-----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, SxGwG7MgdWgX0QPBmi96joX2aaOynexHhHhutfax9UYnCpxTKCJcvPjElGFk6yTk AiBUkxLrUSpZMAu3wc2btw== 0000353184-99-000012.txt : 19990629 0000353184-99-000012.hdr.sgml : 19990629 ACCESSION NUMBER: 0000353184-99-000012 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIR TRANSPORTATION HOLDING CO INC CENTRAL INDEX KEY: 0000353184 STANDARD INDUSTRIAL CLASSIFICATION: AIR COURIER SERVICES [4513] IRS NUMBER: 521206400 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-11720 FILM NUMBER: 99653749 BUSINESS ADDRESS: STREET 1: 3524 AIRPORT RD CITY: MAIDEN STATE: NC ZIP: 28650 BUSINESS PHONE: 704648741X227 MAIL ADDRESS: STREET 1: P O BOX 488 CITY: DENVER STATE: NC ZIP: 28037 FORMER COMPANY: FORMER CONFORMED NAME: ATLANTA EXPRESS AIRLINE CORP DATE OF NAME CHANGE: 19840321 DEF 14A 1 SCHEDULE 14C INFORMATION Information Statement Pursuant to Section 14(c) of the Securities Exchange Act of 1934 Check the appropriate box: [ ] Preliminary Information Statement [ ] Confidential, for use of the Commission only (as permitted by Rule 14c 5(d)(2)) [ ] Definitive Information Statement AIR TRANSPORTATION HOLDING COMPANY, INC. (Name of Registrant As Specified In Charter) Payment of Filing Fee (Check the appropriate box): [ ] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14c-5(g) 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: ________________________________________________________________________ (4) Proposed maximum aggregate value of transaction: ________________________________________________________________________ (5) Total fee paid: ________________________________________________________________________ [ ] 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: _________________________________________ AIR TRANSPORTATION HOLDING COMPANY, INC. NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD AUGUST 11, 1999 To Our Stockholders: The annual meeting of stockholders of Air Transportation Holding Company, Inc. (the "Company") will be held at One IndependenceCenter, 101 North Tryon Street, Suite 1900, Charlotte, North Carolina on Wednesday, August 11, 1999 at 10:00 a.m. local time, for the purpose of considering and acting on the following matters: 1.To elect ten directors to serve until their successors are duly elected and qualified; 2.To approve an amendment to the Air Transportation Holding Company, Inc. 1998 Omnibus Securities Award Plan to increase by 200,000 the number of shares authorized to be issued under such plan; 3.To approve an amendment to the Company's Certificate of Incorporation to change the Company's name to "AirT, Inc." 4.To ratify the appointment of Deloitte & Touche LLP as the independent auditors of the Company for the current fiscal year; and 5.To transact such other business as may properly come before the meeting, or any adjournment or adjournments thereof. Only stockholders of record as of the close of business on July 1, 1999 are entitled to notice of and to vote at the annual meeting and adjournments thereof. Because of the expense involved in collecting proxies, the Company is not soliciting proxies. Accordingly, to vote on matters that will be considered at the Annual Meeting you must either attend the meeting or deliver a valid proxy to a person who attends the meeting. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. The annual report of the Company also accompanies this notice. By Order of the Board of Directors John J. Gioffre Secretary July 14, 1999 AIR TRANSPORTATION HOLDING COMPANY, INC. 3524 Airport Road Maiden, North Carolina 28650 Telephone (704) 377-2109 INFORMATION STATEMENT INTRODUCTION This information statement is furnished to the stockholders of Air Transportation Holding Company, Inc. (hereinafter sometimes referred to as the "Company") by the Board of Directors in connection with the annual meeting of stockholders of the Company to be held on Wednesday, August 11, 1999 at 10:00 a.m. at One Independence Center, 101 North Tryon Street, Suite 1900, Charlotte, North Carolina. Action will be taken at the annual meeting for the election of directors, increase in the number of shares authorized under the Company's 1998 Omnibus Securities Award Plan, approval of an amendment to the Company's Certificate of Incorporation to change the Company's name to "AirT, Inc.", the ratification of the appointment of independent auditors, and any other business that properly comes before the meeting. As provided in the Company's bylaws, up to ten directors may be elected. Because of the expense involved in collecting proxies, the Company is not soliciting proxies. Accordingly, to vote on matters that will be considered at the Annual Meeting you must either attend the meeting or deliver a valid proxy to a person who attends the meeting. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. This information statement is being mailed to stockholders on or about July 14, 1999. The Company's 1999 Annual Report to Stockholders accompanies this information statement. VOTING SECURITIES Only stockholders of record at the close of business on July 1, 1999 will be entitled to vote at the annual meeting or any adjournment or adjournments thereof. The number of outstanding shares entitled to vote at the stockholders meeting is 2,764,653. The presence of a majority of the outstanding shares of the Company's Common Stock, par value $.25 per share (the "Common Stock"), represented in person or by proxy at the meeting will constitute a quorum. Directors will be elected by a plurality of the votes cast. Cumulative voting is not allowed. Accordingly, abstentions and broker non-votes will not effect the outcome of the election of directors. The approval of the amendment to the Company's Certificate of Incorporation to change the Company's name requires the affirmative vote of a majority of the shares of Common Stock outstanding. Accordingly, an abstention and a broker non-vote will have the same effect as a negative vote on this matter. The approval of the amendment to the 1998 Omnibus Securities Award Plan, the ratification of independent auditors and any other business coming before the meeting requires the affirmative vote of a majority of the shares present or represented at the meeting and entitled to vote. On such matters, an abstention will have the same effect as a negative vote but, because shares held by brokers will not be considered entitled to vote on matters as to which the brokers withhold authority, a broker non-vote will have no effect on votes on these matters. CERTAIN BENEFICIAL OWNERS The following table sets forth information regarding the beneficial ownership of shares of Common Stock (determined in accordance with Rule 13d-3 of the Securities and Exchange Commission) of the Company as of May 1, 1999 by each person that beneficially owns five percent or more of the shares of Common Stock. Each person named in the table has sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned, except as otherwise set forth in the notes to the table. