-----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, QfcfNvvKOBqNalto76ZXzxu5c0DGEL0pRc7I+nC6teANveQjLvMysj/AL+bz7ZIC 0w8QQiJGcA+MYya7KYZzUA== 0000927356-96-000605.txt : 19960730 0000927356-96-000605.hdr.sgml : 19960730 ACCESSION NUMBER: 0000927356-96-000605 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960913 FILED AS OF DATE: 19960729 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FRONTIER AIRLINES INC /CO/ CENTRAL INDEX KEY: 0000921929 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 841256945 STATE OF INCORPORATION: CO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-24126 FILM NUMBER: 96600256 BUSINESS ADDRESS: STREET 1: 12015 EAST 46TH AVE CITY: DENVER STATE: CO ZIP: 80239 BUSINESS PHONE: 3033717400 DEF 14A 1 DEFINITIVE PROXY STATEMENT SCHEDULE 14A INFORMATION 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: [_] Preliminary Proxy Statement [_] Confidential, for Use of Commission Only (as permitted by Rule 14a- 6(e)(2)) [X] Definitive Proxy Statement [_] Definitive Additional Materials [_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12 FRONTIER AIRLINES, INC. ------------------------------------------------------------------ (Name of Registrant as Specified in Its Charter) ------------------------------------------------------------------ (Name of Person(s) Filing Proxy Statement if other than Registrant Payment of Filing Fee (Check the appropriate box): [X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2) or Item 22(a)(2) of Schedule 14A [_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a- 6(i)(3). [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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: ---------------------------------------------------------------------- FRONTIER AIRLINES, INC. 12015 E. 46TH AVENUE DENVER, CO 80239 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS _____________________ August 5, 1996 TO THE SHAREHOLDERS OF FRONTIER AIRLINES, INC.: An annual meeting of shareholders of Frontier Airlines, Inc., a Colorado corporation, will be held on Friday, September 13, 1996 at 2:00 p.m. local time at the Airport Holiday Inn, 4040 Quebec Street, Denver, Colorado for the following purposes: 1. To consider and act upon a proposal to elect Samuel D. Addoms, Paul Stephen Dempsey, B. LaRae Orullian, William B. McNamara and D. Dale Browning to the Company's Board of Directors; 2. To consider and act upon an amendment to the Company's 1994 Stock Option Plan; 3. To ratify the appointment of KPMG Peat Marwick LLP as the independent public accountants of the Company for the year ending March 31, 1997; and 4. To transact any other business which properly comes before the meeting or any adjournment. All shareholders of record on the Company's transfer books as of the close of business on August 2, 1996 are entitled to vote at the meeting. A complete list of shareholders entitled to vote at the annual meeting will be available for examination by any Company shareholder at 12015 E. 46th Avenue, Denver, Colorado 80239 for purposes germane to the annual meeting, during normal business hours from August 2, 1996 until the annual meeting. We invite you to be present at the meeting and look forward to seeing you there. However, if you cannot attend please read the attached proxy statement carefully and SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD AUTHORIZING REPRESENTATIVES OF THE COMPANY'S MANAGEMENT TO VOTE ON YOUR BEHALF AT THE MEETING. By order of the Board of Directors FRONTIER AIRLINES, INC. Arthur T. Voss Secretary FRONTIER AIRLINES, INC. 12015 E. 46TH AVENUE DENVER, CO 80239 August 5, 1996 PROXY STATEMENT This proxy statement and accompanying proxy card support a proxy solicitation on behalf of the Board of Directors of Frontier Airlines, Inc. (the "Company") for use at the September 13, 1996 annual meeting of shareholders and at any adjournment of that meeting. This proxy statement and form of proxy, together with the Company's Annual Report on Form 10-KSB, will be sent by mail to shareholders beginning approximately August 5, 1996. The proxy card, when properly signed, dated and returned to the Company, will be voted by the proxies at the annual meeting as directed. Proxy cards returned without direction about business to be transacted at the meeting will be voted in favor of (i) the election of Samuel D. Addoms, Paul Stephen Dempsey, B. LaRae Orullian, William B. McNamara and D. Dale Browning to the Board of Directors of the Company, (ii) the amendment to the Company's Stock Option Plan and (iii) the ratification of the appointment of KPMG Peat Marwick LLP as the independent public accountants of the Company for the Company's fiscal year ending March 31, 1997. The proxies will use their best judgment regarding other matters that properly come before the meeting. The Company is not aware of any matters, other than those discussed in this proxy statement, that will be presented at the meeting. The Company can conduct business at the meeting only if holders of a majority of the total outstanding shares of Common Stock entitled to vote are present, either in person or by proxy. Abstentions will be counted in determining whether a quorum has been reached. Broker-dealer non-votes will also be counted for quorum purposes. Assuming a quorum exists, the affirmative vote of a majority of the shares present and voted, excluding abstentions, is necessary to approve each of the proposed matters to be voted on. Under Securities and Exchange Commission rules, boxes and a designated blank space are provided on the proxy card for shareholders to mark if they wish either to vote "for," "against" or "abstain" on one or more the proposals. REVOCABILITY OF PROXY Execution of the enclosed form of proxy will not affect a shareholder's right to attend the meeting and vote in person. Any shareholder giving a proxy may revoke it at any time before it is exercised by attending the meeting and voting in person by providing notice of revocation to the corporate secretary of the Company at the address set forth above. Shareholders may vote all their eligible shares if they are personally present at the meeting. When a shareholder votes at the meeting, his or her vote will revoke any proxy previously granted by the shareholder. EXPENSE AND MANNER OF SOLICITATION In addition to solicitation by mail, proxies may be solicited in person or by telephone or telegram by directors and officers of the Company who will not receive compensation for their soliciting activities. Brokers and other nominees will solicit proxies or authorizations from beneficial owners and will be reimbursed for their reasonable expenses of forwarding proxy material to beneficial owners. The Company will bear all of the costs of the solicitation. VOTING SECURITIES AND PRINCIPAL HOLDERS As of August 2, 1996, the record date, 8,765,506 shares of the Company's no par value Common Stock were outstanding and entitled to vote at the meeting. Each share may cast one vote on each separate matter of business properly brought before the meeting. Only shareholders of record at the close of business on August 2, 1996 may vote. The following table sets forth certain information regarding beneficial ownership of the Company's Common Stock as of August 2, 1996, by (i) each director of the Company, and (ii) all directors and executive officers as a group. Unless otherwise indicated, based on information furnished by such owners, the Company believes that the shareholders listed below have sole investment and voting power with respect to their shares. To the knowledge of the Company, no person owns beneficially more than five percent of the Company's outstanding Common Stock.
