Annual Incentives
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Company Performance Metric
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NEO Performance Metric
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Adjusted Earnings Per Share
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Adjusted Earnings Per Share
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Customer Service
On-Time
Reliability
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Customer Service
On-Time
Reliability
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Strategic Initiatives
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Individual Performance Objectives
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Long-Term Incentives PSUs and Performance Cash
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Adjusted EBITDA Growth
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Adjusted EBITDA Growth
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Return on Invested Capital
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Return on Invested Capital
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The Compensation Committee has designed and administered compensation programs aligned with this philosophy and is committed to
continued outreach to shareholders to understand and address comments on our compensation programs.
Strong, Well-Balanced Corporate
Governance Practices
✓
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Highly Qualified Board.
Our Directors
bring deep industry experience to provide effective oversight in the boardroom.
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✓
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Independent Board Leadership
. We have had
separate Chairman of the Board and CEO roles for more than 12 years, with an independent Chairman, elected annually by our Board. In the last three years, we have refreshed the independent Chairman (May 2014) and the Chairs of our Audit Committee
(May 2016) and Compensation Committee (September 2014), providing strong, independent Board and Committee leadership. We anticipate refreshing our remaining Committee Chair (Nominating and Governance Committee) at the organizational meeting of the
Board immediately following the Annual Meeting.
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✓
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Focus on Board Composition, Refreshment and Rotation.
We regularly evaluate the composition of our Board and our Committee leadership to ensure that we have the right balance of experience and perspective, and a mix of skills, backgrounds, and diversity to
effectively facilitate oversight of management and strategy. To that end, we have welcomed three new directors, Bobby J. Griffin, John K. Wulff and Charles F. Bolden, Jr., to our Board in 2016 and 2017. We also recently rotated the Chairs of our
Audit Committee and Compensation Committee, following the rotation of the Chair of the Board in
mid-2014.
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vi
To best serve shareholders, our director nominees
bring an appropriate balance of fresh perspective and experience to effectively oversee strategy and management.
Upon election by our shareholders at
the 2017 Annual Meeting, the average tenure of our Directors and the composition of our Board would be as follows:
✓
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Best Practices.
We maintain corporate
governance best practices that promote accountability and protect shareholder rights, including the adoption of proxy access provisions in our
by-laws
and the implementation of majority voting in uncontested
elections.
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In addition, we have annually elected Directors, 100% Board independence (except our CEO), separate CEO and
Chairman positions, no poison pill in place, 100% independent Board committees, and ongoing dialogue with shareholders, including on governance, executive compensation, and investor relations matters.
Please see pages 12-21 for further discussion of our governance practices.
vii
TABLE OF
CONTENTS
viii
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Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
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ix
ATLAS AIR WORLDWIDE HOLDINGS, INC.
2000 Westchester Avenue
Purchase, New York 10577
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PROXY STATEMENT
ANNUAL MEETING OF
SHAREHOLDERS
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May 24, 2017
GENERAL INFORMATION
This Proxy Statement is furnished in connection
with the solicitation of proxies by the Board of Directors (the Board of Directors or Board) of Atlas Air Worldwide Holdings, Inc., a Delaware corporation (AAWW or the Company), for use at the Annual
Meeting of Shareholders (the Annual Meeting) to be held on Wednesday, May 24, 2017, at our principal executive offices located at 2000 Westchester Avenue, Purchase, New York 10577 at 10:00 a.m., local time, and at any adjournments
or postponements of the Annual Meeting. It is expected that this Proxy Statement and the accompanying proxy will first be mailed or delivered to shareholders beginning on or about April 20, 2017. Proxies may be solicited in person, by telephone or
by mail, and the costs of such solicitation will be borne by AAWW.
THE COMPANY
AAWW is a leading global provider of outsourced aircraft and aviation operating services. We operate the worlds largest fleet of 747 freighters and provide
customers with a broad array of 747, 777, 767, 757 and 737 aircraft for domestic, regional and international cargo and passenger applications.
AAWW is
a holding company with two wholly owned operating subsidiaries, Atlas Air, Inc. (Atlas) and, as of April 7, 2016, Southern Air, Inc. (a subsidiary of Southern). We also have a 51% economic interest and a 75% voting interest in Polar
Air Cargo Worldwide, Inc. (Polar). In addition, we are the parent company of several wholly owned subsidiaries related to our dry leasing services (collectively referred to as Titan). Except as otherwise noted, AAWW, Atlas,
Southern and Titan (along with all other entities included in AAWWs consolidated financial statements) are collectively referred to herein as the Company, AAWW, we, us, or our.
Combined with Polar, AAWW provides ACMI, CMI, Charter and Dry Leasing services to DHL Express (DHL) in support of DHLs transpacific
express, North American and intra-Asian networks. Additionally, we fly between the Asia Pacific region, the Middle East and Europe on behalf of DHL and other customers. Atlas also provides incremental charter capacity to Polar and DHL Express on an
ad hoc basis.
2016 STRATEGIC ACTIONS
Building on our previous successes and our commitment to pursue strategic growth, we made several decisions in 2016 that are among the most important in the history of AAWW and in line with a long-term strategic
plan approved by our Board of Directors. These transformational initiatives include our immediately accretive acquisition of Southern in April 2016 and long-term commercial agreements with Amazon in May 2016, which continue to increase our presence
in the fast-growing
integrator-express
and
e-commerce
markets.
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
1
Our acquisition of Southern is a highly
complementary transaction that expands our operating platform and provides our customers with access to a broader array of aircraft and operating services. Southerns
10-aircraft,
777 and 737 CMI
operations generated immediate earnings accretion in 2016 and further developed our business base in the dynamic express and
e-commerce
sectors, both of which rely on airfreight and dedicated freighter
services.
Our new relationship with Amazon supports the ongoing expansion of its
e-commerce
business and its
customer delivery capabilities. In addition to leasing twenty
767-300
converted freighters to Amazon and operating them in support of package deliveries to its customers, our arrangements provide for future
growth of the relationship as Amazon may increase its business with us. We expect these agreements to be meaningfully accretive to our earnings and cash flows over time.
Amazon One, our first aircraft for Amazon and the first in its new Prime Air livery, began operations in August 2016, followed by a second aircraft in early 2017. We have secured all 20 of
the aircraft required for Amazon, as well as a spare, and expect to ramp up to full service through 2018.
As part of the inherent value creation and to
align interests and strengthen the long-term relationship between the companies, we granted Amazon warrants to acquire up to 20% of AAWWs common shares through May 2021 at a price of $37.50 per share. A portion of the warrant, representing the
right to purchase 3.75 million shares, vested immediately upon issuance of the warrant and the remainder of the warrant, representing the right to purchase 3.75 million shares, will vest in increments of 375,000 shares as the lease and operation of
each of the 11th through 20th aircraft commences. The agreements also provide incentives for future growth of the relationship. In that regard, we granted Amazon warrants to acquire up to an additional 10% of our outstanding common shares through
May 2023 at the same exercise price, with vesting tied to payments made by Amazon for additional business with us.
ABOUT THE ANNUAL MEETING
At our Annual Meeting, the holders of shares of our Common Stock, par value $0.01 per share (the Common
Stock), will act upon the matters outlined in the notice of meeting at the beginning of this Proxy Statement, in addition to transacting such other business, if any, as may properly come before the meeting or any adjournments thereof. The
shares represented by your proxy will be voted as indicated on your proxy, if properly executed. If your proxy is properly signed and returned, but no directions are given on the proxy, the shares represented by your proxy will be voted:
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FOR
the election of the Director Nominees named herein, to serve until the 2018 Annual Meeting or until their successors are elected and qualified
(Proposal No. 1);
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FOR
ratifying the selection of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the Company for the year ending
December 31, 2017 (Proposal No. 2);
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FOR
the adoption of an advisory vote approving the compensation of our NEOs (the
Say-on-Pay
vote) (Proposal No. 3);
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FOR
an advisory vote to hold annually an advisory shareholder vote to approve the compensation of our NEOs (the Say on Frequency vote)
(Proposal No. 4);
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FOR
the approval of an amendment to our 2016 Incentive Plan to increase the number of shares that are available for issuance of awards under such
plan (Proposal No. 5).
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In addition, if any other matters are properly submitted to a vote of shareholders at the Annual Meeting,
the accompanying form of proxy gives the proxy holders the discretionary authority to vote your shares in accordance with their best judgment on that matter. Unless you specify otherwise, it is expected that your shares will be voted on those
matters as recommended by our Board of Directors, or if no recommendation is given, in the proxy holders discretion.
For additional information
regarding our Annual Meeting, see Additional Information at the end of this Proxy Statement.
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Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
Record Date and Voting Securities
All of our shareholders of record at the
close of business on March 27, 2017 (the Record Date) are entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements thereof. As of the Record Date, there were 25,255,177 shares of Common Stock issued
and outstanding. Each outstanding share of Common Stock will be entitled to one vote on each matter considered at the Annual Meeting. A description of certain restrictions on voting by shareholders who are not U.S. citizens, as defined
by applicable laws and regulations, can be found in Additional Information Limited Voting by Foreign Owners at the end of this Proxy Statement.
Quorum, Vote Required
A majority of the outstanding shares of Common Stock as of the Record Date must be present, in person or by proxy, at the Annual Meeting to have the required quorum
for the transaction of business. If the number of shares of Common Stock present in person and by proxy at the Annual Meeting does not constitute the required quorum, the Annual Meeting may be adjourned to a subsequent date for the purpose of
obtaining a quorum.
Proposal No.
1: Election of Directors.
In an uncontested election, a Director is elected
by a majority of the votes cast (the number of shares voted For a Director-Nominee must exceed the number of votes cast Against that Director-Nominee). Shares voting Abstain or broker
non-votes
will have no effect on the election of Directors. Brokers, banks, and other nominees have no discretionary voting power in respect of this item.
Proposal No.
2: Ratification of the selection of PricewaterhouseCoopers LLP as the independent registered public accounting
firm for the Company for the fiscal year ending December
31,
2017.
The affirmative vote of a majority of the shares represented at the Annual Meeting, either in person or by proxy and entitled to vote on this proposal,
is required to ratify the selection of PricewaterhouseCoopers LLP. Shares voting Abstain will have the same effect as a vote Against this Proposal 2. Brokers, banks, and other nominees have discretionary voting power in
respect of this item.
Proposal No.
3: Advisory Vote
to Approve
the Compensation of the
Company
s NEOs.
Because Proposal 3 asks for a
non-binding,
advisory vote, there is no required vote that would constitute approval. We value highly the opinions expressed by
our shareholders in this advisory vote, and our Compensation Committee, which is responsible for overseeing and administering our executive compensation programs, will consider the outcome of the vote when designing our compensation programs and
making future compensation decisions for our NEOs. Shares voting Abstain will have the same effect as a vote Against this Proposal 3. Broker
non-votes
will have no effect on this
non-binding
advisory vote. Brokers, banks, and other nominees have no discretionary voting power in respect of this item.
Proposal No.
4: Advisory Vote Regarding the Frequency of the Advisory Shareholder Vote to Approve the Compensation of the Company
s NEOs.
Because Proposal 4 also asks
for a
non-binding,
advisory vote, there is no required vote that would constitute approval. We value highly the opinions expressed by our shareholders in this advisory vote. Our Board has
recommended an annual vote with respect to this item. However, if another frequency receives more votes, our Board will take that fact into account when making its decision on how often to hold executive compensation advisory votes. Shares voting
Abstain or broker
no-votes
will have no effect on this non-binding advisory vote. Brokers, banks, and other nominees have no discretionary voting power in respect of this item.
Proposal No.
5: Approval of
an Amendment to our
2016 Incentive Plan.
The affirmative vote of a majority of
the shares represented at the Annual Meeting, either in person or by proxy and entitled to vote on this proposal, is required to approve an amendment to our 2016 Incentive Plan to increase the number of shares that are available for issuance of
awards under such plan. Shares voting Abstain or broker
no-votes
will have no effect on approval of an amendment to our 2016 Incentive Plan. Brokers, banks, and other nominees have no discretionary
voting power in respect of this item.
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
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3
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PROPOSAL NO. 1 ELECTION OF DIRECTORS
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PROPOSAL NO. 1 ELECTION OF DIRECTORS
Our Board has nominated ten persons to stand for election at the 2017 Annual Meeting and to hold office until the next Annual Meeting. All Nominees are currently Directors elected at the 2016 Annual Meeting, except
for Mr. Bolden, who was elected a Director by the Board in February 2017. The Nominating and Governance Committee has recommended the ten Nominees for nomination by the Board after an evaluation of the size and composition of the Board and a
review of each members skills, characteristics, and independence. The Board believes that each of the Nominees brings strong skills, background, experience and industry expertise to the Board, giving the Board as a group the appropriate
balance of skills needed to exercise its oversight responsibilities. Mr. Bolden was identified by two of our independent Directors as part of the Nominating and Governance Committees comprehensive candidate selection process for
identifying potential Directors with a view to refreshing the Board and enhancing its skills, characteristics and diversity.
Each Nominee has consented
to be named as a Nominee for election as a Director and has agreed to serve if elected. Except as otherwise described below, if any of the Nominees is not available for election at the time of the Annual Meeting, discretionary authority will be
exercised to vote for substitutes designated by our Board of Directors, unless the Board chooses to reduce the number of Directors. Management is not aware of any circumstances that would render any Nominee unavailable. At the Annual Meeting,
Directors are expected to be elected to hold office until the 2018 Annual Meeting or until their successors are elected and qualified, as provided in our
By-Laws.
Because this election is not a contested election, each Director will be elected by the vote of the majority of the votes cast when a quorum is present. A
majority of the votes cast means that the number of votes cast for a Director exceeds the number of votes cast against that Director. Votes cast excludes abstentions and any votes withheld by brokers
in the absence of instructions from street name holders (broker
non-votes).
It is the policy of the
Board that, as a condition of nomination, each incumbent Director nominated has submitted to the Secretary of the Company an irrevocable contingent resignation. This resignation will be effective only if (i) the Nominee fails to receive a
majority of the votes cast in an uncontested election and (ii) the Board accepts such resignation within 60 days following the certification of the election results.
Director Core Competencies
Our Board strives to maintain an appropriate balance of experience, tenure, diversity, leadership, skills and qualifications that are of importance to our Company
and the execution of our strategy. Given the diversity of our operations, it is important to bring together Directors with differing experiences, perspectives and backgrounds to ensure proper oversight of the interests of our Company and our
shareholders.
The Nominating and Governance Committee works with the full Board to determine the qualifications and experiences it believes are most
relevant and responsive to the needs of our business. In doing so, the Nominating and Governance Committee takes into account a number of factors, including the Companys:
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Evolving strategic priorities;
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Existing characteristics of our Board, including tenure and diversity; and
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Results of our annual Board and Committee self-evaluations.
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In 2016, the Board of Directors and the Nominating and Governance Committee continued a process developed in 2015 for seeking out, evaluating and recommending potential candidates for election to the Board. During
2016, the full Board, under the guidance of the Nominating and Governance Committee, undertook a thorough review of the skills, qualifications and tenure of our incumbent Directors, as well as the size of the Board, in the context of our long-range
strategic plan, consistent with our governance principles, and taking into account feedback from shareholder outreach. The Board reviewed in detail the experience, skills, and qualifications of our incumbent Directors and identified areas that would
enhance the overall strength of our current Board and the ability of the
4
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Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
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PROPOSAL NO. 1 ELECTION OF DIRECTORS
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AAWWs Board of Directors Skills and
Qualifications
Civil and Governmental Aviation
Corporate Governance
Finance, Accounting and Risk Management
International and National Trade
Global Operations
Strategic Planning
Mergers and Acquisitions
Capital Structure
Transportation and Security
Legal, Regulatory and Government Affairs
Procurement and Distribution
Military Affairs Sales and Marketing
Previous Public Company CEO/CFO/Executive Experience
Company to execute on
its long-range strategic plan. Key qualifications that the Board and Committee identified included civil and governmental aviation, transportation and security, global operations, strategic planning, corporate governance and military affairs.
The Board and the Nominating and Governance Committee asked all of the Directors to consider the skills and qualifications identified and recommend
potential candidates to be considered, and established a committee consisting of the Chair of the Nominating and Governance Committee, the Chairman of the Board, the Chief Executive Officer and one of the independent Directors to interview and
evaluate the identified candidates and make recommendations to the Nominating and Governance Committee. Over several months, this special committee interviewed all candidates recommended by the members of the Nominating and Governance Committee, as
well as members of the Board. While all of the candidates interviewed demonstrated an extraordinary and diverse background and scope of experience, the Nominating and Governance Committee determined to recommend, and with approval by the Board to
nominate, Mr. Bolden for election as a Director of the Company.
In consideration of the factors noted above, the Board actively seeks new
Directors who possess the skills and qualifications that would enhance Board effectiveness. The chart below depicts the current skills, qualifications, and expertise represented on our Board.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU VOTE
FOR
THE ELECTION OF EACH OF THE NOMINEES NAMED BELOW.
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
5
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PROPOSAL NO. 1 ELECTION OF DIRECTORS
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Nominees for Director
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Frederick McCorkle
Independent
Chairman
Age:
72
Director since:
2004
Committees:
Compensation
Nominating and Governance
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Background:
Lieutenant General Frederick McCorkle, Retired served in the U.S. Marine Corps from 1967 to October 2001. He last served as Deputy Commandant for Aviation, Headquarters, Marine Corps, Washington, D.C. In this position, he was responsible for all of
Marine Aviation procurement, material and parts support, including maintenance of Marine Corps aircraft, with a budget in excess of $8 billion. General McCorkle began his career as a naval aviator in 1969 and accumulated over 6,500 flight hours
in more than 65 different series of aircraft over the course of his career. His assignments, accomplishments, and decorations are numerous and include the Distinguished Flying Cross, the Purple Heart, the Air Medal, the Navy Commendation Medal, and
the Navy Achievement Medal. General McCorkle is currently a member of the board of directors of Lord Corporation and Jura Corporation (both privately held businesses) and of Rolls-Royce North America (a unit of Rolls Royce Group plc).
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Board Skills and
Qualifications
: Civil and Governmental Aviation; Corporate Governance; Global Operations; Legal Regulatory and Government Affairs; Military Affairs; Procurement and Distribution; Strategic Planning; Transportation and Security
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Robert F. Agnew
Independent
Director
Age:
66
Director since:
2004
Committees:
Audit
Nominating and Governance
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Background
:
Mr. Agnew is President and Chief Executive Officer of Morten Beyer & Agnew, an international aviation consulting firm experienced in the financial modeling and technical due diligence of airlines and aircraft funding (Morten
Beyer & Agnew is a privately held business).
Mr. Agnew has over 30
years of experience in aviation and marketing consulting and has been a leading provider of aircraft valuations to banks, airlines, and financial institutions worldwide. Previously, he served as Senior Vice President of Marketing and Sales at World
Airways. Mr. Agnew began his commercial aviation career at Northwest Airlines, where he concentrated on government and contract sales, schedule planning, and corporate operations research. Earlier, he served in the U.S. Air Force as an officer
and instructor navigator with the Strategic Air Command. Mr. Agnew is also a member of the Board of directors of TechPubs LLC (a privately held business) and, within the last five years, served as director of Stanley Martin Communities, LLC
(also a privately held business). In addition, he is a member of the Board of Trustees of the International Society of Transport Aircraft Trading Foundation and formerly chaired the Military Airlift Committee of The National Defense Transportation
Association.
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Board Skills and
Qualifications
: Civil and Governmental Aviation; Finance, Accounting and Risk Management; Global Operations; Mergers and Acquisitions; Military Affairs; Previous Public Company CEO/CFO/Executive Experience; Procurement and Distribution; Sales
and Marketing; Strategic Planning; Transportation and Security
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Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
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PROPOSAL NO. 1 ELECTION OF DIRECTORS
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Timothy J. Bernlohr
Independent
Director
Age:
58
Director since:
2006
Committees:
Audit (Chair)
Nominating and Governance
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Background:
Mr. Bernlohr is the founder and managing member of TJB Management Consulting, LLC, which specializes in providing project-specific consulting services to businesses in transformation, including restructurings, interim executive management and
strategic planning services (TJB Management Consulting is a privately held business). Mr. Bernlohr founded the consultancy in 2005. Mr. Bernlohr was President and Chief Executive Officer of RBX Industries, Inc., which was a nationally
recognized leader in the design, manufacture, and marketing of rubber and plastic materials to the automotive, construction, and industrial markets, until it was sold in 2005. Prior to joining RBX in 1997, Mr. Bernlohr spent 16 years in the
International and Industry Products divisions of Armstrong World Industries, where he served in a variety of management positions. Mr. Bernlohr also serves as a director of WestRock Company (Chairman, Compensation Committee), Overseas Ship
Holding Group (Chairman, Compensation Committee) and International Seaways, Inc. (Chairman, Compensation Committee) Within the last five years, he was a director of Chemtura Corporation, Rock-Tenn Company, Smurfit Stone Container Corporation, The
Cash Store Financial Services Inc., Ambassadors International, Inc., Aventine Renewable Resources, and WCI Steel, Inc.
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Board Skills and
Qualifications:
Capital Structure; Corporate Governance; Finance, Accounting and Risk Management; Legal, Regulatory and Government Affairs; Mergers and Acquisitions; Previous Public Company CEO/CFO/Executive Experience; Procurement and
Distribution; Sales and Marketing Strategic Planning; Transportation and Security
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Charles F. Bolden, Jr.
Independent
Director
Age:
70
Director since:
February 2017
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Major General Charles
F. Bolden, Jr., Retired U.S. Marine Corps served as the 12
th
Administrator of
the National Aeronautics and Space Administration (NASA) from July 2009 to January 2017. As Administrator, he led a nationwide NASA team to advance the missions and goals of the U.S. space program. General Boldens
34-year
career with the U.S. Marine Corps also included 14 years as a member of NASAs Astronaut Office. After joining the Office in 1980, General Bolden traveled to orbit four times aboard the space shuttle
between 1986 and 1994, commanding two of the missions and piloting two others. His flights included deployment of the Hubble Space Telescope and the first joint U.S.-Russian shuttle mission, which featured a cosmonaut as a member of his crew.
General Bolden left NASA in 1994 and returned to the operating forces of the Marine Corps. His final duty was as Commanding General of the 3rd Marine Aircraft Wing, Miramar, CA. General Bolden currently serves as Director of Lord Corporation (a
privately held business).
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Board Skills and
Qualifications:
Civil and Governmental Aviation; Corporate Governance; Global Operations; Military Affairs; Strategic Planning; Transportation and Security
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Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
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7
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PROPOSAL NO. 1 ELECTION OF DIRECTORS
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William J. Flynn
President and
CEO
Age:
63
Director since:
2006
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Background
:
Mr. Flynn has been our President and Chief Executive Officer since June 2006. Mr. Flynn has a
40-year
career in international supply chain management and freight transportation.
Prior to joining us, Mr. Flynn served as President and Chief Executive Officer of
GeoLogistics Corporation since 2002 where he led a successful turnaround of the companys profitability and the sale of the company in September 2005. Prior to his tenure at GeoLogistics, Mr. Flynn served as Senior Vice President at CSX
Transportation from 2000 to 2002. Mr. Flynn spent over 20 years with
Sea-Land
Service, Inc., a global provider of container shipping services, serving in roles of increasing responsibility in the U.S.,
Latin America, and Asia. He ultimately served as head of the companys operations in Asia. Mr. Flynn is also a director of Republic Services, Inc. He is Chairman of the National Defense Transportation Association and a Director of Airlines
for America.
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Board Skills and
Qualifications
: Capital Structure; Civil and Governmental Aviation; Corporate Governance; Finance and Risk Management; Global Operations; International and National Trade; Legal, Regulatory and Government Affairs; Mergers and Acquisitions;
Military Affairs; Previous Public Company CEO/CFO/Executive Experience; Procurement and Distribution; Sales and Marketing; Strategic Planning; Transportation and Security
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James S. Gilmore III
Independent
Director
Age:
67
Director since:
2004
Committees:
Nominating and Governance
(Chair through May 24, 2017)
Compensation
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Background
:
Mr. Gilmore, an attorney and business consultant with Gilmore Global Group, L.L.C., served as the 68th Governor of the Commonwealth of Virginia from 1998 to 2002. Mr. Gilmore was a partner in the law firm of Kelley Drye & Warren
LLP from 2002 to 2008, where he served as the Chair of the firms Homeland Security Practice Group focusing on corporate, technology, information technology, and international matters. He is President and Chief Executive Officer of the American
Opportunity Foundation, formerly the Free Congress Foundation, which offers bipartisan solutions to domestic fiscal and foreign policy challenges. In 2003, President George W. Bush appointed Mr. Gilmore to the Air Force Academy Board of
Visitors, and he was elected Chairman in the fall of 2003. Mr. Gilmore served as the Chairman of the Republican National Committee from 2001 to 2002. He also served as Chairman of the Congressional Advisory Panel to Assess Domestic Response
Capabilities for Terrorism involving Weapons of Mass Destruction, a national panel established by Congress to assess federal, state, and local government capabilities to respond to the consequences of a terrorist attack. Also known as the
Gilmore Commission, this panel was influential in developing the Office of Homeland Security. He is also a director of CACI International Inc. Within the last five years, Mr. Gilmore served as a Director of Barr Laboratories, Inc.,
IDT Corporation, and Everquest Financial Ltd. (a privately held business). He was also a member of the advisory board of Unisys Corporation and the federal advisory board of Hewlett-Packard Company. Mr. Gilmore was a candidate for the
Republican nomination for President of the United States in 2016. He has traveled extensively as Governor of Virginia and for private business.
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Board Skills and
Qualifications:
Corporate Governance; Global Operations; International and National Trade; Legal, Regulatory and Government Affairs; Procurement and Distribution; Strategic Planning
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Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
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PROPOSAL NO. 1 ELECTION OF DIRECTORS
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Bobby J. Griffin
Independent
Director
Age:
68
Director since:
2016
Committees:
Compensation
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Background and Experience:
Mr. Griffin served as
President International Operations for Ryder System, Inc., a global provider of transportation, logistics and supply chain management solutions from 2005 to 2007. Beginning in 1986, Mr. Griffin served in various other management
positions with Ryder, including as Executive Vice President International Operations from 2003 to 2005 and Executive Vice President Global Supply Chain Operations from 2001 to 2003. Prior to Ryder, Mr. Griffin was an
executive at ATE Management and Service Company, Inc., which was acquired by Ryder in 1986. He currently serves as director of Hanesbrands Inc., United Rentals, Inc. and WESCO International, Inc.
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Board Skills and
Qualifications:
Corporate Governance; Executive Experience; Global Operations, Transportation and Supply Chain Logistics; Previous Public Company CEO/CFO/Executive Experience; Procurement and Distribution; Strategic Planning; Transportation and
Security
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Carol B. Hallett
Independent
Director
Age:
79
Director since:
2006
Committees:
Compensation (Chair)
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Background:
Ms. Hallett has been of counsel at the U.S. Chamber of Commerce since 2003 and served as a member of the U.S. Chamber Foundation Board of Directors from 2003 to 2015. From 1995 to 2003, Ms. Hallett was President and Chief Executive Officer
of the Air Transport Association of America (ATA), the nations oldest and largest airline trade association, now known as the Airlines for America (A4A). Prior to joining the ATA, Ms. Hallett served as senior government relations advisor
with Collier, Shannon, Rill & Scott from 1993 to 1995. From 2003 to 2004, she was chair of Homeland Security at Carmen Group, Inc., where she helped develop the homeland security practice for the firm. From 1986 through 1989,
Ms. Hallett served as United States Ambassador to the Commonwealth of the Bahamas. From 1989 to 1993, she was Commissioner of the United States Customs Service. Ms. Hallett has also been a director of Rolls Royce-North America (a unit of
Rolls Royce Group plc) since 2003. In addition, she was appointed by the Secretaries of Treasury and Homeland Security and served on the Customs Oversight Advisory Committee (COAC) from 2011 to 2015. Ms. Hallett has served on the Transnational
Threat Committee at the Center for Strategic and International Studies since 2003. Within the last five years, she was a director of G4S Government Solutions Inc. (a privately held business), Horizon Lines, Inc., and Mutual of Omaha Insurance
Company.
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Board Skills and
Qualifications:
Civil and Governmental Aviation; Corporate Governance; Global Operations; International and National Trade; Legal, Regulatory and Government Affairs; Procurement and Distribution; Strategic Planning; Transportation and
Security
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2017 Notice &
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PROPOSAL NO. 1 ELECTION OF DIRECTORS
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Duncan J. McNabb
Independent
Director
Age:
64
Director since:
2012
Committees:
Audit
Nominating and Governance
(Chair, effective May 24, 2017)
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Background:
General Duncan J. McNabb, Retired U.S. Air Force served as Commander of the United States Air Mobility Command from 2005 to 2007 and Commander of the United States Transportation Command (USTRANSCOM) from 2008 until his retirement from the Air
Force in December 2011. USTRANSCOM is the single manager for air, land, and sea transportation for the Department of Defense (DOD). He also served as DODs Distribution Process Owner, overseeing DODs
end-to-end
supply chain, transportation, and distribution to our armed forces worldwide. General McNabb commanded more than $56 billion in strategic transportation assets, over 150,000 service personnel
and a worldwide
command-and-control
network. A graduate of the United States Air Force Academy and Air Force pilot, he flew more than 5,600 hours in transport and rotary
aircraft, including the
C-17.
