to performance results achieved; and - Closely link the long-term interests of Delta's executives to those of its shareowners by having stock-based compensation comprise a major portion of total pay opportunities. To further support this goal, the Committee has established specific stock ownership levels for Delta executives. These principles apply to compensation determinations for all executive officers. In making decisions about actual compensation levels, the Committee considers all elements of the executive compensation program in total, and not any one element in isolation. The Committee has selected and retained an independent compensation consulting firm to assist it in evaluating and, as appropriate, revising the executive compensation package to better support the Company's business strategy and long-term goals. The Committee believes it is important to consider pay levels and practices of the companies with which Delta competes for executives to ensure that salary levels and incentive opportunities are competitive and support the objectives listed above. During fiscal 1998, the Committee compared Delta's total pay opportunities and executive compensation components to the programs in place at other major U.S. airlines, as well as those at a group that also included transportation, aerospace, service and selected consumer products companies that on average are similar in size to Delta (in terms of revenues, assets, employees, etc.). These comparisons reflect the fact that Delta's competitors for executive talent extend beyond the Company's direct business competitors. For this reason, the relevant market for pay comparisons is broader than the airline peer companies which comprise the published industry index in the Performance Graph shown elsewhere in this proxy statement. The Committee's review of executive compensation during fiscal 1998 showed that overall, total compensation opportunities for Delta's executives are below the average pay opportunities provided by other major U.S. airlines, and are further below those at the broader comparator group. As a result of this review, the Committee made certain changes to specific elements of the current program. These changes are discussed in the separate description of each component below. PRINCIPAL COMPONENTS OF EXECUTIVE COMPENSATION The primary components of Delta's executive compensation package are base salary, incentive compensation and stock-based awards. BASE SALARY The Committee's objective during fiscal 1998 was to set base salaries for Delta's executive officers at levels that are comparable to similar executive positions at other major U.S. airlines or, where appropriate, the broader comparator group described above. The Committee approves actual salaries for executives above the level of Senior Vice President, and recommends the Chief Executive Officer's salary to the Board for its approval. Actual salary levels are based on a combination of factors that includes the executive's performance, responsibilities, and experience, as well as the salaries of comparably-placed executives in the competitive market. Equity considerations relative to base pay for other Company executives also are considered. The 11 Committee exercises its discretion in making salary recommendations and decisions, and does not apply a specific formula or weighting to the factors listed above. In this connection, the Committee relies to a large extent on the Chief Executive Officer's evaluations of individual executive officer performance, after reviewing such individual performance with him. Also, because the Company does not establish an annual salary increase budget for executives, salary increases for executives do not follow a preset schedule. During fiscal 1998, the Committee increased salary rates for selected executives (other than the Chief Executive Officer, whose pay is discussed below) in light of the factors mentioned above. Overall, however, salary rates for Delta's executive officers generally remain somewhat below the average salaries for comparable positions at the major U.S. airlines and the broader comparator group discussed above. INCENTIVE COMPENSATION PLAN The purpose of the Incentive Compensation Plan is to provide additional cash compensation for achieving levels of financial and operating performance that support the Company's near- and long-term strategic objectives. The plan solidifies the link between pay and performance for Delta's executives by clearly establishing the rewards that can be earned for meeting predetermined goals. For fiscal 1998, the Company's executive officers were eligible to earn awards based on achieving specific goals for pre-tax income, operating margin and operation goals (safety, customer satisfaction and on-time performance), weighted equally. Operating margin is measured both against a preset target as well as relative to Delta's peer airlines. To emphasize the importance of continued improvement, the Committee set the fiscal 1998 target performance goals for each measure at levels above the fiscal 1997 results for those measures. Target awards for executive officers (other than the Chief Executive Officer, whose award is discussed below) ranged from 50% to 75% of base salary, and overall were somewhat below the average levels for comparable positions in both pay comparison groups discussed above. Awards earned based on the pre-tax income, operating margin and operations goals can range from a low of 16.7% of target (once a specified threshold performance level is achieved) to a maximum of 150% for exceeding all targeted goals by specified levels. Awards so earned can be further increased by up to 25%, or decreased to zero, based on individual performance. For most participants, individual performance is measured for this purpose based on the performance assessment process used for officers and other managers. The Committee established specific and measurable goals related to financial results, customer service, and operations for Senior Vice Presidents and above. For fiscal 1998, Delta's pre-tax income and operating margin results exceeded the target goals set for the year, and operating margin results were achieved at maximum based on the peer group adjustment. Results for the operations goals were at target. As a result, and after considering adjustments for individual performance, participants under the Incentive Compensation Plan earned awards that were between the target and maximum levels for the year. Amounts paid to the named executive officers (other than the Chief Executive Officer) reported in the Summary Compensation Table in this proxy statement reflect the extent of the achievement of the individual performance goals established. In addition, the awards to certain executive officers were increased in accordance with the Committee's discretion to make such adjustments. In determining final awards, the Committee notes that the Company's overall performance for fiscal 1998 was strong, and that Delta improved its financial condition over the prior year. The Company again achieved record levels of operating and net income, reduced its long-term debt, increased shareowners' equity and enhanced its competitive position. STOCK-BASED AWARDS The potential value of long-term incentive opportunities comprises the largest portion of the total compensation package for executive officers. The Committee strongly believes this approach to total compensation opportunities provides the appropriate focus for those executives who are charged with the greatest responsibility for managing the Company and achieving success for all of Delta's stakeholders. 12 Stock-based compensation awards are made under the 1989 Stock Incentive Plan. This plan provides that employees selected by the Committee can receive awards of stock options, stock appreciation rights, restricted stock and other stock-based awards; award types can vary from year to year at the Committee's discretion. The plan has been approved by shareowners, initially in 1988 and most recently when the plan was amended in October 1997. In January 1998, the Committee granted non-qualified stock options to executive officers (other than the Chief Executive Officer) and selected other employees giving them the right to purchase shares of Common Stock at an exercise price equal to $117.25, the closing price of the Common Stock on the New York Stock Exchange on the date of grant. Stock options granted in fiscal 1998 have a term of ten years, and become exercisable in full on the first anniversary of the grant date. No stock options granted under the plan have been repriced, nor does the Committee intend to consider option repricing in the future. To determine the number of stock options to grant to each participant, the Committee has established award size guidelines that vary by level of responsibility. The guidelines generally fall between the range of average award opportunities at the other major U.S. airlines and those provided for comparable positions at the broader comparator group used for fiscal 1998 pay comparisons. An annualized long-term award value is determined for each eligible employee based on the applicable award level, and is converted to a number of stock options by using the Black-Scholes option pricing model. The Committee may apply its judgment to adjust the formula award based on individual performance, contribution to Company success, and equity relative to other plan participants. The Committee may also consider other factors from time-to-time in making stock option awards. The Committee also made stock option and restricted stock grants to executive officers (other than the Chief Executive Officer, whose awards are discussed below) hired during the fiscal year. Stock option terms generally match those for the grants described above (e.g., exercise price at fair market value as of the date of grant, ten-year option term, etc.); however, these stock options become exercisable in stages over five years following the