SHARES BENEFICIALLY PERCENTAGE OF NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OWNERSHIP (1) - -------------------------------------- -------------------- -------------- Samuel D. Addoms 12015 East 46th Avenue Denver, CO 80239 256,759 (2) 2.4 Paul S. Dempsey 12015 East 46th Avenue Denver, CO 80239 27,000 (3) * B. LaRae Orullian 12015 East 46th Avenue Denver, CO 80239 25,000 (3) * William B. McNamara 12015 East 46th Avenue Denver, CO 80239 10,000 (4) * D. Dale Browning 12015 East 46th Avenue Denver, CO 80239 10,000 (4) * All directors and executive officers as a group (12 persons) 903,105 (5) 8.6
________________________________ * Less than 1% (1) Includes shares of Common Stock issuable on exercise of Options. (2) Includes 212,500 shares held under option, all of which are currently exercisable, and 259 allocated ESOP shares. (3) Includes 25,000 shares held under option, all of which are currently exercisable. (4) Includes 10,000 shares held under option, all of which are currently exercisable. (5) Includes 799,437 shares held under option by the Company's directors and executive officers, all of which are currently exercisable, and 1,668 allocated ESOP shares. DIRECTORS AND EXECUTIVE OFFICERS The following table contains the name, age and position with the Company of each executive officer and director of the Company as of July 31, 1996. Their respective backgrounds are described following the table. Each of these officers devotes his or her full-time efforts to the affairs of the Company. 2
NAME AGE POSITION - --------------------------- --- ---------------------------------------------- Samuel D. Addoms 56 President, Chief Executive Officer and Chief Financial Officer; Director Jimmie P. Wyche 61 Executive Vice President-Operations Jon L. Bartram 58 Vice President-Maintenance William B. Durlin 70 Vice President-Technical Services Jeff S. Potter 36 Vice President-Marketing Elissa A. Potucek 39 Controller and Treasurer Robert M. Schulman 63 Vice President-Corporate Communications Arthur T. Voss 54 Vice President-Administration and General Counsel; Secretary Paul Stephen Dempsey 45 Director B. LaRae Orullian 63 Director and Chair of the Board of Directors William B. McNamara 64 Director D. Dale Browning 58 Director
SAMUEL D. ADDOMS is President and Chief Executive Officer and a director of the Company, having earlier served as Executive Vice President, Treasurer and a director of the Company during its early development in 1993 through September 1994 when he was elected to the position of President. He was elected Chief Executive Officer effective January 1, 1995. Before commencing his involvement in the development of the Company in 1993, he was associated with some 15 firms for the previous ten years, either as an officer, director or consultant. These include Gelco Corporation, Connecting Point of America and Communications World, Inc. His 35 years of management experience include positions as President and Vice President-Finance of Monfort of Colorado, President of the Denver National Bank and Vice President of the Continental Illinois National Bank in Chicago. JIMMIE P. WYCHE has been Executive Vice President-Operations of the Company since August 1995. Prior to that he had been Vice President-Flight Operations of the Company since its inception in February 1994. From 1989 to early 1994 Mr. Wyche was a jet captain with Skyways International, headquartered in Houston, Texas. From 1987 to 1989, he served as Director-Flight Operations with Ports of Call, a Denver-based charter airline. He served in various capacities with the former Frontier Airlines, Inc. between 1961 and 1985, starting as a pilot and then in a succession of management positions including Assistant Chief Pilot, Chief Pilot and Vice President-Flight Operations. He has over 15,500 flying hours. JON L. BARTRAM has been Vice President-Maintenance of the Company since December 1994. From 1993 to 1994 he served as Vice President-Maintenance Operations for DynAir Tech of Texas. He held a number of key maintenance positions with Alaska Airlines between 1987 and 1993 including Director- Production Planning and Director-Base Maintenance. He was an Air Carrier Inspector for the Federal Aviation Administration between 1986 and 1987. Before this, he served with the former Frontier Airlines, Inc., for 27 years (1959- 1986) in a succession of maintenance management positions including Director- Base Maintenance and Director-Technical Services. WILLIAM B. DURLIN has been Vice President-Technical Services of the Company since August 1995. Prior to that he had been Vice President, Maintenance and Engineering of the Company since February 1994. Between 1990 and 1993 he served as a consultant to aircraft leasing companies. From 1989 to 1990 he was Vice President-Maintenance and Engineering of Hawaiian Airlines, Inc., in Honolulu, Hawaii. From 1987 to 1988 he was Director of Aircraft Sales for United Airlines. He served in various capacities with the former Frontier Airlines, Inc., from 1948 to 1986, most recently as Vice President-Aircraft Procurement and Vice President-Engineering and Quality Control. 3 JEFF S. POTTER has been Vice President-Marketing of the Company since July 1995. From 1993 to 1995 he was Regional Director of Commercial Marketing- Pacific and Asia, for McDonnell Douglas Corporation, Long Beach, California. He served from 1992 to 1993 as Director-Domestic Schedule Development for Northwest Airlines in Minneapolis, Minnesota, having earlier held a succession of marketing management positions with Continental Airlines (1988-1991), Houston, Texas; Northwest Airlines (1986-1988), Minneapolis, Minnesota; Pacific Southwest Airlines (1985-1986), San Diego, California; and the former Frontier Airlines (1981-1985), Denver, Colorado. ELISSA A. POTUCEK has been Controller/Treasurer of the Company since June 1995. From 1991 to 1995 she was Controller of Richardson Operating Company and Richardson Production Company, an oil and gas company based in Denver, Colorado. She served from 1990 to 1991 as Controller of Coral Companies, Inc., Denver, Colorado, having earlier held accounting positions with US West Paging, Inc. (1988-1989), Denver, Colorado, and KPMG Peat Marwick LLP (1985-1988), Denver, Colorado. ROBERT M. SCHULMAN has been Vice President-Corporate Communications of the Company since its inception in February 1994. From 1986 to 1993 he was President of BSI Communications, a