General McNabb has held command and staff positions at squadron, group, wing, major command and DOD levels. During his over
37-year
military career, General McNabb also served as the Air Force Deputy Chief of Staff for Plans and Programs with responsibility for all Air Force programs and over $500 billion in funding over the Air Forces Five-Year Defense Plan (FYDP).
He later served as Director of Logistics on the Joint Staff and was responsible for operational logistics and strategic mobility support to the Chairman of the Joint Chiefs and the Secretary of Defense. Before his final command at USTRANSCOM, McNabb
served as the 33rd Vice Chief of Staff of the Air Force. General McNabb is also a Director and Chairman of the Government Security Committee of AT Kearney Public Sector & Defense Services (a privately held business), a member of the Boards
of Directors of AAR Corp. and of Elbit Systems of America and AdvanTac Technologies (both privately held businesses), as well as a cofounder and a managing partner of Ares Mobility Solutions, Inc. (also a privately held business). He serves as
Chairman of the Board of Trustees for Arnold Air Society and Silver Wings, Chairman of the Airlift/Tanker Association and is a member of the Board of Visitors of the United States Air Forces Air University. Within the last five years, he was
also a director of HDT Global (a privately held business).
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Board Skills and
Qualifications:
Civil and Governmental Aviation; Global Operations; International and National Trade; Legal, Regulatory and Government Affairs; Military Affairs; Procurement and Distribution; Strategic Planning; Transportation and
Security
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2017 Notice & Proxy Statement
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PROPOSAL NO. 1 ELECTION OF DIRECTORS
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John K. Wulff
Independent
Director
Age:
68
Director since:
2016
Committees:
Audit
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Background and
Experience:
Mr. Wulff is the former Chairman of the board of directors of Hercules Incorporated, a specialty chemicals company, a position he held from July 2003 until Ashland Inc.s acquisition of Hercules in November 2008. Prior to
that time, he served as a member of the Financial Accounting Standards Board from July 2001 until June 2003. Mr. Wulff was previously Chief Financial Officer of Union Carbide Corporation, a chemical and polymers company, from 1996 to 2001.
During his fourteen years at Union Carbide, he also served as Vice President and Principal Accounting Officer from January 1989 to December 1995, and Controller from July 1987 to January 1989. Mr. Wulff was also a partner of KPMG LLP and
predecessor firms from 1977 to 1987. Mr. Wulff is also a member of the board of directors of Celanese Corporation and Chemtura Corporation. Within the last five years, Mr. Wulff served as a director of Moodys Corporation and Sunoco,
Inc.
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Board Skills and
Qualifications:
Finance, Accounting and Risk Management; Previous Public Company CEO/CFO/Executive Experience; Governmental and Regulatory; Capital Structure; Corporate Governance; Global Operations; Mergers and Acquisitions; Strategic
Planning
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2017 Notice &
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CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS
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CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS
Our Board held five
in-person
meetings and five telephonic meetings in 2016. Pursuant to Board policy, Directors are expected to attend all Board and Committee meetings, as
well as our annual meeting of shareholders. Each Director (other than Mr. Bolden who was elected Director in February 2017) attended more than 75% of the meetings of the Board and committees of the Board on which such Director serves. All of the
Directors (other than newly-elected Mr. Bolden) attended the 2016 Annual Meeting.
Executive Sessions
The outside members of the Board, as well as
our Board Committees, meet in executive session (with no management Directors or management present) on a periodic basis and upon the request of one or more outside Directors. The sessions have been generally scheduled and led by the Chairman of the
Board, and executive sessions of our committees are chaired by the respective committee chair. The executive sessions include topics the outside Directors or Committee members deem appropriate.
Board Leadership Structure
The Chairman of the Board is an independent director. We have
maintained separate roles for the Chairman of the Board and the CEO for more than 10 years. While we do not have a formal policy in place, the Board evaluates its leadership structure on a periodic basis to ensure it aligns with the evolving
circumstances and needs of the Company. The Board believes that its current structure is in the best interest of the Company and its shareholders.
The
separation of the roles contributes to the Boards strong and independent oversight of a focused and effective management team. It allows the CEO to focus on the everyday operations of the business while also positioning the Chairman to provide
independent counsel and leadership to the Board, CEO, and management team relating to Company operations, governance, and compensation matters. The independent Chairmans key responsibilities include:
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Presiding over meetings of our Board of Directors, executive sessions of our
non-management
Directors and our annual
meeting of shareholders;
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Briefing the CEO on issues discussed in executive sessions;
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Facilitating communications among directors and between the CEO and the Board, and supervising the circulation of information to the full Board;
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Developing, in conjunction with our CEO, and approving the agenda for our Board meetings;
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Recommending Board committee appointments and responsibilities in conjunction with the Nominating and Governance Committee;
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Leading the evaluation process of our CEO, with oversight of the annual Board or Committee self-evaluations;
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Overseeing the periodic review of managements strategic plan; and
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Carrying out any other responsibilities requested by the CEO or the Board.
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We currently believe that having an independent Chairman also promotes a greater role for the nonexecutive Directors in the oversight of the Company, including oversight of material risks facing the Company,
encourages active participation by the independent Directors in the work of our Board of Directors, and enhances our Board of Directors role of representing shareholders interests.
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CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS
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Board Oversight of Risk Management
Process
The Board of Directors is responsible
for oversight of the Companys risk assessment and management process.
The Board delegates to the Compensation Committee responsibility for
oversight of managements compensation risk assessment, and ensuring that the compensation practices of the Company continue to not encourage excessive risk-taking by management.
The Board delegates other risk management oversight matters to our Audit Committee. The Audit Committees responsibilities include:
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Direct oversight of our internal audit function, including the organizational structure and staff qualification, as well as the scope and methodology of the
internal audit process; and
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A review, at least annually, of our enterprise risk management plan to ensure that appropriate measures and processes are in place, including discussion of the
major risks, the key strategic plan assumptions considered during the assessment and steps implemented to monitor and mitigate such exposures on an ongoing basis.
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The Audit and Compensation Committees report to the Board, as appropriate, when a matter rises to the level of a material, enterprise level risk. In addition to the reports from the Audit and Compensation
Committees, the Board periodically discusses risk oversight, included as part of its annual detailed corporate strategy review.
The Companys
management is responsible for
day-to-day
risk management. Our Internal Audit, Safety, Security, Corporate Controller, Information Technology, Human Resources, Legal,
Business Resiliency, and Treasury Departments serve as the primary monitoring and testing functions for Company-wide policies and procedures, and manage the
day-to-day
oversight of the risk management strategy for the ongoing business of the Company. This oversight includes identifying, evaluating, and addressing potential risks that may exist at the enterprise, strategic, financial, operational, technological,
compliance, and reporting levels.
We believe that the division of risk management responsibilities as described above is an effective approach for
addressing risks facing the Company.
Compensation of Outside Directors
Compensation for our outside Directors consists of the
following:
Cash Retainer
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Each of our outside Directors receives a $95,000 annual cash retainer, payable quarterly in advance.
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Equity Compensation Restricted Stock Units
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On the date of our annual meeting of shareholders, each of our Directors (other than Mr. Flynn) receives an annual grant of restricted stock units for a
number of shares having a value (calculated based on the closing price of our Common Stock on the date of grant) of $110,000.
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The RSUs generally vest and are automatically converted into common shares on the earlier of (i) the date immediately preceding the Companys next
succeeding annual meeting of shareholders or (ii) the
one-year
anniversary of the date of grant.
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Beginning with RSUs granted in 2017, Directors are expected to be given the option to defer the receipt of common shares resulting from the vesting of their
restricted stock units.
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2017 Notice &
Proxy Statement
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CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS
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Chairman Position
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The Chairman of the Board receives $150,000 annually; and
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The Chairs of the Audit Committee, the Compensation Committee and the Nominating and Governance Committee receive $20,000, $15,000 and $15,000, respectively, per
year.
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Meeting Fees
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Directors do not receive regular meeting fees. However, if more than six meetings of the Board or any Committee occur (determined independently) in any given
year, meeting fees are paid at the rate of $1,500 per meeting (with the Chairman of the Board or the Committee Chair being paid at the rate of $3,000 for any such meeting).
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Medical, Dental and Vision Care Insurance
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Optional medical, dental and vision care coverage are made available to our nonemployee Directors and their eligible dependents on terms and at a premium cost
similar to that charged to Company employees.
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Nonemployee Directors who opt not to stand for re-election to the Board after age 60 and who have 10 or more years of Board service are eligible to participate
in the Companys medical plans (at full premium cost to the Director) until they become eligible for Medicare benefits.
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2016
Total Compensation of Nonemployee Directors
The following table shows (i) the cash amount paid to each nonemployee Director for his or her
service as a nonemployee Director in 2016, and (ii) the grant date fair value of restricted stock units awarded to each nonemployee Director in 2016, calculated in accordance with the accounting guidance on share-based payments. Mr. Flynn did
not receive any additional compensation for his service as a Director in 2016.
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Name
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Fees Paid in Cash
($)
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Stock Awards
($)
(1)
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Total
($)
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Robert F. Agnew
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121,500
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110,018
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231,518
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Timothy J. Bernlohr
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118,500
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110,018
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228,518
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James S. Gilmore III
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120,500
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110,018
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230,518
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Bobby Griffin
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61,657
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110,018
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171,675
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Carol B. Hallett
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120,500
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110,018
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230,518
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Frederick McCorkle
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266,000
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110,018
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376,018
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Duncan J. McNabb
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108,500
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110,018
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218,518
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John K. Wulff
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61,657
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110,018
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171,675
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(1)
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The value of stock equals the grant date fair value of $44.38 per share on May 24, 2016.
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Nonemployee Directors Outstanding Equity Awards at Fiscal
Year-End
2016
There were no outstanding equity awards held by our outside Directors as of December 31, 2016. Any RSUs awarded to the outside Directors in 2016, all originally
scheduled to vest in May 2017 vested on September 20, 2016 in accordance with their terms, when the Companys shareholders approved the issuance by the Company of shares of its common stock representing up to 20% (and up to an additional 10% in
the event of increased future business) of the Companys outstanding shares of Common Stock upon exercise of the warrants issued by the Company to Amazon in May 2016 to satisfy a stock exchange listing requirement.
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CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS
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Communications with the Board
The Board of Directors welcomes input and
suggestions. Shareholders and other interested parties who wish to communicate with the Board may do so by mail to the Office of the Secretary, Atlas Air Worldwide Holdings, Inc., 2000 Westchester Avenue, Purchase, NY 10577, or
e-mail
to corporate.secretary@atlasair.com. All communications received by Directors from third parties that relate to matters within the scope of the Boards responsibilities will be forwarded to the Chairman
of the Board. All communications received by Directors from third parties that relate to matters within the responsibility of one of the Board committees will be forwarded to the Chairman of the Board and the Chairman of the appropriate committee.
All communications received by Directors from third parties that relate to ordinary business matters that are not within the scope of the Boards responsibilities are forwarded to AAWWs General Counsel.
Board Effectiveness and Annual Assessment
Each year our Board and its Committees conduct
self-evaluations to ensure they are performing effectively and to identify opportunities to improve Board and Committee performance. The written self-assessment is conducted under the oversight of the Nominating and Governance Committee. Anonymous
evaluation responses are reviewed and assessed. A written report, based on the anonymous written feedback from the Directors and senior management is compiled and presented by the chair of the Nominating and Governance Committee. The final report is
discussed by the Nominating and Governance Committee, and the Nominating and Governance Committee shares and discusses these responses with the full Board and the other committees of the Board, as applicable.
During 2016, continuing the process developed and implemented in 2015, the full Board, under the guidance of the Nominating and Governance Committee, undertook a
thorough review of the skills, qualifications and tenure of our incumbent Directors, as well as the size of the Board, in the context of our long-range strategic plan. Through this process, the Board identified Mr. Bolden as a candidate for
election to the Board in February 2017. See Director Core Competencies above for additional information.
A copy of our Corporate Governance
Principles can be found on the Corporate Governance page of the Corporate Background portion of our website at
www.atlasair.com
. Our Corporate Governance Principles are described in greater detail below.
Director Independence
The Nominating and Governance Committee has determined that
all Directors, excluding Mr. Flynn, are independent under Company standards and SEC and NASDAQ rules. The Nominating and Governance Committee classifies the following Directors nominated for election at the Annual Meeting as independent:
Messrs. Agnew, Bernlohr, Bolden, Gilmore, Griffin, McCorkle, McNabb, Wulff, and Ms. Hallett.
Our Nominating and Governance Committee Charter
includes categorical standards to assist the Nominating and Governance Committee in making its determination of Director independence within the meaning of the rules of the SEC and the Marketplace Rules of NASDAQ. The Nominating and Governance
Committee will not consider a Director to be independent if, among other things, he or she:
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was employed by us at any time in the last three years;
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has an immediate family member who is, or in the past three years was, employed by us as an executive officer;
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has accepted or has an immediate family member who has accepted any compensation from us in excess of $120,000 during a period of 12 consecutive months within
the three years preceding the determination of independence (other than compensation for Board service, compensation to a family member who is a nonexecutive employee, or benefits under a
tax-qualified
retirement plan or nondiscretionary compensation);
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2017 Notice &
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CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS
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is, was or has a family member who is or was a partner, controlling shareholder, or executive officer of any organization to which we made or from which we
received payments for property or services in the current year or any of the past three fiscal years in an amount that exceeds the greater of $200,000 or 5% of the recipients consolidated gross revenues for the year;
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is or has a family member who is employed as an executive officer of another entity where at any time during the last three years any of the Companys
executive officers serve or served on the entitys compensation committee; or
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is or has a family member who is a current partner of the Companys independent registered public accounting firm or was or has a family member who was a
partner or employee of the Companys independent registered public accounting firm who worked on the Companys audit at any time during the last three years.
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Pursuant to the Nominating and Governance Committee Charter and as further required by NASDAQ rules, the Nominating and Governance Committee made a subjective determination as to each outside Director that no
relationship exists which, in the opinion of the Board, would interfere with such individuals exercise of independent judgment in carrying out his or her responsibilities as a Director. As part of such determination, the Nominating and
Governance Committee examined, among other things, whether there were any transactions or relationships between AAWW and an organization of which a Director or Director Nominee has been a partner, shareholder, or officer within the last fiscal year.
The purpose of this review was to determine whether any such relationships or transactions were inconsistent with a determination that a Director is independent.
Board Committees
Our Board maintains three standing committees, an Audit Committee, Compensation Committee, and Nominating and Governance Committee, each of which has a charter that
details the committees responsibilities. The charters for all the standing committees of the Board of Directors are available in the Corporate Background section of our website located at
www.atlasair.com
and by clicking on the
Corporate Governance link. The charters are also available in print and free of charge to any shareholder who sends a written request to the Secretary at Atlas Air Worldwide Holdings, Inc., 2000 Westchester Avenue, Purchase, NY 10577.
Nominating and Governance Committee
The Nominating and Governance Committee currently consists of
Mr. Gilmore (Chairman) and Messrs. Agnew, Bernlohr, McCorkle, and McNabb, each of whom is an independent Director within the meaning of the applicable NASDAQ rules. The principal functions of the Nominating and Governance Committee are to:
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Identify and approve individuals qualified to serve as members of our Board;
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Select Director Nominees for the next annual meeting of shareholders;
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Review at least annually the independence of our Directors;
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Oversee our Corporate Governance Principles; and
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Perform or oversee an annual review of the CEO, the Board and its committees.
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The Nominating and Governance Committee held four
in-person
meetings in 2016.
Evaluation of Director Nominees and Expansion of the Board
Our Nominating and Governance Committee is responsible for reviewing and developing the Boards criteria for evaluating and selecting new Directors. The
Nominating and Governance Committees charter sets forth the criteria for skills and characteristics for Directors (see Election of Directors for the qualifications and experience of current Directors). The Nominating and Governance
Committee identifies new candidates from a variety of sources, including recommendations submitted by shareholders.
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CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS
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New and incumbent Directors are individually evaluated from a skills and
characteristics perspective on a number of different factors, including having the following traits: high personal standards; the ability to make informed business judgments; literacy in financial and business matters; the ability to be an effective
team member; a commitment to active involvement and an ability to give priority to the Company; no affiliations with competitors; achievement of high levels of accountability and success in his or her given fields; experience in the Companys
business or in professional fields or other industries or as a manager of international business so as to have the ability to bring new insight, experience or contacts and resources to the Company; no direct affiliations with major suppliers,
customers or contractors; and preferably previous public company board experience with good references.
As part of the Nominating
and Governance Committees ongoing evaluation of the Boards composition, in early 2017, our Board elected Charles F. Bolden, Jr. a Director of AAWW, increasing the size of the Board from nine Directors to ten. Mr. Bolden was
recommended as a Director candidate by the Nominating and Governance Committee following referrals by our current Directors as part of the Nominating and Governance Committees process for identifying potential Directors. Mr. Bolden has
notable experience in the field of civil and governmental aviation, having served as the 12
th
Administrator of the National Aeronautics and Space Administration for many years, as well as in military affairs having retired as a Major General in the U.S. Marine Corps following a
34-year
career. Through his substantial experience as a director of several public companies, Mr. Bolden is also well versed in areas of global operations, corporate governance, strategic planning and
transportation and security.
The Nominating and Governance Committee will also consider whether potential Nominees are independent, as defined in
applicable rules and regulations of the SEC and NASDAQ. The Board will nominate new Directors only from candidates identified, screened, and approved by the Nominating and Governance Committee. The Company considers diversity as an important element
of the Board section process but does not have a formal policy regarding the diversity of its Directors. The Nominating and Governance Committee uses the criteria specified above when considering candidates for a Board seat and then searches for
candidates that best meet those criteria without limitations imposed on the basis of race, gender, or national origin. The Board will also take into account the nature of and time involved in a Directors service on other boards in evaluating
the suitability of individual Directors and making its recommendation to AAWWs shareholders. Service on boards of other organizations must be consistent with our conflict of interest policies applicable to Directors and other legal
requirements.
Our Nominating and Governance Committee will consider shareholder recommendations for candidates to serve on the Board, provided that
such recommendations are made in accordance with the Nominating and Governance Committees policy on security holder recommendations of Director Nominees (the Shareholder Nominating Policy), which is subject to a periodic review by
the Nominating and Governance Committee. Among other things, the Shareholder Nominating Policy provides that a shareholder recommendation notice must include the shareholders name, address, and the number of shares beneficially owned, as well
as the period of time such shares have been held, and should be submitted to the Office of the Secretary, Atlas Air Worldwide Holdings, Inc., 2000 Westchester Avenue, Purchase, NY 10577. A copy of our current Policy on Security Holder Recommendation
of Director Nominees is available in the Corporate Background section of our website at
www.atlasair.com
. In evaluating shareholder Nominees, the Board and the Nominating and Governance Committee seek to achieve a balance of knowledge,
experience, and capability. As a result, the Nominating and Governance Committee evaluates shareholder Nominees using the same membership criteria set forth above.
Adoption of Proxy Access
By-Law
Provision
In addition to recommending
candidates to serve on the Board pursuant to the Shareholder Nominating Policy described above, shareholders who satisfy certain requirements may nominate potential candidates to the Board by utilizing the proxy access provisions set forth in our
By-Laws.
In December 2016, the Board authorized and approved an amendment to our
By-Laws
to provide for proxy access. Under the proxy access
By-Law,
any shareholder, or group of up to 20 shareholders, owning three percent or more of our outstanding Common Stock continuously for at least three years, is eligible to nominate and include in our proxy
materials Director Nominees constituting up to the greater of two Directors or 20% of the Directors then serving on the Board, provided that the
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
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CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS
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nominating shareholder(s) and Director Nominee(s) satisfy the requirements specified in the proxy access
By-Law.
If an individual proxy access Director
Nominee does not receive at least 25% of the votes cast for election of that nominee, the proxy access By-law prohibits the renomination of that individual under the proxy access By-law for the next two annual meetings. The Boards adoption of
proxy access followed (i) a series of discussions with various shareholders and (ii) careful evaluations by the Nominating and Governance Committee and the Board of shareholder views on proxy access, proxy advisory firms views on proxy access,
the potential impact on the Company of the adoption of proxy access and proxy access frameworks adopted by other companies. The Board believes the Companys proxy access
By-Law
strikes an appropriate and
meaningful balance between enhancing shareholder rights and adequately protecting the interests of the Company and all of its shareholders.
Corporate Governance Principles
We annually review our
Corporate Governance Principles, believing that sound corporate governance practices provide an important framework to assist the Board in fulfilling its responsibilities. The business and affairs of AAWW are managed under the direction of our
Board, which has responsibility for establishing broad corporate policies, setting strategic direction, and overseeing management. An informed, independent, and involved Board is essential for ensuring our integrity, transparency, and long-term
strength, and maximizing shareholder value. The Corporate Governance Principles address such topics as codes of conduct; Director nominations and qualifications; Board committees; Director compensation; conflicts and waivers of compliance; powers
and responsibilities of the Board; Board independence; serving on other boards and committees; meetings; Director access to officers and other employees; shareholder communications with the Board; annual Board evaluations; financial statements and
disclosure matters; delegation of power; and oversight and independent advisors. A copy of our Corporate Governance Principles is available in the Corporate Background section of our website at
www.atlasair.com
.
Audit Committee
The Audit Committee of the Board of Directors currently
consists of four outside Directors: Messrs. Bernlohr (Chairman), Agnew, McNabb and Wulff, each of whom is an independent Director within the meaning of the applicable rules and regulations of the SEC and NASDAQ (see also Director
Independence above). The Board has determined that Messrs. Agnew, Bernlohr, and Wulff are audit committee financial experts as defined under applicable SEC rules. The Board believes that Mr. Agnew possesses the attributes
necessary to be deemed an audit committee financial expert, these attributes having been acquired by previously chairing the AAWW Audit Committee for ten years, among other things.
The Audit Committees primary function, as set forth in its written charter (available in the Corporate Background section of our website at www.atlasair.com under the heading Audit Committee
Charter) is to assist the Board in overseeing the:
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Quality and integrity of the financial statements of the Company;
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Qualifications and independence of our independent registered public accounting firm;
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Performance of the Companys internal audit function and independent registered public accounting firm;
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Compliance with legal and regulatory requirements by the Company; and
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Effectiveness of the Companys financial reporting process, disclosure practices and systems of internal controls.
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The Audit Committee is also responsible for overseeing the Companys Code of Ethics (see also Code of Ethics above) and related party
transactions. The Audit Committee held four
in-person
meetings and four telephonic meetings in 2016.
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CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS
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Evaluation of Independent Registered Public Accounting Firm
As noted above, the Audit Committee assists the Board in overseeing the independent registered public accounting firms qualifications, independence and
performance. The Audit Committee is also responsible for appointing the independent registered public accounting firm and approving, in advance, audit and permitted
non-audit
services in accordance with the
Committees preapproval policy (see also Proposal No. 2 below).
The Audit Committee received from AAWWs independent
registered public accounting firm, PricewaterhouseCoopers LLP (PwC), the written communications required by applicable requirements of the Public Company Accounting Oversight Board regarding communications with the Audit Committee
concerning independence and satisfied itself as to the independence of PwC.
In addition to PwCs independence, the Audit Committee considered
several other factors in deciding whether to
re-appoint
PwC, including the quality of PwCs staff and work; PwCs procedures related to quality control; the communication and interaction with our PwC
team; PwCs capability and expertise to perform an audit of a company having the complexity of AAWWs business; the length of time PwC has served as the Companys independent registered public accounting firm; the appropriateness of
PwCs fees; and the potential impact of changing our independent registered public accounting firm. As a result, the Audit Committee has selected PwC as the Companys independent registered public accounting firm for the year ending
December 31, 2017.
Audit Committee Report
AAWW management has responsibility for preparing the Companys financial statements and PwC is responsible for auditing those financial statements. In this
context, the Audit Committee has reviewed and discussed AAWWs audited consolidated financial statements as of and for the fiscal year ended December 31, 2016 with management and with PwC. The Audit Committee discussed with PwC the matters
required to be discussed by
Auditing Standard No. 1301
Communications with Audit Committees.
Based
upon its reviews and discussions, including the matters related to PwCs independence, as described above, the Audit Committee recommended, and the Board of Directors approved, that AAWWs audited consolidated financial statements be
included in the Annual Report on Form
10-K
for the fiscal year ended December 31, 2016, for filing with the SEC.
THE AUDIT COMMITTEE
Timothy J. Bernlohr, Chair
Robert F. Agnew
Duncan J. McNabb
John K. Wulff
Code of Ethics and Employee Handbook
We have adopted a Code of Ethics applicable to the CEO,
Senior Financial Officers and Members of the Board of Directors that is monitored by our Audit Committee and that includes certain provisions regarding disclosure of violations and waivers of, and amendments to, the Code of Ethics by covered
parties. The Code of Ethics is reviewed on an annual basis. Any person who wishes to obtain a copy of our Code of Ethics may do so by writing to the Office of the Secretary, Atlas Air Worldwide Holdings, Inc., 2000 Westchester Avenue, Purchase, NY
10577. A copy of the Code of Ethics is available in the Corporate Background section of our website at
www.atlasair.com
under the heading Code of Conduct.
We also have an Employee Handbook and Code of Conduct that sets forth the policies and business practices that apply to all of our executives and other employees globally (except as provided under applicable law)
and excluding employees of our recently acquired subsidiary, Southern. Southern employees are currently subject to a separate Employee Handbook that is similar in content to our Employee Handbook and Code of Conduct. The
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CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS
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Employee Handbook and Code of Conduct, or, in the case of Southern, the Employee Handbook, addresses such topics as compliance with laws, moral and ethical conduct, equal employment opportunity,
promoting a work environment free from harassment or discrimination, and the protection of intellectual property and proprietary information, among other things. In 2015, we completed a year-long review of our Employee Handbook and Code of Conduct
to remain compliant with applicable law and consistent with best practices. We also implemented and distributed an updated Employee Handbook and Code of Conduct to employees worldwide in 2015.
Environmental, Social and Governance Issues
As a leading global provider of outsourced and aviation
operating services, we encounter and manage a broad range of environmental, social and governance (ESG) issues. We have identified the following ESG issues, by category, as among the most relevant to our business and of highest interest
to our key stakeholders:
Environmental:
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Our current fleet consists primarily of
747-8F,
747-400F and 777 aircraft, modern assets which we believe are superior in
terms of fuel efficiency, range, capacity and loading capabilities
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The
-8Fs
are about 15% more fuel efficient than our 400s, which translates into approximately 15% lower carbon dioxide
emissions
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The
-8Fs
are also approximately 30% less noisy than the 400 series
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We conserve fuel wherever possible through our FuelWise fuel management information system, which uses our existing data to analyze fuel consumption performance,
enabling us to track fuel burn rates more accurately and efficiently and to identify additional opportunities to conserve fuel
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We work with our customers to plan routes that are more fuel efficient
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We participate in industry and governmental initiatives to optimize air traffic management systems, where advances could result in substantial reductions in fuel
use and emissions and fewer interruptions at airports
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Our record on the ground is also very strong, with no significant spills of fuel,
de-icing
fluids or other liquids
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Social
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We are an Equal Opportunity Employer
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We have affirmative action plans in place to ensure that qualified applicants and employees are receiving an equal opportunity for recruitment, selection,
advancement and every other term and privilege associated with employment with AAWW
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We seek to attract talented individuals as employees and to develop them to their fullest potential
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We also seek to offer our employees highly competitive compensation and benefit packages to retain them for the long-term
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The health and safety of our employees, particularly our crewmembers, is paramount, and our health and safety track record reflects this commitment
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Our crewmembers are represented by the International Brotherhood of Teamsters, and we consider our relationship with the Teamsters to be good
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We encourage diversity and inclusiveness in our workforce
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We have policies in place prohibiting human trafficking
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We have provided cost-free charter flights for disaster relief and have encouraged our employees to support disaster relief and related activities
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CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS
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We sponsor fundraising efforts and employee volunteer events for nonprofit organizations such as Junior Achievement and the American Red Cross, including Company
matches of employee donations
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Governance
|
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We are firmly committed to maintaining a strong corporate governance program, which reflects best practices
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We endorse the concept of Board and Committee refreshment, which has resulted in the election of three new Board members over the last two years and the rotation
of the Chairman of the Board and the Chairs of the Audit Committee and Compensation Committee over the last three years. We expect to rotate the Chair of the Nominating and Governance Committee at the organizational meeting of the Board immediately
following the Annual Meeting.
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We require our employees to act responsibly in full compliance with all applicable laws and standards and to maintain the highest level of ethical conduct in
their dealings with customers, suppliers and other stakeholders
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We provide recurrent training to our employees that supports their ability to act responsibly in full compliance with all applicable laws and standards
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We are committed to maintaining a strong control environment and to making effective controls an integral part of our routine business practices and having
effective checks and balances in place so that we can address many issues before they become larger problems
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We are committed to frequent and extensive shareholder engagement to learn what issues are important to the owners of your Company
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Your Board of Directors is committed to enhancing shareholder value and has approved a long-term strategic plan, which is designed to achieve this objective and
which is being implemented by senior management under the Boards close supervision
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Compensation Committee
Duties and Responsibilities
The Boards Compensation Committee assists the Board in discharging and performing its duties regarding the compensation of our executives, including our NEOs,
executive succession planning, and other matters. The Compensation Committee also is the administrator of our long-term incentive award and annual bonus plans.