grant date. Restricted stock grants vest in stages over three or five years. STOCK OWNERSHIP GUIDELINES In keeping with the principles outlined earlier in this report, the Committee advocates stock ownership by Delta's executives. The Committee believes that the interests of executives and Delta's shareowners will be more closely aligned if executives own meaningful amounts of Delta stock. For this reason, the Committee adopted guidelines requiring that over a period of time executive officers own stock worth either two or three times base salary, based on level of responsibility. Stock in the form of unexercised options or unvested restricted stock does not count for purposes of measuring compliance with the ownership guidelines. POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT Section 162(m) of the Internal Revenue Code generally limits to $1 million the annual corporate federal income tax deduction for certain "non-performance based" compensation paid to the chief executive officer or any of the four other highest paid officers of a publicly-held corporation. The Committee has carefully considered the Company's executive officer compensation program in light of the applicable rules, and believes that compliance with those rules generally is in the Company's best interests. Accordingly, the material terms of both the Incentive Compensation Plan and the 1989 Stock Incentive Plan have been approved by shareowners. The Committee reserves the right, however, to make exceptions to this practice when it determines that doing so will better support the Company's compensation policies or its business strategy and long-term goals. FISCAL YEAR 1998 COMPENSATION OF THE CHIEF EXECUTIVE OFFICER Mr. Allen was Chairman and Chief Executive Officer of the Company for one month during fiscal 1998 until his retirement on July 31, 1997. For his month of service, Mr. Allen received one-twelfth of his annual salary of $575,000. He received a lump sum severance payment and other benefits under a 13 Retirement Agreement with Delta, details of which are described under the section entitled "Agreement with Mr. Allen" elsewhere in this proxy statement. Mr. Worth served as acting Chief Executive Officer during the period between Mr. Allen's retirement and the date Mr. Mullin became Delta's President and Chief Executive Officer; thereafter, he served as Delta's Chief Operating Officer. During the period in which he served as acting Chief Executive Officer, Mr. Worth's salary was based on an annual rate of $450,000. On August 14, 1997, Delta entered into an employment agreement with Mr. Mullin to become President and Chief Executive Officer of the Company. The Committee and the Board of Directors approved Mr. Mullin's employment agreement after an extensive search had been conducted by the Board with the assistance of an executive search firm. In determining Mr. Mullin's compensation, the Board focused on the importance of hiring a President and Chief Executive Officer with the strategic, financial and leadership skills who could take the actions necessary to improve Delta's competitiveness and profitability. The Board also recognized the need to consider Mr. Mullin's compensation at his former employer as well as benefits he forfeited upon his resignation. The terms of Mr. Mullin's employment agreement are set forth in the section entitled "Employment Agreement with Mr. Mullin" elsewhere in this proxy statement. Mr. Mullin's base salary, stock option and restricted stock awards for fiscal 1998 were governed by the terms of this agreement, which also provided for a guaranteed 1998 annual incentive award equal to Mr. Mullin's base salary. Because the Committee determined that Delta's performance during fiscal 1998 was outstanding, Mr. Mullin's incentive compensation award was increased to $[ ]. In making this determination, the Committee noted the numerous improvements in many areas since Mr. Mullin became President and Chief Executive Officer. Among the factors the Committee considered (without specific weighting) are Delta's record net income and other excellent financial results in fiscal 1998, significant improvements in customer service and operational measures, substantial increases in employee morale, the selection and hiring of key executives, improvement of the Company's competitive position and Delta's strong stock price. OTHER MATTERS During fiscal 1998, the Board of Directors adopted a formal process by which this Committee conducts an annual and independent evaluation of the Chief Executive Officer's performance that involves written feedback from all directors. The Committee reviewed the results of this evaluation with the Board at its July 1998 meeting. Respectfully submitted, THE PERSONNEL & COMPENSATION COMMITTEE R. Eugene Cartledge, CHAIRMAN James L. Broadhead (Committee member until November 1, 1997) Edward H. Budd Mary Johnston Evans Gerald Grinstein 14 EXECUTIVE COMPENSATION The following table sets forth certain information regarding compensation to the Company's Chief Executive Officer, its four other most highly compensated executive officers at June 30, 1998 and its former Chief Executive Officer, for the periods indicated. SUMMARY COMPENSATION TABLE [TABLE/NOTES SUBJECT TO REVISION/COMPLETION]
LONG TERM COMPENSATION --------------------------------------- ANNUAL COMPENSATION AWARDS PAYOUTS ----------------------------------- ------------------------ ------------- OTHER RESTRICTED SECURITIES ALL OTHER ANNUAL STOCK UNDERLYING LTIP COMPEN- SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS SATION NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2) ($)(3) (#)(4) ($)(5) ($)(6) - ----------------------------- --------- --------- --------- ------------- ----------- ----------- ------------- ----------- Leo F. Mullin................ 1998 571,250 [ ] [ ] 526,500 500,000 0 [ ] President and Chief Executive Officer(7) Maurice W. Worth............. 1998 462,600 [ ] 10,110 0 36,500 0 14,892 Chief Operating Officer(7) 1997 333,333 205,743 8,639 0 21,000 0 13,700 1996 282,500 237,500 7,123 0 26,000 0 11,823 Harold C. Alger.............. 1998 367,500 [ ] 10,055 0 16,500 0 14,792 Executive Vice President -- 1997 333,333 205,743 8,639 0 21,000 0 13,700 Operations 1996 300,000 237,500 7,909 0 26,000 0 12,796 Robert S. Harkey............. 1998 270,833 [ ] 7,182 0 10,500 0 10,680 Senior Vice President -- 1997 243,333 159,556 6,170 0 14,000 0 9,893 General Counsel & Secretary 1996 230,000 163,875 6,058 0 17,000 0 9,804 Paul G. Matsen............... 1998 210,000 [ ] 5,746 0 9,100 0 9,824 Senior Vice President -- Alliance Strategy & Development(8) Ronald W. Allen.............. 1998 47,917 0 [ ] 0 0 0 [ ] Chairman of the Board, 1997 562,500 0 14,183 0 54,000 0 20,568 President and Chief 1996 475,000 532,594 12,517 0 66,000 0 15,504 Executive Officer (retired effective July 31, 1997)(7)
- ------------------------ (1) Represents the incentive compensation award, if any, for services rendered during the specified fiscal year. Amounts earned in fiscal 1998 were paid in the first quarter of fiscal 1999. (2) The amount shown for Mr. Mullin represents reimbursements for taxes relating to Delta's payments, in accordance with his Employment Agreement, of relocation expenses and legal fees. The amounts shown for Messrs. Worth, Alger, Harkey and Matsen for fiscal 1998 represent reimbursements for taxes related to Delta's payment of life insurance premiums. No person listed in the Summary Compensation Table other than Mr. Allen received compensation in the form of personal benefits in excess of the lesser of $50,000 or 10% of the total of his annual salary and bonus. During fiscal 1998, Mr. Allen received [$ ] in personal benefits, of which $25,565 related to the installation and improvements of his residential security systems and $16,519 represents reimbursement for taxes related to Delta's payment of life insurance premiums. 15 (3) On August 14, 1997, the Personnel & Compensation Committee granted Mr. Mullin 6,000 shares of restricted stock. These shares vest in three equal installments on July 1, 1998, 1999 and 2000, although the shares are subject to earlier vesting or forfeiture in certain circumstances. Cash dividends on the restricted stock are reinvested in additional shares of Common Stock which are subject to the same restrictions as the original award. The value of this award shown in the table is based on the closing price of the Common Stock on the New York Stock Exchange on the grant date. At June 30, 1998, the number and value (based on the $129.25 closing price of the Common Stock on the New York Stock Exchange on June 30, 1998) of the aggregate restricted stock holdings of the following persons named in the Summary Compensation Table was: Mr. Mullin -- 6,007 shares valued at $776,405; Mr. Worth -- 2,420 shares valued at $312,785; Mr. Alger -- 2,824 shares valued at $365,002; Mr. Harkey -- 1,916 shares valued at $247,643; and Mr. Matsen -- 1,008 shares valued at $130,284. The restrictions on Mr. Allen's fiscal 1995 restricted stock award lapsed at the time of his retirement pursuant to the terms of his Retirement Agreement (discussed on page [20] of this proxy statement). (4) Represents the number of shares of Common Stock subject to stock options awarded under the Company's 1989 Stock Incentive Plan. (5) The Company does not have a plan which meets the definition of a Long Term Incentive Plan. (6) The amount shown for Mr. Mullin represents Delta's payments of [$ ] for Mr. Mullin's relocation expenses, and $61,947 for his legal fees in connection with the preparation of his Employment Agreement (described at pages [20-21] of this proxy statement). During fiscal 1998, Delta paid supplemental group life insurance premiums, and made contributions under the Savings Plan for the persons named in the Summary Compensation Table as follows: Mr. Mullin -- none; Mr. Worth -- $11,592 and $3,200, respectively; Mr. Alger -- $11,592 and $3,200, respectively; Mr. Harkey -- $8,280 and $2,400, respectively; Mr. Matsen -- $6,624 and $3,200, respectively; and Mr. Allen -- $19,044 and $958, respectively. Pursuant to Mr. Allen's Retirement Agreement, during fiscal 1998, Delta also paid to, or on behalf of, Mr. Allen, a lump sum of $[ ], advisory director fees of $22,917, consulting fees of $[ ], legal fees of $210,000 in connection with the preparation of his Retirement Agreement, and expenses of $[ ] associated with providing Mr. Allen an office and secretary. In addition, the Company incurred one-time costs of $[ ] to design, construct and furnish Mr. Allen's office. See page [20] of this proxy statement for information regarding Mr. Allen's Retirement Agreement. (7) Mr. Mullin was elected President and Chief Executive Officer of Delta effective August 14, 1997. Mr. Worth served as acting Chief Executive Officer from August 1, 1997 to August 14, 1997. Mr. Allen retired effective July 31, 1997. (8) Mr. Matsen became an executive officer in November 1997. Accordingly, information regarding his compensation for fiscal 1996 and 1997 is not included. The following table sets forth certain information regarding stock options granted during fiscal 1998 to the persons named in the Summary Compensation Table. 16 OPTION/SAR GRANTS IN LAST FISCAL YEAR