consulting firm specializing in public relations programs for airlines and travel agencies, while concurrently (1990- 1992) participating in the development and start-up of Reno Air, Inc., Reno Nevada. He served with the former Frontier Airlines, Inc. from 1974 to 1986, most recently as Senior Director-Corporate Communications. From 1972 to 1974 he was Public Information Officer of the Air Line Pilots Association, Washington, D.C.; from 1970 to 1972, Regional Manager-Public Relations of Eastern Airlines, Inc., Washington, D.C.; and from 1967 to 1970, Director-Corporate Communications of Mohawk Airlines, Inc., Utica, New York. ARTHUR T. VOSS has been Vice President-Administration, General Counsel and Secretary of the Company since September 1995 and Vice President, General Counsel and Secretary of the Company since its inception in February 1994. From 1991 to present, Mr. Voss has been the Vice President-Legal of Professional Fee Examiners, Inc. a professional fee auditing firm based in Denver, Colorado. He was Vice President-Legal of Aeronautics Leasing, Inc., an aircraft leasing firm based in Golden, Colorado, from 1990 to 1991. From 1986 to 1989 he served as Vice President and General Counsel of Aspen Airways, Inc. He held various management positions in the Legal Department of the former Frontier Airlines, Inc. from 1971 to 1985, most recently as Associate General Counsel. PAUL STEPHEN DEMPSEY has been a director of the Company since July 1994. He is Professor of Law and Director of the Transportation Law Program at the University of Denver, College of Law, Denver, Colorado, having been associated with the institution since 1979. He served as Legal Advisor to the Chairman, U.S. Interstate Commerce Commission, in 1981 and 1982; Attorney-Advisor to the former Civil Aeronautics Board's Office of General Counsel, and its Bureau of Pricing and Domestic Aviation, 1977-1979; and Attorney-Advisor to the Interstate Commerce Commission's Office of Proceedings, Interstate Commerce, 1975-1977. Dr. Dempsey holds the following degrees: A.B.J., J.D., University of Georgia; LL.M., George Washington University; and D.C.L., McGill University. A Fulbright Scholar, he has written more than 40 law review articles, scores of editorials for the news media and six books on topics relating to air transportation. B. LARAE ORULLIAN has been a director of the Company since July 1994 and Chair of the Board of Directors since September 1995. She is Chair of the Board and a director of the Women's Bank, N.A., Denver, Colorado, one of the highest positions held by a woman in the banking industry. She is a director of Equitable Bankshares of Colorado, Inc., a bank holding company. Additionally, she is active in or serves on the boards of 15 organizations including positions as National President of Girl Scouts of the U.S.A., Chair of Blue Cross/Blue Shield of Colorado and Chair of Rocky Mountain Health Care Corporation. She serves on the American Bankers Association Advisory Board of Education Foundation, on the Colorado Governor's Board of Ethics and on the board of Care USA, America's Clean Water Foundation and the Downtown Denver Improvement Association Committees. WILLIAM B. MCNAMARA has been a director of the Company since May 1996. A retired 35-year airline executive specializing in financial management, he most recently served with Continental Airlines, Inc. (1987 to 1994) as Vice President-Finance. From 1983 to 1987 he was Staff Vice President-Finance with New York Air, Inc. Before that he served in a succession of positions with Trans World Airlines, Inc., for 22 years including service as Staff Vice President-Marketing Administration. 4 D. DALE BROWNING has been a director of the Company since July 1996. A long-term bank and bank card executive, he has served since 1995 as President and Chief Executive Office of ProCard, Inc., Golden Colorado, and from 1993 to 1995 as a Senior Consultant to Visa International. He was President and Chief Executive Officer of the Colorado National Bank of Denver from 1986 through 1993, having concurrently served as Vice Chairman and Chief Operating Officer of Colorado National Bankshares and as Chief Executive Officer of Rocky Mountain BankCard System. In 1982 he founded Plus System, Inc., an international automatic teller machine network, and served as President of that company until 1992. MEETINGS OF THE BOARD OF DIRECTORS The Company's Board of Directors met seven times in the fiscal year ended March 31, 1996. All directors were present at these meetings. COMMITTEES The Company's Board of Directors has an Audit Committee and a Compensation Committee. The Board of Directors does not have a Nominating Committee. The duties of the Audit Committee are to recommend independent accountants for selection by the Board of Directors, to review the arrangements for and scope of the independent accountants' audit, to review the findings and recommendations of the independent accountants concerning internal accounting procedures and controls, to review professional services rendered by the independent accountants in regard to the Company and its management, and to review potential conflicts of interest between the Company and its employees. The members of the Audit Committee, which met twice during the fiscal year ending March 31, 1996, are Samuel D. Addoms, Paul Stephen Dempsey and B. LaRae Orullian. The duties of the Compensation Committee include recommending to the Board of Directors the compensation to be provided to the executive officers of the Company and the grant of options to eligible individuals under the Company's stock option plan. The members of the Compensation Committee, which met once during the fiscal year ending March 31, 1996, are Paul Stephen Dempsey and B. LaRae Orullian. CERTAIN TRANSACTIONS The Company's executive officers, who have purchased shares of Common Stock of the Company and received options to purchase additional shares of Common Stock, may be deemed "founders" or "parents" of the Company under the Securities Act of 1933. Transactions between the Company and its officers, directors, employees and affiliates will be on terms no less favorable to the Company than can be obtained from unaffiliated parties. EXECUTIVE COMPENSATION The following table summarizes the cash and noncash compensation awarded to, earned by or paid to the chief executive officer of the Company in the fiscal years ended March 31, 1994, 1995 and 1996.