The Compensation Committee is also responsible for:
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Reviewing, evaluating and establishing compensation plans, programs and policies for, and reviewing and approving the total compensation of, our senior
executives at the level of executive vice president and above, including our CEO;
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Monitoring the search for, and approving the proposed compensation for, all senior executives at the level of executive vice president and above and periodically
reviewing and making recommendations to the full Board regarding the compensation of Directors; and
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Retaining and overseeing the independent compensation consultant that provides advice regarding executive and Director compensation matters.
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Processes and Procedures
Following approval of the annual budget, either before or during the first quarter of each year, the Committee establishes the minimum financial performance
objective required before any annual incentive award payment may be made, as well as the years objectives for financial,
on-time
customer service reliability and individual performance goals and
objectives for senior executives. All are taken into account in setting the performance
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CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS
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range for each such executive and ultimately in determining the amount of each such executives annual award payment, if any. The Committee establishes these criteria, with the advice of the
independent compensation consultant and outside counsel, as appropriate, after reviewing information submitted to the Committee by the CEO and Chief Human Resources Officer (at the request of the Committee). Our CEO and Chief Human Resources Officer
also provide information to the Committee regarding annual and long-term incentive plans that the Committee considers, with the advice of the independent compensation consultant and outside counsel, in its determination of awards under those plans.
The Compensation Committee is required by its charter to meet at least four times annually. During 2016, the Compensation Committee held four
in-person
meetings and four telephonic meetings and acted twice by written consent. In 2016, the Compensation Committee consisted of four outside Directors, Ms. Hallett (Chair), Mr. Gilmore,
Mr. Griffin and Mr. McCorkle, each of whom is an independent Director within the meaning of applicable SEC and NASDAQ rules.
Compensation
Determination Process
The Compensation Committee has primary responsibility for determining and approving, on an annual basis, the compensation of
our CEO and other executive officers. The Compensation Committee receives information and advice from its compensation consultant, as well as from our human resources department and management to assist in compensation determinations.
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Role of Independent Compensation Consultants
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The Compensation Committee engaged the services of Willis Towers Watson (and its predecessor firms) as its independent advisor on matters of executive
compensation from July 2007 through November 2016. Thereafter, following a competitive and thorough selection process, the Committee retained Pay Governance LLC (Pay Governance) for the remainder of 2016 and thereafter. Each of the
Committees consultants reported directly to the Committee and provided no other services to the Company or any of its affiliates. For 2016, the Committee assessed the independence of Willis Towers Watson pursuant to the SEC and NASDAQ rules
and concluded that no conflict of interest existed that would prevent Willis Towers Watson from independently representing the Compensation Committee. At the time of the competitive bid process, the Committee assessed the independence of Pay
Governance pursuant to the SEC and NASDAQ rules and concluded that no conflict of interests exists that would prevent Pay Governance from independently advising the Compensation Committee.
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Pay Governance (and previously Willis Towers Watson) provides advice and analysis to the Compensation Committee on the design, structure and level of executive
and director compensation, and, when requested by the Compensation Committee, attends meetings of the Compensation Committee and participates in executive sessions without members of management present. The independent compensation consultant
reports directly to the Compensation Committee, and the Compensation Committee reviews, on an annual basis, the independent compensation consultants performance and provides the independent compensation consultant with direct feedback on its
performance.
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Role of Our Senior Executives
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While the Compensation Committee has the responsibility to approve and monitor all compensation for our executive officers, management plays an important role in
determining executive compensation. Management, at the request of the Compensation Committee, recommends financial goals that drive the business and works with Pay Governance to analyze competitive market data and to recommend compensation levels
for our executive officers. Our CEO and Chief Human Resources Officer (CHRO). likewise assist the Compensation Committee by providing their evaluation of the performance of our other executive officers and recommending compensation for
NEOs other than themselves, including adjustments to annual incentive compensation, based on individual performance. Any individual whose performance or compensation is to be discussed at a Compensation Committee meeting does not attend such meeting
(or the applicable portion of such meeting) unless specifically invited by the Compensation Committee, and the CEO is not present during voting or deliberations regarding his compensation.
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CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS
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The Committees Risk Assessment of Our Compensation Policies
The Compensation Committee considered the structure and administration of our 2016 compensation program, the advice of Willis Towers Watson following its most
recent evaluation completed in early 2016, and the observations of Pay Governance regarding the overall structure of the program and Willis Towers Watsons evaluation when concluding that our 2016 compensation program is appropriately balanced
and does not promote imprudent or excessive risk taking. Significant factors contributing to their conclusion included:
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Extent of oversight.
The Compensation Committee with members of management reviews the performance of our compensation plans.
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Governance
. Oversight roles are clearly defined throughout the company to ensure that pay plans are aligned with business goals and risk tolerances,
stress tested under realistic assumptions, and balanced between corporate standards and business-unit autonomy.
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Risk profile and balance within the incentive structure
. Our plans are designed by the Compensation Committee to appropriately balance fixed and variable
pay, cash and equity, short- and long-term incentives, and corporate, business unit and individual performance goals.
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Plan design
. Our plans are designed to avoid such features as very steep incentive slopes, unreasonable goals or thresholds, uncapped payouts, rigidly
formulaic awards, undue focus on any one element of compensation, and misaligned timing of payouts and we maintain risk mitigating features including the Compensation Committees retained discretion with respect to assessing awards, clawbacks,
and shareholding requirements.
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Performance metrics
. Performance metrics reflect risk and use of capital, quality and sustainability of results and do not provide an incentive to
management to seek short-term results that encourage high-risk strategies designed to exact short-term results at the expense of long-term performance and value.
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Compensation Committee Interlocks and Insider Participation
No member of our Compensation Committee serves as
a member of the Board of Directors or the compensation committee of any entity that has one or more of our executive officers serving as members of the Board or Compensation Committee.
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COMPENSATION DISCUSSION AND ANALYSIS
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COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis, as well as the Executive Compensation Tables, are organized as follows:
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2017 Notice & Proxy Statement
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COMPENSATION DISCUSSION AND ANALYSIS
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Overview
2016 Performance Highlights
and Key Achievements
We delivered strong operating and share performance in 2016, with historic, transformative actions that position the
Company for future earnings growth. In April 2016, we acquired Southern in a highly complementary transaction that expands our platform into 777 and 737 operations and provides our customers with access to a broader array of aircraft and operating
services. A month later, we reached an agreement to provide air transport services for leading
e-commerce
retailer Amazon. In addition to leasing twenty
767-300
freighters to Amazon and operating them in support of package deliveries to its customers, our arrangements provide for future growth of the relationship as Amazon may increase its business with us.
Our long-term strategic plan to diversify our business and enhance our financial results is consistent with the metrics in our short- and long-term incentive
plans, as described further under the heading Direct Link between Compensation and Business Strategy on page 27. The table below shows how selected company metrics have progressed during this period.
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Long Term Performance Metrics
($ Millions for Adjusted EBITDA
and Free Cash Flow)
|
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2011
|
|
2016
|
|
Compound Annual
Growth Rate
|
|
|
|
|
|
Adjusted
EBITDA*
|
|
$211.8
|
|
$382.3
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|
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h
12.5%
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Free Cash
Flow*
|
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$77.9
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$182.2
|
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h
18.5%
|
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|
|
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|
Year-end
Stock Price per Share
|
|
$38.43
|
|
$52.15
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h
6.3%
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|
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Five-Year
ROIC*
|
|
|
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31.0%
|
|
|
|
|
|
|
|
|
Block
Hours
|
|
137,055
|
|
210,444
|
|
|
h
9.0%
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*
|
Adjusted EBITDA, Free Cash Flow, and ROIC are
non-GAAP
measures. A reconciliation of such
non-GAAP
measures to the most directly comparable GAAP measures is contained in Exhibit A attached hereto.
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Aligning Pay and Performance
Our Compensation Committee believes that our compensation practices have played a key role in our steady operating and financial results both during challenging
times experienced generally in the global freight industry over the last several years and transformative growth periods like what we experienced in 2016. Our pay programs are designed to align executive compensation with Company and individual
performance while providing incentives needed to attract, motivate, and retain executives that drive the Companys creation of long-term shareholder value.
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2017 Notice &
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COMPENSATION DISCUSSION AND ANALYSIS
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How We Incorporate
Pay-for-Performance
into Our Programs
The Compensation Committee
achieves its pay for performance goals by:
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Aligning annual incentives with key annual financial,
on-time
customer service reliability, and operating objectives that
directly tie to the companys strategy and holistic approach to achieving success
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Aligning long-term incentive awards with executive retention and our shareholders interests by basing awards on key Company financial metrics and long-term
operating performance
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Balancing pay mix appropriately between fixed and variable pay, short- and long-term pay and performance metrics that are tied to business strategy that aligns
with shareholder interests and long-term value creation.
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The below table summarizes the three primary components of our NEOs
compensation:
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Elements
of
Pay
|
|
Form
|
|
Links to
Performance
|
|
Purposes
|
Base Salary
|
|
Cash
|
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Fixed annual compensation
|
|
◾
Attract and retain executive talent
◾
Compensate executives for their responsibility, experience, sustained high performance and contributions to Company
success
|
Annual
Incentives
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Cash
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EPS
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◾
Drives key business, operating and individual results on an annual basis (EPS)
◾
Derived from our annual operating plan (EPS)
◾
Strictly performance-based against measureable metrics; no payout guaranteed (all metrics)
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Objective
on-time
customer service reliability metrics
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Individual Performance Objectives
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Long-Term
Incentives
|
|
Performance Share Units (PSU)
and
Performance Cash
|
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Average Growth in Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
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|
◾
Links NEO and long-term shareholder interests
◾
Serves as a key retention tool and a strong long-term performance driver
◾
Performance-based against measureable metrics; no payout guaranteed
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Return on Invested Capital (ROIC)
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RSUs
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Alignment with shareholder returns
|
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◾
Multi-year long-term retention
◾
Value tied to share price
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In 2016, we executed on our strategic initiatives to strengthen and diversify our business mix, expand our customer base, generate
cost savings through operating efficiencies, and enhance our portfolio of assets and services. Our results reflected the strength of our ACMI and Dry Leasing businesses, growth in the Charter business, progress in our efficiency and productivity
initiatives, and an increase in the average utilization of our operating fleet during the year as we capitalized on the market demand for our aircraft. See also Pay for Performance in Action on page 28.
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COMPENSATION DISCUSSION AND ANALYSIS
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Direct Link between Compensation and Business Strategy
Our compensation programs are designed to drive achievement of our business strategies and provide competitive opportunities, principally dependent on the
successful achievement of performance goals closely tied to Company performance, as exemplified by the following 2016 features:
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Annual Incentives
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Company Performance Metric
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NEO Performance Metric
|
Adjusted Earnings Per Share
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Adjusted Earnings Per Share
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Customer Service
On-Time
Reliability
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Customer Service
On-Time
Reliability
|
Strategic Initiatives
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Individual Performance Objectives
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Long-Term Incentives PSUs and Performance Cash
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Adjusted EBITDA Growth
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Adjusted EBITDA
Growth
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Return on Invested Capital
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Relative Return
on Invested Capital
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CEO Compensation Opportunity
We design our CEOs compensation opportunity to be largely performance-based. 67.2% of maximum total CEO compensation opportunity in 2016 was designed to be
based on attainment of performance metrics, including approximately 43.3% in the form of long-term multi-year opportunities and 23.9% in annual incentive opportunity. An additional 20.9% of compensation opportunity was granted in the form of RSUs
with four-year vesting.
Our CEOs base salary has not been increased in the past five years, his bonus opportunity has not been increased since
2010 and his long term incentive opportunity was decreased from 4.75 multiple of salary to 3.75 multiple of salary in 2014 to be better aligned with peer group levels. The following charts illustrate our CEOs total compensation opportunity in
2016, as well as the 2016 long-term incentive opportunity for our CEO (assuming payout at maximum levels):
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Total CEO Compensation Opportunity
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CEOs Long-Term Incentive Opportunity
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In connection with the Amazon transaction, as a result of our CEOs retirement eligibility under our Company programs and
timing requirements under Section 409A of the Internal Revenue Code of 1986, as amended (the Code), in 2016 Mr. Flynn became entitled to certain components of his awards. Please see page 43.
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2017 Notice &
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COMPENSATION DISCUSSION AND ANALYSIS
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Compensation Risk Mitigating Policies and Practices
We maintain stock ownership guidelines, anti-hedging and anti-pledging policies, as further described below on pages 30 and 44. Through our compensation program design and related policies, we pursue the alignment
of interests of our executives with those of our shareholders over a multi-year long-term basis and encourage thoughtful and appropriate business risk-taking.
Pay for Performance in Action
Our compensation program is structured to be
strongly aligned with the performance of the Company, with a significant portion of our NEOs compensation based upon various performance metrics tied to our annual and long-term incentive plans. The performance metrics are designed to drive
the achievement of key business, financial,
on-time
customer service, and operational annual and long-term results, in addition to individual contributions. The performance-based payouts for 2016 demonstrate
the Compensation Committee has set rigorous goals that align with the Companys strategy and reflect the performance outcomes over the past few years:
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Performance-Based Long-Term Incentive (for three-year period 2014-2016)
: Payout reflecting transformative company growth and attainment of metrics due to
Amazon transaction (as discussed under the heading Amazon Transaction below on page 42) and Southern acquisition (as discussed under the heading Southern 2016 Acquisition Incentive Program under the 2007
Incentive Plan on page 42).
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Annual Incentive (2016)
: Payout at 139.2% for our CEO and 149.2% for our other NEOs, reflecting our strong 2016 performance, which included the
consummation of the Amazon transaction and the acquisition of Southern, high customer service reliability metric attainment, as well as a stock price increase of approximately 26%. Please see page 36 for a further discussion of our 2016 AIP
payout.
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No (zero) payout was made under the 2013-2015 LTl award
based on the Committees review and consistent with the pay for performance structure of our
long-term incentive plan, given that AAWWs EBITDA and ROIC growth levels placed it below the threshold required, primarily due to the effect of the Companys 2015 settlement of its legacy antitrust class action lawsuit (relating to
alleged matters from 2000-2006). The fact that no payment was made under the 2013-2015 award grants reflects the strong link between our incentive compensation metrics and actual company performance.
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2017 Notice & Proxy Statement
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COMPENSATION DISCUSSION AND ANALYSIS
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Recent Compensation Program and Corporate Governance Changes
As discussed on page iv, we engage in extensive ongoing shareholder outreach in order to better understand their perspectives and consider ideas for further
improvements to, among other things, our executive compensation programs and disclosures. This year we reached out to shareholders representing approximately 75% of our outstanding shares and were able to engage in discussions with those
representing approximately one-half of our outstanding shares. We have made significant recent changes to our governance and compensation programs in response to insight gained during these discussions (as well as recommendations from our various
advisors).
Although shareholders with whom we held discussions did not identify specific executive compensation practices suggesting changes, and such
shareholders expressed very positive feedback about company performance in 2016, we gathered meaningful topical feedback (e.g.,
in-house
metrics used by shareholders to assess pay for performance) which we
carefully considered when setting and structuring 2017 compensation and during our ongoing review and enhancement of our compensation and governance programs and structures.
As highlighted in the table below, we have made significant changes in our governance and compensation practices over the last several years.
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Annual Bonus
Performance
Metrics
|
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Company performance metrics for our NEOs increased to 60% of weighted performance metrics from 50% effective 2017. Company performance component for our CEO was raised from 50% to 60% effective 2016. (page 34)
Enhanced disclosure to clarify that 2017 company performance goals continue to be set at a higher level than actual company performance in 2016
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Peer Group
|
|
Reviewed and adjusted the benchmarked peer group to consist of ~20 companies in industries similar to ours, with median revenue size approximately equal to AAWW revenues (including
revenues of Polar). (page 31)
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CEO
Compensation
Benchmarking
|
|
Our CEOs base salary has not been increased in the past five years, his bonus opportunity has not been increased since 2010 and his long term incentive opportunity was decreased from 4.75 multiple of salary to 3.75 multiple of
salary in 2014 to be better aligned with peer group levels.
CEO long-term incentive plan (LTI) award grant level revised in 2014 to
be targeted at approximately the median of benchmarked peer group.
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New Independent Compensation
Consultant
|
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Following a competitive and thorough selection process, the Compensation Committee retained Pay Governance LLC as its new independent compensation consultant (Willis Towers Watson and
its predecessor firms was our independent compensation consultant from July 2007 until November 2016). (page 22)
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Proxy Access
|
|
Proactively adopted proxy access provisions to our bylaws generally allowing shareholders having held at least 3% of our outstanding shares for 3 years to include nominees for up to
the greater of two Directors or 20% of the Board (up to 20 holders may aggregate their shares to satisfy the 3% eligibility requirement).
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Majority
Voting
|
|
Adopted majority voting standard in uncontested elections to enhance Director accountability and as a matter of best corporate governance practices.
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Board
Refreshment and Rotation
|
|
Three new Directors were elected in 2016 and 2017, enhancing the Boards overall level of skill and bringing new perspectives to the Board and Committee decision-making processes. (page 17)
Rotated the Audit and Compensation Committee Chair positions, as well as the Chairman of the Board within the last 2.5 years to ensure fresh perspectives and to enhance the Directors understanding of different aspects of the
Companys business and enabling functions. Mr. Griffin, one of the Directors elected at our 2016 Annual Meeting, is a member of the Compensation Committee, while Mr. Wulff, the second Director elected in 2016, is a member of the Audit
Committee. (pages 9 and 11)
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COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
|
|
|
|
|
Enhanced
Stock
Ownership
Guidelines
|
|
Revised our Guidelines to increase target ownership requirements for the Directors and the NEOs.
Target ownership levels for the Directors and the NEOs are now based on the lesser of: (1) 4x annual base cash retainer, or 7,500 shares, for independent Directors, (2) 5x base salary, or 100,000 shares, for the CEO, (3) 3.5x base
salary, or 40,000 shares, for the Chief Executive Officer of Titan or the President of Atlas Air, and (4) 3x base salary, or 30,000 shares, for executive vice presidents. (page 44)
|
Best Practices and Risk Management
The Compensation Committee is required by its charter to meet at least four times annually. During 2016, the Compensation Committee held four
in-person
meetings and four
telephonic meeting and acted twice by written consent. In 2016, the Compensation Committee consisted of four outside Directors, Ms. Hallett (Chair), Mr. Gilmore, Mr. Griffin and Mr. McCorkle, each of whom is an independent
Director within the meaning of applicable SEC and NASDAQ rules.
The Compensation Committee has primary responsibility for determining and approving, on
an annual basis, the compensation of our CEO and other executive officers. The Compensation Committee receives information and advice from its compensation consultant, as well as from our human resources department and management to assist in
compensation determinations.
|
|
|
Compensation Practice
|
|
AAWW Policy
|
|
|
Significant
At Risk
Compensation
|
|
✓
Morethan 65% of
maximum total CEO and target total other NEOs compensation is designed to be at risk and subject to achievement of
pre-established
performance goals tied to operational, financial and strategic
objectives.
|
|
|
Clawback Policy
|
|
✓
Clawbackof annual incentive compensation to discourage imprudent risk taking.
|
|
|
No
Adjustments for
Shareholder Buybacks
|
|
✓
Executivesannual incentives do not benefit from share buybacks.
|
|
|
No Change of
Control
Gross Ups
|
|
✓
Changeof control
payments are not grossed up for tax purposes.
|
|
|
Extended
Vesting
Requirements
|
|
✓
Time-basedequity
award agreements generally provide for a four-year vesting schedule.
|
|
|
Limited Perquisites
|
|
✓
TheCompany strictly
limits perquisites and does not provide for items such as personal use of airplanes, Company-provided autos, and/or auto allowances or club dues.
|
|
|
No Grants of
Stock
Options
|
|
✓
TheCompany provides
full value equity awards with either performance-based vesting or extended time-vesting requirements and has not granted stock options for many years.
|
|
|
No Repricing
|
|
✓
Repricingof
underwater stock options not allowed.
|
|
|
No Hedging or
Pledging
of Shares
|
|
✓
Insidersprohibited
from engaging in hedging and monetizing transactions involving the Companys securities and from engaging in certain speculative transactions in respect of the Companys securities. No waivers,
pre-clearance
or exceptions are permitted.
|
|
|
Risk Management
|
|
✓
Compensationprogram
design does not promote excessive risk taking.
|
|
|
162(m) Design
|
|
✓
AIPcompensation is
intended to qualify as performance-based compensation under Section 162(m).
|
|
|
Performance
Assessment
|
|
✓
TheCompensation Committee annually assesses its own performance.
|
30
|
Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
|
|
|
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
Peer
Group
|
|
Base Salary
|
|
Performance-Based Incentives
|
|
2016 Transformative Events
|
|
Other Elements
|
|
Additional
Policies
|
Discussion of Our Compensation Program
Peer Group
Using a Sensibly Structured Peer Group to Aid Our Compensation Decisions
Our Compensation Committee, together with its independent compensation consultant, periodically reviews relevant competitive market pay data for executives in our industry and similar industries. The
Committee identifies a core group of companies, used to periodically assess the Companys compensation levels and practices, as one factor in the compensation-setting process.
The Compensation Committee believes that identification of peers using a broad industry sector code is inadequate and does not establish similarity of operations and business models, nor adequately represent past,
current and future competitors for managerial talent factors the Compensation Committee considers in the selection of companies for these purposes.
Given the global nature and structure of our business, we believe it is critical to recruit and retain executives with a breadth of experience in global markets. A significant portion of our revenue is derived from
companies and business activity based outside of the United States, including those of our unconsolidated subsidiary, Polar Air, which is operated by our leadership team. In 2016, we operated 39,882 flights, serving 420 destinations in 119
countries. A significant portion of our revenue is derived from companies and business activity based outside the United States.
For 2016, our
peer group includes companies that are, in comparison to AAWW:
|
|
Comparably sized as measured by revenue, with median revenue peer group in 2016 of $2.1 billion, and with revenues that range from 0.37x to 2.02x of
AAWWs revenue. (AAWWs 2016 revenue (i) was approximately $2.5 billion, including approximately $645 million from Polar and (ii) estimated at $2.7 billion in 2017, inclusive of Polar revenue).
|
|
|
Operate and compete for business and talent in similar industries, including transportation, logistics and aerospace services industries.
|
For peer comparison purposes only, AAWWs revenue includes Polar revenue. AAWW holds a 51% economic interest and a 75% voting
interest in Polar. Polar operates a fleet of 747 and 767 freighters in time-definite,
airport-to-airport
scheduled air cargo service to North America, Asia, Europe and
the Middle East. Although Polars revenues and results are not consolidated with those of AAWW for financial reporting purposes, Mr. Flynn serves as Chairman, CEO and President, Mr. Dietrich serves as Executive Vice President and
Chief Transportation Officer and Mr. Kokas serves as Executive Vice President, General Counsel, Chief Human Resources Officer and Assistant Secretary of Polar. As executive officers of Polar, Messrs. Flynn, Dietrich and Kokas have significant
Polar-related executive, operating and administrative responsibilities. In addition, Messrs. Flynn, Dietrich, Kokas and Schwartz are members of the Polar board of directors, with Mr. Flynn as Chairman.
Because AAWW controls the voting interests of Polar, has operational control of Polars complex global network, and AAWWs NEOs serve in executive
positions at Polar for the benefit of both AAWW (as majority owner of Polar) and Polar, we believe including Polars revenues among AAWWs for purposes of peer group comparisons is appropriate.
We note that, aside from a $20,000 salary increase in 2015 in connection with Mr. Steens promotion, we have not raised base compensation levels for our NEOs
in the past three years, and five years for our CEO. Accordingly we did not engage in benchmarking in 2016.
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
31
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|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peer
Group
|
|
Base Salary
|
|
Performance-Based Incentives
|
|
2016 Transformative Events
|
|
Other Elements
|
|
Additional
Policies
|
Our 2016 peer group is comprised of the following companies:
|
|
|
|
|
|
|
Company
|
|
Description
|
|
Revenue for FY2016
($ in millions)
|
|
AAR Corp.
|
|
Provider of aviation services to the worldwide commercial aerospace and government/defense industries
|
|
$
|
1,663
|
|
Alliant Techsystems Inc.
(nka: Orbital ATK, Inc.)
|
|
Aerospace, defense, commercial products
|
|
|
4,455
|
|
Barnes Group Inc.
|
|
Aerospace and industrial manufacturer
|
|
|
1,231
|
|
B/E Aerospace Inc.
|
|
Aerospace fasteners and consumables distributor
|
|
|
2,933
|
|
Bristow Group Inc.
|
|
Offshore helicopter transport services
|
|
|
1,446
|
|
Curtiss-Wright Corp.
|
|
Engineered, technologically advanced products and services
|
|
|
2,109
|
|
Echo Global Logistics, Inc.
|
|
Technologically enabled business process outsourcing
|
|
|
1,716
|
|
Esterline Technologies Corp.
|
|
Aerospace and defense manufacturer
|
|
|
2,009
|
|
GATX Corporation
|
|
Railcar leasing
|
|
|
1,418
|
|
Hexcel Corporation
|
|
Industrial manufacturer
|
|
|
2,004
|
|
Kansas City Southern
|
|
International transportation
|
|
|
2,334
|
|
Park-Ohio Holdings Corp.
|
|
Industrial supply chain logistics and diversified manufacturing industries
|
|
|
1,277
|
|
Rockwell Collins, Inc.
|
|
Avionics and information technology systems and services provider
|
|
|
5,283
|
|
Ryder System, Inc.
|
|
Truck rental, supply chain and fleet management services
|
|
|
6,787
|
|
Spirit Aerosystems Holdings, Inc.
|
|
Aero structures manufacturer
|
|
|
6,793
|
|
Teledyne Technologies, Inc.
|
|
Provider of enabling technologies for industrial growth markets
|
|
|
2,150
|
|
Tidewater Inc.
|
|
Large offshore service vessels to global energy industry provider
|
|
|
1,496
|
|
TransDigm Group Inc.
|
|
Commercial and military aerospace components manufacturer
|
|
|
2,707
|
|
Trinity Industries, Inc.
|
|
Transportation, construction and industrial products manufacturer
|
|
|
4,588
|
|
Median Revenue of Peers*
|
|
|
|
$
|
2,109
|
|
Atlas Air Worldwide Holdings, Inc.
|
|
|
2,484
|
|
*
|
UTi Worldwide, Inc. underwent a merger in 2016 and is no longer part of our peer group.
|
32
|
Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
|
|
|
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
Peer
Group
|
|
Base Salary
|
|
Performance-Based Incentives
|
|
2016 Transformative Events
|
|
Other Elements
|
|
Additional
Policies
|
Components of Compensation
Base Salary
Purpose
:
Compensate executives for their responsibility, experience, sustained high level of performance, and contribution to our success.
Process for
setting salaries
: The amount of any senior executive salary increase has been determined by the Compensation Committee based on a number of factors, including but not limited to:
|
-
|
|
the nature and responsibilities of the position;
|
|
-
|
|
the level of performance of the individual;
|
|
-
|
|
the expertise of the individual;
|
|
-
|
|
advice of the Compensation Committees independent compensation consultant, including survey data; and
|
|
-
|
|
recommendations of the CEO (except regarding his own salary) and the Chief Human Resources Officer (except regarding his own salary).
|
Salary levels for NEOs are generally reviewed annually by the CEO and the Compensation Committee as part of the performance review
process.
|
Salary in 2016:
The Compensation Committee made no adjustments to the salary for the CEO. The Compensation Committee has not increased the salary for the CEO in five years.
The Compensation Committee has not increased salaries for the other NEOs
since 2014, except in February 2015 for Mr. Steen whose annual base salary was increased by $20,000 in connection with his promotion to President and CEO of the Companys Titan dry leasing subsidiary, while also retaining his EVP position
for AAWW.
|
Performance-Based Compensation: Annual and Long-Term Incentive Compensation
|
The Compensation Committee takes a holistic approach to incentive compensation, using a combination of related short- and long-term performance-based incentives to encourage achievement of the Companys
annual, as well as longer-term, strategic goals.
|
At-Risk
Philosophy:
The Compensation Committee believes that a significant portion of a senior executives compensation should be
at-risk,
based upon the Companys
financial and operating performance. Performance-based compensation aligns senior executive compensation with our goals for corporate financial and operating performance and encourages a high level of individual performance. For 2016, 67.2% of our
CEOs maximum total direct compensation opportunity (base salary and maximum payout opportunity of annual and long-term incentive awards granted in 2016) was performance-based.
How we set our incentive metrics
:
|
AIP financial and performance metrics are based on measurable performance-based criteria, including (i) EPS; (ii)
on-time
customer service reliability and
(iii) individual annual objectives.
Long-term performance
incentives are directly linked to strategic initiatives and are intended to enhance shareholder long-term interests currently, Adjusted EBITDA growth and ROIC.
|
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
33
|
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peer
Group
|
|
Base Salary
|
|
Performance-Based Incentives
|
|
2016 Transformative Events
|
|
Other Elements
|
|
Additional
Policies
|
We base a significant portion of our executives compensation on the Companys financial and operating performance to align senior executive compensation
with our goals for corporate financial as well as operating performance and to encourage a high level of individual performance. The annual and long-term metrics upon which our incentive plans are structured are designed to drive, on an integrated
basis, the achievement of key business, financial,
on-time
customer service, and operational annual and long-term results, as well as to recognize the individual contributions of our executives towards these
goals.