GRANT DATE INDIVIDUAL GRANTS (1) VALUE ------------------------------------------------------ ----------- NUMBER OF % OF TOTAL SECURITIES OPTIONS/SARS UNDERLYING GRANTED TO EXERCISE OR GRANT DATE OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT NAME GRANT DATE GRANTED(#) FISCAL YEAR ($/SH) (2) DATE VALUE($)(3) - ------------------------------ ---------- ------------ ------------ ----------- ---------- ----------- Leo F. Mullin................. 08/14/97 500,000(2) 5.08 88.3125 08/14/2007 16,889,000 Maurice W. Worth.............. 01/22/98 36,500(3) 0.37 117.2500 01/21/2008 1,351,230 Harold C. Alger............... 01/22/98 16,500(3) 0.17 117.2500 01/21/2008 610,830 Robert S. Harkey.............. 01/22/98 10,500(3) 0.11 117.2500 01/21/2008 388,710 Paul G. Matsen................ 01/22/98 9,100(3) 0.09 117.2500 01/21/2008 336,882 Ronald W. Allen............... N/A 0 N/A N/A N/A N/A
- ------------------------ (1) None of the grants made during fiscal 1998 included stock appreciation rights. (2) The exercise price for Mr. Mullin's grant is equal to the opening price of the Common Stock on the New York Stock Exchange on the grant date. These stock options become exercisable as to 200,000 shares on August 14, 1998, and as to an additional 100,000 shares on each of August 14, 1999, 2000 and 2001. The exercise price for grants to Messrs. Worth, Alger, Harkey and Matsen is equal to the closing price of the Common Stock on the New York Stock Exchange on January 22, 1998, the grant date. These grants become exercisable on January 22, 1999. (3) The hypothetical grant date present value was determined using the Black-Scholes option pricing model and, consistent with the Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," include the following material assumptions and adjustments:
EXPECTED INTEREST VOLATILITY DIVIDEND DATE OPTION BECOMES EXERCISABLE OPTION TERM RATE(%)(a) RATE(%)(b) YIELD(%)(c) - ----------------------------------- -------------------- ------------------- ----------- ----------- August 14, 1998.................... 4.6 years 6.14 26.62 0.23 August 14, 1999.................... 5.6 years 6.19 26.05 0.23 August 14, 2000.................... 6.6 years 6.26 26.24 0.23 August 14, 2001.................... 7.6 years 6.29 26.94 0.23 January 22, 1999................... 4.6 years 5.41 25.60 0.17
(a) The interest rate represents the interest rate on a U.S. Treasury security on the date of grant with a maturity date corresponding to the expected option term. (b) The volatility rate is calculated using monthly Common Stock closing price and dividend information for the period equal to the expected option term that ended on the grant date. (c) The dividend yield represents the Common Stock's current $0.20 per share annualized dividends divided by the fair market value of the Common Stock on the grant date. The following table sets forth certain information regarding stock options exercised by the persons named in the Summary Compensation Table during fiscal 1998, as well as the number and value of their unexercised in-the-money stock options and stock appreciation rights at June 30, 1998 (based on the $129.25 closing price of the Common Stock on the New York Stock Exchange on June 30, 1998). None of the exercises described below involved the exercise of stock appreciation rights. 17 AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS AT OPTIONS/SARS SHARES VALUE FY-END(#) AT FY-END($) ACQUIRED ON REALIZED -------------------------- --------------------------- NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - --------------------------------------- ----------- ---------- ----------- ------------- ------------ ------------- Leo F. Mullin.......................... 0 0 0 500,000 0 20,468,750 Maurice W. Worth....................... 0 0 21,000 36,500 984,375 438,000 Harold C. Alger........................ 16,000 490,000 5,000 16,500 234,375 198,000 Robert S. Harkey....................... 0 0 56,000 10,500 3,049,625 126,000 Paul G. Matsen......................... 2,500 153,906 21,500 9,100 1,203,250 109,200 Ronald W. Allen........................ 89,000 6,319,000 209,000 0 13,039,625 0
RETIREMENT AND OTHER PLANS The following table shows the estimated annual pension payable to a non-pilot employee (before reduction for Social Security benefits and not accounting for the limitations discussed below), including the persons named in the Summary Compensation Table, assuming retirement at the end of fiscal 1998 at the normal retirement age of 65 after selected periods of service under the Delta Family-Care Retirement Plan ("Pension Plan"), a non-contributory qualified defined benefit plan. The benefits in the table would be paid in the form of a joint and 50% survivor annuity. PENSION PLAN TABLE
FINAL 25 YEARS 30 OR MORE AVERAGE 10 YEARS OF 15 YEARS OF 20 YEARS OF OF YEARS OF EARNINGS SERVICE SERVICE SERVICE SERVICE SERVICE - ------------ ----------- ----------- ----------- ---------- ---------- 200,000 40,000 60,000 80,000 100,000 120,000 400,000 80,000 120,000 160,000 200,000 240,000 600,000 120,000 180,000 240,000 300,000 360,000 800,000 160,000 240,000 320,000 400,000 480,000 1,000,000 200,000 300,000 400,000 500,000 600,000 1,200,000 240,000 360,000 480,000 600,000 720,000 1,400,000 280,000 420,000 560,000 700,000 840,000 1,600,000 320,000 480,000 640,000 800,000 960,000 1,800,000 360,000 540,000 720,000 900,000 1,080,000 2,000,000 400,000 600,000 800,000 1,000,000 1,200,000
Final average earnings, for purposes of the Pension Plan, are the average of an employee's annual earnings, based on the employee's salary and payments received under the Company's Incentive Compensation Plan or broad-based profit sharing programs, for the 36 consecutive months in the 120-month period immediately preceding retirement which produces the highest average earnings. The annual pension benefit is determined by multiplying final average earnings by 60%, and then reducing that amount for service of less than 30 years and by 50% of the participant's primary Social Security benefit payable to the employee. The 50% Social Security offset is reduced for service of less than 30 years with Delta. For purposes of pension benefits under the Pension Plan and the supplemental non-qualified retirement plans discussed below, the years of service for the persons named in the Summary Compensation Table are as 18 follows: Mr. Mullin -- 22* years; Mr. Worth -- 37 years; Mr. Alger -- 32 years** ; Mr. Harkey -- 30 years; and Mr. Matsen -- 4 years. Employees designated by the Personnel & Compensation Committee, including the persons named in the Summary Compensation Table, are eligible to participate in supplemental, non-qualified retirement plans which provide for benefits which may not be paid under the Pension Plan due to limits on the amount of compensation and benefits for qualified plans established by the Internal Revenue Code of 1986, as amended. The Delta Family-Care Disability and Survivorship Plan ("Survivorship Plan") for eligible non-pilot personnel provides monthly short term disability and survivorship benefits based on a participant's final average earnings and years of service, and monthly long term disability benefits based on a participant's final average earnings. The Survivorship Plan also provides a lump sum death benefit of up to $50,000. In general, final average earnings, for purposes of the Survivorship Plan, are (1) for purposes of determining benefits during the first six months of disability, the employee's monthly earnings, based on the employee's salary at the time of disability; and (2) for other purposes, the average of the employee's monthly earnings, based on the employee's salary and payments received under the Company's Incentive Compensation Plan or broad-based profit sharing programs, over specified periods. In the event the employee dies while employed by the Company, the employee's eligible family members are entitled to receive an amount equal to 50%, 60% or 70% of final average earnings (depending upon whether the employee has one, two, or three or more eligible family members, respectively), subject to reduction for service of less than 30 years with Delta and certain benefits payable under Social Security, the Pension Plan and other sources. Any benefits which may not be paid under the Survivorship Plan due to Internal Revenue Code limits on the amount of compensation and benefits for such plan, including a post-retirement lump sum death benefit of up to $50,000, are provided under a supplemental plan for employees designated by the Personnel & Compensation Committee, including the persons named in the Summary Compensation Table. Mr. Allen retired effective July 31, 1997, with 34 years of service. See pages [21-22] of this proxy statement