LONG-TERM ANNUAL COMPENSATION COMPENSATION ------------------------------------------ -------------- OTHER ANNUAL COMPENSATION STOCK OPTIONS NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) GRANTED (#)(1) - ----------------------------- ---- --------- -------- ------------ -------------- Samuel D. Addoms, 1996 $48,229 N/A ----- 0 Chief Executive Officer 1995 $53,260 N/A ----- 0 1994 $ 2,500 N/A ----- 212,500 - -----------
(1) The incentive stock options were granted effective April 16, 1994. See "--Option Plan" below. 5 DIRECTOR COMPENSATION Since inception of the Company in February 1994 directors have served without cash compensation. For the Company's fiscal year beginning April 1, 1996 and ending March 31, 1997, the Company has agreed to pay each director who is not a Company employee $5,000 for serving in that capacity. Directors who are also employees of the Company will receive no additional compensation for serving as directors. The Company reimburses all of its directors for travel and out-of- pocket expenses in connection with their attendance at meetings of the Board of Directors. Two of the Company's outside directors each hold nonqualified options to purchase 25,000 shares of Common Stock at prices ranging between $1.00 and $7.75 per share under the Company's 1994 Stock Option Plan. Two other of the Company's outside directors each hold nonqualified options to purchase 10,000 shares of Common Stock under the Company's 1994 Stock Option Plan at prices per share of $7.75 and $9.00, respectively. OPTION PLAN For a discussion of the Company's Stock Option Plan, see "PROPOSAL 2. AMENDMENT TO THE 1994 STOCK OPTION PLAN" set forth below. EMPLOYEE STOCK OWNERSHIP PLAN The Company has established an Employee Stock Ownership Plan ("ESOP") which inures to the benefit of each permanent employee of the Company, except those employees covered by a collective bargaining agreement that does not provide for participation in the ESOP. Company contributions to the ESOP are discretionary and vary from year to year. In order for an employee to receive an allocation of Company Common Stock from the ESOP that employee must be employed on the last day of the Company's fiscal year, with certain exceptions. The Company's annual contribution to the ESOP, if any, will be allocated among the eligible employees of the Company as of the end of each plan year in proportion to the relative compensation (as defined in the ESOP) earned that plan year by each of the eligible employees. The ESOP does not provide for contributions by participating employees. Employees will vest in contributions made to the ESOP based upon their years of service with Frontier. A year of service is a fiscal year of the Company during which an employee has at least 1,000 hours of service. Vesting generally occurs at the rate of 20% per year, beginning after the first year of service, so that a participating employee will be fully vested after five years of service. Distributions from the ESOP will not be made to employees during employment. However, upon termination of employment with the Company, each employee will be entitled to receive the vested portion of his or her account balance. The initial Company contribution to the ESOP was made on June 22, 1995 and consisted of 137,340 shares of Common Stock, of which 27,468 shares relate to the plan year ended March 31, 1995 and 109,872 shares relate to the period from April 1, 1995 to December 31, 1995. The Company recognized compensation expense during the year ended March 31, 1996 of $721,000 related to its contribution to the ESOP. PROPOSAL 1 ELECTION OF THE BOARD OF DIRECTORS The Board of Directors of the Company has nominated Samuel D. Addoms, Paul Stephen Dempsey, B. LaRae Orullian, William B. McNamara and D. Dale Browning, all members of the existing Board of Directors, for election to the Board of Directors. Each of these nominees was elected to the Board of Directors at the Company's 1995 Annual Meeting of Shareholders, with the exception of Messrs. McNamara and Browning, who were appointed by the Board of Directors in May and July, 1996, respectively. A proposal to elect Samuel D. Addoms, Paul Stephen Dempsey, B. LaRae Orullian, William B. McNamara and D. Dale Browning to the Board of Directors of the Company will be presented to the shareholders at the annual meeting. THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ELECTION OF SAMUEL D. ADDOMS, PAUL STEPHEN DEMPSEY, B. LARAE ORULLIAN, WILLIAM B. MCNAMARA AND D. DALE BROWNING TO THE COMPANY'S BOARD OF DIRECTORS. 6 PROPOSAL 2 AMENDMENT TO THE 1994 STOCK OPTION PLAN The Board of Directors adopted a Stock Option Plan (the "Plan") in March 1994, which was subsequently approved by the Company's shareholders. Under the Plan, the Company has reserved an aggregate of 1,750,000 shares of Common Stock for issuance pursuant to the exercise of options. Options may be granted to key employees of the Company, including directors who are also employees of the Company, and to outside directors. There are currently approximately 14 individuals who qualify as key employees of the Company. At July 26, 1996, the closing price of the Company's Common Stock as listed on the Nasdaq SmallCap Market was $7.00 per share. As of May 14, 1996, all of the options currently authorized under the Plan had been granted. The following table sets forth certain information regarding options exercised by the Chief Executive Officer of the Company during the fiscal year ended March 31, 1996 and the value of options held by that officer at the end of fiscal 1996. There were no options granted under the Plan to the Chief Executive Officer of the Company during the fiscal year ended March 31, 1996. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION -------------------------------------------------------------------------- VALUES ------
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS SHARES ACQUIRED VALUE AT MARCH 31, 1996 AT MARCH 31, 1996 NAME ON EXERCISE (#) REALIZED ($) (#)(1) (1)(2) - ---------------- --------------- ------------ --------------------- -------------------- Samuel D. Addoms None N/A 212,500 $1,487,500