In designing the annual incentive awards for our executives, the Compensation Committee considers the Board-approved annual budget, as well as
short- and long-term strategic goals, and then designs the annual and long-term incentive targets, including EPS, ROIC, and EBITDA, around the Board-approved budget and strategic plan. Notably, share repurchases do not contribute to the achievement
of EPS performance under the AIP. We also believe that a significant portion of our executives total compensation should be equity-based, providing a strong alignment between the senior executives compensation and shareholders
interests.
Our long-term business strategy contemplates initiatives which enhance our organizational and operating capabilities, generate additional
operating efficiencies, broaden our portfolio of assets and services, and diversify our business mix.
Link Between Our Performance, Our Strategy and
Our Incentive Metrics:
Set forth below are the metrics used under our performance incentive plans in 2016 to provide appropriate rewards for prudent
risk-taking, key financial performance and objective results in support of our business strategy. In addition, we believe that our performance metrics align and underscore the link between incentive compensation and the successful execution of our
business strategy, and reflect our ongoing commitment to a
pay-for-performance
compensation philosophy.
Note: Due to potential for competitive harm, detailed quantitative company financial performance targets for our incentive compensation plans are disclosed for the completed 2016 fiscal year but 2017 targets
will be withheld for disclosure in next years Proxy Statement.
We have not disclosed the specific EBITDA growth and ROIC targets for the
three-year performance period because they represent confidential, commercially-sensitive information that we do not disclose to the public and that could cause competitive harm if known in the marketplace. Both EBITDA growth and ROIC targets, as
well as the factors that influence these measures, such as revenue and efforts to control costs, are inherently competitive and, if disclosed, would provide valuable insight into areas of focus for the Company. The Compensation Committee set the
EBITDA growth and ROIC targets at a level that it believes would be challenging but possible for the Company to achieve.
|
|
|
|
|
Annual
Incentives
|
Performance Metrics
|
|
Weighting
|
|
Rationale
|
|
|
|
EPS
|
|
CEO: 60%
Other NEOs 2016: 50%
Other NEOs 2017: 60%
|
|
Promotes the creation of
shareholder value and the achievement of financial performance targets, particularly profitability.
|
|
|
|
On-time
customer service reliability
|
|
CEO: 20%
Other NEOs: 20%
|
|
Objective, measurable goals that provide an incentive to management to meet or exceed challenging standards set by our customers in the applicable service agreements (maintaining
superior
on-time
customer service is essential to differentiating AAWW from its competitors and strengthening long-term customer relationships).
|
34
|
Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
|
|
|
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
Peer
Group
|
|
Base Salary
|
|
Performance-Based Incentives
|
|
2016 Transformative Events
|
|
Other Elements
|
|
Additional
Policies
|
|
|
|
|
|
Annual
Incentives
|
Performance Metrics
|
|
Weighting
|
|
Rationale
|
|
|
|
Individual annual objectives
|
|
CEO: 20%
Other NEOs 2016: 30%
Other NEOs 2017: 20%
|
|
Tied directly into the annual and long-term goals set in our
board-approved annual operating budget and long-term strategic plan, including continuous improvement and cost savings, diversifying our business, and enhancing our financial results.
|
Long-Term
Incentives
|
Performance Metrics
|
|
Weighting
|
|
Rationale
|
|
|
|
Adjusted EBITDA growth
|
|
50%
vesting based on a
performance matrix
|
|
Encourages management to
pursue long-term profit potential and cash flow opportunities and is consistent with achievement of the Companys long-term strategic goals.
Used for companies in industries like ours that require significant upfront financial
investments. EBITDA is an appropriate measure of underlying profit potential and an indicator of operating cash flow.
|
|
|
|
ROIC
|
|
50%
vesting based on a
performance matrix
|
|
Drives growth and
profitability through the efficient use of our capital and encourages prudent risk-taking.
Used because the Companys strategic plan involves a significant investment
program in its aircraft fleet, and the ability of the Company to manage its balance sheet to generate returns is an important measure to investors.
|
For our long-term incentive awards, the Compensation Committee each year establishes the performance metrics for the following
three-year award period. Our long-term incentive performance metrics relate to key Company long-term strategies and provide substantial payouts only upon achievement of exceptional performance.
At the end of the three-year period, the awards vest based on a performance matrix ranging from no vesting if the Companys performance is in the bottom
quintile of both EBITDA and ROIC metrics to 200% vesting if performance on both metrics is in the top quintile. Target vesting (100% of the award) is achieved if the Companys performance is at the target level.
More detail on our AIP and LTIP, as well as more specifics relating to the awards granted in 2016 to our CEO and NEOs, is provided below.
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
35
|
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peer
Group
|
|
Base Salary
|
|
Performance-Based Incentives
|
|
2016 Transformative Events
|
|
Other Elements
|
|
Additional
Policies
|
Annual Incentive Program
Annual cash incentive compensation awards to our executives are made under our AIP. Each of our executives is assigned a minimum threshold, target bonus opportunity
and a maximum bonus opportunity. For 2016, Mr. Flynn had a target bonus opportunity of 100% and a maximum bonus opportunity of 200% of annual base salary; the target bonus opportunity for each of Messrs. Dietrich and Steen was 90% of annual base
salary, and their respective maximum bonus opportunities were 180% of annual base salary. Messrs. Kokas and Schwartz had a target bonus opportunity of 85% of annual base salary, with a maximum bonus opportunity of 170% of annual base salary.
The AIP was part of the Companys 2007 Incentive Plan
for awards granted in respect of 2016 and will be a part of the Companys 2016 Incentive Plan for awards granted after 2016.
We collectively refer to the Companys 2007 Incentive Plan and 2016 Incentive Plan herein as our Incentive Plans. Annual cash incentive awards under the AIP are intended to qualify as performance-based compensation as defined in
Section 162(m) of the Code.
Bonuses are payable based on the achievement of the EPS,
on-time
customer service
reliability, and individual business objectives as further described below. As a preliminary matter, the Company must generate a threshold level of EPS for any award to be payable under the AIP.
2016 Payout
Based on achievement of our EPS, on-time
customer service reliability, and individual business objectives weighted for each executive as set forth above under Link Between Our Performance, Our Strategy and Our Incentive Metrics, management and the committees independent
compensation consultant recommended an AIP payout for 2016 at 139.2% for our CEO and 149.2% for our other NEOs.
As described below, the Company
exceeded the threshold EPS level for awards to be payable under the AIP for 2016, exceeded the service quality metric at 196% and individual business objectives of our CEO and our other NEOs were achieved at 200%. Actual bonus amounts paid to
Messrs. Flynn, Dietrich, Steen, Kokas, and Schwartz under the AIP are included in the Summary Compensation Table for Fiscal 2016 under
Non-Equity
Incentive Plan Compensation.
EPS
Objective Metric.
The most heavily weighted performance factor in the 2016 AIP was our EPS. For purposes of the
AIP, the EPS performance range was (1) a threshold amount of $4.15 per share, (2) $5.19 per share for the target amount, and (3) $5.50 per share representing maximum achievement.
The EPS number was calculated based on
25.49
million shares outstanding, which was set at the beginning of the year, (to avoid any benefits due to share repurchases, which could otherwise result in a higher bonus payout based solely on such share repurchases)
. For
2016, EPS was deemed achieved at target (100%) due to the triggering of certain change in control provisions set forth in the AIP as a result of our transaction with Amazon. (In fact, prior to the change in control, EPS was tracking at a near target
level.)
In calculating pretax earnings, items contained in the Companys board-approved annual operating budget do not result in any adjustment.
However, limited listed items may be taken into account as adjustments to the extent that amounts related thereto were not included in the target for the Companys operating plan as approved by the Board of Directors.
|
|
Our EPS metric under the AIP is designed to be rigorous. The target amount of $5.19 in 2016 represented an approximately
27% increase over
the Company
s EPS target in 2015
as well
as an increase over our actual Adjusted Diluted EPS from continuing operations, net of taxes of $5.01.* The EPS metric under the AIP is not benefitted by share repurchases.
|
*
|
Adjusted Diluted EPS from continuing operations, net of taxes is a
non-GAAP
measure. A reconciliation to the most directly comparable GAAP
measure is contained in Exhibit A attached hereto.
|
36
|
Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
|
|
|
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
Peer
Group
|
|
Base Salary
|
|
Performance-Based Incentives
|
|
2016 Transformative Events
|
|
Other Elements
|
|
Additional
Policies
|
On-Time
Customer Service Reliability
Objective Metric.
An additional objective
performance metric that was used to determine 2016 annual cash bonus payments was our
on-time
customer service reliability. Our 2016
on-time
customer service quality
goals are all objective, measurable goals that are set to meet or exceed challenging standards set forth in our customer service agreements. In 2016, we exceeded our
on-time
customer service reliability levels
in all categories except for U.S. Military AMC performance, resulting in 196% performance attributable to this objective performance metric.
The
on-time
customer service reliability portion of our AIP is an objective
on-time
calculation. It is comprised of specific challenging, objective, measurable
on-time
customer service reliability goals set forth in our written customer contracts.
|
|
|
Customer
Service
Offering
|
|
2016
Result
|
|
|
ACMI
|
|
Exceeded all on-time objective customer service performance goals during the year without incurring net
customer financial penalties.
|
|
|
CMI
|
|
Exceeded all on-time objective customer service performance goals during the year without incurring net
customer financial penalties.
|
|
|
AMC/Military
|
|
On-time objective customer service performance goals during the year achieved in part. Both cargo and
passenger performance were impacted by fewer mission counts (fewer flights), short-notice demand and higher rates of operational delays.
|
2016 Individual Business Objectives.
Individual annual business objectives for our NEOs are reviewed
with and approved by the Compensation Committee early in the year, or late the preceding year when the Companys operating plan is being approved by the Board of Directors. These individual business objectives tie into our annual business plan
and our long-term strategic plan, including continuous improvement and cost savings, diversifying our business, and enhancing our financial results, among others.
Set forth below are a representative sampling of the numerous individual business objectives and achievements applicable to each of our NEOs during 2016. All of our NEOs met or exceeded the maximum achievement on
their individual business objectives (the third AIP performance metric), resulting in a 200% performance factor. This metric was weighted at 20% for our CEO and 30% for all other NEOs for 2016 and will be weighted at 20% for the CEO and all other
NEOs in 2017.
2016 Individual Performance Objectives
William J. Flynn President and Chief Executive Officer
✓
|
|
Execute the Companys Long-Term Strategic Plan
|
|
|
|
Objective
|
|
Accomplishment
|
Identify and pursue specific plans to further diversify
and grow revenue and profitability
Drive operational and financial growth and
diversification, with a specific focus on growing the 777 and 737 platforms
|
|
Identification, pursuit and closing of:
- Amazon transaction
(long-term lease and operation of 20 767-300s with future growth opportunity)
- Southern acquisition (which added five 777s and five 737s to our fleet)
|
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
37
|
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peer
Group
|
|
Base Salary
|
|
Performance-Based Incentives
|
|
2016 Transformative Events
|
|
Other Elements
|
|
Additional
Policies
|
✓
|
|
Achieve Continuous Improvement Savings; Develop and Structure Corporate Balance Sheet to Fund Growth Initiatives
|
|
|
|
Objective
|
|
Accomplishment
|
Target cost savings and efficiency goal set
|
|
Savings attained and efficiencies realized significantly in excess of goal, including in connection with
CF6-80
engine program and other procurement-related initiatives
|
John W. Dietrich Executive Vice President and Chief Operating Officer
|
|
|
Objective
|
|
Accomplishment
|
Southern integration
|
|
On schedule or ahead of schedule:
-
Single Operating
Certificate expected August 2017
- Atlas and Polar certificates successfully moved from New York to Cincinnati
(CVG)
|
✓
|
|
Continuous Improvement and Strategic Growth Initiatives
|
|
|
|
Objective
|
|
Accomplishment
|
Improve block hour utilization
|
|
Record block hour production of 184,047 hours flown in 2016 versus 178,061 in 2015
|
Manage pilot staffing and training to accommodate aggressive fleet growth plan
|
|
323 new hires. 502 Operating Experience completions by new hires and new seat trainees.
|
|
|
|
Objective
|
|
Accomplishment
|
Target cost savings and efficiency goal set
|
|
Savings attained and efficiencies realized significantly in excess of goal, including in connection with
CF6-80
engine program and other procurement-related initiatives
|
Michael Steen Executive Vice President and Chief Commercial Officer
✓
|
|
Develop and Implement Titan Growth Plan
|
|
|
|
Objective
|
|
Accomplishment
|
Execute fleet-type strategies to support growth
|
|
Titan became worlds second largest freighter lessor, with acquisition of 19
767-300BCFs
|
✓
|
|
Executing the Companys Long-Term Strategic Plan and Business Development
|
|
|
|
Objective
|
|
Accomplishment
|
Develop/refine geographic growth opportunities
|
|
Record revenues in South America, despite continued economic crisis in Brazil, Argentina and Venezuela
|
Continue to pursue ACMI/CMI growth opportunities across all fleet and product types
|
|
Signed/extended/renewed numerous ACMI contracts, including with Asiana and NCA
Signed a
5-year
agreement with FedEx for peak-season
lease of 5
747-400Fs
|
38
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Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
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COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
Peer
Group
|
|
Base Salary
|
|
Performance-Based Incentives
|
|
2016 Transformative Events
|
|
Other Elements
|
|
Additional
Policies
|
Spencer Schwartz Executive Vice President and Chief Financial Officer
✓
|
|
Execute the Strategic Plan and Enhance Stakeholder Value
|
|
|
|
Objective
|
|
Accomplishment
|
Support plans to diversify and grow revenue and
profitability
Identify and pursue appropriate acquisitions or investments to
deliver shareholder value
|
|
Played key role in transformative Amazon transaction, which expands Company presence in growing e-commerce
markets
Played key role in immediately accretive Southern acquisition which grows
and diversifies revenues and earnings, and increases Company presence in the growing integrator-express markets
Supported continuous improvement bottom line savings initiatives
|
✓
|
|
Develop and Structure the Balance Sheet to Fund Growth Initiatives
|
|
|
|
Objective
|
|
Accomplishment
|
Determine financing initiatives to address growth and cash requirements
|
|
$70 million loan facility closed with an attractive rate to finance GEnx spare engines
|
Strong balance sheet and appropriate leverage
|
|
$14.8 million financing with an attractive rate for a 767 aircraft in CMI operation
Established a $150 million revolving credit facility with attractive
terms
|
Adam R. Kokas Executive Vice President, General Counsel, Chief Human Resources Officer
and Secretary
✓
|
|
Execute the Strategic Plan and Enhance Stakeholder Value
|
|
|
|
Objective
|
|
Accomplishment
|
Support plans to diversify and grow revenue and
profitability
Identify and pursue appropriate acquisitions or investments to
deliver stockholder value
Support of fleet plan strategy to provide for customer
growth and fleet modernization
|
|
Key role in the structuring and negotiating the transformative Amazon transaction, which expands Company
presence in growing e-commerce markets
Key role in the structuring and negotiating
the accretive Southern acquisition which grows and diversifies revenues and earnings and increases Company presence in the growing integrator-express markets
Support of Titan dry leasing business - became second largest freighter lessor by way of numerous aircraft transactions in 2016
|
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
39
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|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peer
Group
|
|
Base Salary
|
|
Performance-Based Incentives
|
|
2016 Transformative Events
|
|
Other Elements
|
|
Additional
Policies
|
✓
|
|
People Focus/Labor Relations
|
|
|
|
Objective
|
|
Accomplishment
|
Successfully implement Southern integration
Achieve key recruiting, retention and organizational development goals to support growth
plan
Support management of pilot staffing and related matters
|
|
All material integration elements on or ahead of schedule. Single aircraft operating certificate
(AOC), which requires FAA approval, is on track for 3rd quarter 2017. Atlas and Polar AOCs moved from New York to Cincinnati (CVG). Achieved economic synergies and cost savings significantly exceeding business case
Executed on key recruiting, retention and organizational goals, both with Southern integration
process and meaningfully increasing ground staff (non-pilot) work force to support growth plan
Successfully executed significant pilot staffing demands. Over 320 pilot hired and trained, all in a timely fashion to support growth initiatives. Further supported other crewmember projects to support strategic
plan
|
Long-Term Incentive Compensation
Under our Long-Term Incentive Plan, the Compensation Committee is authorized to grant to participants a variety of long-term incentives, including shares of common
stock, restricted stock, share units, stock options, stock appreciation rights, performance units, and/or performance cash incentives. In granting these awards, the Compensation Committee is authorized to establish any conditions or restrictions,
consistent with the Long-Term Incentive Plan, it deems appropriate.
During 2016, the Compensation Committee made long-term incentive grants to our NEOs
in the form of performance share units, performance-based cash awards, and time-based restricted stock units, as set forth in the Grants of Plan Based Awards table appearing below.
2016 Long-Term Incentive Awards
The total long-term incentive grant in a given year is based on a multiple
calculated as a percentage of base salary. For the CEO, the multiple is based on his actual base salary and for the other NEOs and other executives, the multiple is based on an average base salary for all executives at a particular level (for
example Executive Vice President, Senior Vice President or Vice President). The multiple is converted into an aggregate LTI plan award opportunity, and for 2016 awards, which, consistent with prior years, was the average closing price for the 30
trading days ending on January 29, 2016.
For 2016, the award was granted in the form of an LTI award consisting of three-year performance units
(25%) and performance cash awards (25%) (using target levels to allocate) and four-year vesting restricted stock units (50%), all as more fully described below. Assuming achievement at maximum performance opportunity, the performance share units and
performance cash units together would then payout at
two-thirds
of the value of the award grant.
40
|
Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
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|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
Peer
Group
|
|
Base Salary
|
|
Performance-Based Incentives
|
|
2016 Transformative Events
|
|
Other Elements
|
|
Additional
Policies
|
Performance-Based Share Units
Performance share
units
, or PSUs, are paid in AAWW common shares on vesting. Key characteristics of the PSUs granted in 2016 are as follows:
|
|
Pays out only if the Company achieves, over a three-year period, rigorous preset objective financial targets measured as compared to comparative financial
targets for a peer group.
|
|
|
Subject to the following financial metrics for the 2016 grant: EBITDA growth and ROIC.
|
|
|
The grant date value is reported in the Summary Compensation Table, but actual value (if any) will not be realized by the NEOs until the three-year period ends
and then only if the awards meet applicable performance criteria.
|
|
|
In connection with the Amazon transaction, the 2016 PSU performance goals were deemed satisfied at 200% performance levels in accordance with their terms due to
the change of control, although such PSUs have not paid out to any of the NEOs other than the CEO in accordance with their double-trigger terms. (Our performance awards provide for 200% satisfaction in the event of change of control in
order to provide retention incentives to key employees while appropriately adjusting for the changed performance environment.)
|
Cash-based long-term incentive awards
are paid at the end of a three-year performance period. Key characteristics of the cash-based long-term incentive
awards are as follows:
|
|
Pays out only if the Company achieves, over a three-year period, rigorous preset comparative financial targets.
|
|
|
Subject to the following financial metrics for the 2016 grant: EBITDA growth and ROIC.
|
|
|
In connection with the Amazon transaction, the 2016 performance goals applicable to cash-based long-term incentive awards were deemed satisfied at maximum
performance levels in accordance with their terms due to the change of control. Therefore, pursuant to SEC rules, the value of the cash-based long-term incentive awards is reported in the 2016 Summary Compensation Table, even though, in the case of
our NEOs other than our CEO (whose awards vested due to the change in control and his retirement eligibility), the awards will not be paid until after 2018, subject to the executives continued employment. (Our cash-based long-term incentive
awards provide for deemed maximum satisfaction in the event of change of control in order to provide retention incentives to key employees while appropriately adjusting for the changed performance environment.)
|
Payout of 2014-2016 Performance LTI Awards.
In the first quarter of 2017, the Compensation Committee reviewed AAWWs performance over the
three-year performance period ended December 31, 2016 for grants made in 2014. The performance metrics for these awards were set in 2014 and were EBITDA growth and three-year ROIC applied on an absolute basis. Performance LTI payouts for the
2014-2016 performance period were made in January 2017 for our NEOs other than Mr. Flynn, whose retirement eligibility entitled him to payout in September 2016. 2014-2016 Performance LTIs were paid out at the 200% level due to the triggering of
certain change of control provisions set forth in the Performance LTI as a result of our transaction with Amazon. Our performance awards provide for 200% satisfaction in the event of change of control in order to provide retention incentives to key
employees while appropriately adjusting for the changed performance environment. Immediately prior to the change in control provisions being triggered, performance pursuant to the original payment time of such awards was tracking toward 138% target
payout attainment.
Restricted Stock Units
Restricted stock units
, or RSUs, are paid in shares of Common Stock and have the following key characteristics:
|
|
Vest annually over a four-year period.
|
|
|
Align economic interests of management with long-term shareholders.
|
RSUs are designed to attract and retain executives by providing them with (1) stock ownership during the four-year vesting period, and (2) strong incentive to remain with the Company until at least the
four-year vesting period ends.
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
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41
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|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peer
Group
|
|
Base Salary
|
|
Performance-Based Incentives
|
|
2016 Transformative Events
|
|
Other Elements
|
|
Additional
Policies
|
2016 Transformative Events Impacting Compensation
2016 was a truly historic and transformative year for Atlas
Air Worldwide.
In keeping with our commitment to drive value for our shareholders and our vision to be our customers most trusted partner, we
capitalized on several strategic opportunities to further strengthen our position as the leader in international aviation outsourcing.
Southern 2016 Acquisition Incentive Program under the 2007 Incentive Plan
In April 2016, we acquired Southern in a highly complementary transaction that expands our platform into 777 and 737 operations and provides our customers with access to a broader array of aircraft and operating
services. Although the Company has acquired and financed many aircraft over the course of its operations over the past two decades, the Southern acquisition is the first acquisition of an airline we have made in the past 15 years, making it an
extraordinary milestone.
On January 6, 2016, with the Southern transaction being competitively pursued at the time, our Compensation Committee
adopted the Acquisition Incentive Program, a
sub-plan
under our 2007 Incentive Plan, pursuant to which certain of our key employees, including our NEOs, were eligible to receive performance-based bonuses if
the Southern transaction was successfully consummated. Our Compensation Committee determined that it was important to adopt a supplemental bonus program so that it could, in a targeted way, motivate and incentivize those employees who were critical
to our ability to successfully negotiate and complete the Southern transaction (the Southern Transaction), which was immediately accretive to our revenue and growth. In tandem with the Amazon transaction, the Southern Transaction was an
important part of our long-term strategy to expand our platform into 777 and 737 operations and provide our customers with access to a broader array of aircraft and operating services. Bonus amounts under the plan were payable only upon the
consummation of the Southern Transaction by December 31, 2016. Following consummation of the Southern Transaction on April 7, 2016, the Compensation Committee certified that the Southern Transaction met the performance metrics described
above. Accordingly, our NEOs received the following amounts under the Acquisition Incentive Program: Mr. Flynn $1,850,000, and each of Messrs. Dietrich, Kokas, Schwartz and Steen $775,000.
Amazon Transaction
In May
2016, we reached an agreement to provide air transport services for leading
e-commerce
retailer Amazon. In addition to leasing twenty
767-300
freighters to Amazon and
operating them in support of package deliveries to its customers, our arrangements provide for future growth of the relationship as Amazon may increase its business with us.
In connection with this transformative transaction, which obtained over 99% shareholder approval, the Company and Amazon entered into an Investment Agreement in May 2016, pursuant to which the Company issued to
Amazon warrants (approved by the Companys shareholders in September 2016) to acquire shares representing up to 20% (and up to an additional 10% in the event of increased future business) of the Companys outstanding common stock as of
May 4, 2016. This shareholder approval resulted in a change in control under the existing terms of certain of the Companys plans and agreements and had the following effects on certain components of our NEOs compensation:
In early 2014, based on shareholder feedback from our outreach, we changed our LTI award grant practices from single-trigger to
double-trigger. Due to the multiyear vesting schedule of our RSUs, legacy single-trigger 2013 awards were still outstanding at the time of the Amazon transaction. Thus, RSUs granted in 2013 to our NEOs vested in connection with the
change in control and were settled in January 2017 in accordance with their terms. Note that these 2013 RSUs were three-quarters vested as of immediately prior to the change in control because each NEO had continued his employment through each of
2014, 2015 and 2016 in accordance with the time-based vesting requirements of the 2013 RSUs.
42
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Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
|
|
|
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
Peer
Group
|
|
Base Salary
|
|
Performance-Based Incentives
|
|
2016 Transformative Events
|
|
Other Elements
|
|
Additional
Policies
|
For our NEOs other than Mr. Flynn, in accordance with
the double-trigger terms of their remaining RSUs, such RSUs will continue to vest over the remainder of the applicable four-year vesting period or will fully vest upon the earlier occurrence of a qualifying termination of employment (as
described starting on page 54 under the heading Potential Payments Upon Termination or Change of Control).
Under our 2016 Annual Incentive
Plan, performance goals were each deemed satisfied at no less than target level in accordance with the terms of plan. This had a very modest impact on the 2016 AIP payouts as the customer service & individual performance goals were satisfied
well in excess of target level, while the EPS goal was tracking at a near target level. See Annual Incentive Program on page 36 for additional detail.
Our performance LTIs provide for deemed attainment of performance at 200% in the event of change in control in order to provide retention incentives to key employees while appropriately adjusting for the changed
performance environment. Accordingly, in connection with the Amazon transaction, performance goals applicable to our performance LTIs were deemed satisfied at 200%. For our NEOs other than Mr. Flynn, in accordance with the double-trigger
terms of their PSUs and cash-based long-term incentive awards, such awards would vest and be settled upon the regularly scheduled vesting date at the end of the applicable three-year performance period or upon the earlier occurrence of a qualifying
termination of employment (as described starting on page 54 under the heading Potential Payments Upon Termination or Change of Control).
For reference, performance metrics under our PSUs and long-term performance cash were tracking as follows immediately prior to the change in control:
|
|
|
|
|
2014-2016 LTIs: 138%
|
|
2015-2017 LTIs: 139%
|
|
2016-2018 LTIs: N/A. Too early to determine.
|
In connection with the change in control and the fact that he satisfied certain tenure requirements related to retirement
eligibility (which were structured to comply with timing requirements under Code Section 409A) under certain of the award agreements, Mr. Flynns performance LTIs vested and were settled immediately at the 200% level applied to our other NEOs,
and his 2014, 2015 and 2016 RSUs were vested and settled immediately. Although it is difficult to project what future annual and long-term incentive payments would be due to various performance-based components, the amounts paid to Mr. Flynn in
connection with the Amazon transaction and his retirement eligibility
were not incremental and were designed to give him the same payments he would have received in the ordinary course
.
In accordance with the terms of our 401(k) Restoration and Voluntary Deferral Plan, NEO account balances were paid out in connection with the change in control.
All of our NEOs account balances were already vested at the time of the change in control.
As described starting on page 54 under the heading
Potential Payments Upon Termination or Change of Control, our NEOs would be entitled to receive certain separation payments and benefits in the event of a qualifying termination of employment prior to September 20, 2017 (the first
anniversary of the change in control) in accordance with the terms of their employment agreements or the Companys Benefits Program for Senior Executives, as applicable.
Other Elements of Compensation
Other Benefits and Limited Perquisites
We provide our executives with common benefits, which include health insurance (including certain limited retiree health benefits), severance
benefits commensurate with position, 401(k) plan participation, and a retirement restoration program. The Compensation Committee believes that perquisites should be limited and not broad-based. Such perquisites are limited principally to financial
counseling and limited travel-related benefits, including tax reimbursement payments related thereto. Details concerning these perquisites can be found in the footnotes to the Summary Compensation Table for Fiscal 2016 below.
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
43
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|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peer
Group
|
|
Base Salary
|
|
Performance-Based Incentives
|
|
2016 Transformative Events
|
|
Other Elements
|
|
Additional
Policies
|
Retirement Plans
In addition to the Companys 401(k) plan, the Company maintains the 401(k) Restoration and Voluntary Deferral Plan (the Retirement Restoration
Plan) for employees holding the title of Executive Vice President or higher. This plan is a nonqualified deferred compensation plan intended to make eligible employees whole for compensation limits imposed under our 401(k) plan. Under the
retirement restoration plan, a participant is eligible to make elective deferrals and to receive employer credits equal to 5% of eligible compensation in excess of the limits described in Sections 401(a)(17) and 402(g) of the Code. Employer credits
vest upon the third anniversary of the executives first three years of eligibility for the plan, and all employer credits after such anniversary are fully vested. Deferrals and employer credits are credited with notional earnings equal to the
prime interest rate until distributed on the earliest of (i) the participant becoming disabled, (ii) the participants separation from service (including death), or (iii) a change of control of the Company.
Under our Benefits Program for Senior Executives, employees holding the rank of Executive Vice President or above would become retirement eligible upon attaining
age 60 and 10 years of service. Of our NEOs, only Mr. Flynn is currently retirement eligible, and no other NEO is retirement-eligible for several years. Please see pages 54-56 for further detail regarding provisions relating to
Mr. Flynns retirement eligibility.