for information regarding Mr. Allen's retirement and survivor benefits under the Retirement Agreement. - ------------------------ * Pursuant to Mr. Mullin's Employment Agreement, described on pages [20-21] of this proxy statement, under certain circumstances, Mr. Mullin will receive a retirement benefit equal to that which he would have earned under the Company's defined benefit plans, calculated crediting him with 22 years of service plus the number of years of service attributable to his actual service with the Company. At June 30, 1998, Mr. Mullin had ten months of actual service. ** For 27 of his 32 years of service, Mr. Alger accrued a benefit under non-contributory qualified retirement plans for pilot personnel established by the Company pursuant to collective bargaining agreements. The estimated annual pension benefit payable to Mr. Alger under these plans at normal pilot retirement age of 60 and with 25 or more years of service is 60% of his final average earnings under these plans, reduced by 50% of the primary Social Security benefit that would have been payable to him had he retired in 1973 at age 65. The normal form of benefit payment is a joint and 50% survivor annuity but the benefit may be paid in a single life annuity with spousal consent. The Company has agreed that Mr. Alger's total benefits will be no less than they would have been had he been a participant in the Pension Plan from his original date of employment with the Company. Thus, a portion of Mr. Alger's total retirement benefits will be paid from the pilot plans, and the remainder will be paid from the Pension Plan and the non-qualified plans described herein. 19 OTHER MATTERS INVOLVING DIRECTORS AND EXECUTIVE OFFICERS COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The members of the Personnel & Compensation Committee are Mr. Cartledge, who serves as Chairman, Mr. Broadhead (until November 1, 1997), Mr. Budd, Mrs. Evans and Mr. Grinstein. Mr. Grinstein was an executive officer of Western Air Lines, Inc. ("Western") from 1985 through March 1987. Western became a wholly owned subsidiary of the Company on December 18, 1986, and was merged into Delta on April 1, 1987. RETENTION PROTECTION AGREEMENTS Delta has entered into Retention Protection Agreements ("Retention Agreements") with all of the persons named in the Summary Compensation Table (other than Mr. Allen) and certain other management personnel. These agreements provide certain benefits that vary by participation level to covered individuals if there is a Qualifying Event (as defined) during the term of the Retention Agreement. A Qualifying Event occurs if, within a specified period after a Change in Control (as defined), (1) there is an involuntary termination of the individual's employment by Delta, other than for Cause (as defined) or due to the individual's death or disability; or (2) the individual voluntarily terminates his employment for Good Reason (as defined). A Qualifying Event also occurs if there is a Change in Control within one year after a termination under either circumstance described in the preceding sentence as a result of actions taken by Delta in anticipation of a Change in Control. A Change in Control is generally defined as (1) the acquisition of 20% or more of the combined voting power of Delta stock; (2) a change in the composition of the Board of Directors such that the persons who were directors at the beginning of any two-year period (and any new director whose election was approved by at least two-thirds of directors then still in office who either were directors at the beginning of the period or whose election was so approved) cease to constitute a majority of the Board; or (3) a reorganization, merger or consolidation of Delta, or the Company's shareowners' approval of a sale of all or substantially all the assets of Delta, other than in certain specified circumstances. The benefits provided upon a Qualifying Event for executive officers include a lump sum payment of either two or three times the sum of the individual's annual base salary rate and target incentive compensation award; the present value of the individual's non-qualified pension benefits (with certain additional age and service credits); certain retiree medical and monthly survivor coverage (or the present value equivalent, depending on the individual's age) and life insurance coverage; certain flight benefits; and payment of any compensation deferred under Delta's Executive Deferred Compensation Plan. In addition, upon a Change in Control, pro rata target incentive compensation awards will be paid under the Incentive Compensation Plan, and all outstanding stock options, restricted stock and similar awards granted under the 1989 Stock Incentive Plan will immediately vest and become nonforfeitable and exercisable. The Retention Agreements also provide for reimbursement to the individual for taxes on certain welfare benefits as well as any excise taxes paid under Section 4999 of the Internal Revenue Code and related taxes thereon. EMPLOYMENT AGREEMENT WITH MR. MULLIN The Board of Directors elected Mr. Mullin as Delta's President and Chief Executive Officer effective August 14, 1997. The Company and Mr. Mullin have entered into an agreement ("Employment Agreement") regarding Mr. Mullin's employment with Delta. The Employment Agreement provides for Mr. Mullin's employment through the later of August 31, 2002, or the first anniversary of the date written notice of intent to terminate is provided by either party. The Employment Agreement set Mr. Mullin's initial annual salary at $650,000, subject to possible future increases; and provides Mr. Mullin the opportunity to receive an annual incentive award under the 20 Company's Incentive Compensation Plan, with a guaranteed award for fiscal 1998 equal to his base salary. The Employment Agreement also provides for Mr. Mullin to participate in the Company's employee benefit programs, including insurance, retirement and fringe benefits, on terms no less favorable than the terms offered to other senior executives of the Company; for the Company to pay certain costs incurred by Mr. Mullin in connection with his relocation to the Atlanta area as well as his reasonable legal fees in connection with the preparation of the Employment Agreement; and for Mr. Mullin to receive from the Company a retirement benefit equal to that which Mr. Mullin would have earned under the Company's defined benefit plans, calculated crediting Mr. Mullin with 22 years of service plus the number of years of service attributable to his actual service with the Company. The retirement benefit will vest on August 14, 2000, and will be offset by benefits provided Mr. Mullin under the Company's qualified and non-qualified defined benefit plans, as well as by Mr. Mullin's Social Security benefits. Special provisions apply upon Mr. Mullin's retirement prior to age 60 or death prior to commencement of benefits. In the event of the termination of Mr. Mullin's employment during the term of the Employment Agreement by Delta without Cause (as defined), or by Mr. Mullin for Good Reason (as defined), the Employment Agreement generally provides that Mr. Mullin will be entitled to a lump sum payment equal to two times the sum of his final annual salary and the greater of his most recent target or actual annual incentive award; to a prorated target incentive award; and to continuation of medical and other benefits for two years after termination. In addition, upon termination under these circumstances, Mr. Mullin will be credited with two additional years of service for purposes of the retirement benefit described above, and to immediate vesting of the retirement benefit and of stock options and restricted stock. For these purposes, Cause and Good Reason are generally defined in a manner similar to the definitions of these terms in the Retention Agreements described above. In the event of a Change in Control of the Company, as defined in the Retention Agreements, the Employment Agreement provides that Mr. Mullin will be entitled to all of the benefits afforded to senior executives under the Retention Agreements. In addition, in the event of a Change in Control, the definition of Good Reason applicable to Mr. Mullin will include Mr. Mullin's resignation from the Company during the sixty-day period commencing on the first anniversary of the Change in Control. On August 14, 1997, Delta granted to Mr. Mullin under the Company's 1989 Stock Incentive Plan non-qualified stock options to purchase 500,000 shares of Common Stock at an exercise price of $88.3125 per share, the opening price of the Common Stock on the New York Stock Exchange on that date; and 6,000 shares of restricted stock. The stock options become exercisable as to 200,000 shares on August 14, 1998, and as to an additional 100,000 shares on each of August 14, 1999, 2000 and 2001. The restricted shares granted to Mr. Mullin vest in three equal installments on July 1, 1998, 1999 and 2000. Pursuant to Mr. Mullin's Employment Agreement, an agent of the Company purchased Mr. Mullin's home in Chicago. The Company's purchase price was $1,175,000, which is equal to the price an unrelated third party paid to purchase the house from the Company. AGREEMENT WITH MR. ALLEN Effective July 31, 1997, Mr. Allen retired as Chairman of the Board, President and Chief Executive Officer, and resigned as a director of the Company. In connection with Mr. Allen's retirement and resignation, Delta and Mr. Allen entered into an agreement ("Retirement Agreement") which replaced and superseded Mr. Allen's employment agreement with Delta. Under the Retirement Agreement, Mr. Allen agreed to certain restrictions on his ability to provide services to major U.S. airlines that compete with Delta, and to restrictions on his solicitation of employment of Delta employees and disclosure of confidential information relating to Delta. In addition, Mr. Allen and Delta agreed under the Retirement Agreement to release each other from any claims relating to Mr. Allen's employment with or retirement from Delta. The Retirement Agreement provides that Mr. Allen will serve as a consultant to Delta for seven years, subject to extension in certain circumstances to eight years, in exchange for an annual consulting fee of $500,000. 