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS Amount of Percent Title of Name and address of Beneficial Owners of Class Beneficial Owners as of May 1, 1999 Class Common Stock, par value $.25 per share Walter Clark and Caroline Clark, Executors(1) P.O. Box 488 Denver, North Carolina 28650 1,288,716(1) 46.6% William H. Simpson P.O. Box 488 Denver, North Carolina 28650 261,580(2) 9.4% _____________________________ (1) Includes 1,279,272 shares controlled by such individuals as the executors of the estate of David Clark, 7,222 shares owned by Walter Clark and 2,222 shares owned by Caroline Clark. (2) Includes 1,200 shares held jointly with J. Hugh Bingham and 24,000 shares under options granted by the Company. ELECTION OF DIRECTORS Under the Company's Certificate of Incorporation and bylaws, directors are elected at each annual meeting and hold office until their respective successors are elected and have qualified. All of the incumbent directors were elected by the stockholders at the last annual meeting. As provided in the Company's bylaws, up to ten directors may be elected. DIRECTORS AND EXECUTIVE OFFICERS J. Hugh Bingham, age 53, has served as President and Chief Operating Officer of the Company since April 1997, as Senior Vice President of the Company from June 1990 until April 1997, as Executive Vice President from June 1983 to June 1990, and as a director since March 1987. Mr. Bingham also serves as Chief Executive Officer and a director of MAC, as Chief Executive Officer of MAS and as an Executive Vice President and director of CSA. Walter Clark, age 42, has served as Chairman of the Board of Directors of the Company and Chief Executive Officer since April 1997. Mr. Clark also serves as a director of MAC and CSA. Mr. Clark was elected a director of the Company in April 1996. Mr. Clark was self-employed in the real estate development business from 1985 until April 1997. John J. Gioffre, age 55, has served as Vice PresidentFinance and Chief Financial Officer of the Company since April 1984 and as Secretary/Treasurer of the Company since June 1983. He has served as a director of the Company since March 1987. Mr. Gioffre also serves as Vice-President, Secretary/Treasurer and a director of MAC and CSA and as Vice President-Finance, Treasurer and Secretary of MAS. J. Leonard Martin, age 62, was elected a director in August 1994 and joined the Company as a Vice President in April 1997. From June 1995 until April 1997, Mr. Martin was an independent aviation consultant. From April 1994 to June 1995, Mr. Martin has served as Chief Operating Officer of Musgrave Machine & Tool, Inc., a machining company. From January 1989 to April 1994, Mr. Martin served as a consultant to the North Carolina Air Cargo Authority in connection with the establishment of the Global TransPark air cargo facility in Kinston, North Carolina. From 1955 through 1988 Mr. Martin was employed by Piedmont Airlines, a commercial passenger airline, in various capacities, ultimately serving as Senior Vice President-Passenger Services. William H. Simpson, age 51, has served as Executive Vice President of the Company since June 1990, as Vice President from June 1983 to June 1990, and as a director of the Company since June 20, 1985. Mr. Simpson is also the President and a director of MAC, the Chief Executive Officer and a director of CSA and Executive Vice President of MAS. Menda J. Street, age 47, has served as Vice President of MAC since 1984, and in various other capacities at MAC since 1979. Claude S. Abernethy, Jr., age 72, was elected as director of the Company in June 1990. For the past five years, Mr. Abernethy has served as a Senior Vice President of IJL Wachovia Securities, a securities brokerage and investment banking firm, and its predecessor. Mr. Abernethy is also a director of Carolina Mills, Inc. and Ridgeview Incorporated. Sam Chesnutt, age 65, was elected a director of the Company in August 1994. Mr. Chesnutt serves as President of Sam Chesnutt and Associates, an agribusiness consulting firm. From November 1988 to December 1994, Mr. Chesnutt served as Executive Vice President of AgriGeneral Company, L.P., an agribusiness firm. Allison T. Clark, age 43, has served as a director of the Company since May 1997. Mr. Clark is self-employed in the real estate development business since 1987. Herman A. Moore, age 69, was elected a director of the Company on June 22, 1998. Mr. Moore is the president of Herman A. Moore & Assoc., Inc., a real estate development company. George C. Prill, age 76, has served as a director of the Company since June 1982, as Chief Executive Officer and Chairman of the Board of Directors from August 1982 until June 1983, and as President from August 1982 until spring 1984. Mr. Prill has served as an Editorial Director for General Publications, Inc., a publisher of magazines devoted to the air transportation industry, since November 1992 and was retired from 1990 until that time. From 1979 to 1990, Mr. Prill served as President of George C. Prill & Associates, Inc., of Charlottesville, Virginia, which performed consulting services for the aerospace and airline industry. Mr. Prill has served as President of Lockheed International Company, as Assistant Administrator of the FAA, as a Senior Vice President of the National Aeronautic Association and Chairman of the Aerospace Industry Trade Advisory Committee. The officers of the Company and its subsidiaries each serve at the pleasure of the Board of Directors. Allison Clark and Walter Clark are brothers. Each director receives a director's fee of $500 per month and an attendance fee of $500 is paid to outside directors for each meeting of the board of directors or a committee thereof. Pursuant to the Company's 1998 Omnibus Securities Award Plan (the "Plan"), upon approval of the Plan by the Company's stockholders, each director who is not an employee of the Company received an option to purchase 1,000 shares of Common Stock at an exercise price of $6.375 per share (the closing bid price per share on the date of stockholder approval of the Plan.) The Plan provides for a similar option award to any director first elected to the board after the date the stockholders approved the Plan. Such options expire ten years after the date they were granted. The Board of Directors has two standing committees: the Audit Committee and the Compensation Committee. The Audit Committee consists of Messrs. Abernethy, Chesnutt and Moore each of whom is not an employee of the Company. The Audit Committee met once during the fiscal year. The functions of the Audit Committee are to recommend to the Board of Directors the firm of independent auditors to serve the Company each fiscal year, to review the scope, fees and results of the audit performed by the independent auditors and to review the adequacy of the Company's system of internal accounting controls and the scope and results of internal auditing procedures. The Compensation Committee, which met four times during the most recent fiscal year, consists of Messrs. Abernethy, Chesnutt and Prill, all of whom are non-employee directors. The functions of the Compensation Committee include establishing policies for the compensation of the Company's executive officers and determining the types and amounts of remuneration to be paid to the Company's executive officers. During the fiscal year ended March 31, 1999, the Board of Directors met four times. Each