Additional Compensation Policies
Executive Stock Ownership
In
support of the Board philosophy that performance and equity incentives provide the best incentives for our NEOs and other members of management and promote increases in shareholder value, the Board monitors compliance with Stock Ownership Guidelines
(the Guidelines) covering all Directors, NEOs, and other executives. Such guidelines include both stock ownership and recommended stock holding periods as described below. The Guidelines require executives to achieve certain levels of
share ownership over a five-year period based on the lesser of a percentage of annual base salary or a fixed number of shares.
Current target share
ownership levels for the Directors and the NEOs under the Guidelines are generally based on the lesser of: (1) 4x annual base cash retainer, or 7,500 shares, for independent Directors, (2) 5x base salary, or 100,000 shares, for the CEO, (3) 3.5x
base salary, or 40,000 shares, for the Chief Executive Officer of Titan or the President of Atlas Air, and (4) 3x base salary, or 30,000 shares, for executive vice presidents.
All of our Directors and NEOs are in full compliance with the requisite Common Stock ownership levels set forth in the Guidelines.
If an individual covered by the Guidelines has not attained the requisite level of share ownership upon a vesting event or exercise of a stock option or otherwise receives stock as compensation from the Company, it
is recommended that he or she retain the lesser of (i) a number of shares equal to 50% of the net value of shares acquired or vested (after deducting the exercise price and withholding taxes) or (ii) a number of shares necessary to reach
the applicable stock ownership guidelines amount for such covered person.
Tax Considerations
Section 162(m) of the Code limits the deductibility of compensation in excess of $1 million paid to the Companys Chief Executive Officer and to each of
the other three highest-paid executive officers (other than the Chief Financial Officer). There is, however, an exception to this limit on deductibility for compensation that satisfies certain conditions for qualified performance-based
compensation set forth under Section 162(m). The Company may implement compensation arrangements that qualify as
tax-deductible
performance-based compensation under the Long-Term Incentive Plan;
provided, however, that such intended implementation should not be viewed as a guarantee that the Company will be able to deduct all such compensation and certain events could cause
44
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Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
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|
|
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
Peer
Group
|
|
Base Salary
|
|
Performance-Based Incentives
|
|
2016 Transformative Events
|
|
Other Elements
|
|
Additional
Policies
|
awards intended to qualify as qualified performance-based compensation to lose such qualification and the Compensation Committee has made, and reserves the right in its discretion to
make, payments or grant awards that do not qualify for tax deductibility under Section 162(m).
Equity Grant Practices
The Compensation Committee generally grants equity awards to NEOs in the first quarter of each year. The Compensation Committee does not have any
programs, plans or practices of timing these awards in coordination with the release of material nonpublic information. We have never backdated,
re-priced,
or spring-loaded any of our equity awards.
Clawback Policy
In
2014, we adopted a compensation clawback policy to enhance the alignment of our compensation program features with best practices and consistent with feedback received from our shareholders. Our clawback policy permits us to seek to recover certain
amounts of annual cash incentive compensation awarded to any executive officers on or after February 2014 if payment of such compensation was based on the achievement of financial results that were subsequently the subject of a substantial
restatement of our financial statements due to material noncompliance and the executive officers intentional misconduct after February 2014 that contributed to higher amount of cash incentive compensation received.
Compensation Committee Report
Letter to the Shareholders from the Board of Directors
In managing the Company, our entire Board of Directors seeks to achieve long-term, sustainable performance and create value through the right
strategies, prudent risk management, effective corporate governance practices and executive compensation programs, and well-functioning talent and succession planning. Please see Letter to the Shareholders from the Board of Directors
appearing at the beginning of this Proxy Statement.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis
section with senior management. Based on this review, the Compensation Committee recommends to the Board of Directors that the Compensation Discussion and Analysis section be included in this proxy statement.
|
THE COMPENSATION COMMITTEE
|
|
Carol B. Hallett, Chair
James S. Gilmore III
Bobby J. Griffin
Frederick McCorkle
|
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
45
|
|
|
2016 SUMMARY COMPENSATION TABLE
|
|
|
Compensation Tables and Explanatory Notes
2016 Summary Compensation Table
As described in the Compensation Discussion and Analysis Overview section of this Proxy Statement, based on our extensive shareholder
outreach over the last several years, we have made numerous changes to our compensation programs, while maintaining and enhancing our pay for performance philosophy and ensuring that these programs do not promote excessive risk taking. Please read
the Compensation Discussion and Analysis Overview appearing on pages 25-30 of this Proxy Statement, along with the remainder of the Compensation Discussion and Analysis section on pages 31-45 and the material presented below.
The following table provides information concerning compensation for our NEOs during fiscal year 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and
Principal
Position
(a)
|
|
Year
(b)
|
|
Salary
($)
(c)
|
|
Bonus
($)
(d)
|
|
Stock
Awards
($)
(e)
|
|
Option
Awards
($)
(f)
|
|
Non-Equity
Incentive
Plan
Compensation
($)
(g)
|
|
All Other
Compensation
($)
(i)
|
|
Total
($)
(j) (*)
|
William J. Flynn
|
|
2016
|
|
1,035,040
|
|
|
|
2,717,144
|
|
|
|
9,112,626
|
|
622,977
|
|
13,487,787
|
President and Chief
|
|
2015
|
|
1,035,040
|
|
|
|
2,940,674
|
|
|
|
2,028,600
|
|
203,570
|
|
6,207,884
|
Executive Officer
|
|
2014
|
|
1,035,040
|
|
|
|
2,667,230
|
|
|
|
2,070,000
|
|
139,667
|
|
5,911,937
|
John W. Dietrich
|
|
2016
|
|
665,026
|
|
|
|
1,543,654
|
|
|
|
4,873,328
|
|
188,753
|
|
7,270,762
|
Chief Operating Officer
|
|
2015
|
|
665,026
|
|
|
|
1,670,631
|
|
|
|
1,173,060
|
|
155,044
|
|
3,663,761
|
|
|
2014
|
|
665,026
|
|
|
|
1,374,905
|
|
|
|
1,130,500
|
|
113,602
|
|
3,284,033
|
Michael T. Steen
|
|
2016
|
|
600,023
|
|
|
|
1,543,654
|
|
|
|
4,786,044
|
|
179,606
|
|
7,109,328
|
Chief Commercial Officer
|
|
2015
|
|
600,023
|
|
|
|
1,670,631
|
|
|
|
1,058,400
|
|
119,361
|
|
3,448,415
|
|
|
2014
|
|
580,022
|
|
|
|
1,374,905
|
|
|
|
986,000
|
|
98,521
|
|
3,039,448
|
Adam R. Kokas
|
|
2016
|
|
537,021
|
|
|
|
1,268,939
|
|
|
|
4,363,036
|
|
158,273
|
|
6,327,269
|
General Counsel and Chief
|
|
2015
|
|
537,021
|
|
|
|
1,515,846
|
|
|
|
894,642
|
|
113,411
|
|
3,060,920
|
Human Resources Officer
|
|
2014
|
|
537,021
|
|
|
|
1,374,905
|
|
|
|
912,900
|
|
92,387
|
|
2,917,213
|
Spencer Schwartz
|
|
2016
|
|
525,020
|
|
|
|
1,268,939
|
|
|
|
4,347,817
|
|
157,113
|
|
6,298,889
|
Chief Financial Officer
|
|
2015
|
|
525,020
|
|
|
|
1,515,846
|
|
|
|
874,650
|
|
118,061
|
|
3,033,577
|
|
|
2014
|
|
525,020
|
|
|
|
1,374,905
|
|
|
|
892,500
|
|
88,379
|
|
2,880,804
|
46
|
Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
|
|
|
|
|
PRO-FORMA SUMMARY COMPENSATION TABLE EXCLUDING AMAZON IMPACT
|
Pro Forma Summary Compensation Table (excluding Amazon Impact)
(*) The following table sets forth (a) our NEOs fiscal year 2015 compensation as set forth in the Summary Compensation Table and (b) a projection of our
NEOs fiscal year 2016 compensation that would have been reported in the Summary Compensation Table had the Amazon transaction not occurred:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and
Principal
Position
|
|
Year
|
|
|
Salary
(c)($)
|
|
|
Stock
Awards
(e)($)
|
|
|
Non-Equity
Incentive
Plan
Compensation
(g)($)(^)
|
|
|
All Other
Compensation
(i)($)(^)
|
|
|
Total
(j)($)
|
|
William J. Flynn
|
|
|
2016
|
|
|
|
1,035,040
|
|
|
|
2,717,144
|
|
|
|
4,202,117
|
|
|
|
331,884
|
|
|
|
8,286,185
|
|
President and Chief
|
|
|
2015
|
|
|
|
1,035,040
|
|
|
|
2,940,674
|
|
|
|
2,028,600
|
|
|
|
203,570
|
|
|
|
6,207,884
|
|
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Dietrich
|
|
|
2016
|
|
|
|
665,026
|
|
|
|
1,543,654
|
|
|
|
2,139,749
|
|
|
|
188,754
|
|
|
|
4,537,184
|
|
Chief Operating Officer
|
|
|
2015
|
|
|
|
665,026
|
|
|
|
1,670,631
|
|
|
|
1,173,060
|
|
|
|
155,044
|
|
|
|
3,663,761
|
|
Michael T. Steen
|
|
|
2016
|
|
|
|
600,023
|
|
|
|
1,543,654
|
|
|
|
2,055,242
|
|
|
|
179,606
|
|
|
|
4,378,525
|
|
Chief Commercial Officer
|
|
|
2015
|
|
|
|
600,023
|
|
|
|
1,670,631
|
|
|
|
1,058,400
|
|
|
|
119,361
|
|
|
|
3,448,415
|
|
Adam R. Kokas
|
|
|
2016
|
|
|
|
537,021
|
|
|
|
1,268,939
|
|
|
|
1,934,548
|
|
|
|
158,273
|
|
|
|
3,898,782
|
|
General Counsel and Chief
|
|
|
2015
|
|
|
|
537,021
|
|
|
|
1,515,846
|
|
|
|
894,642
|
|
|
|
113,411
|
|
|
|
3,060,920
|
|
Human Resources Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spencer Schwartz
|
|
|
2016
|
|
|
|
525,020
|
|
|
|
1,268,939
|
|
|
|
1,919,814
|
|
|
|
157,113
|
|
|
|
3,870,886
|
|
Chief Financial Officer
|
|
|
2015
|
|
|
|
525,020
|
|
|
|
1,515,846
|
|
|
|
874,650
|
|
|
|
118,061
|
|
|
|
3,033,577
|
|
^
|
Includes adjustments to reflect lower payout levels that would have been attained absent the Amazon transaction (using projected estimates), and elimination of compensation
events triggered by the Amazon transaction under the terms of our plans and agreements in effect prior to the change in control. Please see above under the heading Amazon Transaction for further discussion of these adjustments.
|
Summary Compensation Table Notes
Column (c) Salary
Mr. Flynn did not receive a salary increase in 2016.
Mr. Flynns last salary increase was in April 2012.
Aside from a $20,000 salary increase in 2015 in connection with Mr. Steens
promotion, we have not raised base compensation levels for our NEOs in the past three years, and five years for our CEO.
Column
(e) Stock Awards
The amounts included reflect the grant date fair value of stock awards, computed in accordance with FASB ASC Topic
718, excluding the effect of estimated forfeitures and with performance awards valued based on the probable outcome of performance conditions. For more information about the assumptions used in valuing these awards, see Note 15 in our Annual Report
on Form 10-K. Stock awards for 2016 reflect the aggregate grant date fair value of (i) time-based restricted stock units vesting over four years and (ii) performance share units for the three-year performance period ending
December 31, 2018 (see pages 35 and 41 for a discussion of the methodology followed by the Compensation Committee to determine the number of performance share units awarded) assuming target level performance. Performance share units are settled
in shares of Common Stock at 0% to 200% of target based upon AAWWs EBITDA growth and ROIC performance relative to internal targets over such three-year performance period. The performance goals were deemed satisfied at maximum performance
levels in accordance with their terms in connection with the Amazon transaction due to the change of control. Assuming that the performance share units are paid at the maximum level, the aggregate dollar values of restricted stock unit and
performance share unit awards for 2016 (based on the closing price of our Common Stock on the date of grant) would be $3,622,870 for Mr. Flynn, $2,058,218 for Mr. Dietrich and Mr. Steen and $1,691,919 for Mr. Schwartz and
Mr. Kokas. In addition, as further discussed in the section entitled Amazon Transaction on
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
47
|
|
|
PRO-FORMA SUMMARY COMPENSATION TABLE EXCLUDING AMAZON IMPACT
|
|
|
page 42, Mr. Flynns 2016 performance share units vested in connection with the Amazon transaction change of control and his retirement eligibility. This amendment did not result in any
incremental fair value in accordance with accounting principles generally accepted in the United States of America (GAAP). For assumptions used to determine the fair value of stock awards, see Note 15 to the Companys 2016
Consolidated Financial Statements.
Column
(g) Non-Equity
Incentive Plan
Compensation
Reflects cash payments made under the AIP and the 2016 Acquisition Incentive Program, a subplan of our 2007 Incentive Plan as well as
the value of the NEOs cash-based long-term incentive awards, for which the applicable performance goals were deemed satisfied at maximum performance in accordance with their terms in connection with the Amazon transaction. In the case of our
NEOs other than Mr. Flynn, in accordance with the double trigger terms of these long-term incentive awards, they would vest and be settled upon the earlier to occur of regularly-scheduled settlement dates or a qualifying termination
of employment, as described in the Potential Payments Upon Termination or Change of Control section of this Proxy Statement.
Column (i) All Other Compensation
All Other Compensation includes Company matching contributions under our 401(k) plan. For 2016, these amounts totaled $12,000 for Mr. Flynn and Mr. Dietrich and $9,000 for each of the other
NEOs.
We provide a limited number of perquisites and other personal benefits to our senior executives. We believe these benefits are reasonable,
competitive and consistent with our overall executive compensation program and philosophy and with comparable programs maintained by the companies with which we compete for executive talent. The costs of these benefits constitute only a small
percentage of each NEOs total compensation. For 2016, these personal benefits included financial counseling fees and limited travel-related expenses. Reimbursement of taxes owed for these benefits for 2016 totaled $31,801 for Mr. Flynn,
$23,408 for Mr. Dietrich, $21,154 for Mr. Steen, $19,929 for Mr. Schwartz, and $19,244 for Mr. Kokas. These amounts are included in the All Other Compensation column.
As described above in section entitled Other Elements of Compensation Retirement Plans, our NEOs are entitled to receive an employer contribution
under the Retirement Restoration Plan. The portion of account balances attributable to employer contributions made under the Retirement Restoration Plan to each of our NEOs during 2016 totaled $527,799 for Mr. Flynn, $121,668 for Mr. Dietrich,
$112,683 for Mr. Steen, $99,744 for Mr. Schwartz, and $101,343 for Mr. Kokas. These amounts are included in the All Other Compensation column. See Nonqualified Deferred Compensation below for additional information about
the Retirement Restoration Plan.
The All Other Compensation column also includes
de minimis
amounts for group term life insurance and
long-term disability insurance.
48
|
Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
|
|
|
|
|
2016 GRANTS OF PLAN-BASED AWARDS
|
2016 Grants of Plan-Based Awards
The grants set forth in the following table were made pursuant to (i) our 2007 Incentive Plan and related award agreements and (ii) our AIP, each of
which is described in more detail in the section headed Compensation Discussion and Analysis above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
Under
Non-Equity
Incentive
Plan Awards
|
|
|
Estimated Future Payouts
Under Equity
Incentive Plan Awards
(4)
|
|
|
All
Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(5)
(#)
(i)
|
|
|
All Other
Option
Awards:
Number
of
Securities
Underlying
Options (#)
(j)
|
|
|
Exercise
or Base
Price
of
Option
Awards ($)
(k)
|
|
|
Grant
Date Fair
Value of
Stock
and
Option
Awards
(6)
($)
(l)
|
|
Name
(a)
|
|
Grant
Date
(b)
|
|
|
Threshold
($)
(c)
|
|
|
Target
($)
(d)
|
|
|
Maximum
($)
(e)
|
|
|
Threshold
(#)
(f)
|
|
|
Target
(#)
(g)
|
|
|
Maximum
(#)
(h)
|
|
|
|
|
|
William J. Flynn
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
(1)
|
|
|
|
|
|
|
776,250
|
|
|
|
1,035,000
|
|
|
|
2,070,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Southern
(2)
|
|
|
|
|
|
|
1,850,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIPLTC
(3)
|
|
|
2/11/16
|
|
|
|
|
|
|
|
970,313
|
|
|
|
1,940,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIPPSUs
(4)
|
|
|
2/11/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,535
|
|
|
|
51,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
905,726
|
|
LTIPRSUs
(5)
|
|
|
2/11/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,069
|
|
|
|
|
|
|
|
|
|
|
|
1,811,417
|
|
John W. Dietrich
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
(1)
|
|
|
|
|
|
|
448,875
|
|
|
|
598,500
|
|
|
|
1,197,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Southern
(2)
|
|
|
|
|
|
|
775,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIPLTC
(3)
|
|
|
2/11/16
|
|
|
|
|
|
|
|
551,250
|
|
|
|
1,102,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIPPSUs
(4)
|
|
|
2/11/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,507
|
|
|
|
29,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
514,563
|
|
LTIPRSUs
(
5)
|
|
|
2/11/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,013
|
|
|
|
|
|
|
|
|
|
|
|
1,029,091
|
|
Michael T. Steen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
(1)
|
|
|
|
|
|
|
405,000
|
|
|
|
540,000
|
|
|
|
1,080,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Southern
(2)
|
|
|
|
|
|
|
775,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIPLTC
(3)
|
|
|
2/11/16
|
|
|
|
|
|
|
|
551,250
|
|
|
|
1,102,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIPPSUs
(4)
|
|
|
2/11/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,507
|
|
|
|
29,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
514,563
|
|
LTIPRSUs
(5)
|
|
|
2/11/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,013
|
|
|
|
|
|
|
|
|
|
|
|
1,029,091
|
|
Adam R. Kokas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
(1)
|
|
|
|
|
|
|
342,338
|
|
|
|
456,450
|
|
|
|
912,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Southern
(2)
|
|
|
|
|
|
|
775,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIPLTC
(3)
|
|
|
2/11/16
|
|
|
|
|
|
|
|
453,150
|
|
|
|
906,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIPPSUs
(4)
|
|
|
2/11/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,925
|
|
|
|
23,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
422,980
|
|
LTIPRSUs
(5)
|
|
|
2/11/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,850
|
|
|
|
|
|
|
|
|
|
|
|
845,960
|
|
Spencer Schwartz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
(1)
|
|
|
|
|
|
|
334,688
|
|
|
|
446,250
|
|
|
|
892,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Southern
(2)
|
|
|
|
|
|
|
775,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIPLTC
(3)
|
|
|
2/11/16
|
|
|
|
|
|
|
|
453,150
|
|
|
|
906,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIPPSUs
(4)
|
|
|
2/11/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,925
|
|
|
|
23,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
422,980
|
|
LTIPRSUs
(5)
|
|
|
2/11/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,850
|
|
|
|
|
|
|
|
|
|
|
|
845,960
|
|
(1)
|
Represents the range of potential cash payouts under the AIP for 2016. The actual AIP
payouts for 2016 are included in the Summary Compensation Table above.
|
(2)
|
Represents cash paid under the 2016 Acquisition Incentive Program, a subplan of our 2007 Incentive Plan.
|
(3)
|
Represents the grant (under the Long-Term Incentive Plan) of performance cash awards
that vest only if certain preestablished performance criteria for the period beginning on January 1, 2016 and ending December 31, 2018 are achieved. The performance goals were deemed satisfied at maximum performance levels in accordance
with their terms in connection with the Amazon transaction due to the change of control. Pursuant to SEC rules, the value of these awards is reported in the 2016 Summary Compensation Table even through, in the case of our NEOs other than our CEO,
the awards will not be paid until 2018, subject to the executives continued employment.
|
(4)
|
Represents the grant (under the Long-Term Incentive Plan) of performance-based
long-term stock awards that vest only if certain preestablished performance criteria for the period beginning on January 1, 2016 and ending December 31, 2018 are achieved. In connection with the Amazon transaction, the performance
conditions associated with the PSUs was deemed achieved at 200%, PSUs for Mr. Flynn became fully vested and were settled due to his retirement eligibility and PSUs for our other NEOs remain subject to service-based vesting conditions through the
applicable performance period.
|
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
49
|
|
|
2016 GRANTS OF PLAN-BASED AWARDS
|
|
|
(5)
|
Represents award of time-based restricted stock units that vest ratably over a four-year period. In connection with the Amazon transaction and his retirement
eligibility, Mr Flynns RSUs became fully vested and were settled.
|
(6)
|
The fair value of the restricted stock units and performance share units shown in the
table is based on the closing market price of our Common Stock as of the date of the particular award, computed in accordance with GAAP, excluding the effect of estimated forfeitures and with performance awards valued based on the probable outcome
of performance conditions. See footnote (e) to the Summary Compensation table for the assumptions used in valuing these awards and for the grant date fair value of awards if maximum levels of performance were achieved.
|
50
|
Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
|
|
|
|
|
2016 OUTSTANDING EQUITY AWARDS
|
2016 Outstanding Equity Awards
The table below shows outstanding equity awards for our NEOs as of December 31, 2016. Market values reflect the closing price of our common stock on the NASDAQ Global Market on December 31, 2016, which
was $52.15 per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
(a)
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
(b)
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
(c)
|
|
|
Equity
Incentive
Plan
Awards:
Number
of Securities
Underlying
Unexercised
Unearned
Options
(#)
(d)
|
|
|
Option
Exercise
Price
($)
(e)
|
|
|
Option
Expiration
Date
(f)
|
|
|
Number of
Shares or
Units of
Stock
That
Have
Not
Vested
(#)
(g)
|
|
|
Market
Value of
Shares or
Units of
Stock
That Have
Not
Vested
($)
(h)
|
|
|
Equity
Incentive
Plan Awards:
Number
of Unearned
Shares,
Units or
Other
Rights
That
Have
Not Vested
(#)
(i)
|
|
|
Equity
Incentive
Plan Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)
(j)
|
|
William J.
Flynn
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W.
Dietrich
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,291
|
(3)
|
|
|
745,276
|
|
|
|
28,582
|
(2)
|
|
|
1,490,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,593
|
(5)
|
|
|
917,475
|
|
|
|
23,458
|
(4)
|
|
|
1,223,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,013
|
(7)
|
|
|
1,513,028
|
|
|
|
29,014
|
(6)
|
|
|
1,513,080
|
|
Michael T.
Steen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,291
|
(3)
|
|
|
745,276
|
|
|
|
28,582
|
(2)
|
|
|
1,490,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,593
|
(5)
|
|
|
917,475
|
|
|
|
23,458
|
(4)
|
|
|
1,223,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,013
|
(7)
|
|
|
1,513,028
|
|
|
|
29,014
|
(6)
|
|
|
1,513,080
|
|
Adam R.
Kokas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,291
|
(3)
|
|
|
745,276
|
|
|
|
28,582
|
(2)
|
|
|
1,490,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,963
|
(5)
|
|
|
832,470
|
|
|
|
21,284
|
(4)
|
|
|
1,109,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,850
|
(7)
|
|
|
1,243,778
|
|
|
|
23,850
|
(6)
|
|
|
1,243,778
|
|
Spencer
Schwartz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,291
|
(3)
|
|
|
745,276
|
|
|
|
28,582
|
(2)
|
|
|
1,490,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,963
|
(5)
|
|
|
832,470
|
|
|
|
21,284
|
(4)
|
|
|
1,109,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,850
|
(7)
|
|
|
1,243,778
|
|
|
|
23,850
|
(6)
|
|
|
1,243,778
|
|
(1)
|
All of Mr. Flynns outstanding equity awards vested as of September 20, 2016 in connection with the Amazon transaction and his retirement eligibility.
|
(2)
|
Performance share units awarded on February 21, 2014 vest on attainment of certain
preestablished performance criteria during the three-year performance period ended December 31, 2016. The performance goals were deemed satisfied at maximum performance levels in accordance with their terms in connection with the Amazon transaction
due to the change of control.
|
(3)
|
Restricted stock units awarded on February 21, 2014 vest 25% ratably on each of
February 21, 2015, 2016, 2017, and 2018, and would fully vest upon certain terminations of employment, as described in more detail in the section entitled Potential Payments Upon Termination or Change of Control Payments Upon a Change
of Control and Termination of Employment Long-Term Incentive Awards.
|
(4)
|
Performance share units awarded on February 24, 2015 vest on attainment of certain
preestablished performance criteria during the three-year performance period ended December 31, 2017. The performance goals were deemed satisfied at maximum performance levels in accordance with their terms in connection with the Amazon transaction
due to the change of control.
|
(5)
|
Restricted stock units awarded on February 24, 2015 vest 25% ratably on each of
February 24, 2016, 2017, 2018, and 2019, and would fully vest upon certain terminations of employment, as described in more detail in the section entitled Potential Payments Upon Termination or Change of Control Payments Upon a Change
of Control and Termination of Employment Long-Term Incentive Awards.
|
(6)
|
Performance share units awarded on February 11, 2016 vest on attainment of certain
preestablished performance criteria during the three-year performance period ended December 31, 2018. The performance goals were deemed satisfied at maximum performance levels in accordance with their terms in connection with the Amazon transaction
due to the change of control.
|
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
51
|
|
|
2016 OPTION EXERCISES AND STOCK VESTED; NONQUALIFIED DEFERRED COMPENSATION
|
|
|
(7)
|
Restricted stock units awarded on February 11, 2016 vest 25% ratably on each of
February 11, 2017, 2018, 2019, and 2020, and would fully vest upon certain terminations of employment, as described in more detail in the section entitled Potential Payments Upon Termination or Change of Control Payments Upon a Change
of Control and Termination of Employment Long-Term Incentive Awards.
|
2016 Option Exercises
and Stock Vested
The following table sets forth information relating to stock vesting during fiscal 2016 for each of our NEOs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
Name
(a)
|
|
Number of Shares
Acquired On
Exercise
(b)(#)
|
|
|
Value
Realized
on Exercise
(c)($)
|
|
|
Number of
Shares
Acquired on Vesting
(d)(#)
|
|
|
Value Realized
on Vesting
(e)($)
|
|
William J. Flynn
|
|
|
|
|
|
|
|
|
|
|
320,205
|
|
|
|
12,210,829
|
|
John W. Dietrich
|
|
|
|
|
|
|
|
|
|
|
29,298
|
|
|
|
1,085,413
|
|
Michael T. Steen
|
|
|
|
|
|
|
|
|
|
|
29,298
|
|
|
|
1,085,413
|
|
Adam R. Kokas
|
|
|
|
|
|
|
|
|
|
|
22,845
|
|
|
|
845,172
|
|
Spencer Schwartz
|
|
|
|
|
|
|
|
|
|
|
22,845
|
|
|
|
845,172
|
|
(1)
|
Represents, in the case of Mr. Flynn, the vesting and settlement of all of his outstanding restricted stock units and performance share units in connection with
the Amazon transaction and his retirement eligibility and, in the case of the other NEOs, only the vesting and settlement of legacy single-trigger RSUs granted in 2013.
|
(2)
|
The value is calculated based on the closing market price of our Common Stock as of the vesting date of the applicable award.
|
Nonqualified Deferred Compensation
As described above in the section entitled Other Elements of Compensation Retirement Plans, our NEOs are entitled to receive an annual employer
contribution under the Retirement Restoration Plan.
The table below sets forth the amount of employer contributions made under the Retirement
Restoration Plan to each of our NEOs during 2016. Each Executive Officer is 100% vested in his aggregate account balance. In accordance with the terms of the Retirement Restoration Plan, vested account balances were paid out in connection with the
occurrence of a change of control due to the Amazon transaction, described further under the heading Amazon Transaction above on page 42.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
(a)
|
|
Executive
Contributions
in Last Fiscal
Year
(b)($)
|
|
|
Registrant
Contributions
in Last Fiscal
Year
(c)($)
(1)
|
|
|
Aggregate
Earnings
in Last Fiscal
Year
(d)($)
|
|
|
Aggregate
Withdrawals/
Distributions
(e)($)
|
|
|
Aggregate
Balance
at Last Fiscal
Year End
(f)($)
(2)
|
|
William J. Flynn
|
|
|
|
|
|
|
527,799
|
|
|
|
17,072
|
|
|
|
(1,210,623
|
)
|
|
|
14,496
|
|
John W. Dietrich
|
|
|
|
|
|
|
121,668
|
|
|
|
9,358
|
|
|
|
(494,553
|
)
|
|
|
9,315
|
|
Michael T. Steen
|
|
|
|
|
|
|
112,683
|
|
|
|
7,618
|
|
|
|
(415,434
|
)
|
|
|
8,404
|
|
Adam R. Kokas
|
|
|
|
|
|
|
101,343
|
|
|
|
6,433
|
|
|
|
(356,582
|
)
|
|
|
7,521
|
|
Spencer Schwartz
|
|
|
|
|
|
|
99,744
|
|
|
|
5,423
|
|
|
|
(313,893
|
)
|
|
|
7,354
|
|
(1)
|
The amounts reported in this column for each NEO are reflected in the All Other Compensation column of the Summary Compensation Table.
|
(2)
|
Represents employer contributions that were credited to the NEOs account following the date of, and that were not paid out in connection with, the change of
control in connection with the Amazon transaction.
|
52
|
Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
Employment
Agreements
William J.