________________________________ (1) The options are currently exercisable in full. (2) Based on the closing bid price of the Common Stock on the Nasdaq SmallCap Market of $7.00 per share on March 29, 1996. * * * The Plan is administered by a committee which is composed of disinterested members of the Board of Directors (the "Committee"). Subject to the terms of the Plan, the Committee determines the persons to whom awards are granted, the type of award granted, the number of shares granted, the vesting schedule, and the term of each option (not to exceed ten years). Under the Plan, the Company may grant both incentive stock options ("incentive stock options") intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and options which are not qualified as incentive stock options ("nonqualified stock options"). Incentive stock options must be granted at an exercise price equal to or greater than the fair market value of the Common Stock on the date of grant. The exercise price of nonqualified stock options granted under the Plan will be determined by the Committee on the date of grant. The exercise price of incentive stock options granted to holders of more than 10 percent of the Common Stock must be at least 110 percent of the fair market value of the Common Stock on the date of grant, and the term of these options may not exceed five years. The Plan provides that the total number of shares covered by such plan, the number of shares covered by each option and the exercise price per share may be proportionately adjusted by the Board of Directors or the Committee in the event of a stock split, reverse stock split, stock dividend or similar capital adjustment effected without receipt of consideration by the Company. Upon a change in control of the Company, stock options outstanding under the Plan immediately become fully vested and exercisable. Also, in the event of a merger or consolidation in which the Company is not the surviving corporation, the sale of all or substantially all of the Company's assets, certain reorganizations or the liquidation of the Company, each option granted under the Plan may, at the election of the holder, become immediately exercisable. 7 An optionee will not be required to recognize any income at the time an incentive stock option is granted or exercised (assuming the optionee is an employee of the Company at all times from the date of grant until three months before the date of exercise), although the exercise may give rise to alternative minimum tax liability for the optionee. If an optionee does not dispose of shares acquired on exercise of an incentive stock option within the two-year period beginning the day after the day of grant of the option or within the one- year period beginning on the day after the day of the transfer of the shares to the optionee, the gain (if any) on a subsequent sale (i.e., the excess of the proceeds received over the option price) will be long-term capital gain and any loss the optionee may sustain on such sale will be long-term capital loss. If the optionee disposes of the shares within the two-year or one-year periods referred to above, the disposition is a "disqualifying disposition," and the optionee will generally recognize ordinary income taxable as compensation in the year of the disqualifying disposition to the extent of the excess of the fair market value of the shares on the date of exercise over the option price. The balance, if any, will be a long-term or short-term capital gain depending, generally, on whether the shares were held more than one year after the incentive stock option was exercised. The Company will not be entitled to a deduction with respect to an incentive stock option except to the extent the optionee recognizes ordinary income with respect to a disqualifying disposition, the Company will be entitled to a corresponding deduction, subject to general rules relating to the reasonableness of compensation. With respect to nonqualified stock options, there is no taxable income recognized by the optionee as a result of the grant of such an option. However, an optionee generally recognizes taxable income upon the exercise of a nonqualified stock option equal to the excess of the fair market value of the stock on the date of exercise over the option price. The Company is not entitled to a tax deduction upon the grant of a nonqualified stock option, but is entitled to a tax deduction upon exercise corresponding to the optionee's taxable income. The following table summarizes the presently outstanding options issued under the Plan to the indicated persons as of August 2, 1996:
Name or Group Number - ------------- ------ Samuel D. Addoms, Chief 212,500 Executive Officer All current executive officers as a group 729,437 All current directors who are not executives officers, as a group 70,000 All employees, excluding executive officers 208,375 Persons owning more than 5% of outstanding options: M.C. Lund 245,125 Samuel D. Addoms 212,500 Janice Brown 146,188 Robert M. Schulman 180,000 Don A. Love 159,375 William B. Durlin 108,000 Arthur T. Voss 98,937 Each of the five nominees for director: Samuel D. Addoms 212,500 Paul Stephen Dempsey 25,000 B. LaRae Orullian 25,000
8
Name or Group Number - ------------- ------ William B. McNamara 10,000 D. Dale Browning 10,000
On May 14, 1996 the Board of Directors approved an amendment to the Plan increasing the number of options available to be granted under the Plan by 500,000 or to a total of 2,250,000 and directed that this amendment be submitted to the shareholders for ratification. There are currently no options remaining for grant under the Plan, and the Board of Directors believes that the availability of options for grant under the Plan is an important factor in the Company's ability to attract and retain key employees. THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR RATIFICATION OF THE AMENDMENT TO THE STOCK OPTION PLAN. PROPOSAL 3 RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS KPMG Peat Marwick LLP was the Company's independent public accounting firm for the fiscal years ended March 31, 1994, 1995 and 1996 and has been appointed by the Board of Directors to continue in that capacity for the fiscal year ending March 31, 1997. A proposal to ratify the appointment of KPMG Peat Marwick LLP will be presented to the shareholders at the annual meeting. Representatives of KPMG Peat Marwick LLP will be present at the annual meeting and will have an opportunity to make a statement if they desire to do so and respond to appropriate questions. THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP. SHAREHOLDER PROPOSALS Shareholders are entitled to submit proposals on matters appropriate for shareholder action consistent with regulations of the Securities and Exchange Commission and the Company's bylaws. Should a shareholder wish to have a proposal appear in the Company's proxy statement for next year's annual meeting, under the regulations of the Securities and Exchange Commission it must be received by the corporate secretary at 12015 East 46th Avenue, Denver, CO 80239 on or before April 4, 1997. OTHER BUSINESS All items of business to be brought before the meeting are set forth in this proxy statement. Management knows of no other business to be presented. If other matters of business not presently known to management are properly raised at the meeting, the proxies will vote on the matters in accordance with their best judgment. NOTE: SHAREHOLDERS ARE REQUESTED TO SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD, USING THE ENCLOSED POSTAGE PREPAID ENVELOPE. 