21 In settlement of Mr. Allen's rights under his prior employment agreement and under certain employee benefit plans and arrangements, and in return for Mr. Allen's undertakings as described above, Delta agreed under the Retirement Agreement to provide Mr. Allen with a lump sum severance payment of $4,586,515, as well as supplemental pension benefits sufficient to provide Mr. Allen with a total annual retirement benefit (including his benefits under Delta's existing qualified and non-qualified pension plans, but before plan related reductions such as the Social Security offset and preretirement survivor benefit charges) of $765,000 per year. In addition, Delta agreed to provide Mr. Allen with retiree life insurance coverage as though he had retired at age 65; survivor benefits under the Company's Disability and Survivorship Plan (see page [19]) based on assumed final average earnings for purposes of that plan of $106,333 per month; and certain fringe benefits, including flight privileges, office space and secretarial services. The Retirement Agreement also provides for Mr. Allen's election as a lifetime advisory director of Delta, and for the Company to pay Mr. Allen's reasonable legal fees in connection with the preparation of the Retirement Agreement. Pursuant to the Retirement Agreement, upon his retirement and resignation, all stock options held by Mr. Allen became nonforfeitable, and restrictions on all of Mr. Allen's shares of restricted stock lapsed. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires Delta's directors, executive officers and persons who beneficially own more than 10% of a registered class of the Company's equity securities ("Reporting Persons") to file certain reports concerning their beneficial ownership of Delta's equity securities. Delta believes that during fiscal 1998 all Reporting Persons complied with their Section 16(a) filing obligations, except that a Form 4 reporting a sale of Common Stock in connection with a stock option exercise by Mr. Matsen was filed late. 22 PERFORMANCE GRAPH The following graph compares the cumulative total return on the Common Stock with the cumulative total returns on two published indices, the Standard & Poor's 500 Stock Index and the Standard & Poor's Airline Index, over the preceding five fiscal years. CUMULATIVE TOTAL RETURNS (1) ON $100 INVESTED ON JUNE 30, 1993 [Graphic]
DATE DELTA S&P 500 S&P AIRLINE (2) - ---------------------------------------------------------------------- --------- --------- ----------------- June 30, 1993......................................................... $ 100.00 $ 100.00 $ 100.00 June 30, 1994......................................................... $ 93.92 $ 101.44 $ 91.50 June 30, 1995......................................................... $ 153.63 $ 127.81 $ 110.64 June 30, 1996......................................................... $ 173.36 $ 160.95 $ 133.98 June 30, 1997......................................................... $ 173.02 $ 216.70 $ 138.68 June 30, 1998......................................................... $ 271.13 $ 281.90 $ 248.24
- ------------------------ (1) Cumulative total return is defined as stock price appreciation plus dividends paid, assuming reinvestment of all such dividends. (2) The Standard & Poor's Airline Index consists of AMR Corporation, Delta, Southwest Airlines and US Airways Group. 23 PROPOSAL 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS The Board of Directors, upon recommendation of the Audit Committee, has reappointed the firm of Arthur Andersen LLP as independent auditors for the Company for fiscal 1999, subject to ratification by the shareowners. Arthur Andersen LLP has served as the Company's independent auditors since 1949. A representative of Arthur Andersen LLP is expected to be present at the Annual Meeting, and will have an opportunity to make a statement if he or she so desires and to respond to questions. If the shareowners do not ratify the selection of Arthur Andersen LLP, the Board of Directors will reconsider the selection of independent auditors. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL. PROPOSAL 3 AMENDMENT OF THE CERTIFICATE OF INCORPORATION A. DESCRIPTION OF PROPOSED AMENDMENT The Board of Directors has approved, and is recommending to the shareowners for approval at the Annual Meeting, an amendment to Article Fourth of the Certificate of Incorporation (1) to increase the number of shares of Common Stock which the Company is authorized to issue from 150 million, par value $3.00 per share, to 450 million, par value $1.50 per share; and (2) to effect a two-for-one stock split by changing each issued share of Common Stock into two shares of Common Stock, par value $1.50 per share. The Board of Directors determined that this amendment is advisable and should be considered at the Annual Meeting to be held October 22, 1998. The full text of the proposed amendment to the Certificate of Incorporation is set forth in Appendix A to this proxy statement. The Company is currently authorized to issue 20 million shares of preferred stock, par value $1.00 per share. The proposed amendment will not affect this authorization. B. PURPOSES AND EFFECTS OF PROPOSED INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK The proposed amendment would increase the number of shares of Common Stock which the Company is authorized to issue from 150 million to 450 million. The additional 300 million shares would be a part of the existing class of Common Stock and, if and when issued, would have the same rights and privileges as the shares of Common Stock presently issued and outstanding. At August 31, 1998, [xx,xxx,xxx] shares of Common Stock were outstanding; [x,xxx,xxx] shares of Common Stock were held in treasury; and [xx,xxx,xxx] shares of Common Stock were reserved for issuance under the Company's broad-based stock option plans, the 1989 Stock Incentive Plan and the Non- Employee Directors' Stock Plan; and [x,xxx,xxx] shares of Common Stock were reserved for conversion of the Company's outstanding ESOP Preferred Stock. The Board of Directors believes it is desirable to increase the number of shares of Common Stock the Company is authorized to issue to accomplish the proposed stock split, to reserve an amount of shares sufficient to satisfy the requirements set forth above and to provide the Company with adequate flexibility in the future. Except for the proposed stock split, the Company has no present commitments, agreements or intent to issue additional shares of Common Stock, other than with respect to currently reserved shares, or shares which may be issued or transferred from treasury under Delta's employee benefit, stock option and dividend reinvestment plans. The proposed stock split cannot occur unless shareowners approve the proposed amendment to Article Fourth of the Certificate of Incorporation. 24 The proposed amendment to Article Fourth would permit the issuance of additional shares without further action or authorization by shareowners (except as may be required in a specific case by law or New York Stock Exchange rules). The Board believes it is prudent for the Company to have this flexibility. The holders of Common Stock of the Company are not entitled to preemptive rights or cumulative voting. Thus, the issuance of additional shares of Common Stock might dilute, under certain circumstances, the ownership and voting rights of shareowners. The proposed increase in the number of shares of Common Stock the Company is authorized to issue is not intended to inhibit a change in control of the Company. The availability for issuance of additional shares of Common Stock could discourage, or make more difficult, efforts to obtain control of the Company. For example, the issuance of shares of Common Stock in a public or private sale, merger or similar transaction would increase the number of outstanding shares, thereby possibly diluting the interest of a party attempting to obtain control of the Company. The Company is not aware of any pending or threatened efforts to acquire control of the Company. C. PURPOSES AND EFFECTS OF PROPOSED TWO-FOR-ONE COMMON STOCK SPLIT The Board of Directors anticipates that the increase in the number of outstanding shares of Common Stock of the Company resulting from a two-for-one stock split will place the market price of the Common Stock in a range more attractive to investors, particularly individuals, and may result in a broader market for the shares. The Common Stock is currently listed for trading on the New York Stock Exchange, and the Company will apply for listing of the additional shares of Common Stock to be issued in the event the proposed stock split is approved. If the proposed amendment is adopted, each shareowner of record at 5:00 p.m., eastern standard time, on November 2, 1998, would be the record owner of, and entitled to receive, a certificate or certificates representing one additional share of Common Stock for each share of Common Stock then owned of record by such shareowner. In addition, certificates representing shares of Common Stock, $3.00 par value, would be deemed to represent the same number of shares of Common Stock having a par value of $1.50 per share. Consequently, certificates representing shares of Common Stock should be retained by each shareowner and should not be returned to the Company or to its transfer agent. It will not be necessary to submit outstanding certificates for exchange. If effected, the proposed stock split will result in an adjustment to each outstanding share of ESOP Preferred Stock by changing (1) the conversion price from $83.94 to $41.97; (2) the conversion ratio from 0.8578 to 1.7155; and (3) the voting rights from one vote