Flynn.
Pursuant to Mr. Flynns employment agreement, he receives a base annual salary at a rate that is reviewed at least annually and may be adjusted from time to time by our Compensation Committee. If
Mr. Flynn is terminated by the Company for cause, or if he resigns other than for good reason, he would be entitled to receive salary earned up to date of termination or resignation. If Mr. Flynn is terminated by the Company without cause,
or if he resigns for good reason (as defined in the agreement and discussed in the section headed Payments Upon a Change of Control and Termination of Employment below), he would be entitled to (i) an amount equal to two times his
then-current annual base salary
(one-third
of which would be payable on the first day of the seventh month following termination of employment (the Payment Commencement Date), with the balance
payable in accordance with Atlas normal pay schedule beginning on the Payment Commencement Date and continuing for one year thereafter); (ii) accrued but unused vacation pay; (iii) all vested rights and benefits pursuant to other Company
plans and programs; (iv) health and welfare benefits coverage for 12 months (provided that such coverage will cease if Mr. Flynn receives comparable coverage from subsequent employment); and (v) a cash payment under our AIP equal to
the lesser of (a) the amount he would have received if he had been employed by Atlas on the last day of such year (assuming for such purpose that 50% of any individual bonus objectives had been achieved) or (b) his target bonus percentage.
Substantially equivalent compensation and benefits would be payable in the event of Mr. Flynns permanent disability (as defined) or his death. If, within 12 months immediately following a change of control (as defined in the agreement and
discussed in the section headed Payments Upon a Change of Control and Termination of Employment below), Mr. Flynns employment is terminated not for cause or if he resigns for good reason, Mr. Flynn would be entitled to
the same compensation and benefits as described above, except that the amount of the payment to which he would be entitled would be increased from two to three times his then-current annual base salary
(one-fourth
of which would be payable on the Payment Commencement Date, with the balance payable in accordance with Atlas normal pay schedule beginning on the Payment Commencement Date and continuing for
18 months thereafter). Moreover, if, within six months following termination of employment by Atlas for reasons other than cause or by Mr. Flynn for good reason, a change of control occurs, then, in addition to the payment described above,
Mr. Flynn would be entitled to an additional amount equal to 12 months of his then-current monthly base salary.
Under the terms of his employment
agreement, Mr. Flynn is prevented from soliciting or interfering with any of our contracts, client relationships, independent contractors, suppliers, customers, employees, or Directors for a period of two years following termination of his
employment with us. Additionally, for a period of one year following termination of his employment, Mr. Flynn may not accept employment with, or give advice to, any air cargo carrier carrying on a business substantially similar to Atlas.
Mr. Flynns employment agreement was entered into on April 21, 2006 and became effective on June 22, 2006. It was initially amended at
year-end
2008 and further amended in 2011.
John W. Dietrich.
Pursuant to Mr. Dietrichs employment agreement, he receives an annual base salary at a rate that is
reviewed and adjusted from time to time by our Compensation Committee. Under the agreement, if Mr. Dietrich is terminated by the Company for cause, or if he resigns for other than good reason, he would be entitled to receive salary earned up to
the date of termination or resignation. If Mr. Dietrichs employment is terminated without cause, or if Mr. Dietrich resigns for good reason (as defined in his agreement), he would be entitled to an amount equal to two times his then
current annual base salary, payable in a single lump sum on the Payment Commencement Date, which amount increases to three times his then current annual base salary if his employment is terminated or he resigns for good reason within 12 months
immediately following a change of control. Mr. Dietrich would also be entitled to (i) any accrued but unused vacation pay; (ii) all vested rights and benefits pursuant to our Company plans and programs; (iii) relocation benefits
back to the Chicago, IL area; (iv) health and welfare benefits coverage for 12 months (provided such coverage will cease if Mr. Dietrich receives comparable coverage from subsequent employment); and (v) a cash payment under our AIP
equal to the lesser of (a) the amount he would have received if he had been employed by Atlas on the last day of such year (assuming for such purpose that 50% of any individual bonus objectives had been achieved) or (b) his target bonus
percentage. Substantially equivalent compensation and benefits would be payable in the event of Mr. Dietrichs permanent disability (as defined) or his death. Moreover, if, within six months following termination of employment by Atlas for
reasons other than cause or by Mr. Dietrich for good reason, a change of control occurs, then, in addition to the payment described above, Mr. Dietrich would be entitled to an additional amount equal to 12 months of his then-current
monthly base salary.
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
53
|
|
|
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
|
|
|
Mr. Dietrichs employment agreement also
provides that he will not, for a period of one year following the termination of his employment with us, solicit or interfere with any of our contracts, client relationships, independent contractors, suppliers, customers, employees, or Directors.
Additionally, for a period of one year following termination of his employment, Mr. Dietrich may not accept employment in a
non-attorney
capacity with, or give
non-legal
advice to, certain of our major competitors. Mr. Dietrichs employment agreement was amended and restated effective September 15, 2006 and was further amended at
year-end
2008 and in 2011.
Aside from Messrs. Flynn and Dietrich, our other NEOs do not have employment agreements.
Potential Payments Upon Termination or Change of Control
Our AIP for Senior Executives, Incentive Plans and related
award agreements, employment agreements with Mr. Flynn and Mr. Dietrich and Benefits Program for Senior Executives (the Benefits Program) provide for payments and benefits to our executive officers upon certain terminations of
employment, a change of control of the Company, or retirement.
For purposes of these plans and arrangements, a change of control of the Company means a
change of control as defined in Section 409A of the Code and in the regulations promulgated thereunder, which generally includes (i) the acquisition by any person or group of more than 50% of the total fair market value or total
voting power of the Common Stock, (ii) the acquisition by any person or group, during any twelve-month period of ownership, of stock possessing 30% or more of the total voting power of the Company, (iii) the replacement of a majority of
the membership of the Companys Board of Directors during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the Companys then Board of Directors, or (iv) the acquisition by a person
or group during any twelve-month period of assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all assets of the Company.
As described in the section entitled Amazon Transaction, the Company and Amazon entered into an Investment Agreement on May 4, 2016, pursuant to
which the Company issued to Amazon warrants (approved by over 99% of the Companys shareholders on September 20, 2016) to acquire shares representing up to 20% (and an additional 10% in the event of increased future business) of the
Companys outstanding common stock on May 4, 2016 upon the exercise of the warrants. This shareholder approval resulted in a change of control under the Companys plans and arrangements described above.
Based on our extensive shareholder outreach and related feedback, beginning in 2014, equity and other long-term incentive awards under our Incentive Plan generally
are subject to double-trigger agreements that require a change of control to be accompanied by a qualifying termination of employment in order for any such award to vest on an accelerated basis. However, as discussed in the section
entitled Amazon Transaction, legacy single-trigger RSUs granted in 2013 remained outstanding in 2016 due to their multi-year vesting schedules and immediately vested in connection with the Amazon transaction in accordance with their
terms, and Mr. Flynns remaining outstanding long-term incentive awards vested due to the change of control and his satisfying certain tenure requirements related to retirement eligibility.
Payments Upon Termination of Employment or Retirement (Without a Change of Control)
Severance Entitlements
Mr. Steen, Mr. Schwartz and Mr. Kokas participate in the
Benefits Program, which provides for the following severance payments and benefits in the event the executive is terminated by the Company without cause or due to disability, or the executive resigns for good reason (as defined below),
in the absence of a change of control of the Company: (i) 24 months continued base salary; (ii) twelve months continued health and welfare benefits; and (iii) an annual bonus payment for the year of termination, based on the
lesser of actual and target performance.
For purposes of the Benefits Program, good reason means (i) a reduction in the executive
officers annual base salary, except where such reduction is part of a general salary reduction by the Company, or the executive officer
54
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Atlas Air Worldwide Holdings,
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2017 Notice & Proxy Statement
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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
|
ceasing to be eligible to earn an annual bonus under the Companys annual bonus plan, (ii) the executive officer ceasing to hold the title of Executive Vice President, other than
through promotion or through reassignment to another job title of comparable responsibility, or (iii) a reduction in job responsibilities which diminishes the executive officers opportunity to earn a bonus under the Companys annual
bonus plan.
Mr. Flynns and Mr. Dietrichs severance benefits under their individual employment agreements in the event of certain
terminations in the absence of a change of control of the Company are described above under the section entitled
Employment Agreements
.
Annual Incentive Program
A participant in our AIP for Senior Executives would be entitled to
receive an annual bonus payment under the plan, based on the lesser of actual and target level performance, in the event of a termination by the Company without cause or a resignation for good reason (as defined below), or in the event
of the participants retirement, in each case in the absence of a change of control of the Company. In the event of a participants death or termination by reason of disability in the absence of a change of control, the Company may in its
sole discretion pay all or a portion of the participants annual incentive award based on participants performance and duration of employment during the plan year.
For purposes of the AIP, good reason means (i) a material reduction in the participants duties and responsibilities or (ii) a reduction of the participants aggregate salary,
benefits and other compensation, except where such reduction is part of a general salary reduction by the Company.
Long-Term
Incentive Awards
In the event of a termination of employment by the Company without cause or due to death or disability in the absence of a change
of control of the Company, a
pro-rata
portion of our executive officers outstanding PSUs and cash-based long-term incentive awards would vest, based on the portion of the performance period elapsed prior
to such termination, with all applicable performance goals determined at the end of the performance period based on actual performance. Mr. Flynns outstanding PSUs would vest without proration but based on actual performance determined at the
end of the performance period in the event of his retirement. Our executive officers outstanding RSUs would immediately vest in the event of a termination by the Company due to death or disability (or, with respect to Mr. Flynn, retirement) in
the absence of a change of control of the Company.
Payments Upon a Change of Control (Without Termination of Employment)
Annual Incentive Program
In the event of a
change of control of the Company, a participant in our AIP for Senior Executives would remain eligible to receive an annual bonus payment following the completion of the plan year in which the change of control occurs, based on the greater of target
level performance and actual performance determined at the end of the performance period.
Long-Term Incentive Awards
In the event of a change of control of the Company, legacy single-trigger RSUs granted to our executive officers in 2013 would immediately vest and all outstanding
PSUs and cash-based long-term incentive awards would be deemed satisfied at maximum performance levels. All outstanding long-term incentive awards would immediately vest in connection with the change of control if the awards are not assumed or
substituted by the acquiror in the transaction. If, however, the awards are assumed or substituted by the acquiror in the transaction (as was the case in the Amazon transaction), then the awards would remain outstanding subject to the executive
officers continued employment, and would immediately vest in the event of certain terminations of employment following the change of control, as described in the section entitled
Payments Upon a Change of Control and Termination of
Employment
Long-Term Incentive Awards
on page 56.
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
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55
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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
|
|
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Nonqualified Deferred
Compensation
As described above in section entitled Other Elements of CompensationRetirement Plans, our NEOs are entitled to
receive an annual employer contribution under the Retirement Restoration Plan. Each of our executive officers is fully vested in his account balance under the Retirement Restoration Plan. All account balances under the plan would become immediately
payable in the event of a change of control.
Payments Upon a Change of Control and Termination of Employment
Severance Entitlements
Mr. Steen,
Mr. Schwartz and Mr. Kokas participate in the Benefits Program, which provides for the following severance payments and benefits in the event the executive is terminated by the Company without cause or resigns for good reason
(as defined above), within the twelve-month period following a change of control of the Company: (i) a cash payment equal to three times his then-current annual base salary, payable in a lump sum, (ii) twelve months continued health
and welfare benefits coverage and (iii) an annual bonus payment for the year of termination, based on the lesser of actual and target performance.
If Mr. Steen, Mr. Schwartz or Mr. Kokas is terminated by the Company without cause or due to disability, or resigns for good reason,
within the
six-month
period prior to a change of control of the Company, then he would be entitled to receive a cash payment equal to
one-times
his then-current annual
base salary (in addition to any payments or benefits he was otherwise entitled to receive in connection with such termination, as described in the section entitled
Payments Upon Termination of Employment or Retirement (Without a Change of
Control)
Severance Entitlements
), payable in a lump sum six months following the change of control.
None of Mr. Steen, Mr. Schwartz or Mr. Kokas is entitled to any tax
gross-up
payments in the event the
executive officer is subject to the golden parachute excise tax under Section 4999 of the Code. Receipt of the separation payments and benefits described above is conditioned upon the applicable executive officer executing a release
of claims in favor of the Company and complying with a restrictive covenant agreement.
Mr. Flynns and Mr. Dietrichs severance
benefits under their individual employment agreements in the event of certain terminations following a change of control are described under the section entitled
Employment Agreements
above.
Long-Term Incentive Awards
In the event of
a termination by the Company without cause or due to death or disability, or the executive officers resignation for good reason (as defined below) (or, for Mr. Flynn, his retirement eligibility), in each case following a change of
control of the Company, all outstanding long-term incentive awards that were not substituted or assumed by the acquiror in connection with the transaction would immediately vest, with any applicable performance goals deemed satisfied at maximum
performance levels.
For purposes of the long-term incentive awards, good reason means (i) a material reduction in the executive
officers duties and responsibilities, (ii) a reduction in the executive officers aggregate salary, benefits and other compensation (including any incentive opportunity), other than as part of a general reduction applicable to all
similarly situated employees, or (iii) a relocation to a position that is located greater than 40 miles from the executive officers most recent principal location of employment with the Company.
56
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Atlas Air Worldwide Holdings,
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2017 Notice & Proxy Statement
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POST-TERMINATION AND CHANGE OF CONTROL TABLE
|
POST-TERMINATION AND CHANGE OF
CONTROL TABLE
The table below sets forth the estimated dollar value of the payments and other benefits our NEOs would receive in the event of his
termination of employment or a change of control that are in addition to amounts previously earned and accrued by the executive, in each case assuming that such termination is without cause and such termination or change of control occurred on
December 31, 2016.
These estimates were valued based on the closing price of our Common Stock as quoted on the NASDAQ Global Market on
December 31, 2016, which was $52.15 per share. The actual amounts to be paid can only be determined at the time of such events.
These estimates
assume that all payments under our AIP for Senior Executives are made at target level and the NEO (a) executes a release of claims, (b) does not violate the executives noncompetition or nonsolicitation agreements or any other
restrictive covenants with us following termination, (c) does not receive medical and life insurance coverage from another employer within twelve months of the termination of his employment, (d) does not have any unused vacation time and
(e) does not incur legal fees or relocation expenses requiring reimbursement from us.
These estimates exclude the following items:
|
|
Payments under our AIP for Senior Executives that each NEO became entitled to as of December 31, 2016.
|
|
|
The value of the NEOs accrued balances under the Companys 401(k) Restoration and Voluntary Deferral Plan, which are disclosed in the Nonqualified
Deferred Compensation Table above.
|
|
|
The value of PSUs and cash-based long-term incentive awards granted to our NEOs in 2014 that vested upon the completion of the applicable performance period on
December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Payments
on
Termination of
Employment Due
to Death
(1)
|
|
|
Payments
on
Termination of
Employment Due
to Disability
(2)
|
|
|
Payments
on
Termination of
Employment
Without
Cause
(3)
|
|
|
Payments
in
Connection with a
Change of Control
Without Qualifying
Termination
of Employment
(4)
|
|
|
Payments
in
Connection
with a Change of
Control With a
Qualifying
Termination of
Employment
(5)
|
|
William J. Flynn
|
|
$
|
2,105,496
|
|
|
$
|
2,105,496
|
|
|
$
|
2,105,496
|
|
|
$
|
14,496
|
|
|
$
|
3,140,496
|
|
John W. Dietrich
|
|
|
5,797,302
|
|
|
|
5,797,302
|
|
|
|
2,621,523
|
|
|
|
9,315
|
|
|
|
11,683,060
|
|
Michael T. Steen
|
|
|
3,911,652
|
|
|
|
5,616,391
|
|
|
|
2,440,612
|
|
|
|
8,404
|
|
|
|
11,437,149
|
|
Adam R. Kokas
|
|
|
3,911,819
|
|
|
|
4,985,819
|
|
|
|
2,164,295
|
|
|
|
7,521
|
|
|
|
10,211,984
|
|
Spencer Schwartz
|
|
|
4,416,391
|
|
|
|
4,961,652
|
|
|
|
2,140,128
|
|
|
|
7,354
|
|
|
|
10,175,817
|
|
(1)
|
Represents (a) two times Mr. Flynns and Mr. Dietrichs annual base salary, (b) the estimated cost of 12 months of continued health
care, (c) the estimated cost of relocation reimbursement for Mr. Dietrich and (d) the aggregate value of the NEOs long-term incentive awards, prorated based on the portion of the performance period elapsed prior to
December 31, 2016 and assuming target level performance, in the case of the NEOs PSUs and cash-based long-term incentive awards. However, as described above, a change of control of the Company occurred on September 20, 2016 in
connection with the Amazon transaction for purposes of certain of the Companys plans and arrangements. As a result, instead of the benefits described in clause (d) above, all of the NEOs long-term incentive awards would have vested,
without proration and with any applicable performance criteria deemed satisfied at maximum levels, in the event of the NEOs death on December 31, 2016.
|
(2)
|
Represents (a) two times the NEOs annual base salary, (b) the estimated cost of 12 months of continued health care, (c) the estimated cost
of relocation reimbursement for Mr. Dietrich and (d) the aggregate value of the NEOs long-term incentive awards outstanding, prorated based on the portion of the performance period elapsed prior to December 31, 2016 and assuming
target level performance, in the case of the NEOs PSUs and cash-based long-term incentive awards. However, as described above, a change of control of the Company occurred on September 20, 2016 in connection with the Amazon transaction for
purposes of certain of the Companys plans and arrangements. As a result, instead of the benefits
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Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
57
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POST-TERMINATION AND CHANGE OF CONTROL TABLE
|
|
|
|
described in clause (d) above, all of the NEOs long-term incentive awards would have vested, without proration and with any applicable performance criteria deemed satisfied at maximum
levels, in the event of a termination of employment by the Company due to disability on December 31, 2016.
|
(3)
|
Represents (a) two times the NEOs annual base salary, (b) the estimated cost of 12 months of continued health care, (c) the estimated cost
of relocation reimbursement for Mr. Dietrich and (d) the aggregate value of the NEOs PSUs and cash-based long-term incentive awards, prorated based on the portion of the performance period elapsed prior to December 31, 2016 and
assuming target level performance. However, as described above, a change of control of the Company occurred on September 20, 2016 in connection with the Amazon transaction for purposes of certain of the Companys plans and arrangements. As
a result, instead of the benefits described above, the NEO would have received the payments and benefits set forth in the Payments in Connection with a Change of Control With a Qualifying Termination of Employment column in the event of
a termination of employment by the Company without cause on December 31, 2016.
|
(4)
|
As a result of the Amazon transaction, the NEOs legacy single-trigger RSUs granted in 2013 immediately vested and the NEOs accrued balances under the
Companys 401(k) Restoration and Voluntary Deferral Plan were paid. As discussed in the section entitled Amazon Transaction on page 43, Mr. Flynns legacy single-trigger RSUs granted in 2013 immediately vested in
connection with the Amazon transaction in accordance with their terms, and the remainder of his outstanding long-term incentive awards vested in connection with the change in control and his retirement eligibility.
|
(5)
|
Represents (a) three times the NEOs annual base salary, (b) the estimated cost of twelve months of continued health care, (c) the estimated
cost of relocation reimbursement for Mr. Dietrich and (d) the aggregate value of the NEOs long-term incentive awards, with any applicable performance criteria deemed satisfied at maximum levels. The amounts in this column do not
reflect any reductions for federal excise tax levied on certain excess termination payments under Section 4999 of the Code.
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58
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Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
PROPOSAL NO. 2 RATIFICATION OF
PRICEWATERHOUSECOOPERS LLP AS THE COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2017
The Audit Committee has selected PwC as the
Companys independent registered public accounting firm for the year ending December 31, 2017 and has directed that management submit the selection of that firm to the shareholders for ratification at the Annual Meeting. PwC has served as
the Companys independent registered public accounting firm since 2007. Representatives from PwC are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they desire to do so, and will be available to
respond to appropriate questions.
Shareholder ratification of the selection of PwC as the Companys independent registered public accounting firm
is not required by the Companys
By-Laws
or otherwise. However, we are submitting the selection of PwC to the shareholders for ratification as a matter of good corporate practice. If the shareholders fail
to ratify the selection, the Audit Committee will reconsider whether or not to retain PwC. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting
firm at any time during the year if it is determined that such a change would be in the best interests of the Company and its shareholders.
Services
provided to us by PwC for each of the last two fiscal years are described below (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
Audit Fees
|
|
$
|
2,093
|
|
|
$
|
1,810
|
|
Audit-Related Fees
|
|
|
3
|
|
|
|
6
|
|
Tax Fees
|
|
|
1,670
|
|
|
|
1,378
|
|
Other Fees
|
|
|
46
|
|
|
|
115
|
|
Total
|
|
$
|
3,812
|
|
|
$
|
3,309
|
|
|
|
Audit Fees
represent professional services, including
out-of-pocket
expenses, rendered for the integrated audit of our consolidated financial statements, for reviews of our financial statements included in our Quarterly Reports on Form
10-Q,
for services provided in connection
with statutory and regulatory filings and for consents and comfort letters in connection with registration statements.
|
|
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Audit-Related Fees
consist of a subscription for accounting research software.
|
|
|
Tax Fees
consist of tax services, including tax compliance, tax advice, and tax planning.
|
|
|
Other Fee
s consist of advisory services, including
out-of-pocket
expenses,
related to the Southern acquisition in 2016 and maintenance activities in 2015.
|
The Audit Committee preapproves audit and permissible
non-audit
services provided by the independent registered public accounting firm in accordance with the Committees preapproval policy. These services may include audit services, audit-related services,
tax services, and other services. Necessary approvals required between Audit Committee meetings must be preapproved by the Audit Committee Chairman, or such other Audit Committee member who has been delegated this authority by the Audit Committee
Chairman. For any such approvals between meetings, a description is provided to the Audit Committee for discussion at its next regularly scheduled meeting. The Audit Committee has concluded that the provision of the
non-audit
services described above are compatible with maintaining the independence of PwC. The Audit Committee has met with management and PwC to review and approve the overall plan and scope of the audit for
the current year.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR
THE RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2017.
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
59
PROPOSAL NO. 3 ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are seeking shareholder input on our NEO compensation as disclosed in this Proxy
Statement, and particularly in the Compensation Discussion and Analysis. The Board and the Compensation Committee assess and structure our executive compensation practices to align with our
pay-for-performance
philosophy and with a focus on industries where we operate and the marketplace where we compete for executive talent. We seek to compensate each NEO consistently with the principle of
pay-for-performance
while providing an overall compensation structure that serves to attract and retain the best talent and without encouraging excessive risk taking.
Our principal compensation policies, which enable us and are designed to attract and retain strong and experienced senior executives and drive
long-term company performance, include:
|
|
Designing competitive total compensation to enhance our ability to attract and retain knowledgeable and experienced senior executives and to reward them for a
very high level of performance;
|
|
|
Establishing meaningful objective performance metrics under our AIP each year at challenging levels;
|
|
|
Granting performance-based, long-term equity awards that will be earned only on the achievement of key long-term strategic goals;
|
|
|
Providing that time-based, long-term equity awards, granted chiefly for retention purposes, are subject to a four-year vesting schedule;
|
|
|
Setting compensation and incentive levels that reflect competitive market practices, reflect the global nature of our business and reward senior executives for
significant achievements;
|
|
|
Requiring material stock holdings to align the interests of senior executives with those of our shareholders and prohibiting these persons from hedging,
maintaining margin accounts and otherwise engaging in speculative trading activities;
|
|
|
Prohibiting tax gross ups for any change of control payments; and
|
|
|
Prohibiting the grant of excessive perquisites such as the personal use of airplanes, Company-provided auto, and/or auto allowances or club dues.
|
The Board has adopted a policy of providing for annual
say-on-pay
votes. The next
say-on-pay
vote will occur at our 2018 annual meeting, absent
any change in response to the
Say-on-Frequency
vote set forth in Proposal No. 4 of this Proxy Statement.
We are asking our shareholders to support our NEO compensation program as described in this Proxy Statement. This is an advisory vote and is not intended to address any specific item of compensation, but rather the
overall compensation of our NEOs and our compensation philosophy, policies and practices described in this Proxy Statement. However, the Board and the Compensation Committee will review and consider the voting results when evaluating our executive
compensation program.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR
THIS PROPOSAL.
60
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Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
PROPOSAL NO. 4 ADVISORY VOTE
REGARDING THE FREQUENCY OF THE ADVISORY SHAREHOLDER VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
As required by the Dodd-Frank
Wall Street Reform and Consumer Protection Act, we are also seeking shareholder input on whether the
Say-on-Pay
vote should occur every one, two or three years.
Shareholders have the option to vote for any one of the three options or to abstain on the matter.
After careful consideration of this proposal, the
Board has determined that an advisory vote regarding the compensation of our NEOs that occurs annually is the most appropriate option for the Company, and the Board therefore recommends that you vote for a frequency of One Year for
future advisory shareholder votes regarding the compensation of our NEOs.
We believe that an annual advisory vote on our executive compensation program
will enhance shareholder communication by encouraging our shareholders to provide us with their input on our executive compensation policies, practices and plans and will provide us with a means to obtain regular feedback on shareholder sentiment
regarding our executive compensation decisions. An annual vote on our executive compensation program by the shareholders is also consistent with our current practice.
You may indicate your preferred voting frequency by voting for the option of three years, two years, or one year, or you may abstain from voting. We will consider shareholders to have expressed an advisory
preference for the frequency that receives the highest number of favorable votes. Due to the advisory nature of this preference, the Board may decide, either now or in the future, that it is in the best interests of our shareholders and the Company
to hold an advisory vote on the compensation of our NEOs more or less frequently than the option preferred by our shareholders.
YOUR
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR
EVERY ONE (1) YEAR REGARDING THE FREQUENCY OF THE ADVISORY SHAREHOLDER VOTE TO APPROVE THE COMPENSATION OF THE
COMPANYS NEOS.
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
61
PROPOSAL NO. 5 APPROVAL OF AN AMENDMENT TO OUR 2016 INCENTIVE PLAN
Overview
At the 2016 Annual Meeting, shareholders approved the adoption of the Atlas Air Worldwide Holdings, Inc. 2016 Incentive Plan (the 2016 Plan), including
the material terms of performance goals for performance awards to be granted under the 2016 Plan. The 2016 Plan replaced our 2007 Incentive Plan, as amended (the 2007 Plan), on May 23, 2016, and no new awards have been granted under the
2007 Plan since that time. Awards outstanding under the 2007 Plan continue to be governed by the terms of that plan and agreements under which they were granted.
We are asking shareholders to approve an amendment to Section 4(a) of the 2016 Plan to increase the shares available for awards from 722,415 to 847,415. No other amendments or revisions to the 2016 Plan are being
submitted to shareholders for their consideration at this time. A copy of the 2016 Plan as it is proposed to be amended is attached as Exhibit B to this Proxy Statement.
Of the amount currently available for issuance under the 2016 Plan, as of March 31, 2017, 225,456 remain available for issuance of future awards (assuming maximum payout of all outstanding equity awards). As
discussed in further detail below, we do not believe that these remaining shares are sufficient to continue implementing our long-term incentive program over the next two years. Due to PSU awards vesting at the 200% level as a result of the Amazon
transaction in 2016, a significant portion of the available reserved shares, which would have been carried over from our 2007 Plan, remained in the 2007 Plan, leaving only 97,415 shares available for transfer to the 2016 Plan. This resulted in an
aggregate of 722,415 shares being registered and available for future issuance under the 2016 Plan (625,000 newly-issued shares plus 97,415 shares transferred from the 2007 Plan). Annual grants assuming maximum performance would require
approximately 450,000 shares under current grant practices.
We tie our target annual stock grants to a dollar amount rather than a fixed number of
shares in accordance with shareholder-favored grant practices. This results in the unintentional consequence of raising the burn rate number used by ISS in their equity plan scorecard but is favored under their grant practices scoring.
Additionally, since 2013 we repurchased approximately 2.6 million shares, another shareholder-friendly practice. This also results in an unintentional
increase in the burn rate calculation.
If this amendment is not approved by shareholders, the proposed additional 125,000 shares will not become
available for issuance under the 2016 Plan, but the 2016 Plan will otherwise remain in effect.
Plan Features That Protect
Shareholder Interests
The Board believes that
the amendment to our 2016 Plan will promote the interests of our shareholders and is consistent with principles of good corporate governance. The 2016 Plan contains several features that are intended to protect the interests of our shareholders,
including:
|
|
Minimum Vesting.
Our Compensation Committee recently approved an amendment to the 2016 Plan that limits the number of
awards (other than cash-based awards) that may be granted with a less than
one-year
vesting term. (As described on page 41, all our outstanding NEO awards are subject to multi-year vesting provisions).
|
|
|
Independent Plan Administration.