of the directors attended at least 75 percent of the total of the meetings of the Board of Directors and committees thereof on which such director served during such period, except for Messrs. Abernethy and Moore. The following table sets forth information regarding the beneficial ownership of shares of Common Stock of the Company by each director of the Company and by all directors and executive officers of the Company as a group as of May 1, 1999. Each person named in the table has sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned, except as otherwise set forth in the notes to the table. SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS Shares and Percent of Common Stock Beneficially Owned as of May 1, 1999 Name Position with Company No. of Shares Percent J. Hugh Bingham President, Chief Operating Officer, Director 119,080(1)(2) 4.3% Walter Clark Chairman of the Board of Directors and Chief Executive Office 1,286,494(3) 46.5% John J. Gioffre Vice President-Finance, Secretary and Treasurer, Director 57,580(4) 2.1% J. Leonard Martin Vice President, Director 100(5) * William H. Simpson Executive Vice President, Director 261,580(1)(6) 9.4% Claude S. Abernethy, Jr. Director 23,611(7) * Sam Chesnutt Director 9,600(7) * Allison T. Clark Director 3,222(7) * Herman A. Moore Director 31,000(7) 1.1% George C. Prill Director 46,966(7) 1.7% All directors and executive officers as a group (11 persons) N/A 1,853,033(8) 66.1% __________________________________________ * Less than one percent. (1) Includes 1,200 shares jointly held by Messrs. Simpson and Bingham. (2) Includes 6,000 shares under options granted by the Company to Mr. Bingham. (3) Includes 1,279,272 shares held by the estate of David Clark, of which Mr. Walter Clark is a co-executor. (4) Includes 4,000 shares under options granted by the Company to Mr. Gioffre. (5) Such 100 shares are held by Mr. Martin's spouse of which shares Mr. Martin disclaims beneficial ownership. (6) Includes 24,000 shares under options granted by the Company to Mr. Simpson. (7) Includes 1,000 shares under options granted by the Company. (8) Includes an aggregate of 39,000 shares of Common Stock members of such group have the right to acquire within 60 days. EXECUTIVE COMPENSATION The following table sets forth a summary of the compensation paid during each of the three most recent fiscal years to the Company's Chief Executive Officer and to the four other executive officers on March 31, 1999 with total compensation of $100,000 or more. SUMMARY COMPENSATION TABLE Long-term Annual Compensation Awards Name and principal Compensation Securities underlying Position Year Options(#) Salary($) Bonus($) Walter Clark (1) 1999 132,527 20,900 - Chief Executive Officer 1998 76,236 10,000 - 1997 - - - J. Hugh Bingham 1999 203,774 20,900 9,000 Senior Vice President 1998 184,445 70,721 - 1997 148,289 50,222 - John J. Gioffre 1999 128,297 15,675 9,000 Vice President 1998 127,142 52,641 - 1997 121,208 37,667 - J. Leonard Martin (2) 1999 129,955 4,000 9,000 Vice President 1998 117,751 15,953 - 1997 - - - William H. Simpson 1999 204,008 20,900 - Executive Vice President 1998 195,809 70,721 - 1997 186,299 50,222 - ______________________________________ (1) Mr. Walter Clark commenced his employment in April 1997. (2) Mr. Martin commenced his employment in April 1997. The following table sets forth, for each of the executive officers listed in the Summary Compensation Table information with respect to grants of options to purchase Common Stock made by the Company to such executive officers during the fiscal year ended March 31, 1999, as well as a calculation of the potential realizable value based upon assumed annual rates of stock price appreciation of five and ten percent per year. OPTION GRANTS IN LAST FISCAL YEAR Individual Potential Grants Realizable value at Number Percent of Assumed Of Total Annual rates Securities Options Price of stock price Underlying Employees or Appreciation Options in Base for Option Granted Fiscal Price Expiration Term (1) Name (#) Year ($/SH) Date 5%($) 10%($) Walter Clark - - - - - - J. Hugh Bingham 9,000 5.73 2.75 3/19/03 5,334 11,487 John J. Gioffre 9,000 5.73 2.75 3/19/03 5,334 11,487 J. Leonard Martin 9,000 5.73 2.75 3/19/03 5,334 11,487 William H. Simpson - - - - - - _________________ (1)The options were granted pursuant to the Company's 1998 Omnibus Securities Award Plan (the "Plan"). Options become exercisable with respect to one-third of the total number of shares each year beginning on the first anniversary of the date of grant. In addition, upon a "change in control" of the Company, as defined in the Plan, the options become immediately exercisable. The options expire four years after the date of grant. In addition, the options expire immediately upon the termination of employment, other than termination by the Company without cause or as a result of death, permanent disability or retirement after age 55 with the consent of the Company. Options expire three months after termination of employment without cause, one year after death, permanent disability or retirement after age 55 with the consent of the Company. (2) These amounts, based on the assumed 5% and 10% appreciation rates prescribed by the Securities and Exchange Commission rules, are not intended to forecast possible future appreciation, if any, of the price of the Common Stock and may not reflect the actual value ultimately realized by recipients of the options. The following table sets forth, for each of the executive officers listed in the Summary Compensation Table who exercised options to purchase shares of Common Stock during the most recent fiscal year, the number of shares purchased and the value realized upon exercise, which is determined based on the aggregate fair market value of the shares at the time of the exercise minus the aggregate exercise price. The table also sets forth the number of shares of Common Stock underlying unexercised options at March 31, 1999 held by each of the executive officers listed in the Summary Compensation Table. The table also includes the value of such options at March 31, 1999 based upon the closing bid price of the Company's Common Stock in the overthe-counter market on that date ($3.625 per share) and the exercise price of the options. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES Shares Number of Securities Value of Unexercised Acquired Value UnderlyingUnexercised In-the-MoneyOptions On Realized Options at FY-End (#) at FY-End ($) Name Exercise ($) Exer- Unexer- Exer- Unexer- # Cisable cisable cisable cisable Walter Clark - - - - - - J. Hugh Bingham 32,000 35,000 6,000 9,000 14,250 7,875 John J. Gioffre 16,000 18,000 4,000 9,000 9,500 7,875 J. Leonard Martin - - - 9,000 - 7,875 William H. Simpson 28,000 30,000 24,000 - 61,000 - EMPLOYMENT AGREEMENTS Effective January 1, 1996, the Company and each of its subsidiaries entered into employment agreements with J. Hugh Bingham, John J. Gioffre and William H. Simpson, each of substantially similar form. Each of such employment agreements provides for an annual base salary ($130,000, $103,443 and $165,537 for Messrs. Bingham, Gioffre and Simpson, respectively) which may be increased upon annual review by the Compensation Committee of the Company's Board of Directors. In addition, each such agreement provides for the payment of annual incentive bonus compensation equal to a percentage (2.0%, 1.5% and 2.0% for Messrs. Bingham, Gioffre and Simpson, respectively) of the Company's consolidated earnings before income taxes and extraordinary items as reported by the Company in its Annual Report on Form 10-K. Payment of such bonus is to be made within 15 days after the Company files its Annual Report on Form 10-K with the Securities and Exchange Commission. The initial term of each such employment agreement expires on March 31, 1999, and the term is automatically extended for additional one-year terms unless either such executive officer or the Company's Board of Directors gives notice to terminate automatic extensions which must be givenby December 1 of each year (commencing with December 1, 1996). Each such agreement provides that upon the executive officer's retirement, he shall be entitled to receive an annual benefit equal $75,000 ($60,000 for Mr. Gioffre), reduced by three percentfor each full year that the termination of his employment precedes the date he reaches age 65. The retirement benefits under such agreements may be paid at the executive officer's election in the form of a single life annuity or a joint and survivor annuity or a life annuity with a ten-year period certain. In addition, such executive officer may elect to receive the entire retirement benefit in a lump sum payment equal to the present value of the benefit based on standard insurance annuity mortality tables and an interest rate equal to the 90-day average ofthe yield on ten-year U.S. Treasury Notes. Retirement benefits shall be paid commencing on such executive officer's 65th birthday, provided that such executive officer may elect to receive benefits on the later of his 62nd birthday, in which case benefits will be reduced as described above, or the date on which his employment terminates, provided that notice of his termination of employment is given at least one year prior to the termination of employment. Any retirement benefits due under the employment agreement shall be offset by any other retirement benefits that such executive officer receives under any plan maintained by the Company. In the event such executive officer becomes totally disabled prior to retirement, he will be entitled to receive retirement benefits calculated as described above. In the event of such executive officer's death before retirement, the agreement provides that the Company shall be required to pay an annual death benefit to such officer's estate equal to the single life annuity benefit such executive officer would have received if he had terminated employment on the later of his 65th birthday or the date of his death, payable over ten years; provided that such amount would be reduced by five percent for each year such executive officer's death occurs prior to age 65, but in no event more than 50 percent. Each of the employment agreements provides that if the Company terminates such executive officer's employment other than for "cause" (as defined in the agreement), such executive officer be entitled to receive a lump sum cash payment equal to the amount of base salary payable for the remaining term of the agreement (at the then current rate) plus one-half of the maximum incentive bonus compensation that would be payable if such executive officer continued employment through the date of the expiration of the agreement(assuming for such purposes that the amount of incentive bonus compensation would be the same in each of the years remaining under the agreement as was paid for the most recent year prior to termination of employment). Each of the agreements further provides that if any payment on termination of employment would not be deductible by the Company under Section 280G(b)(2) of the Internal Revenue Code, the amount of such payment would be reduced to the largest amount that would be fully deductible by the Company. CERTAIN TRANSACTIONS The Company leases its corporate and operating facilities at the Little Mountain, North Carolina airport from Little Mountain Airport Associates, Inc. ("Airport Associates"), a corporation whose stock is owned by J. Hugh Bingham, William H. Simpson, John J. Gioffre, the estate of David Clark and three unaffiliated third parties. On May 30, 1996, the Company renewed its lease for this facility, scheduled to expire on that date, for an additional five-year term, and adjusted the rent to account for increases in the consumer price index. The lease may be extended for an additional five- year term, with rental payments to be adjusted to reflect changes in the consumer price index. Upon the renewal, the monthly rental payment was increased from $7,000 to $8,073. The Company paid aggregate rental payments of $96,876 to Airport Associates pursuant to such lease during the fiscal year ended March 31, 1998. The Company believes that the terms of such lease are no less favorable to the Company than would be available from an independent third party. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Compensation Committee of the Board of Directors establishes the compensation paid to the Company's executive officers, including the individuals named in the Summary Compensation Table. The Compensation Committee met four times during the fiscal year and also communicated informally by telephone conferences between certain members of the Committee and the distribution of memoranda to all members of the Committee. Policies The Compensation Committee seeks to establish compensation policies that provide appropriate rewards to the Company's executive officers commensurate with their service with the Company and to provide incentives for superior performance. Executive compensation is comprised of three components: base salary, annual cash bonuses and stock option awards. In setting an executive officer's base salary, the Compensation Committee engages in a subjective evaluation, examining the officer's level of responsibility in the Company and previous base compensation, the officer's performance over both the short and longer terms, the Company's performance over those periods and the length of the officer's service with the Company, assigning no particular weight to any of these factors. The Company has entered into employment agreements with certain of its executive officers establishing a minimum base annual salary and providing for an annual cash bonus equal to an established percentage of the Company's earnings before income taxes and extraordinary items. Accordingly, the Committee believes that a substantial portion of compensation of executive officers will be tied directly to the Company's overall financial performance. In addition, during the most recent fiscal year, the Company awarded executive officers and other employees bonuses under the Company's 1998 Omnibus Securities Award Plan. Because the Company has not awarded stock options to its employees in the several years, and then awarded options only to executive officers, option awards were fairly uniformly distributed among the key employees of the Company, with each executive officer (other than the Chief Executive Officer and the Executive Vice President) receiving 9,000 options. These options vest in equal one- third increments over three years and expire four years after they were awarded. No options were awarded to the Company's Chief Executive Officer in light of his substantial existing beneficial ownership. The Compensation Committee believes that options are performance-based compensation and serve as an incentive to management to remain with the Company. Stock options and other equity- based performance compensation may be awarded in the future. Compensation of Chief Executive Officer Upon Mr. Walter Clark's appointment as Chief Executive Officer in April 1997, the Committee established his initial annual salary at $60,000. The Committee authorized an increase in Mr. Walter Clark's annual salary to $120,000 in January 1998. In setting Mr. Walter Clark's salary, the Committee deferred in part to Mr. Walter Clark's request that his compensation be kept relatively low. In determining salary and bonus for Mr. Walter Clark, the Committee has used its subjective evaluation of Mr. Walter Clark's performance and responsibilities, the Company's overall performance and his request that his compensation be relatively low. The Committee believes that the scope and his performance of his responsibilities, would justify a higher level of compensation to Mr. Walter Clark. Compensation Committee Claude S. Abernethy, Jr. Sam Chesnutt George C. Prill COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN The following graph compares the Company's cumulative total shareholder return at the end of the five most recent fiscal years, assuming an investment on March 31, 1994 of $100 in Common Stock and reinvestment of all dividends in Common Stock, along with the cumulative total returns determined on the same basis of a broad-based equity market index - -- The Center for Research in Securities Prices (CRSP) Total Return Index for the Nasdaq Stock Market (U.S. Companies) -- and two peer indices. The Company has historically presented in its stockholder communications a selfconstructed peer index that includes all U.S. companies with stock registered with the Securities and Exchange Commission that list the code for overnight package delivery as their primary standard industrial classification code. The Company is presenting a second, more diversified, peer index this year-the CRSP Nasdaq Trucking & Transportation Index-in light of the increasing significance of the Company's aviation ground support equipment and aviation related parts brokerage and overhaul services businesses. The Company intends to present a comparison to the Nasdaq Trucking & Transportation Index in future years. (1) The peer issuers index is an index constructed by the Company and is comprised of all U.S. companies with stock registered with the Securities and Exchange Commission having the same standard industrial classification code as the Company: Airborne Freight Corporation, Federal Express Corporation and Pittston Services Group, Inc., which operates Emery Air Freight. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE To the Company's knowledge, based solely on review of the copies of reports under Section 16(a) of the Securities Exchange Act of 1934 that have been furnished to the Company and written representations that no other reports were required, during the fiscal year ended March 31, 1997 all executive officers, directors and greater than ten-percent beneficial owners have complied with all applicable Section 16(a) filing requirements, except that Mr. Moore was late in filing a Form 4 report with respect to his acquisition of shares in February 1999. ADOPTION OF 1998 OMNIBUS SECURITIES AWARD PLAN On June 21, 1999, the Board of Directors adopted, subject to the approval of the stockholders, an amendment to the Air Transportation Holding Company, Inc. 1998 Omnibus Securities Award Plan (the "Plan"). The Plan was adopted by the stockholders at the Company's 1998 annual meeting. The amendment approved by the Board will increase the number of shares that may be issued under the Plan from 165,000 to 365,000. Options for all 165,000 shares authorized under the Plan have been awarded. By increasing the number of shares available under the Plan, the Company can continue to use the Plan to allow it to attract and retain key employees, to stimulate the efforts of such employees, and to strengthen their desire to remain with the Company. In addition, the Plan is intended to aid the Company in attracting superior individuals to serve as directors. The following discussion describes the Plan as it is proposed to be amended by the Board of Directors. Material Features of the Plan The Plan is designed to give the Board of Directors, acting through a committee of non- employee directors (the "Committee"), flexibility to adapt the long-term incentive compensation of key employees to changing business conditions through a variety of long-term incentive arrangements. Under the Plan, the Committee may grant stock options (both non-qualified and incentive), stock appreciation rights, performance restricted stock awards, performance awards and performance units to employees of the Company holding positions of responsibility in managerial, administrative, operational or professional capacities ("Key Employees"). The Plan also provides for the grant of options to non- employee directors ("Nonemployee Directors") upon the initial approval of the Plan in 1998 or upon a director's initial election to the Board thereafter. The Plan also Nonemployee Directors to elect to take their compensation in the form of stock options instead of cash. In addition to the enumerated incentive compensation awards, the Committee may establish other types of Key Employee Awards it determines are consistent with the Plan's purposes. Key Employee Stock Options. Under the Plan, the Committee may grant awards in the form of options to purchase shares of the Company's Common Stock. The Committee will determine the number of shares subject to the option, the manner and time of the option's exercise and the exercise price per share of stock subject to the option. In no event may the exercise price of a stock option be less than 100% of the fair market value of the Common Stock on the date of the grant. The last sale of the Common Stock on June 18, 1999 was at $5.125 per share. All stock options under the Plan will expire no later than ten years from the date of the grant, and the exercise price of outstanding options may not be altered by the Committee. The Plan provides for the grant to Key Employees of incentive stock options within the meaning of Section 422 of the Internal Revenue Code, as amended (the "Code"). Stock Appreciation Rights. The Plan authorizes the Committee to grant stock appreciation rights ("SARs") to Key Employees. A SAR consists of the right to receive a payment equal to appreciation in market value of the stated number of shares of Common Stock from the SAR exercise price to the market value on the date of its exercise. The Committee determines the number of shares of the Company's Common Stock subject to the SARs, the manner and time of the SAR's exercise