to two votes. Thus, the proposed stock split would not dilute the economic interest of the holders of the ESOP Preferred Stock, nor would it have any effect on the proportionate voting rights of such holders. In addition, appropriate adjustments will be made to the Company's 1989 Stock Incentive Plan and broad-based stock option plans. The Company has been advised by counsel that the proposed stock split would result in no gain or loss or realization of taxable income to owners of Common Stock under existing United States federal income tax laws. The cost basis for tax purposes of each new share and each retained share of Common Stock would be equal to one-half of the cost basis for tax purposes of the corresponding share immediately preceding the stock split. In addition, the holding period for the additional shares issued pursuant to the stock split would be deemed to be the same as the holding period for the original share of Common Stock. The laws of jurisdictions other than the United States may impose income taxes on the issuance of the additional shares and shareowners are urged to consult their tax advisors. If shareowners dispose of their shares subsequent to the stock split, they may pay higher brokerage commissions on the same relative interest in the Company because that interest is represented by a greater number of shares. Shareowners may wish to consult their respective brokers to ascertain the brokerage commission that would be charged for disposing of the greater number of shares. 25 If the proposed amendment is adopted, the shareowners' equity accounts of the Company would not change. The par value of a share of Common Stock after the split would be $1.50 per share. The number of shares issued and outstanding, reserved for issuance and held in the treasury would double. D. EFFECTIVE DATE OF PROPOSED AMENDMENT AND ISSUANCE OF SHARES FOR STOCK SPLIT The proposed amendment to Article Fourth of the Certificate of Incorporation of the Company, if adopted by the required vote of shareowners, will become effective at 5:00 p.m., eastern standard time, on November 2, 1998, the proposed record date for the determination of the owners of Common Stock entitled to receive a certificate or certificates representing the additional shares. Please do not destroy or send your present Common Stock certificates to the Company. If the proposed amendment is adopted, those certificates will remain valid for the number of shares shown thereon, and should be carefully preserved by you. You will be mailed certificates only for the additional shares to which you are entitled. It is planned that the certificates for additional shares will be mailed on or about November 16, 1998. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL. PROPOSAL 4 SHAREOWNER PROPOSAL Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue, N.W., Suite 215, Washington, D.C. 20037, who is the beneficial owner of 50 shares of Common Stock, has given notice that she will introduce the following resolution at the Annual Meeting: "RESOLVED: That the stockholders of Delta Air Lines, Inc., assembled in Annual Meeting in person and by proxy, hereby request the Board of Directors to take the necessary steps to provide for cumulative voting in the election of directors, which means each stockholder shall be entitled to as many votes as shall equal the number of shares he or she owns multiplied by the number of directors to be elected, and he or she may cast all of such votes for a single candidate, or any two or more of them as he or she may see fit. REASONS: Many states have mandatory cumulative voting, so do National Banks. In addition, many corporations have adopted cumulative voting. If you AGREE, please mark your proxy FOR this resolution." THE BOARD OF DIRECTORS OPPOSES THIS PROPOSAL. Cumulative voting could facilitate the election of directors who represent special minority interests. The Board of Directors opposes cumulative voting because it believes each director has a duty to represent the interests of the shareowners as a whole, rather than only a limited group of shareowners. Moreover, the Board believes the present method of voting, in which each director is elected by a majority of the votes present at the annual meeting, provides the best assurance that directors will represent all shareowners. ACCORDINGLY, THE BOARD RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL. PROPOSAL 5 SHAREOWNER PROPOSAL The Sisters of St. Francis of Philadelphia, 609 South Convent Road, Aston, PA 19014, who are the beneficial owners of shares of Common Stock with a market value of at least $1,000, and the Bernardine Franciscan Sisters, 2627 West Ninth Street, Chester, PA 19013, who are the beneficial owners of at least 100 shares of Common Stock, have given notice that they will introduce the following resolution at the Annual Meeting: 26 "ENDORSEMENT OF THE CERES PRINCIPLES FOR PUBLIC ENVIRONMENTAL ACCOUNTABILITY" "WHEREAS WE BELIEVE, Responsible implementation of a sound, credible environmental policy increases long-term shareholder value by raising efficiency, decreasing clean-up costs, reducing litigation, enhancing public image and product attractiveness. Adherence to public standards for environmental performance gives a company greater public credibility than standards created by industry alone. For maximum credibility and usefulness, such standards should specifically meet the concerns of investors and other stakeholders. Companies are increasingly being expected by investors to do meaningful, regular, comprehensive and impartial environmental reports. Standardized environmental reports enable investors to compare performance over time. They also attract investment from investors seeking companies which are environmentally responsible and which minimize the risk of environmental liability. WHEREAS: The Coalition for Environmentally Responsible Economies (CERES) - -which includes shareholders of this Company; public interest representatives, and environmental experts--consulted with corporations to produce the CERES Principles as comprehensive public standards for both environmental performance and reporting. Scores of companies, including Bank America, Baxter International, Bethlehem Steel, General Motors, H.B. Fuller, ITT Industries, Pennsylvania Power and Light, Polaroid, and Sun (Sunoco), have endorsed these principles to demonstrate their commitment to public environmental accountability and standardized reporting. Fortune 500 endorsers say that the benefits of working with CERES are *public credibility, *direct access to major environmental and shareholder organizations, *leadership in designing the rapidly advancing standardization of environmental disclosure, and *measurable value-added for the company's environmental initiative; A company endorsing the CERES Principles commits to work toward: 1. Protection of the biosphere 4. Energy conservation 7. Environmental restoration 2. Sustainable natural resource use 5. Risk reduction 8. Informing the public 3. Waste reduction and disposal 6. Safe products/services 9. Management commitment 10. Audits and reports
(Materials on the CERES Principles and CERES Report Form are obtainable from CERES, 711 Atlantic Avenue, Boston, MA 02110, tel: 617-451-0927, fax: 617-482-2028). CERES is distinguished from other initiatives for corporate environmental responsibility by being (1) a successful model of shareholder relations; (2) a leader in public accountability through standardized environmental reporting; and (3) a catalyst for significant and measurable environmental improvement within firms. RESOLVED: Shareholders request the Company to endorse the CERES Principles as a part of its commitment to be publicly accountable for its environmental impact. SUPPORTING STATEMENT Many investors support this resolution. Those sponsoring similar resolutions at various companies have portfolios totaling $75 billion. Furthermore, the number of public pension funds and foundations supporting this resolution increases every year. We believe the CERES Principles exceed the European Community regulation for voluntary participation in verified and publicly-reported eco-management and auditing, and that they also exceed the requirements for ISO 14000. 27 Your vote FOR this resolution will encourage both scrutiny of our Company's environmental policies and reports and adherence to goals supported by management and shareholders alike. We believe the CERES Principles will protect both your investment and your environment." THE BOARD OF DIRECTORS OPPOSES THIS PROPOSAL. Delta has in place a policy recognizing the need to preserve and protect the vital natural resources of clean air, clean water and land. The Company also recognizes its responsibility to comply with the laws, regulations and the legitimate interests of those communities in which it operates. Delta's clear and mandatory policy is to be sensitive to the quality of the environment and to conduct its business in an environmentally conscious and responsible manner. Implementation of this policy is a primary management objective and the responsibility of all Delta personnel. Delta's environmental policy includes the following principles: - Maintaining an effective program of compliance with all environmental laws and regulations; - Properly managing solid and hazardous waste; - Providing annual training to all employees involved in the handling of hazardous materials and petroleum product storage and transfer; - Minimizing the discharge of waste materials in to the environment by using responsible pollution control practices; and - Conducting audits of Delta's performance and practices to ensure regulatory compliance and good environmental practice. The Board believes the adoption of the CERES Principles would subject the Company to additional reporting and audit requirements without enhancing Delta's strong commitment to act in an environmentally responsible manner. ACCORDINGLY, THE BOARD RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL. EXPENSE