The Compensation Committee, comprised solely of nonemployee, independent directors who meet NASDAQ standards for
independence and who meet the definition of outside directors for purposes of Section 162(m) of the Code and
non-employee
directors under Rule
16b-3(b)(3)
of the Securities Exchange Act of 1934, as amended, administers the 2016 Plan.
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62
|
Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
|
|
Limits on Awards
. The 2016 Plan limits the number of stock options, stock appreciation rights (SARs) and other awards that may be granted to
plan participants and the amount that may be paid in respect of cash awards in any calendar year. The 2016 Plan also contains separate limits on the value of awards that may be granted to
non-employee
directors in any calendar year.
|
|
|
No Liberal Share Recycling
. Shares underlying stock options and other awards issued under the 2016 Plan will not be recycled back into the share pool
under the 2016 Plan if they are withheld in payment of the exercise price of the award or to satisfy tax withholding obligations in respect of the award. The number of shares available for delivery under the 2016 Plan will not be increased by any
shares that are repurchased by the Company on the open market using proceeds directly attributable to stock option exercises.
|
|
|
No Repricing.
Stock options and stock appreciation rights may not be repriced or otherwise terminated, surrendered, cancelled or exchanged for
consideration without shareholder approval.
|
|
|
No Discounted Stock Options or SARs.
Stock options and SARs may not be granted with an exercise price or base price that is less than the fair market
value of the underlying stock on the date of grant.
|
|
|
No Single-Trigger Vesting on a Change in Control.
The 2016 Plan does not provide for acceleration of equity or cash awards in connection with a change in
control unless there is no assumption or substitution of awards in connection with such change in control. All outstanding NEO awards are double-trigger with the exception of those held by Mr. Flynn which provide for vesting in
connection with a change in control due to his retirement eligibility.
|
|
|
Clawback Policy.
Awards under the 2016 Plan are subject to the terms of applicable Company clawback policies. Please see page 45 for additional
information regarding our clawback policies.
|
Why You Should Vote for the Amendment of our 2016 Plan
We believe that the amendment to our 2016
Plan is important to our continued growth and success and is essential to our ability to attract, motivate and retain highly qualified officers, directors, key employees and other key individuals. We believe that providing these individuals with an
opportunity to acquire a direct proprietary interest in the operations and future success of the Company will motivate these individuals to serve the Company and our shareholders by expending the maximum effort to improve our business and results of
operations. We believe that equity award grants under the 2016 Plan are a valuable incentive to participants and benefit shareholders by aligning more closely the interests of Plan participants with those of our shareholders.
A combination of factors, including among other things, increased reliance upon restricted stock units and performance units for equity compensation, have driven
increased share usage under the 2016 Plan, thereby reducing the shares remaining available for future issuance under the 2016 Plan. We are therefore asking shareholders to consider the following factors and to vote for the approval of the proposed
amendment to our 2016 Plan:
Equity incentive awards are an important part of our overall compensation
philosophy.
The 2016 Plan is critical to our ongoing effort to build shareholder value. Equity incentive awards have historically been and remain a critically important component of our compensation program. Our
Compensation Committee believes that our ability to grant equity incentive awards to employees is an important factor in our ability to attract, retain and motivate key employees. Our Compensation Committee believes that equity compensation provides
a strong incentive for employees to work to grow the business, build shareholder value over the long term and strongly align the interests of our employees with our other shareholders. Moreover, equity awards to our senior executives reflect the
Compensation Committees pay for performance philosophy since payout amounts are at risk and contingent on Company performance as described in the Compensation Discussion and Analysis section of this Proxy
Statement.
Share exhaustion under the 2016 Plan would harm the competiveness of our compensation offerings.
We
believe that the remaining shares reserved for issuance under the 2016 Plan (225,456 shares) are insufficient to meet our future compensation requirements if we continue to make grants consistent with historic grant levels and with the Compensation
Committees practices as described in the Compensation Discussion and Analysis section of this Proxy Statement. We believe we must continue to offer a competitive equity compensation program to attract and motivate our workforce. If
the 2016 Plan were to run out of shares
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
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63
available for grant, we would not be able to grant additional equity awards. We also believe that our inability to award equity compensation will result in difficulty in attracting, retaining,
and motivating our employees, whose efforts are a necessary element to implement our strategic plan and to ensure our future success. The 350,456 shares that would be available for future issuance under the 2016 Plan should be sufficient to cover
most of next years grant based on historical grant rates. Any shortfall may be accommodated through other compensatory measures. Therefore, we are asking our shareholders to approve an amendment to our 2016 Plan for such purpose.
Existing Equity Plan Information
At present, the 2016 Plan, which was previously approved by
our shareholders, is the only long-term incentive plan of the Company under which equity awards may be granted.
The table below includes aggregated
information regarding awards outstanding under the 2016 Plan and the Companys 2007 Plan, under which we cannot make additional grants but under which certain awards remain outstanding, the number of shares available for future awards under our
2016 Plan as of March 31, 2017, and the proposed number of new shares available for delivery under the 2016 Plan as it is proposed to be amended.
|
|
|
|
|
|
|
|
|
|
|
Number
of
shares (as of
March 31, 2017)
|
|
|
As a
percentage
of stock
outstanding
25,258,361
shares (as of
March 31, 2017)
|
|
Shares subject to outstanding stock options and SARs under the 2007 Plan
(1)
|
|
|
4,500
|
|
|
|
0.02
|
%
|
Shares subject to awards, other than stock options and SARs, outstanding under the 2007 and 2016
Plan (so called full-value awards)
(2)
|
|
|
1,378,684
|
|
|
|
5.46
|
%
|
Total shares subject to existing outstanding equity awards:
|
|
|
1,383,184
|
|
|
|
5.48
|
%
|
Proposed new shares available for future awards under the 2016 Plan
|
|
|
0
|
|
|
|
0.00
|
%
|
Total shares subject to existing outstanding equity awards and reserved for issuance under the 2016
Plan:
|
|
|
1,383,184
|
|
|
|
5.48
|
%
|
Shares available for future awards under the 2016
Plan
(3)
|
|
|
225,456
|
|
|
|
0.89
|
%
|
TOTAL:
|
|
|
1,608,640
|
|
|
|
6.37
|
%
|
(1)
|
As of March 31, 2017, the 4,500 outstanding stock options had a weighted average exercise price of $58.89 and a weighted average life of approximately one
month.
|
(2)
|
For purposes of determining shares available under the 2016 Plan, each share subject
to an award will count as one share. Other share-counting provisions of the 2016 Plan are described below under Authorized Shares. Because the 2016 Plan does not specify the mix of stock options and SARs, on one hand, and full-value
awards, on the other, it is not possible to determine the amount of subsequent dilution that may ultimately result from such awards. Also includes restricted stock units and performance share units and assumes the target performance requirements for
outstanding PSUs are achieved.
|
(3)
|
Includes 97,415 shares rolled over from the 2007 Plan.
|
Plan Summary
A summary of the 2016 Plan as amended and restated is set forth below. This summary is qualified in its entirety by the full text of the 2016 Plan, which is attached as Exhibit B to this Proxy Statement.
Administration.
The 2016 Plan is administered by our Compensation Committee, which has the authority to, among other
things, interpret the 2016 Plan; determine eligibility for, grant and determine the terms and conditions of awards; prescribe forms, rules and procedures; and otherwise do all things necessary or desirable to administer the Plan. The Compensation
Committee has the authority to delegate certain of its duties, powers and responsibilities to one or more of its members, to certain officers, and to certain other persons in accordance with the terms of the 2016 Plan. As used herein, the term
Administrator refers to our Compensation Committee or its authorized delegates, as applicable.
64
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Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
Term
. No awards may be granted after April 12, 2026,
but previously granted awards may continue beyond that date in accordance with their terms.
Eligibility
. Key employees,
directors, consultants and advisors of the Company and its affiliates who are in a position to make a significant contribution to the success of the Company or its affiliates and are selected by the Administrator are eligible to receive awards under
the 2016 Plan. Eligibility is generally limited to individuals who may permissibly use a Form
S-8
registration statement. Eligibility for stock options intended to be incentive stock options within
the meaning of Section 422 of the Code is limited to employees of the Company or its parents and subsidiaries, in accordance with Section 422 of the Code. As of March 31, 2017, we estimate that approximately 90 employees are eligible
to receive ongoing grants under the 2016 Plan, with an additional 325 employees who would, at the discretion of the Administrator, be eligible for
one-time
high performer grants.
Authorized Shares.
Subject to adjustment as described below, the maximum number of shares of Common Stock that may be
delivered in satisfaction of awards under the 2016 Plan is 847,415 shares (the Share Pool), plus shares that return to the Share Pool as a result of an award granted under the 2007 Plan or the 2016 Plan terminating, expiring or otherwise
being satisfied without the delivery of shares or, in the case of restricted stock awards, being forfeited. The following rules apply in respect of the Share Pool:
|
|
As described above, our Compensation Committee recently approved an amendment to the 2016 Plan that permits no more than five percent of the Share Pool to be
issued as awards that have a vesting date that is less than one year from the date of grant.
Cash-based awards and awards that vest on account of death, disability or change in control do not count toward the foregoing limit.
|
|
|
Any shares of Common Stock underlying the portion of any award granted under the 2016 Plan that is settled in cash or that otherwise expires, terminates or is
forfeited, in each case, without the issuance of the underlying shares, will not reduce the Share Pool.
|
|
|
All shares covering any portion of a SAR that is settled in stock and any shares withheld from a stock option or other award in satisfaction of the exercise
price or tax withholding obligations will be treated as having delivered under the 2016 Plan and will not be added back to the Share Pool.
|
|
|
The Share Pool will not be increased by any shares that are repurchased by the Company from the open market using proceeds directly attributable to stock option
exercises.
|
|
|
Shares issued under awards of an acquired company that are converted, replaced or adjusted for in connection with the acquisition will not reduce the Share Pool.
|
Shares that may be delivered under the 2016 Plan may be authorized but unissued shares of our Common Stock or previously issued
shares of our Common Stock acquired by the Company and held in its treasury. The closing price of our Common Stock as reported on NASDAQ on April 17, 2017 was $54.95 per share.
Annual Individual Limitations (other than
Non-Employee
Directors).
|
|
The maximum number of shares for which stock options may be granted and the maximum number of shares for which stock appreciation rights may be granted to any
person during any calendar year under the 2016 Plan is, in each case, 200,000 shares.
|
|
|
The maximum number of shares subject to other awards that are denominated in our Common Stock that may be granted to any person during any calendar year is
500,000 shares.
|
|
|
The maximum dollar amount payable to any person in respect of cash awards in any calendar year is $7,000,000. The foregoing limitations do not apply to
non-employee
members of the Board, whose awards are subject to the limits described below.
|
Annual
Non-Employee
Director Limits
. In the case of a
non-employee
director, the maximum grant-date fair market value (determined in accordance with applicable financial accounting rules) of stock-based awards granted under the 2016 Plan in any calendar year is
$400,000 (or $500,000, in the case of a
non-employee
chairman of the board of directors or lead director).
Non-employee
directors are not eligible to receive cash awards
under the 2016 Plan. The foregoing limitations do not apply to any award granted pursuant to a directors election to receive shares in lieu of cash retainers or other fees.
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
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65
Types of Awards.
The
2016 Plan provides for grants of stock options, SARs, restricted and unrestricted stock, restricted and unrestricted stock units, performance awards, cash awards and other awards convertible into or otherwise based on shares of our Common Stock.
Dividend equivalents may also be provided in connection with awards under the 2016 Plan. Awards may be settled in shares of our Common Stock, in cash or in a combination of cash and shares.
|
|
Restricted and Unrestricted Stock Units.
A stock unit is an unfunded and unsecured promise, denominated in shares of Common Stock, to deliver Common Stock
or cash measured by the value of our Common Stock in the future. The delivery of Common Stock or cash in respect of a stock unit may be subject to satisfaction of performance or other vesting conditions.
|
|
|
Performance Awards.
A performance award is an award the vesting, settlement or exercisability of which is subject to specified performance criteria.
|
|
|
Cash Awards.
A cash award is an award denominated in cash and may include performance awards.
|
|
|
Stock Options.
The 2016 Plan provides for the grant of incentive stock options (ISOs) and nonqualified stock options (NSOs). The
exercise price of a stock option granted under the 2016 Plan shall not be less than 100% of the fair market value of a share of our Common Stock (or, in the case of an ISO granted to a ten percent shareholder, 110%) on the date of grant. Fair market
value shall be determined in accordance with the requirements of Section 422 and Section 409A of the Code. Subject to the foregoing, the Administrator will determine the exercise price of each stock option granted under the 2016 Plan on the
basis of the closing price of the stock on the date of grant. Stock options will have a maximum term of ten years from the date of grant. The exercise price of stock options may be paid in cash, by check or by such other means as may be acceptable
to the Administrator.
|
|
|
Stock Appreciation Rights (SARs).
A SAR entitles the holder upon exercise to receive an amount (payable in cash or Common Stock) equal to the excess of
the fair market value of the shares of Common Stock subject to the SAR over the base value from which appreciation is measured. Such base value may not be less than the fair market value of a share of our Common Stock on the date of grant.
|
|
|
Restricted and Unrestricted Stock.
A restricted stock award is an award of Common Stock subject to restrictions requiring it to be redelivered or offered
for sale to the Company if specified conditions are not satisfied, while an unrestricted stock award is an award of Common Stock that is not subject to restrictions.
|
Vesting; Other Terms and Conditions.
The Administrator determines the terms and conditions of all awards, including the vesting schedule, if any, applicable to each award. Subject to
the terms of the 2016 Plan, the Administrator has the authority to waive or modify the terms and conditions applicable to any award and to accelerate the vesting or exercisability of any award.
Termination of Employment or Service.
The Administrator determines the effect of termination of employment or other service on
awards. The 2016 Plan provides default rules governing how awards are treated in the event that a participants employment or other service terminates. Upon termination of a participants employment or other service, all awards requiring
exercise will cease to be exercisable and will terminate, and all other awards, to the extent not vested, will be forfeited unless the administrator provides otherwise. Notwithstanding the above, unless the administrator provides otherwise, if a
participant dies or terminates employment or service by reason of disability, stock options and SARs exercisable immediately prior to such death or disability may be exercised by the participant or the participants executor, administrator or
transferee, as applicable, during a period of one year following such death or termination by reason of disability (or for the remainder of their original term, if less). In the case of termination of the participants employment or service for
reasons other than death or disability, stock options and SARs will remain exercisable, to the extent they were exercisable immediately prior to termination, for three months (or for the remainder of their original term, if less); provided that if
in the Administrators judgment the reason for the participants termination casts such discredit on the participant so as to justify immediate termination of the award, then such award, whether or not vested, will immediately terminate.
66
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Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
Transferability.
Neither ISOs nor, except as the
Administrator otherwise expressly provides, other awards may be transferred other than by will or by the laws of descent and distribution. During a participants lifetime ISOs and, except as the Administrator otherwise expressly provides, other
awards requiring exercise may be exercised only by the recipient.
Performance Criteria
. The 2016 Plan provides that
performance awards may be made subject to achieving performance criteria over a specified performance period. In the case of any performance award intended to qualify as exempt performance-based compensation under Section 162(m) of the
Code, the Administrator will use one or more objectively determinable measures of performance relating to any combination of the following (measured either absolutely or by reference to an index or indices and determined either on a consolidated
basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combinations thereof): sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest,
taxes, depreciation, or amortization, whether or not on a continuing operations or an aggregate or per share basis (basic or fully diluted); return on equity, investment, capital or assets; one or more operating ratios such as earnings before
interest, taxes, and/or depreciation and amortization; borrowing levels, leverage ratios or credit rating; market share; capital expenditures; cash flow; free cash flow, cash flow, return on investment (discounted or otherwise), net cash provided by
operations, or cash flow in excess of cost of capital; stock price; shareholder return; sales of particular products or services; customer acquisition or retention; acquisitions and divestitures (in whole or in part); economic value added; strategic
business criteria, consisting of one or more objectives based on meeting specific market penetration, geographic business expansion goals, facility construction or completion goals, geographic facility relocation or completion goals, cost targets,
customer satisfaction, supervision of litigation or information technology; joint ventures and strategic alliances; spin-offs,
split-ups
and the like; reorganizations; or recapitalizations, restructurings,
financings (issuance of debt or equity) or refinancings.
Performance criteria and any targets with respect thereto need not be based upon an increase,
a positive or improved result or avoidance of loss. To the extent consistent with the requirements for satisfying the performance-based compensation exception under Section 162(m) of the Code, the Administrator may provide in the case of any award
intended to qualify for such exception that one or more of the performance criteria applicable to such award will be adjusted in an objectively determinable manner to reflect events (for example, but without limitation, acquisitions or dispositions)
occurring during the performance period that affect the applicable performance criteria.
Repricing.
Stock options or SARs
granted under the 2016 Plan may not be repriced, nor may any consideration be paid upon the termination, cancellation, voluntary surrender or exchange of any stock options or SARs, in each case, without shareholder approval in accordance with any
applicable stock exchange listing standards.
Clawback.
Awards granted under the 2016 Plan are subject to
forfeiture, termination and rescission, and a participant will be obligated to return any payments received in respect of awards to the extent provided in the award, as may be required by law, or as provided in any applicable Company clawback or
recoupment policy.
Corporate Transactions.
In the event of the consummation of a consolidation, merger or similar
transaction or series of related transactions, a sale of all or substantially all of the Companys assets or a dissolution or liquidation of the Company (each, a Covered Transaction), the 2016 Plan permits the Administrator to,
among other things, provide for the continuation or assumption of outstanding awards, for new grants in substitution of outstanding awards, for the accelerated vesting or delivery of shares of common stock under awards or for a cash out of
outstanding awards, in each case on such terms and with such restrictions as it deems appropriate. Except as the Awards may otherwise determine, awards not assumed will terminate upon the consummation of such Covered Transaction.
Adjustments.
In the event of a stock dividend, stock split or combination or shares (or reverse stock split), recapitalization or
other change in the Companys capital structure that constitutes an equity restructuring within the meaning of FASB ASC Topic 718, the Administrator will make appropriate adjustments to the limits described above and will also make appropriate
adjustments to the number and kind of shares of stock or securities subject
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
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67
to awards, to the exercise prices of awards and to other provisions of awards affected by the change. The Administrator may also make similar adjustments to take into account other distributions
to shareholders or any other event, if the Administrator determines that adjustments are appropriate to avoid distortion in the operation of the 2016 Plan and to preserve the value of awards.
Amendment.
The Administrator may amend the 2016 Plan or any outstanding award at any time, provided that except as otherwise expressly provided in the 2016 Plan the Administrator may
not, without the participants consent, alter the terms of an award so as to affect materially and adversely the participants rights under the award, unless the administrator expressly reserved the right to do so at the time of the award.
No such amendment will, without the approval of the shareholders of the Company, effectuate a change for which shareholder approval is required by law (including the Code and applicable stock exchange requirements).
Federal Income Tax Consequences
The following discussion summarizes certain U.S. federal
income tax consequences of the issuance and receipt of awards under the 2016 Plan. The summary does not purport to cover federal employment tax or other U.S. federal tax consequences that may be associated with the 2016 Plan, nor does it cover
state, local or
non-U.S.
taxes, except as specifically noted.
RSUs and
PSUs
.
The grant of an RSU or PSU does not itself generally result in taxable income. Instead, the participant realizes taxable ordinary income upon settlement, in an amount generally equal to the fair market value
of any cash or shares received in settlement (a corresponding deduction is generally available to the Company at this time), and the participant will be subject to withholding for federal income and other taxes, each as applicable.
If the shares delivered in settlement of an RSU or PSU are restricted for tax purposes, the participant will instead be subject to the rules described below for
restricted stock.
Incentive Stock Options.
In general, a participant does not realize taxable income upon the grant or
exercise of an ISO. However, the exercise of an ISO may result in an alternative minimum tax liability to the participant.
With certain exceptions, a
disposition of shares purchased under an ISO within two years from the date of grant or within one year after exercise produces ordinary income to the participant (and generally a corresponding deduction to the Company) equal to the difference
between the fair market value of the shares at the time of exercise and the exercise price. Any additional gain recognized in the disposition is treated as a capital gain to the participant (for which the Company would not be entitled to a
deduction).
If, instead, the participant does not dispose of ISO shares until after the expiration of the above-described
one-
and
two-year
holding periods, any gain or loss recognized upon a subsequent sale is treated as a long-term capital gain or loss to the participant and the Company would
not be entitled to a corresponding deduction.
Nonstatutory Options.
In general, in the case of an NSO, a participant does
not realize taxable income at the time of grant. Upon with the participants exercise of the NSO, the participant would generally realize taxable income in an amount equal to the excess (at the time of exercise) of the fair market value of the
shares acquired upon exercise over the exercise price. A corresponding deduction is generally available to the Company. Upon a subsequent sale or exchange of the shares, appreciation or depreciation after the date of exercise is treated as capital
gain or loss for which the Company would not be entitled to a deduction.
In general, an ISO that is exercised more than three months after termination
of employment (other than termination by reason of death or permanent and total disability) is treated as an NSO. ISOs are also treated as
non-ISOs
to the extent they first become exercisable by an individual
in any calendar year for shares having a fair market value (determined as of the date of grant) in excess of $100,000.
SARs
. The grant of a SAR does not itself result in taxable income, nor does taxable income result merely because a SAR becomes
exercisable. In general, a participant who exercises a SAR for shares of stock or receives payment in cancellation of a SAR will have ordinary income equal to the amount of any cash and the fair market value of any stock received. A corresponding
deduction is generally available to the Company.
68
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Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
Restricted Stock
. A participant who is awarded or
purchases shares subject to a substantial risk of forfeiture generally does not realize taxable income until the risk of forfeiture lapses. When the risk of forfeiture lapses, the participant would realize ordinary income equal to the excess of the
fair market value of the shares at that time over the purchase price, if any, and a corresponding deduction would generally be available to the Company in the same year that the participant recognizes income. However, a participant may make an
election under Section 83(b) of the Code to be taxed on restricted stock at the time of grant or purchase. A participant who makes an effective 83(b) election will realize ordinary income equal to the fair market value of the shares as of the time
of grant or acquisition less any price paid for the shares. A corresponding deduction will generally be available to the Company. If a participant makes an effective 83(b) election, no additional income results by reason of the lapsing of the
restrictions. Any subsequent gain would be capital gain income to the participant (for which the Company would not be entitled to a corresponding deduction).
Dividends that are received by a participant before the shares are taxed to the participant under the rules described in the preceding paragraph are taxed as additional ordinary income, not as dividend income. The
tax basis in the ordinary shares received by a participant will equal the amount recognized by the participation as ordinary income under the rules described in the preceding paragraph, and the participants capital gains holding period in
those shares will commence on the later of the date the shares are received or the restrictions lapse.
Unrestricted
Stock.
A participant who purchases or is awarded unrestricted stock generally has ordinary income equal to the excess of the fair market value of the shares over the purchase price, if any, and a corresponding
deduction is generally available to the Company in the same year that the participant recognizes income. A participant who purchases or is awarded restricted stock has income as described in the preceding paragraph.
Section 162(m)
. Stock options, SARs and certain performance awards under the 2016 Plan are generally intended to be exempt or
eligible for exemption from the deductibility limits of Section 162(m). However, the Administrator will have discretionary authority to provide compensation that is not exempt from the limits on deductibility under Section 162(m).
Certain Change of Control Payments
. Under Section 280G of the Code, the vesting or accelerated exercisability of stock options or the
vesting and payments of other awards in connection with a change of control of a corporation may be required to be valued and taken into account in determining whether participants have received compensatory payments, contingent on the change of
control, in excess of certain limits. If these limits are exceeded, a substantial portion of amounts payable to the participant, including income recognized by reason of the grant, vesting or exercise of awards may be subject to an additional 20%
federal excise tax and may be
non-deductible
to the Company. The Company does not provide for reimbursement or
gross-ups
of any such excise tax incurred by a
participant.
Section 409A.
Awards under the 2016 Plan are intended either to be exempt from the rules of Section
409A or to satisfy those rules and shall be construed accordingly. The Company does not provide for reimbursement or
gross-ups
to any participant with respect to any adverse tax consequences
arising to a participant under Section 409A.
Plan Benefits
The future benefits or amounts that would be received under the 2016 Plan by executive officers, nonexecutive directors and nonexecutive officer employees are discretionary and are therefore not determinable at
this time. Details concerning award grants made in respect of the fiscal year ended December 31, 2016 appear in the tables below.
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
69
The following table sets forth information
regarding time-based restricted stock units, performance-based stock units and performance-based cash awards granted under the Plan in the first quarter of 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NameGroup
|
|
Number
of
Restricted
Stock Units
Grants (1)
|
|
|
Dollar
Value of
Restricted Stock
Units (1)
|
|
|
Number
of
Performance Stock
Units Granted (2)
|
|
|
Dollar
Value of
Performance
Stock Units at
Target (2)
|
|
|
Dollar Value of
Performance Cash
Award at
Target (3)
|
|
William J. Flynn
|
|
|
36,578
|
|
|
$
|
1,982,528
|
|
|
|
18,289
|
|
|
$
|
991,264
|
|
|
$
|
970,313
|
|
John W. Dietrich
|
|
|
20,781
|
|
|
|
1,126,330
|
|
|
|
10,390
|
|
|
|
563,138
|
|
|
|
551,250
|
|
Spencer Schwartz
|
|
|
17,083
|
|
|
|
925,899
|
|
|
|
8,541
|
|
|
|
462,922
|
|
|
|
453,150
|
|
Michael T. Steen
|
|
|
20,781
|
|
|
|
1,126,330
|
|
|
|
10,390
|
|
|
|
563,138
|
|
|
|
551,250
|
|
Adam R. Kokas
|
|
|
17,083
|
|
|
|
925,899
|
|
|
|
8,541
|
|
|
|
462,922
|
|
|
|
453,150
|
|
Executive Officers as Group (6 persons)
|
|
|
114,500
|
|
|
|
4,205,901
|
|
|
|
57,248
|
|
|
|
3,102,841
|
|
|
|
3,037,307
|
|
Nonexecutive Directors
(4)
(9 persons)
|
|
|
1,024
|
|
|
|
54,989
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other employees
(756 persons)
|
|
|
110,704
|
|
|
|
6,000,157
|
|
|
|
8,144
|
|
|
|
441,409
|
|
|
|
432,000
|
|
(1)
|
Represents award of time-based restricted stock units that vest ratably over a four-year period beginning in 2018. Each unit is converted automatically into one
share of our Common Stock upon vesting. The fair value of the restricted stock units is based on the closing market price of our Common Stock of as of the date of the award.
|
(2)
|
Represents target award of performance-based stock units that vest only if certain pre-established performance criteria for the period beginning on January 1,
2017 and ending December 31, 2019 are achieved. To the extent these awards are earned, they will be paid our in 2020. The maximum payout is 200% of the target amount. The fair value of the performance stock units shown in the table is based on the
closing market price of our Common Stock as of the date of the award.
|
(3)
|
Represents target award of performance-based cash award that vest only if certain pre-established performance criteria for the period beginning on January 1,
2017 and ending December 31, 2019 are achieved. To the extent these awards are earned, they will be paid out in early 2020. The maximum payout is 200% the target amount.
|
(4)
|
Represents award of time-based restricted stock units that are expected to vest on the day prior to the Annual Meeting.
|
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR
THE APPROVAL OF AN AMENDMENT THE 2016 INCENTIVE PLAN AS SET FORTH HEREIN.
70
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Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
STOCK OWNERSHIP
The following table sets forth, as of March 31, 2017, information regarding beneficial ownership of our Common Stock by:
|
|
Each shareholder who is known to us to be the beneficial owner of 5% or greater of our Common Stock, based on currently available Schedules 13G and 13D filed
with the SEC, as may be updated by a Statement of Change of Beneficial Ownership of Securities on Form 4 subsequently filed with the SEC;
|
|
|
All of our Executive Officers and members of our Board as a group.
|
Unless otherwise indicated, each shareholder has sole voting and dispositive power with respect to the shares of Common Stock beneficially owned by that shareholder. The number of shares of Common Stock
beneficially owned is determined under rules issued by the SEC. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power and any shares as to which the
individual or entity has the right to acquire beneficial ownership within 60 days of March 31, 2017, through the exercise of any stock option or other right. The inclusion in the following table of those shares, however, does not constitute an
admission that the named shareholder is a direct or indirect beneficial owner. The number of shares of our Common Stock issued and outstanding as of March 31, 2017 was 25,255,177. Except as otherwise indicated in the table below, addresses of
named beneficial owners are c/o Atlas Air Worldwide Holdings, Inc., 2000 Westchester Avenue, Purchase, NY 10577.
Beneficial Ownership Table
|
|
|
|
|
|
|
|
|
Name and Address of Beneficial
Owner
|
|
Number
of shares
Beneficially Owned
|
|
|
Percentage of
Outstanding Shares
Beneficially Owned
|
|
5% Shareholders:
|
|
|
|
|
|
|
|
|
BlackRock,
Inc.