9 Appendix to Proxy Statement FRONTIER AIRLINES, INC. 1994 STOCK OPTION PLAN 1. Purpose. ------- The purpose of the Frontier Airlines, Inc. 1994 Stock Option Plan (the Plan") is to provide an incentive to certain employees and directors of Frontier Airlines, Inc. (the Company), by granting to such employees incentive stock options ("ISOs"), within the meaning of Section 422A of the Internal Revenue Code of 1986, as amended (the "Code"), to acquire Common Stock, no par value of the Company ("Stock"); and by granting to such employees and directors Options not constituting ISOs ("NQSOs"), to acquire Stock. 2. Effective Date and Term of the Plan. ----------------------------------- The Plan is effective March 10, 1994 (the "Effective Date"). Unless sooner terminated, the Plan shall continue in effect from the Effective Date until March 10, 2004 (the "Termination Date"). In no event shall an ISO or any other Option be granted after the Termination Date. Options granted prior to the Termination Date shall remain in effect until their exercise, surrender, cancellation or expiration in accordance with their terms. 3. Stock Subject to the Plan. ------------------------- (a) Subject to adjustment as provided in Section 10 below, the aggregate number of shares of Stock ("Shares") to be delivered upon exercise of all Options granted under the Plan shall not exceed one million, six hundred thousand (1,600,000). (b) If any Option granted under the Plan expires, terminates or is cancelled without having been exercised in full, the number of shares of Stock as to which the Option has not been exercised shall become available for further grants under the Plan, except that if any Option is cancelled on account of the exercise of a related Option, the Shares represented by such cancelled Option shall no longer be available for issuance under the Plan. (c) Upon exercise of an Option the Company may issue authorized but unissued shares of Stock, shares of Stock held in its treasury, or both. (d) Shares of Stock issued upon the exercise of an Option shall be fully paid and nonassessable. (e) Unless otherwise determined by the Committee, no fractional share of Stock shall be issued or transferred upon exercise of an Option under the Plan. 4. Administration of the Plan. -------------------------- (a) Committee. The Plan shall be administered by a Committee of the --------- Board of Directors (the "Committee"). The Committee shall initially consist of the entire Board. However, the Board may elect at any time to provide that the Committee shall consist of not less than two members, each of whom shall be a Director who is a "disinterested person" within the meaning of Title 17, Code of Federal Regulations, Section 16b-3(c)(2)(i). The Committee shall be appointed by, and serve at the pleasure of, the Board of Directors. (b) Authority. Subject to the specific limitations and restrictions --------- set forth in the Plan, the Committee shall have the authority: (i) to grant ISOs to employees whom the Committee determines are key to the success of the Company ("Key Employees"); (ii) to grant NQSOs to such employees or members of the Board of Directors as the Committee shall select (the grantee of an ISO or NQSO being hereinafter referred to as an "Optionee"); (iii) to make all determinations necessary or desirable for the administration of the Plan including, within any applicable limits specifically set out in the Plan, the number of shares of Stock that may be purchased under an Option, the price at which an Option may be exercisable, and the period during which an Optionee must remain in the -2- employ of the Company or a subsidiary of the Company prior to the exercise of an Option; (iv) to construe the respective Option agreements and the Plan; (v) to prescribe, amend and rescind rules and regulations relating to the Plan; (vi) to determine the terms and provisions of the respective Option agreements, which need not be identical; (vii) to correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Option granted under the Plan, in a manner that the Committee deems necessary or desirable; (viii) to amend any Option granted under the Plan, subject to the provisions of the Plan; (ix) to grant to Optionees in exchange for their surrender of Options, new Options containing such other terms and conditions as the Committee shall determine; and (x) to make all other determinations in the judgment of the Committee necessary or desirable for the administration of the Plan. Any interpretation or decision of the Committee shall be final and conclusive. Nothing in this Section 4(b) shall give the Committee the right to increase the total number of Shares that may be purchased on exercise of Options (except as provided in Section 10 below), to extend the term of the Plan, or to extend the period during which an ISO is exercisable beyond ten years from the date of grant thereof. (c) Liability/Protection. No member of the Committee shall be liable, -------------------- in the absence of bad faith, for any act or omission with respect to serving as a member of the Committee. Service as a member of the Committee shall constitute service as a member of the Board of Directors, so that members of the Committee shall be entitled to indemnification for their service on the Committee to the full extent provided for service as members of the Board of Directors. 5. Option Grants. ------------- (a) Option Agreement. The Committee shall have sole authority to ---------------- grant Options under this Plan. Each Option granted under the Plan shall be evidenced by a stock option agreement (the "Option Agreement"). The Option Agreement shall be subject to the terms and conditions of the -3- Plan and may contain additional terms and conditions (which may vary from Optionee to Optionee) not inconsistent with the Plan, as the Committee may deem necessary or desirable. Appropriate officers of the Company are hereby authorized to execute and deliver Option Agreements, and amendments thereto, in the name of the Company. (b) Option Price. The Option Price of each Share purchasable under an ------------ Option granted under the Plan shall be determined by the Committee at the time the Option is granted, and shall be specified in the Option Agreement. The Option Price shall not be less than (i) in the case of a grant of an ISO to a Key Employee who, at the time of the grant, is not a Ten Percent Shareholder, as defined below, one hundred percent (100%) of the fair market value of a share of Stock as determined on the date the Option is granted, (ii) in the case of a grant of an ISO to a Key Employee who, at the time of grant, owns stock representing more than ten percent of the total combined voting power of all classes of stock of the Company or of any subsidiary (a "Ten Percent Stockholder"), one hundred and ten percent (110%) of the fair market value of a Share of Stock, as determined on the date the Option is granted, or (iii) in the case of a NQSO, the price determined by the Committee. The fair market value of a share of Stock for purposes of determining the Option Price shall be determined by the Committee in accordance with any reasonable method of valuation consistent with applicable requirements of Federal tax law, including, as applicable, the provisions of Section 422(c)(8) of the Internal Revenue Code of 1986, as amended. The Option Price shall be subject to adjustment in accordance with Section 10 hereof. (c) Number of Shares of Stock. Each Option Agreement shall specify ------------------------- the number of shares of Stock which the Optionee may purchase. The Committee shall have the authority to allow a form of payment other than cash to the extent consistent with applicable requirements of Federal tax law. -4- (d) Option Term. The Committee shall determine the length of the ----------- Option term, except that no Option term shall extend for a period greater than ten (10) years from the date of grant. 6. Exercise of Options. ------------------- General Rules. Subject to applicable law and the terms and conditions ------------- of the Plan, an Option granted under the Plan shall be exercisable at such time, or times, upon the occurrence of such event or events, for such period or periods, in such amount or amounts, and upon the satisfaction of such terms and conditions including, without limitation, terms and conditions relating to notice of exercise, date the Option is deemed exercised, delivery and transferability of shares and withholding of taxes, as the Committee shall determine and specify in the Option Agreement. The aggregate fair market value (determined at the time the Option is granted), of the Stock with respect to which an ISO or ISOs granted to any Key Employee are to become exercisable for the first time during any calendar year (under the Plan and any other plan of the Company and its subsidiary corporations) shall not exceed One Hundred Thousand Dollars ($100,000). The application of the limitation set forth in the preceding sentence to any individual Option shall be determined by the Committee subject to applicable rules and regulations under Section 422 of the Code. However, no Option granted hereunder may provide for exercise in the form of stock or other securities of the Company unless the Plan meets the applicable requirements of Title 17, Code of Federal Regulations, Section 16b-3. 7. Expiration of Options. --------------------- The unexercised portion of any Option granted under the Plan shall automatically and without notice expire at the time of the earliest to occur of the following: (a) the expiration of ten years from the date on which the Option is granted, or such shorter term as may be specified in the Option Agreement; or -5- (b) the expiration of the period specified in the Option Agreement following the termination of the Optionee's employment with the Company. Anything to the contrary notwithstanding, in the case of an ISO, such Option shall by its terms not be exercisable after the expiration of ten years (or, in the case of a Ten Percent Stockholder, five years) from the date such Option is granted. 8. Non-Transferability of Options. ------------------------------ (a) No Option granted under the Plan shall be transferable by an Optionee other than by will or the laws of descent or distribution. During the lifetime of an Optionee, an Option shall be exercisable only by the Optionee. Except as otherwise determined by the Committee, any attempt to transfer, assign, pledge, hypothecate, or otherwise dispose of, or to subject to execution, attachment or similar process, any Option other than as permitted above shall be null and void and of no effect, and shall result in the forfeiture of all rights as to such Option. (b) The Company may require any person to whom an Option is granted, as a condition of exercising such Option, to give written assurances in substance and form satisfactory to the Company to the effect that such person is acquiring the Common Stock subject to the Option for his or her own account for investment and not with any present intention of selling or otherwise distributing the same, and to such other effects as the Company deems necessary or appropriate in order to comply with applicable Federal and state securities laws. (c) Notwithstanding any provision of the Plan or the terms of any Option granted pursuant to the Plan, the Company shall not be required to issue any Shares if such issue or transfer would, in the judgment of the Committee, constitute a violation of any state or Federal law or the rules or regulations of any governmental regulatory body or any securities exchange. Each Option may be subject to the requirement that if, at any time, counsel to the Company shall determine that -6- the listing, registration or qualification of the Shares subject to such Option upon any securities exchange or under any state or Federal law, or the consent or approval of any governmental or regulatory body, is necessary as a condition of, or in connection with, the issuance or purchase of Shares thereunder, such Option may not be exercised, in whole or in part, unless such listing, registration, qualification, consent or approval shall have been effected or obtained on conditions acceptable to the Board. Nothing herein shall be deemed to require the Company to apply for or to obtain such listing, registration or qualification. 9. No Special Rights. ----------------- Until an Optionee has made payment of the Option Price, has paid or has had satisfied any applicable withholding taxes, and has had issued to him a certificate or certificates for the shares of Stock so acquired, the Optionee shall have no rights as a stockholder of the Company with respect to the Stock. No Option granted under the Plan shall confer upon an Optionee any right to continued employment with the Company or its subsidiaries, nor shall it interfere in any way with the right of the Company or its subsidiaries to terminate an Optionee's employment at any time. 10. Adjustments for Change in Capital Structure and Special Transactions. -------------------------------------------------------------------- (a) Recapitalization etc. In the event of a stock dividend, stock -------------------- split or recapitalization or a corporate reorganization in which the Company is a surviving corporation, including without limitation a merger, consolidation, split-up or spin-off or a liquidation or distribution of securities or assets other than cash dividends (a "Restructuring Event"), the number or kinds of Shares subject to the Plan or to any Option previously granted, and the Option Price, shall be adjusted by the Committee as it determines in its sole discretion to