and exercise price of the SAR, which exercise price may in no event be less than 100% of the fairmarket value of the Common Stock on the date of grant of the SAR. SARs may be granted either in tandem with Key Employee stock options or independent of the grant of such options. Performance Restricted Stock Program. The performance restricted stock program provides Key Employee participants the opportunity to earn shares of the Company's Common Stock based upon the achievement of objective goals determined by the Committee. Under this program, the Committee may establish for any Key Employee a target award for a performance cycle, which target is expressed as a fixed number of shares of restricted Common Stock. Each performance cycle will be one year or longer as set by the Committee, and performance cycles can be of varying and overlapping durations. Within the first 90 days of a performance cycle, the Committee will establish written performance goals based on objective business criteria enumerated in the Plan, which are limited to return on net assets, return on stockholders' equity, return on assets, return on capital, stockholder returns, profit margin, earnings per share, net earnings, operating earnings, Common Stock price per share, and sales or market share (the "Performance Criteria"). Awards are paid for the performance cycle only if the performance goals are attained. At the same time, the Committee will establish a performance formula that will determine, assuming the performance goals for the performance cycle are achieved, what percentage of the participant's target award for the performance cycle has been earned. After the close of each performance cycle, the Committee will calculate, based upon application of the performance formula to the performance goals, what percentage of the target award has been earned for the period, although the Committee will have the authority to reduce or eliminate an award based on any other objective or subjective criteria it deems appropriate. Awards under this program will be paid in restricted Common Stock. Such stock may not be sold, transferred or encumbered by the participant during the restriction period established by the Committee, which restriction period will be at least three years. Except in the case of a "change in control" of the Company (as defined in the Plan), in the event a participant's employment is terminated prior to completion of a performance cycle for any reason other than death, disability, retirement or another reason approved by the Committee (an "Approved Reason"), all of the awards granted to the participant for such cycle shall be forfeited. In addition, any such termination (whether or not it occurs during a performance cycle) will cause the participant to forfeit any restricted Common Stock that is subject to an unexpired restriction period. In the event a participant's employment is terminated due to death, disability, retirement or an Approved Reason prior to the completion of such cycle, he or she shall receive, assuming Awards are earned for such cycle, a pro rata award based upon his or her employment during the cycle prior to termination of employment and the participant will be entitled to keep restricted Common Stock subject to an unexpired restriction period in a pro rata amount based on the elapsed portion of the restriction period prior to termination. Performance Awards Program. The Performance Award Program is structured similarly to the Performance Restricted Stock Program, and provides participants the opportunity to earn awards in the form of cash or Common Stock, subject to such restrictions as the Committee determines. Performance Awards will be based on written objective performance goals for a performance period (which must be at least one year, but it can be of varying and overlapping durations) established by the Committee. Awards will be determined by applying a performance formula to the performance goals (which must be based only on one or more of the Performance Criteria) attained in the performance period to determine an award expressed as a percentage of the participant's base salary. The Committee will have the authority to reduce or eliminate Performance Awards in the same manner as under the Performance Restricted Stock Program. The termination of a participant during a performance period will be treated in an equivalent manner as under the Performance Restricted Stock Program. Performance Units. The Plan allows the Committee to grant Awards in the form of Performance Units which are units valued by reference to criteria selected by the Committee, which are not limited to the Performance Criteria specified in the Plan. Performance Units are similar to Performance Restricted Stock Program Awards in that they are contingently awarded based on the attainment of certain performance objectives over a fixed period; however, Performance Units shall not be payable in Common Stock. The length of such period, the performance objectives to be achieved during the period and the measure of whether and to what degree such objectives have been achieved will be determined by the Committee. Limitation on Awards. The maximum number of shares of Common Stock for which stock options may be granted to any Key Employee in a calendar year is 50,000. The maximum number of shares of Common Stock for which stock appreciation rights may be granted to any Key Employee in a calendar year is 50,000. The maximum number of shares of Common Stock for which an Award may be made under the Performance Restricted Stock Program in any performance cycle is 5,000. The maximum Award that may be granted under the Performance Award Program for any performance period is $100,000 or, in the event the Performance Award is paid in shares of Common Stock, the Common Stock equivalent thereof as of date of payment. Director Formula Options and Deferral Options. The Plan provides for the grant, upon a Nonemployee Director's election at the 1998 annual meeting of stockholders or upon his or her subsequent initial election or appointment as Director, of a Formula Option to purchase 1,000 shares of the Company's Common Stock at an exercise price of no less than 100% of the fair-market value of the Company's Common Stock on the date of grant. The formula for the grant of Formula Options may not be altered by the Committee more often than once every six months except as necessary to comply with the Code or the Employee Retirement Income Security Act. Formula options may not be exercised sooner than six months from (i) the date of grant or (ii) the date of shareholder approval of the Plan, whichever is later. Formula Options become immediately exercisable upon a Director's death, disability or retirement or upon a Change in Control of the Company (as defined in the Plan). The Plan also provides that Nonemployee Directors may elect annually to receive their compensation for service as a Director for the following year (not including reimbursement of expenses) in the form of Deferral Options. Deferral Options are granted at the commencement of the 12- month period for which the election has been made. The number of Deferral Options granted to an electing Nonemployee