OF SOLICITATION The cost of this solicitation will be borne by Delta. In addition to solicitation by mail, certain officers and employees of the Company, who will receive no compensation for their services other than their regular salaries, may solicit proxies in person, telephone or by other means. Delta may also make arrangements with brokerage houses, custodians, nominees and other fiduciaries to send proxy material to their principals at the Company's expense. The Company has retained Morrow & Co., Inc. to aid in the solicitation of proxies at a fee of $9,500 plus certain expenses. SUBMISSION OF SHAREOWNER PROPOSALS AND NOMINATIONS To be considered for inclusion in the Company's 1999 proxy materials under Securities and Exchange Commission regulations, a shareowner proposal must be directed to the Secretary of the Company at its principal executive office address set forth on page one of this proxy statement, must be received by the Company not later than May 19, 1999, and must comply in all respects with the applicable Securities and Exchange Commission rules and regulations. The following requirements apply to all shareowner proposals other than those included in the Company's proxy materials pursuant to Securities and Exchange Commission rules and regulations. The Company's By-Laws require a shareowner proposing to nominate persons for election to the Board of Directors, or to introduce other business, at the annual meeting of shareowners to give timely written notice to the Secretary of the Company. To be timely, a shareowner's notice must be delivered to or mailed and received at the Company's principal executive offices not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting; provided that if the Board 28 of Directors calls the annual meeting for a date that is not within 30 days before or after such anniversary date, notice by the shareowner to be timely must be so delivered or mailed and received not later than the close of business on the 10th day following the day on which the Board of Directors gave such notice or made such public disclosure of the date of the annual meeting, whichever first occurs. The Company's By-Laws further provide that a shareowner's notice proposing to nominate persons for election to the Board of Directors must contain certain information including, but not limited to, information relating to such persons that would be required to be disclosed in proxy solicitations for the election of directors under Securities and Exchange Commission regulations. A shareowner's notice proposing to bring other business before the annual meeting must contain (1) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (2) the shareowner's name and address; (3) the class and number of shares of the Company's capital stock beneficially owned by the shareowner; and (4) any material interest of the shareowner in such business. ANNUAL REPORT This proxy statement is accompanied, or preceded, by the Company's Annual Report to Shareowners for the fiscal year ended June 30, 1998. The Annual Report, which contains financial and other information regarding the Company, is not incorporated in the proxy statement and is not to be deemed a part of the proxy soliciting material. OTHER MATTERS The Board of Directors knows of no other matters which may come before the Annual Meeting. If any matters other than those referred to above should properly come before the meeting, the persons designated by the Board to serve as proxies will have discretionary authority to vote such proxies in accordance with their best judgment. 29 APPENDIX A ARTICLE FOURTH OF THE CERTIFICATE OF INCORPORATION OF DELTA AIR LINES, INC. (AS PROPOSED TO BE AMENDED) "FOURTH: A. The total number of shares of capital stock which the corporation shall have authority to issue is Four Hundred Seventy Million (470,000,000), of which Four Hundred Fifty Million (450,000,000) shall be common stock, of the par value of One Dollar and Fifty Cents ($1.50) per share (hereinafter called the "common stock"), and Twenty Million (20,000,000) shall be preferred stock of the par value of One Dollar ($1.00) per share (hereinafter called the "preferred stock"). "Each share of common stock issued and outstanding or held in treasury of the corporation immediately prior to 5:00 p.m., eastern standard time, on November 2, 1998 (the "Effective Time"), that being the time when the amendment of this Article FOURTH of the Certificate of Incorporation shall have become effective, shall be changed into and reclassified into two fully paid and nonassessable shares of common stock, par value $1.50 per share, such that at the Effective Time: (1) each holder of record of common stock, par value $3.00 per share, shall, without further action, be and become the holder of one additional share of common stock, par value $1.50 per share, for each share of common stock held of record immediately prior to the Effective Time; and (2) each certificate representing shares of common stock outstanding or held in treasury immediately prior to the Effective Time shall continue to represent the same number of shares of common stock. The corporation shall issue and cause to be delivered to each holder of record of shares of common stock immediately prior to the Effective Time, as promptly as practicable thereafter, an additional certificate or certificates representing one additional share of common stock for each share of common stock held of record immediately prior to the Effective Time." A-1 APPENDIX B DELTA AIR LINES, INC. PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREOWNERS TO BE HELD ON OCTOBER 22, 1998 OR ANY ADJOURNMENTS THEREOF. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS DIRECTED BY THE SHAREOWNER(S). The undersigned hereby appoints Mary Johnston Evans, Gerald Grinstein and Leo F. Mullin jointly and severally with full power of substitution to each, or, instead of any of them, ____________, as proxies for and on behalf of the undersigned, to attend the Annual Meeting of Shareowners of Delta Air Lines, Inc., to be held at The Waldorf=Astoria, 301 Park Avenue, New York, New York, on Thursday, October 22, 1998, at 9:00 a.m., local time, or any adjournments thereof, and to vote as directed below all stock of this Company which the undersigned would be entitled to vote if personally present. BY ACCEPTANCE, THE PROXIES NAMED ABOVE AGREE THAT THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY THE SHAREOWNER GIVING THIS PROXY. IF NO DIRECTIONS ARE SPECIFIED, THE PROXY WILL BE VOTED FOR THE ELECTION OF ALL NINE NOMINEES FOR DIRECTOR, FOR THE RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS FOR FISCAL YEAR 1999, FOR THE PROPOSED AMENDMENT TO ARTICLE FOURTH OF THE CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED COMMON STOCK OF THE COMPANY AND TO EFFECT A TWO-FOR-ONE SPLIT OF THE ISSUED COMMON STOCK OF THE COMPANY AND AGAINST PROPOSALS 4 AND 5, ALL AS SET FORTH ON THE REVERSE. DISCRETIONARY AUTHORITY IS HEREBY CONFERRED AS TO ALL OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF, AS SET OUT IN THE PROXY STATEMENT DATED SEPTEMBER 16, 1998, RECEIPT OF WHICH IS ACKNOWLEDGED. THIS PROXY, IF PROPERLY EXECUTED AND DELIVERED, WILL REVOKE ALL PRIOR PROXIES. NOMINEES FOR DIRECTOR: Edwin L. Artzt, Henry A. Biedenharn, III, James L. Broadhead, Edward H. Budd, R. Eugene Cartledge, Mary Johnston Evans, Gerald Grinstein, Leo F. Mullin and Andrew J. Young. DETACH AND RETURN PROXY CARD; RETAIN ADMISSION TICKET - -------------------------------------------------------------------------------- ADMISSION TICKET If you plan to attend the 1998 Annual Meeting of Shareowners, please mark the appropriate box on the proxy card. Please present this ticket to the Delta Air Lines representative at the entrance to the Annual Meeting to be admitted. Only the shareowner whose name(s) appears on this ticket will be admitted. DELTA AIR LINES, INC. ANNUAL MEETING OF SHAREOWNERS THURSDAY, OCTOBER 22, 1998, 9:00 A.M. THE WALDORF=ASTORIA 301 PARK AVENUE NEW YORK, NEW YORK 10022 CONDUCT OF MEETING In fairness to all shareowners attending the Annual Meeting of Shareowners and in the interest of an orderly and constructive meeting, the following procedures will apply: 1. Proposals will be presented in the order in which they appear in the Proxy Statement. Presentations by proponents and supporters of qualified shareowner proposals may not exceed a total of five minutes. Questions about any proposal under consideration should be limited to two minutes. 2. Questions or comments concerning any issue raised during the general shareowner question and comment period should be relevant to matters of interest to shareowners and will be limited to three minutes. 3. The use of cameras, sound recording equipment, communication devices, or any other similar equipment is prohibited without Delta's prior permission. B-1 /X/ Please mark your votes as in this example. The Proxy when properly executed will be voted in the manner directed herein by the undersigned shareowner. If no direction is made, this Proxy will be voted FOR all nominees, FOR Proposals 1, 2, and 3 and AGAINST Proposals 4 and 5. - -------------------------------------------------------------------------------- THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES AND FOR PROPOSALS 2 AND 3. - -------------------------------------------------------------------------------- 1. Election of Directors. / / FOR all nominees / / WITHHOLD authority to vote (see reverse) (except as indicated below) for all nominees Withhold authority to vote for the following nominee(s) only: - -------------------------------------------------------------------------------- FOR AGAINST ABSTAIN 2. PROPOSAL to ratify the appointment of Arthur Andersen LLP as independent / / / / / / auditors for fiscal year 1999. 3. PROPOSAL to amend the Certificate of Incorporation to increase the authorized / / / / / / common stock of the Company and to effect a two-for-one split of the issued common stock of the Company. - -------------------------------------------------------------------------------- THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 4 AND 5. - -------------------------------------------------------------------------------- 4. PROPOSAL by a shareowner relating to cumulative voting for directors. / / / / / / 5. PROPOSAL by a shareowner relating to the CERES Principles for Public / / / / / / Environmental Accountability. I plan to attend the Annual Meeting of Shareowners. YES / / Please sign EXACTLY as your name(s) appears hereon. When signing as administrator, attorney, executor, guardian or trustee, please give your full title. If the signer is a corporation or partnership, please sign full corporate or partnership name by duly authorized officer or person. If shares are held jointly, each joint owner should sign. DATE: --------------------------------------------------------------------, 1998 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SIGNATURE(S) PLEASE DATE, SIGN AND MAIL THIS PROXY CARD IN THE ACCOMPANYING ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