reflect such Restructuring Event. -7- (b) Special Transactions. In the event of a merger, consolidation or -------------------- other form of reorganization of the Company with or into another corporation (other than a merger, consolidation or other form of reorganization in which the Company is the surviving corporation), a sale or transfer of all or substantially all of the assets of the Company or a tender or exchange offer made by any corporation, person or entity (other than an offer made by the Company), the committee, either before or after the merger, consolidation or other form of reorganization, may take such action as it determines in its sole discretion with respect to the number or kinds of shares subject to the Plan or any Option under the Plan. Such action by the Committee may include (but shall not be limited to) the following: (i) accelerating the full exercisability of an Option during such period as the Committee shall prescribe following the public announcement of such merger, consolidation, other form of reorganization, sale or transfer of assets or tender or exchange offer; (ii) permitting an Optionee at any time during such period as the Committee shall prescribe in connection with such merger, consolidation, other form of reorganization, sale or transfer of assets or tender or exchange offer, to surrender his Option (or any portion thereof), to the Company in exchange for a cash payment in an amount and in a manner determined by the Committee; or (iii) requiring an Optionee, at any time in connection with such merger, consolidation, other form of reorganization, sale or transfer of assets or tender or exchange offer, to surrender his Option (or any portion thereof) to the Company (A) in exchange for a cash payment as described in clause (ii) above, or (B) in exchange for, and subject to shareholder approval of, a substitute Option or other award issued by the corporation surviving such merger, consolidation or other form of reorganization (or an affiliate of such corporation), or the corporation acquiring such -8- assets (or an affiliate of such corporation), which the Committee, in its sole discretion, determines to have a value substantially equivalent to the value of the Option surrendered. 11. Amendment, Suspension or Termination of the Plan. ------------------------------------------------ The Committee may, at any time, amend, suspend or terminate any and all parts the Plan and any Option granted under the Plan in such respects as the Committee shall deem necessary or desirable, except that no such action may be taken which would impair the rights of any Optionee with respect to any Option previously granted under the Plan without the Optionee's consent. 12. Governing Law. ------------- The Plan shall be governed by the laws of the State of Colorado without regard to the principles of conflict of laws. In case any one or more of the provisions contained herein are for any reason deemed to be invalid, illegal or unenforceable in any respect by a judicial body, such illegality, invalidity or unenforceability shall not effect any other provision of this Plan, and this Plan shall be construed as if such invalid, unenforceable or illegal provision had never been contained herein. 13. References. ---------- In the event of an Optionee's death or a judicial determination of his physical or mental incompetence, reference in the Plan to the Optionee shall be deemed, where appropriate, to refer to his beneficiary or his legal representative. FRONTIER AIRLINES, INC. By: /s/ M.C. LUND ---------------- Name: M.C. Lund Title: President -9- AMENDMENT NO. 1 TO FRONTIER AIRLINES, INC. 1994 STOCK OPTION PLAN WHEREAS the Board of Directors of Frontier Airlines, Inc. (the "Company") on June 16, 1994 adopted a resolution that the number of shares of Common stock available for grant of stock options under the Company's 1994 Stock Option Plan be increased by 150,000 to a total of 1,750,000; and, WHEREAS the foregoing increase in the number of shares of common ,stock available for grant of stock options was approved by vote of the Company's shareholders at a special meeting of shareholders held on September 22, 1994. NOW, THEREFORE, the Frontier Airlines, Inc. 1994 Stock Option Plan is hereby amended as set forth below. Section 3 (a) of the Frontier Airlines, Inc. 1994 Stock Option Plan is deleted and replaced by the following: 3. Stock Subject to the Plan. ------------------------- (a) Subject to adjustment as provided in Section 10 below, the aggregate number of shares of Stock ("Shares") to be delivered upon exercise of all Options granted under the Plan shall not exceed one million, seven hundred fifty thousand (1,750,000). Dated the 22nd day of September, 1994. FRONTIER AIRLINES, INC. By: /s/ SAMUEL D. ADDOMS ------------------------------------- Name: Samuel D. Addoms Title: President -10- FRONTIER AIRLINES, INC. 12015 E. 46TH AVENUE DENVER, CO 80239 This Proxy is Solicited on Behalf of the Board of Directors. The undersigned hereby appoints Samuel D. Addoms and Arthur T. Voss as Proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated below, all the shares of common stock of Frontier Airlines, Inc. held of record by the undersigned on August 2, 1996, at the annual meeting of shareholders to be held on September 13, 1996, or any adjournment thereof. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN ITEM 1 AND "FOR" ITEM 2 AND ITEM 3. Item 1 - ELECTION OF DIRECTORS [_] FOR all nominees [_] WITHHOLD AUTHORITY for all nominees INSTRUCTION: To withhold authority to vote for any individual nominee, strike a line through the nominee's name in the list below. Samuel D. Addoms Paul Stephen Dempsey B. LaRae Orullian William B. McNamara D. Dale Browning Item 2 - PROPOSAL TO RATIFY AMENDMENT TO THE 1994 STOCK OPTION PLAN [_] For [_] Against [_] Abstain Item 3 - PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG Peat Marwick LLP as the independent public accountants of the Company [_] For [_] Against [_] Abstain The shares represented by this proxy will be voted as directed by the shareholder. If no direction is given when the duly executed proxy is returned, such shares will be voted "FOR all nominees" in Item 1 and "FOR" Item 2 and Item 3. PLEASE DATE AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. ------------- In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof. This proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder. Please make, sign, date and return the proxy promptly, using the enclosed envelope. Date__________________________________ Signature_____________________________ Signature if held jointly_______________________ Please sign exactly as name appears. When shares are held by joint tenants, both should sign. When signing as attorney, as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. -----END PRIVACY-ENHANCED MESSAGE-----