Director in any year shall be an amount whose value, as determined by any generally accepted option pricing model, is equivalent on the date of grant to the cash compensation which the Nonemployee Director would otherwise have been entitled to receive for the year. In general, Deferral Options become exercisable one year after the date of grant and are exercisable at a price equal to the market price of the Company's Common Stock at the close of business on the day of grant, or next preceding trading day if the date of grant is not a trading day. Deferral Options become immediately exercisable upon a Director's death, disability or retirement or upon a Change in Control of the Company. If a Director's tenure ends for a reason other than death, disability, retirement or change in control, then the number of Deferral Options granted for the year in which the tenure ends shall be reduced to reflect the amount of compensation actually earned by the Director in that year. Available Shares. The maximum amount of Common Stock reserved and available for issuance under the Plan is 365,000 shares, which number may be adjusted by the Committee for to reflect future stock splits, stock dividends and other changes in the capital structure of the Company. Shares of Common Stock related to Awards which terminate by expiration, forfeiture, cancellation or otherwise without the issuance of shares, or are settled in cash in lieu of Common Stock, will not again be available for grant under the Plan. Eligibility for Participation. The selection of Key Employees to participate in the Plan is within the discretion of the Committee. The Committee has not determined how many Key Employees will ultimately participate in the Plan. However, the Committee intends to grant awards under the Plan to Employees who the Committee believes can have a significant effect on the growth, profitability and success of the Company. There are approximately 40 employees of the Company in this category. Only Nonemployee Directors are eligible to receive Formula Options and Deferral Options. There are currently five Nonemployee Directors, each of whom received a Formula Option for 1,000 shares of Common Stock upon initial stockholder approval of the Plan at the 1998 annual meeting of stockholders. Other benefits to potential participants under the Plan are not presently determinable. Change in Ownership or Control. For all awards (other than Formula Options and Deferral Options, the treatment of which has been discussed above) in the event of a Change In Control (defined as a change in a majority of directors resulting from a tender offer, merger or similar transaction), a participant whose employment is terminated for a reason other than death, disability, cause, voluntary resignation other than for "Good Reason" (as described below) or retirement, within two years of the date of such event will be entitled to the following treatment under the Plan: (i) all of the terms, conditions, restrictions and limitations in effect on any of the participant's outstanding awards will immediately lapse, (ii) all of the participant's outstanding awards will automatically become 100% vested, (iii) all of the participant's outstanding stock options, SARs, Common Stock awards, unpaid Performance Restricted Stock and Performance Awards and other stock-based awards will be immediately paid and (iv) all of the participant's outstanding performance units will be paid. As provided in the Plan, during such two- year period following a Change in Control, a participant voluntarily resigns, the participant's awards under the Plan will be treated as described in the immediately preceding paragraph if the participant resigns for "Good Reason," which is defined in the Plan to include the assignment to the participant of duties inconsistent with the participant's position, duties or responsibilities immediately prior to the Change in Control, a reduction in the participant's base salary or in benefits under any benefit or incentive plan in which the participant participated at the time of the Change in Control, relocation to a place more than 30 miles from the participant's workplace at the time of the Change in Control or reduction in paid vacation time. The Plan also provides that if the Company's Common Stock ceases to be actively traded on the exchange or quotation system on which it is then traded, then all participants, regardless of whether their employment is terminated, will automatically receive the same treatment afforded to a participant terminated without cause upon a Change In Control. Plan Administration and Termination. The Committee that administers the Plan may be comprised of either the Compensation Committee of the Board or other committee designated by the Board, provided, that each of the members of the Committee must be both a "disinterested director" and an "outside director" as defined under applicable law. No member of the Committee is eligible to be selected to participate in the Plan except through Formula Options and Deferral Options. Among the powers granted to the Committee are the authority to interpret the Plan, establish rules and regulations for its operation, select key employees of the Company and its subsidiaries to receive Awards and determine the form and amount and other terms and conditions of such Awards. The Plan authorizes the Committee to grant Common Stock Awards to Key Employees during the period from August 13, 1998 through August 13, 2001; except that the Committee may grant Awards under the Performance Award Program and Performance Restricted Stock Program after such date in recognition of performance for Performance Cycles and Performance Periods commencing prior to such date. The Committee may suspend or terminate the Plan at any time, with or without prior notice. In general, the Committee may not make substantive amendments to the Plan without stockholder approval. Plan Benefits No Awards have been made to date under the Plan. The Company has no existing stock option plans. Since the grant of Awards under the Plan is entirely within the Committee's discretion, subject to the limitations set forth in the Plan, it is not possible to determine the amount of Awards that would have been granted for the last fiscal year had the Plan been in effect. Federal Income Tax Consequences The following is a brief summary of the principal United States federal income tax consequences under current federal income tax laws related to Awards under the Plan. This summary is not intended to be exhaustive and, among other things, does not describe state or local tax consequences. Stock Options. A participant who is granted an incentive stock option within the meaning of Section 422 of the Code should not realize any taxable income at the time of the grant or at the time of exercise. Similarly, the Company is not entitled to any deduction at the time of grant or at the time of exercise. If the participant makes no disposition of the shares acquired pursuant to an incentive stock option before the latter of two years from the date of grant of such option and one year from the exercise of such option, any gain or loss realized on a subsequent disposition of the shares