DETACH AND RETURN PROXY CARD - -------------------------------------------------------------------------------- / / TELEPHONE AND INTERNET VOTING INSTRUCTIONS Dear Shareowner: You may choose to vote your shares electronically through the telephone or internet. This eliminates the need to return the proxy card. To vote your shares electronically, you must use the control number. The control number is the series of numbers printed in the box above, just below the perforation. This control number must be used to access the system. 1. To vote over the internet: Log on to the internet and go to the web site http://www.xxx.com 2. To vote over the telephone: On a touch-tone telephone, call (xxx) xxx-xxxx, 24 hours per day, 7 days a week Your electronic vote authorizes the named proxies in the same manner as if you marked, signed, dated and returned the proxy card. If you choose to vote your shares electronically, there is no need for you to mail back your proxy card. These telephone and internet voting procedures comply with Delaware law. DATE: September 16, 1998 TO: Delta Family-Care Savings Plan Participants FROM: President and Chief Executive Officer SUBJECT: DELTA'S 1998 ANNUAL MEETING OF SHAREOWNERS Enclosed are the 1998 Notice of Annual Meeting of Shareowners, Proxy Statement, Annual Report to Shareowners, and Voting Instruction Form. This year if you own Delta stock in your own name and are also a participant in the Delta Family-Care Savings Plan, your annual report was sent in a separate package with proxy materials for the shares registered in your name. As Trustee for the Delta Family-Care Savings Plan, Fidelity Management Trust Company is providing the attached Voting Instruction Form for the shares of Delta Common Stock and Series B ESOP Convertible Preferred Stock attributable to your Savings Plan account. Under the Savings Plan, you have the confidential right to instruct the Trustee how to vote these shares at the Annual Meeting, and we strongly encourage you to do so. Please complete and sign the Voting Instruction Form and return it to First Chicago in the envelope provided. If you wish to instruct the Trustee how to vote your shares via the telephone or internet, please refer to the instructions on the reverse side of the Voting Instruction Form. Your vote is important. Delta's Board of Directors recommends a vote "FOR" the election of all nine nominees for Director, "FOR" Proposals 2 and 3, and "AGAINST" Proposals 4 and 5, as set forth in the Proxy Statement. Attendance at the Annual Meeting will be limited to shareowners, those holding proxies from shareowners, Delta Family-Care Savings Plan Participants, and representatives of the news media. IF YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE MARK THE APPROPRIATE BOX ON THE VOTING INSTRUCTION FORM. Leo F. Mullin DETACH AND RETURN VOTING INSTRUCTION FORM - -------------------------------------------------------------------------------- DELTA FAMILY-CARE SAVINGS PLAN VOTING INSTRUCTION FORM DELTA'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES AND FOR PROPOSALS 2 AND 3. 1. Election of Directors. FOR WITHHOLD ALL nominees (except as indicated authority to vote for all nominees listed below) below / / / / NOMINEES FOR DIRECTOR: Edwin L. Artzt, Henry A. Biedenharn, III, James L. Broadhead, Edward H. Budd, R. Eugene Cartledge, Mary Johnston Evans, Gerald Grinstein, Leo F. Mullin and Andrew J. Young. (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.) - ---------------------------------------------------------------------------------------------------------------------------- 2. PROPOSAL to ratify the appointment of Arthur Andersen LLP as FOR AGAINST ABSTAIN independent auditors for fiscal year 1999. / / / / / / 3. PROPOSAL to amend the Certificate of Incorporation to / / / / / / increase the authorized common stock of the Company and to effect a two-for-one split of the issued common stock of the Company. DELTA'S BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 4 AND 5. 4. PROPOSAL by a shareowner relating to cumulative voting for / / / / / / directors. 5. PROPOSAL by a shareowner relating to the CERES Principles / / / / / / for Public Environmental Accountability.
I PLAN TO ATTEND THE ANNUAL MEETING OF SHAREOWNERS YES / / NO / / ADMISSION TICKET / / TELEPHONE AND INTERNET VOTING INSTRUCTIONS DEAR PLAN PARTICIPANT: You may choose to instruct the Trustee to vote your shares electronically through the internet or the telephone. To direct the Trustee to vote your shares electronically, you must use the control number. The control number is the series of numbers printed in the box above. This control number must be used to access the system. 1. To vote over the internet: Log on to the internet and go the the web site http://www.xxx.com 2. To vote over the telephone: On a touch-tone telephone call (xxx) xxx-xxxx, 24 hours per day, 7 days a week. Your electronic vote instructs the Trustee in the same manner as if you marked, signed, dated and returned the Voting Instruction Form. If you choose to instruct the Trustee to vote your shares electronically, there is no need for you to mail back your Voting Instruction Form. Your electronic vote must be received by 5:00 pm EST on October 20, 1998. If you plan to attend the 1998 Annual Meeting of Shareowners, please mark the appropriate box on the Voting Instruction Form. Please present this ticket to the Delta Air Lines representative at the entrance to the Annual Meeting to be admitted. Only the person whose name(s) appears on this ticket will be admitted. DELTA AIR LINES, INC. ANNUAL MEETING OF SHAREOWNERS THURSDAY, OCTOBER 22, 1998, 9:00 A.M. THE WALDORF=ASTORIA 301 PARK AVENUE NEW YORK, NEW YORK 10022 CONDUCT OF MEETING In fairness to all shareowners attending the 1998 Annual Meeting of Shareowners and in the interest of an orderly and constructive meeting, the following procedures will apply: 1. Proposals will be presented in the order in which they appear in the Proxy Statement. Presentations by proponents and supporters of qualified shareowner proposals may not exceed a total of five minutes. Questions about any proposal under consideration should be limited to two minutes. 2. Questions or comments concerning any issue raised during the general shareowner question and comment period should be relevant to matters of interest to shareowner and will be limited to three minutes. 3. The use of cameras, sound recording equipment, communication devices, or any other similar equipment is prohibited without Delta's prior permission. DETACH AND RETURN VOTING INSTRUCTION FORM; RETAIN ADMISSION TICKET - -------------------------------------------------------------------------- DELTA FAMILY-CARE SAVINGS PLAN VOTING INSTRUCTION FORM THIS VOTING INSTRUCTION FORM IS PROVIDED BY FIDELITY MANAGEMENT TRUST COMPANY, AS TRUSTEE FOR THE DELTA FAMILY-CARE SAVINGS PLAN, for the Annual Meeting of Shareowners. This form constitutes voting instructions for any shares of Series B ESOP Convertible Preferred Stock and Common Stock of Delta attributable to my account in the Delta Family-Care Savings Plan. I understand that under the Savings Plan, I have the confidential right to instruct the Trustee to vote such shares of stock in accordance with the instructions on the reverse side of this card at the Annual Meeting and any adjournment thereof. I also understand that shares of Series B ESOP Convertible Preferred Stock not yet allocated to any participant's accounts will be voted in the same proportion as allocated shares of such stock for which instructions are received. If no instructions are provided or this form is not received on or before October 20, 1998 by 5:00 pm EST, shares of Series B ESOP Convertible Preferred Stock and Common Stock of Delta attributable to my account will be voted by the Trustee in its discretion. Pursuant to the Savings Plan, I instruct the Trustee to vote the shares of Series B ESOP Convertible Preferred Stock and Common Stock of Delta attributable to my Savings Plan account at the Annual Meeting of Shareowners of Delta Air Lines, Inc., to be held at The Waldorf=Astoria, 301 Park Avenue, New York, New York on Thursday, October 22, 1998, at 9:00 a.m., local time, or any adjournments thereof, as indicated on the reverse of this form. This instruction, if properly executed and delivered, will revoke all prior instructions. I hereby acknowledge receipt of Delta's Proxy Statement dated September 16, 1998. Please sign EXACTLY as your name(s) appears hereon. When signing as administrator, attorney, executor, guardian or trustee, please give your full title. DATE: ------------------------------------------------------, 1998 ------------------------------------------------------------------ SIGNATURE(S)
PLEASE DATE, SIGN AND MAIL THIS VOTING INSTRUCTION FORM IN THE ACCOMPANYING ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. -----END PRIVACY-ENHANCED MESSAGE-----