will be treated as a longterm capital gain or loss. Under such circumstances, the Company will not be entitled to any deduction for Federal income tax purposes. Upon a sale or other disposition of shares acquired upon the exercise of an incentive stock option within one year after the transfer of the shares to the participant or within two years after the date of grant of the incentive stock option (including the delivery of such shares in payment of the exercise price of another incentive stock option within such period), any excess of (a) the lesser of (i) the fair market value of the shares at the time of exercise of the option and (ii) the amount realized on such disqualifying sale or other disposition of the shares over (b) the exercise price of such shares, should constitute ordinary income to the participant and the Company should be entitled to a deduction in the amount of such income. The excess, if any, of the amount realized on a disqualifying sale over the fair market value of the shares at the time of the exercise of the option generally will constitute short-term or long-term capital gain and will not be deductible by the Company. A participant who is granted a non-qualified stock option will not have taxable income at the time of grant, but will have taxable income at the time of exercise equal to the difference between the exercise price of the shares and the market value of the shares on the date of exercise. The Company will be entitled to a corresponding deduction for the same amount. Other Awards. The grant of an SAR has no Federal tax consequences for the participant or the Company. The exercise of an SAR results in taxable income to the participant equal to the difference between the exercise price of the shares and the market price of such shares of the date of exercise and a corresponding deduction by the Company. A participant who has been granted either Performance Awards or Performance Units will not realize taxable income at the time of grant, and the Company will not be entitled to a deduction at such time. A participant will realize ordinary income at the time the Award is paid, and the Company will have a corresponding deduction. If an Award is paid in the form of Common Stock, the participant will be treated as having received taxable compensation in an amount equal to the then fair market value of the Common Stock distributed to him or her and the Company will receive a corresponding deduction for the same amount. A participant who has been granted an Award of restricted shares of Common Stock will not realize taxable income at the time of grant, and the Company will not be entitled to a deduction at the time of grant, assuming that the restrictions constitute a substantial risk of forfeiture for Federal income tax purposes. When such restrictions lapse, the participant will receive taxable income in an amount equal to the excess of the fair-market value of the shares at such time over the amount, if any, paid for such shares. The Company will be entitled to a corresponding deduction. Limitation on Income Tax Deduction. The Plan has been designed to enable any Award granted by the Committee under the Plan to a Key Employee to qualify as "performance-based compensation" under Section 162(m) of the Code. Through such qualification, the Company can preserve the deductibility of certain compensation in the event that the annual compensation of a Key Employee exceeds $1,000,000. Under certain circumstances the accelerated vesting or exercise of options or other awards under the Plan in connection with a change of control of the Company might be deemed an "excess parachute payment" for purposes of the golden parachute tax provisions of section 280G of the Code. To the extent it is so considered, the participant may be subject to a 20% excise tax and the Company may be denied a tax deduction. Other Information Approval of the proposed amendment to the Plan requires the affirmative vote of a majority of the shares of Common Stock present or represented by proxy and entitled to vote at the Meeting. APPROVAL OF AMENDMENT TO COMPANY'S CERTIFICATE OF INCORPORATION TO CHANGE NAME On April 30, 1999, the Board of Directors adopted a resolution to amend the Company's Certificate of Incorporation to change the Company's name to "AirT, Inc." Although the Company has used its current name for over 15 years, the November 1997 name change by a company formerly known as ValuJet, Inc. to "AirTran Holdings, Inc." and the similarity in business operations of the two companies-AirTran Holdings, Inc. operates a passenger airlines--has resulted in substantial confusion. Almost daily, the Company receives multiple telephone calls and correspondence intended to be directed to AirTran Holdings, Inc. Although the Company has requested that AirTran Holdings, Inc. change its name to eliminate this confusion, AirTran Holdings, Inc. appears unwilling to do so voluntarily. Because the Company does not operate any consumer business using the "Air Transportation Holding Company" name and is known by many simply as "AirT," the Board of Directors believes that changing the Company's name to "AirT," rather than pursuing any legal remedy the Company may have, is the most cost-appropriate means of eliminating this confusion. Accordingly, the Board of Directors recommends that the stockholders approve the following resolution: "RESOLVED, that the Certificate of Incorporation of Air Transportation Holding Company, Inc. be amended to change the name of the Company to `AirT, Inc.' and that Article 1 of the Certificate of Incorporation be amended to read in its entirety as follows: `The name of the Corporation is AirT, Inc.'" Approval of this amendment requires the affirmative vote of a majority of the outstanding shares of Common Stock of the Company. RATIFICATION OF INDEPENDENT AUDITORS The Board of Directors recommends that the stockholders ratify the appointment of Deloitte & Touche LLP to serve as the independent auditors for the Company and its subsidiary corporations for the fiscal year ending March 31, 2000. This firm has served as the independent auditors for the Company since 1983. Representatives of Deloitte & Touche LLP are expected to be present at the annual meeting and will have an opportunity to make a statement and will be available to respond to appropriate questions. ADDITIONAL INFORMATION THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER OF THE COMPANY, AND TO EACH PERSON REPRESENTING THAT AS OF THE RECORD DATE FOR THE MEETING HE OR SHE WAS A BENEFICIAL OWNER OF SHARES ENTITLED TO BE VOTED AT THE MEETING, IF SOLICITED BY WRITTEN REQUEST, A COPY OF THE COMPANY'S 1999 ANNUAL REPORT ON FORM 10-K TO THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS. SUCH WRITTEN REQUESTS SHOULD BE DIRECTED TO AIR TRANSPORTATION HOLDING COMPANY, INC., 3524 AIRPORT ROAD, MAIDEN, NORTH CAROLINA 28650, ATTENTION: MR. JOHN J. GIOFFRE, SECRETARY. OTHER MATTERS The Board of Directors knows of no other matters that may be presented at the meeting. AIR TRANSPORTATION HOLDING COMPANY, INC. NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD AUGUST 11, 1999 AND INFORMATON STATEMENT JULY 14, 1999 -----END PRIVACY-ENHANCED MESSAGE-----