(a)
|
|
|
2,796,240
|
|
|
|
11.1%
|
|
55 East
52
nd
Street
|
|
|
|
|
|
|
|
|
New York, NY 10022
|
|
|
|
|
|
|
|
|
Dimensional Fund Advisors LP
(b)
|
|
|
2,109,241
|
|
|
|
8.4%
|
|
Building One
|
|
|
|
|
|
|
|
|
6300 Bee Cave Road
|
|
|
|
|
|
|
|
|
Austin, TX 78746
|
|
|
|
|
|
|
|
|
The Vanguard
Group
(c)
|
|
|
2,081,320
|
|
|
|
8.2%
|
|
100 Vanguard Boulevard
|
|
|
|
|
|
|
|
|
Malvern, PA 19355
|
|
|
|
|
|
|
|
|
FMR
LLC
(d)
|
|
|
1,710,300
|
|
|
|
6.8%
|
|
245 Summer Street
|
|
|
|
|
|
|
|
|
Boston, MA 02210
|
|
|
|
|
|
|
|
|
Amazon.com,
Inc.
(e)
|
|
|
1,586,206
|
|
|
|
6.3%
|
|
410 Terry Avenue North
|
|
|
|
|
|
|
|
|
Seattle, WA 98109
|
|
|
|
|
|
|
|
|
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
71
|
|
|
|
|
|
|
|
|
Name and Address of Beneficial
Owner
|
|
Number
of shares
Beneficially Owned
(a)
|
|
|
Percentage of
Outstanding Shares
Beneficially Owned
|
|
Directors:
|
|
|
|
|
|
|
|
|
Robert F. Agnew
|
|
|
29,712
|
|
|
|
*
|
|
Timothy J. Bernlohr
|
|
|
33,481
|
|
|
|
*
|
|
Charles F. Bolden, Jr.
(f)
|
|
|
1,024
|
|
|
|
*
|
|
James S. Gilmore III
|
|
|
30,601
|
|
|
|
*
|
|
Bobby J. Griffin
|
|
|
2,479
|
|
|
|
*
|
|
Carol B. Hallett
|
|
|
32,201
|
|
|
|
*
|
|
Frederick McCorkle
|
|
|
41,712
|
|
|
|
*
|
|
Duncan J. McNabb
|
|
|
13,969
|
|
|
|
*
|
|
John K. Wulff
|
|
|
27,479
|
|
|
|
*
|
|
|
|
|
Director and NEO:
|
|
|
|
|
|
|
|
|
William J. Flynn
|
|
|
246,958
|
|
|
|
1.0%
|
|
|
|
|
Other NEO:
|
|
|
|
|
|
|
|
|
John W. Dietrich
|
|
|
30,176
|
|
|
|
*
|
|
Michael T. Steen
|
|
|
62,678
|
|
|
|
*
|
|
Adam R. Kokas
|
|
|
46,014
|
|
|
|
*
|
|
Spencer Schwartz
|
|
|
28,282
|
|
|
|
*
|
|
|
|
|
All Directors, Nominees and executive officers as a group (15 persons, including the persons
listed above)
|
|
|
627,630
|
|
|
|
2.5%
|
|
*
|
Represents less than 1% of the outstanding shares of Common Stock.
|
(a)
|
This information is based on a Schedule 13G/A filed with the SEC on January 29, 2017. As set forth in this filing, BlackRock, Inc. has sole voting power
over 2,752,104 shares and sole dispositive power with regard to 2,796,240 shares. We have not made any independent determination as to the beneficial ownership of this shareholder and are not restricted in any determination we may make by reason of
inclusion of such shareholder or their shares in this table.
|
(b)
|
This information is based on Schedule 13G/A filed with the SEC on February 9,
2017. As set forth in this filing, Dimensional Fund Advisors LP has sole voting power over 2,032,050 shares and sole dispositive power with regard to 2,109,241 shares. We have not made any independent determination as to the beneficial ownership of
this shareholder and are not restricted in any determination we may make by reason of inclusion of such shareholder or their shares in this table.
|
(c)
|
This information is based on Schedule 13G/A filed with the SEC on February 9,
2017. As set forth in this filing, The Vanguard Group has sole voting power over 28,676 shares, sole dispositive power with regard to 2,052,458 shares and shared dispositive power over 28,862 shares. We have not made any independent determination as
to the beneficial ownership of this shareholder and are not restricted in any determination we may make by reason of inclusion of such shareholder or their shares in this table.
|
(d)
|
This information is based on a Schedule 13G/A filed jointly by FMR LLC, Abigail P.
Johnson and Fidelity
Low-Priced
Stock Fund with the SEC on February 14, 2017. In the filing, Abigail P. Johnson reported that she had sole dispositive power over 1,710,300 shares. Fidelity
Low-Price
Stock Fund, a mutual fund managed by Fidelity Management & Research Company, which is a wholly-owned subsidiary of FMR LLC, reported that it has sole voting power with respect to 1,398,300 shares.
FMR LLC reported that it had sole voting power over 253,000 shares and sole dispositive power over 1,710,300 shares. Abigail P. Johnson and members of her family, collectively own, directly or through trusts, shares of FMR LLC representing 49% of
the voting power of FMR LLC and may therefore be deemed to form a controlling group with respect to FMR LLC. The filing states that it reflects the securities beneficially owned, or that may deemed to be beneficially owned, by FMR LLC, certain of
its subsidiaries and affiliates and other companies. We have not made any independent determinations as to the beneficial ownership of this shareholder and are not restricted in any determination we may make by reason of inclusion of such
shareholder or their shares in this table.
|
72
|
Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
(e)
|
This information is based on Schedule 13G/A filed with the SEC on January 27, 2017. Amazon.com, Inc. has sole voting power and sole dispositive power over
1,586,206 shares. These share amounts are calculated with reference to applicable notification and clearance thresholds in the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the HSR Act) and are reported with reference
to the market price of the Companys common stock (as calculated pursuant to the HSR Act) and the applicable HSR thresholds as of December 31, 2016. We have not made any independent determination as to the beneficial ownership of this
shareholder and are not restricted in any determination we make by reason of inclusion of such shareholder or their shares in this table.
|
(f)
|
Restricted stock units expected to vest on May 23, 2017.
|
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the Exchange Act) requires certain of our executive officers, as well as our Directors and persons who own more than 10% of a registered class of AAWWs equity securities, to file reports of ownership and changes in
ownership with the SEC. Based solely on our review of the reporting forms received by us or written representations from reporting persons, we believe that during the last fiscal year all executive officers and Directors complied with their filing
requirements under Section 16(a) for all reportable transactions during the year.
Certain Relationships
and Related Person Transactions
Our Code of
Conduct Applicable to our CEO, Senior Financial Officers and Members of the Board of Directors (the Code of Ethics), which is available on our website at www.atlasair.com under the Corporate Background section, provides that such
officers and Directors should follow the guidelines outlined in our Employee Handbook and Code of Conduct and communicate any potential or actual conflicts of interest (however immaterial) to the Chairman of the Board, the Chairman of the Audit
Committee of the Board of Directors, and the General Counsel so that an objective, third-party review can be made of the matter. Pursuant to our Audit Committee Charter, which is also available on our website at www.atlasair.com, the Audit Committee
reviews reports and disclosures of insider and affiliated party transactions and/or conflicts of interest or potential conflicts of interest involving corporate officers and members of the Board of Directors. The Audit Committee, when appropriate,
will also review and approve any involvement of corporate officers and members of the Board of Directors in matters that might constitute a conflict of interest or that may otherwise be required to be disclosed as a related party transaction under
SEC regulations. Our Nominating and Governance Committee separately determines Director Independence as summarized in Director Independence above.
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
73
|
|
|
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
|
|
|
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS TO BE PRESENTED
AT THE 2018 ANNUAL MEETING
Shareholder Proposals to Be Included in Our 2018 Proxy Statement
We currently expect to hold our 2018 annual meeting of
shareholders on or about May 30, 2018. Under the rules of the SEC, if a shareholder wants us to include a proposal in the proxy statement and form of proxy for presentation at our 2018 annual meeting, the proposal must be received by our
Secretary no later than December December 21, 2017. All shareholder proposals must be made in writing and addressed to the Office of the Secretary, Atlas Air Worldwide Holdings, Inc., 2000 Westchester Avenue, Purchase, NY 10577.
Proxy Access Notice Procedures
Notices of proxy access Director Nominees for the 2018 annual
meeting of shareholders must include the information required by the By-Laws and be delivered to our Secretary at our principal executive offices at 2000 Westchester Avenue, Purchase, NY 10577 not earlier than November 19, 2017 and not
later than December
19, 2017. A copy of the By-Laws will be sent to any shareholder upon written request to the Secretary.
Advance
Notice Procedures
In addition, under our
By-Laws,
and as permitted by the rules of the SEC, no shareholder nominations of persons for election to the Board of Directors (other than a Director Nominee nominated for inclusion in our proxy materials pursuant
to our proxy access By-Law) and no other business may be brought before the 2018 annual meeting of shareholders except as specified in the notice of the meeting or otherwise brought before such annual meeting by or at the direction of the Board or
by a shareholder entitled to vote who has delivered notice to us (containing certain information specified in our
By-Laws)
not earlier than January 24, 2018 and not later than February 23, 2018. A
copy of the
By-Laws
will be sent to any shareholder upon written request to the Secretary of AAWW. These requirements are separate and apart from, and in addition to, the SECs requirements that a
shareholder must meet in order to have his or her proposal included in our Proxy Statement as discussed above.
ADDITIONAL INFORMATION
Shares Registered in the Name of a Bank, Broker or Nominee
Brokerage firms and banks holding shares in street name for
customers are required to vote such shares in the manner directed by their customers. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in street name, and
these proxy materials are being forwarded to you by your broker, bank or nominee which is considered, with respect to those shares, the shareholder of record. As the beneficial owner, you have the right to direct your broker, bank or other nominee
how to vote and are also invited to attend the meeting. Your broker, bank or nominee has enclosed herewith or separately provided a voting instruction form for you to use in directing the broker, bank or nominee how to vote your shares. However,
since you are not the shareholder of record, you may not vote these shares in person at the meeting unless you obtain a signed proxy from the record holder giving you the right to vote these shares. You should note that if you hold your shares
through a brokerage firm, a bank or other nominee, the broker, bank or other nominee that holds the stock will not be able to vote your shares on any proposal other than ratifying the selection of PricewaterhouseCoopers LLP, unless you have provided
specific voting instructions. See Broker
Non-Votes
and Quorum, Vote Required herein for additional information.
74
|
Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
If you hold your shares directly in your own name, they will not be voted if you do not
vote them at the Annual Meeting or provide a proxy.
Broker
Non-Votes
A broker
non-vote
occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have
discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner, but does have discretionary voting power over other routine items and submits votes for those matters. As discussed
above, if you hold your shares through a broker, bank or other nominee and do not provide specific instructions to your broker, bank or other nominee, your shares may not be voted with respect to the following
non-routine
proposals:
|
|
Proposal No. 1 (election of the Companys Directors);
|
|
|
Proposal No. 3 (the
Say-on-Pay
vote);
|
|
|
Proposal No. 4 (the
Say-on-Frequency
vote); and
|
|
|
Proposal No. 5 (approval of an amendment to our 2016 Incentive Plan)
|
We do not expect to have any broker
non-votes
with respect to Proposal No. 2, which is routine and which provides for the ratification of the selection of
PricewaterhouseCoopers LLP to serve as the independent registered public accounting firm for the Company for the year ending December 31, 2016.
Revocability of Proxies
If you hold your shares registered in your name, you may revoke your proxy at any time before its use by delivering to the Secretary of AAWW a written notice of
revocation or a duly executed proxy bearing a later date or by attending the Annual Meeting and voting in person. Attending the Annual Meeting in and of itself will not constitute a revocation of a proxy.
If your shares are held in street name and you wish to revoke your proxy and vote at the Annual Meeting, you must contact your broker, bank or other nominee and
follow the requirements set by your broker, bank or nominee. We cannot guarantee that you will be able to revoke your proxy or attend and vote at the Annual Meeting.
Proxy Solicitation
This proxy solicitation is being made by our Board, and the cost of soliciting proxies will be borne by us. We expect to reimburse brokerage firms, banks,
custodians and other persons representing beneficial owners of shares of Common Stock for their reasonable
out-of-pocket
expenses in forwarding solicitation material to
such beneficial owners. Proxies may be solicited by certain of our Directors, officers and other employees, without additional compensation, in person or by telephone,
e-mail
or facsimile. We have retained
Morrow Sodali LLC, 470 West Avenue, Stamford, Connecticut 06902, to assist us in the solicitation of proxies and will pay Morrow Sodali a fee of approximately $14,000, plus
out-of-pocket
expenses, all related to the solicitation.
Proxy Tabulation
Proxies and ballots will be received and tabulated by an
independent entity that is not affiliated with us. The inspectors of election will also be independent of us. Comments on written proxy cards will be provided to the Secretary of AAWW without disclosing the vote unless the vote is necessary to
understand the comment.
Separate Voting Materials
Some banks, brokers and other record holders have begun the
practice of householding proxy statements and annual reports. Householding is the term used to describe the practice of delivering a single set of proxy statements and annual reports to a household at which two or more
shareholders reside if a company reasonably believes the shareholders are members of the same family. This procedure reduces the volume of duplicate
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
75
information shareholders receive and also reduces printing and mailing costs. If you participate in householding and wish to continue receiving individual copies of our proxy
statement and annual report, please write or call us at the following address or phone number: Office of the Secretary, Atlas Air Worldwide Holdings, Inc., 2000 Westchester Avenue, Purchase, NY 10577, (914)
701-8000.
We will promptly deliver an additional copy of the proxy and/or the annual report to any shareholder who so requests.
List of Shareholders
At the Annual Meeting and for 10 days prior to the meeting, the names of shareholders entitled to vote at the Annual Meeting will be available for inspection for
any purpose germane to the meeting, between the hours of 9 a.m. and 5 p.m., at our principal executive offices located at 2000 Westchester Avenue, Purchase, New York 10577, by contacting the Secretary of AAWW.
Additional Copies of Annual Report
A copy of our 2016 Annual Report accompanies this Proxy
Statement. If any person who was a beneficial owner of Common Stock on the Record Date desires additional copies, such copies may be obtained without charge upon request in writing addressed to the Office of the Secretary, Atlas Air Worldwide
Holdings, Inc., 2000 Westchester Avenue, Purchase, NY 10577. Each such copy of our 2016 Annual Report so furnished does not include any exhibits thereto, but is accompanied by a list briefly describing all such exhibits. We will furnish any such
exhibit upon written request and upon payment of a reasonable specified fee. The Form
10-K
is also available on our website at www.atlasair.com.
Limited Voting by Foreign Owners
To comply with restrictions imposed by federal aviation law on foreign ownership of U.S. airlines, our Certificate of Incorporation and
By-Laws
restrict foreign ownership of shares of our Common Stock. The restrictions imposed by federal aviation law (49 U.S.C. §41102) currently include a requirement that no more than 25% of our voting stock be
owned or controlled, directly or indirectly, by persons who are not Citizens of the United States. There is a separate requirement that we be under the actual control of Citizens of the United States.
Pursuant to our
By-Laws,
there is a separate stock record, designated the Foreign Stock Record for the
registration of Voting Stock that is Beneficially Owned by aliens. Voting Stock means all outstanding shares of our capital stock that we may issue from time to time which, by their terms, may vote. Beneficially Owned refers
to owners of our securities who, directly or indirectly, have or share voting power and/or investment power.
At no time will ownership of our shares of
Common Stock representing more than the Maximum Percentage be registered in the Foreign Stock Record. Maximum Percentage refers to the maximum percentage of voting power of Voting Stock which may be voted by, or at the direction of,
aliens without violating applicable statutory, regulatory or interpretative restrictions or adversely affecting our, Atlass or Polars operating certificates or authorities. If we find that the combined voting power of Voting Stock then
registered in the Foreign Stock Record exceeds the Maximum Percentage, the registration of such shares will be removed from the Foreign Stock Record sufficient to reduce the combined voting power of the shares so registered to an amount not in
excess of the Maximum Percentage.
The enclosed proxy card contains a certification that by signing the proxy card the shareholder certifies that
such shareholder is a Citizen of the United States as defined by 49 U.S.C. §40102(a)(15) or that the shares represented by the proxy card have been registered on our Foreign Stock Record.
We will promptly deliver a copy of our
By-laws
to any shareholder who writes or calls us at the following address or phone
number: Office of the Secretary, Atlas Air Worldwide Holdings, Inc., 2000 Westchester Avenue, Purchase, NY 10577, (914)
701-8000.
76
|
Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
Extent of Incorporation by Reference of
Certain Materials
The Audit Committee Report
and the Compensation Committee Report on Executive Compensation included in this Proxy Statement do not constitute soliciting materials and should not be deemed filed or incorporated by reference into any other filing made by us under or subject to
Regulation 14A or 14C (other than Item 7 to Regulation 14A), or to the liabilities of Section 18 of the Exchange Act, except to the extent we specifically incorporate such reports by reference therein.
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
77
OTHER
MATTERS
As of the date of this Proxy Statement, we know of no business that will be presented for consideration at the Annual Meeting other than
the election of Directors, the ratification of the selection of our independent registered public accounting firm, the approval of an amendment to our 2016 Incentive Plan and the advisory votes on
Say-on-Pay
and
Say-on-Frequency,
all as described above. If any other matter is properly brought before the Annual Meeting for
action by the shareholders, all proxies (in the enclosed form) returned to us will be voted in accordance with the recommendation of the Board of Directors or, in the absence of such a recommendation, in accordance with the judgment of the proxy
holder.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY AND THAT YOUR SHARES BE REPRESENTED. SHAREHOLDERS ARE URGED TO FILL IN, SIGN AND PROMPTLY
RETURN THE ACCOMPANYING FORM OF PROXY IN THE ENCLOSED ENVELOPE.
|
By Order of the Board of Directors,
|
|
WILLIAM J. FLYNN
|
President and Chief Executive Officer
|
78
|
Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
Atlas Air Worldwide Holdings, Inc.
Reconciliation of GAAP to
Non-GAAP
Measures
(in
thousands)
(Unaudited)
The Compensation
Discussion and Analysis contains certain
non-GAAP
financial measures to assist in the evaluation of our business performance. These
non-GAAP
measures include Adjusted
Diluted EPS from continuing operations, net of taxes, Adjusted income from continuing operations, net of taxes, Adjusted EBITDA, ROIC and Free Cash Flow, which exclude certain items. These
non-GAAP
measures
may not be comparable to similarly titled measures used by other companies and should not be considered in isolation or as a substitute for Income from continuing operations, net of taxes, Diluted EPS from continuing operations, net of taxes, and
net cash provided by operating activities, which are the most directly comparable measures of performance prepared in accordance with GAAP.
Our
management uses these
non-GAAP
financial measures in assessing the performance of the Companys ongoing operations. We believe that these adjusted measures provide meaningful information to assist
investors and analysts in understanding our financial results and assessing our prospects for future performance.
We calculate ROIC as cumulative
operating income after cash taxes paid (NOPAT) divided by average capital over the years presented (Average Capital).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
|
|
NOPAT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
$
|
168,311
|
|
|
$
|
123,505
|
|
|
$
|
175,972
|
|
|
$
|
186,790
|
|
|
$
|
226,491
|
|
|
|
|
|
Income tax benefit (expense)
|
|
|
(46,791
|
)
|
|
|
24,506
|
|
|
|
12,678
|
|
|
|
(23,833
|
)
|
|
|
(75,561
|
)
|
|
|
|
|
Deferred taxes
|
|
|
47,381
|
|
|
|
(25,898
|
)
|
|
|
(12,714
|
)
|
|
|
22,856
|
|
|
|
75,365
|
|
|
|
|
|
NOPAT
|
|
$
|
168,901
|
|
|
$
|
122,113
|
|
|
$
|
175,936
|
|
|
$
|
185,813
|
|
|
$
|
226,295
|
|
|
|
|
|
Four-Year Cumulative NOPAT
|
|
$
|
879,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Average Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
$
|
1,517,338
|
|
|
$
|
1,454,183
|
|
|
$
|
1,417,795
|
|
|
$
|
1,322,125
|
|
|
$
|
1,288,104
|
|
|
$
|
1,141,375
|
|
Short-term and Long-term Debt
|
|
|
1,851,411
|
|
|
|
1,901,307
|
|
|
|
1,917,940
|
|
|
|
1,649,738
|
|
|
|
1,264,220
|
|
|
|
741,734
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, and Restricted cash
|
|
|
(138,250
|
)
|
|
|
(438,931
|
)
|
|
|
(312,882
|
)
|
|
|
(328,307
|
)
|
|
|
(409,763
|
)
|
|
|
(187,111
|
)
|
Purchase deposits for flight equipment
|
|
|
(154,226
|
)
|
|
|
(39,678
|
)
|
|
|
(20,054
|
)
|
|
|
(69,320
|
)
|
|
|
(147,946
|
)
|
|
|
(407,184
|
)
|
Short-term and Long-term investments and accrued interest
|
|
|
(32,264
|
)
|
|
|
(42,702
|
)
|
|
|
(138,280
|
)
|
|
|
(141,171
|
)
|
|
|
(150,617
|
)
|
|
|
(143,832
|
)
|
Total Capital
|
|
$
|
3,044,009
|
|
|
$
|
2,834,179
|
|
|
$
|
2,864,519
|
|
|
$
|
2,433,065
|
|
|
$
|
1,843,998
|
|
|
$
|
1,144,982
|
|
Average Capital
|
|
$
|
2,832,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Five-Year ROIC
|
|
|
31.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
A-1
We calculate Free Cash Flow as Net Cash Provided by
Operating Activities minus Capital expenditures, excluding the purchase of flight equipment, and Capitalized interest.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2011
|
|
|
Compound
Annual
Growth
Rate
|
|
Net Cash Provided by Operating Activities
|
|
$
|
232,182
|
|
|
$
|
142,958
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures, excluding payments for flight equipment and modifications
|
|
|
(46,717
|
)
|
|
|
(37,374
|
)
|
|
|
|
|
Capitalized interest
|
|
|
(3,313
|
)
|
|
|
(27,636
|
)
|
|
|
|
|
Free Cash Flow
|
|
$
|
182,152
|
|
|
$
|
77,948
|
|
|
|
18.5
|
%
|
Adjusted earnings before interest, taxes, depreciation and amortization is calculated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2011
|
|
|
Compound
Annual
Growth
Rate
|
|
Income (loss) from continuing operations before income taxes
|
|
$
|
89,416
|
|
|
$
|
156,989
|
|
|
|
|
|
Charges associated with benefit plan change in control
|
|
|
23,527
|
|
|
|
|
|
|
|
|
|
Gain on disposal of aircraft
|
|
|
(11
|
)
|
|
|
(364
|
)
|
|
|
|
|
Special charge
|
|
|
10,140
|
|
|
|
5,441
|
|
|
|
|
|
Pre-operating expenses
|
|
|
|
|
|
|
17,130
|
|
|
|
|
|
Transaction-related expenses
|
|
|
22,071
|
|
|
|
|
|
|
|
|
|
Accrual for legal matters and U.S. class action professional fees
|
|
|
6,465
|
|
|
|
|
|
|
|
|
|
Gain on investments
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncash expenses and income, net
|
|
|
8,111
|
|
|
|
(852
|
)
|
|
|
|
|
Charges associated with refinancing debt
|
|
|
132
|
|
|
|
|
|
|
|
|
|
Unrealized loss on investments
|
|
|
2,888
|
|
|
|
|
|
|
|
|
|
Adjusted pretax income
|
|
|
162,739
|
|
|
|
178,344
|
|
|
|
|
|
Interest expense (income), net
|
|
|
70,616
|
|
|
|
(5,709
|
)
|
|
|
|
|
Other
non-operating
expenses (income)
|
|
|
70
|
|
|
|
(180
|
)
|
|
|
|
|
Adjusted operating income
|
|
|
233,425
|
|
|
|
172,455
|
|
|
|
|
|
Depreciation and amortization
|
|
|
148,876
|
|
|
|
39,345
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
382,301
|
|
|
$
|
211,800
|
|
|
|
12.5
|
%
|
A-2
|
Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
Adjusted income from continuing operations, net of taxes and Adjusted Diluted EPS from continuing operations, net of taxes are calculated as follows:
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
Income from continuing operations, net of taxes
|
|
$
|
42,625
|
|
|
$
|
7,286
|
|
Impact from:
|
|
|
|
|
|
|
|
|
Charges associated with benefit plan change in control
|
|
|
23,527
|
|
|
|
|
|
Loss on disposal aircraft
|
|
|
(11
|
)
|
|
|
1,538
|
|
Special charge
|
|
|
10,140
|
|
|
|
17,958
|
|
Transaction-related expenses
|
|
|
22,071
|
|
|
|
|
|
Accrual for legal matters and professional fees
|
|
|
6,465
|
|
|
|
104,380
|
|
Noncash expenses and income, net
|
|
|
8,111
|
|
|
|
4,480
|
|
Charges associated with refinancing debt
|
|
|
132
|
|
|
|
73,411
|
|
Gain on investments
|
|
|
|
|
|
|
(13,439
|
)
|
Unrealized loss on financial instruments
|
|
|
2,888
|
|
|
|
|
|
Income tax effect of reconciling items
|
|
|
(1,651
|
)
|
|
|
(66,300
|
)
|
ETI tax benefit
|
|
|
|
|
|
|
(4,008
|
)
|
Adjusted income from continuing operations, net of taxes
|
|
|
114,297
|
|
|
|
125,306
|
|
Weighted average diluted shares outstanding
|
|
|
25,120
|
|
|
|
25,018
|
|
Add: dilutive warrants
|
|
|
299
|
|
|
|
|
|
Adjusted weighted average diluted shares outstanding
|
|
|
25,419
|
|
|
|
25,018
|
|
Adjusted Diluted EPS from continuing operations, net of taxes
|
|
$
|
4.50
|
|
|
$
|
5.01
|
|
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
A-3
Atlas Air Worldwide Holdings, Inc.
AMENDED AND RESTATED 2016 INCENTIVE PLAN
1. DEFINED TERMS
Exhibit
A
, which is
incorporated by reference, defines the terms used in the Plan and sets forth certain operational rules related to those terms.
2. PURPOSE
The Plan has been established to advance the interests of the Company by providing for the grant to Participants of Stock-based and other incentive Awards.
3. ADMINISTRATION
The Administrator has discretionary authority, subject only
to the express provisions of the Plan, to interpret the Plan; determine eligibility for and grant Awards; determine, modify or waive the terms and conditions of any Award; prescribe forms, rules and procedures; and otherwise do all things necessary
or desirable to carry out the purposes of the Plan. In the case of any Award intended to be eligible for the performance-based compensation exception under Section 162(m), the Administrator will exercise its discretion consistent with
qualifying the Award for that exception. Determinations of the Administrator made under the Plan will be conclusive and will bind all parties.
4. LIMITS ON AWARDS UNDER THE PLAN
(a)
Number of Shares
.
Subject to adjustment as provided in Section 7(b), the maximum number of
shares of Stock that may be delivered in satisfaction of Awards under the Plan is 750,000 shares of Stock plus unused Prior Plan shares of Stock. For purposes of the preceding sentence, shares of Stock shall be treated as unused Prior Plan shares of
Stock (i) if they were subject to awards under the Prior Plan, other than restricted stock awards, that were outstanding on the day preceding the Effective Date, to the extent such Prior Plan awards are exercised or are satisfied, or terminate
or expire, on or after the Effective Date without the delivery of such underlying shares, or (ii) if they were outstanding on the day preceding the Effective Date as restricted stock awards under the Prior Plan and are thereafter forfeited. For
purposes of this Section 4(a), the number of shares of Stock delivered in satisfaction of Awards under the Plan will be determined (i) without regard to shares of Stock underlying the portion of any Award that is settled in cash or the portion
of any Award that expires, terminates, or is forfeited, in each case, without the issuance of Stock, (ii) by treating as having been delivered the full number of shares covered by any portion of a SAR that is settled in Stock (and not only the
number of shares of Stock delivered in settlement) and (iii) by treating as having been delivered any shares of Stock withheld from a Stock Option or other Award to satisfy the tax withholding obligations with respect to such Stock Option or
other Award or in payment of the exercise price of such Stock Option. For the avoidance of doubt, the number of shares of Stock available for delivery under the Plan shall not be increased by any shares of Stock that are repurchased on the open
market by the Company using proceeds directly attributable to Stock Option exercises. The limits set forth in this Section 4(a) shall be construed to comply with Section 422. To the extent consistent with the requirements of Section 422
and with other applicable legal requirements (including applicable stock exchange requirements), Stock issued under awards of an acquired company that are converted, replaced, or adjusted in connection with the acquisition shall not reduce the
number of shares available for Awards under the Plan.
(b)
Type of Shares
.
Stock
delivered by the Company under the Plan may be authorized but unissued Stock or previously issued Stock acquired by the Company. No fractional shares of Stock will be delivered under the Plan.
(c)
Section 162(m) Limits
.
The maximum number of shares of Stock for which Stock Options may be granted to any person
(other than a
non-employee
member of the Board, whose Awards shall be subject to the limits set forth
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
B-1
in subsection (d) below) in any calendar year and the maximum number of shares of Stock subject to SARs granted to any person in any calendar year will each be 200,000. The maximum number of
shares subject to other Awards granted to any such person in any calendar year will be 500,000 shares. The maximum amount payable to any such person in any calendar year under Cash Awards will be $7,000,000. The foregoing provisions will be
construed in a manner consistent with Section 162(m).
(d)
Limitations on Awards to
Non-Employee
Directors
.
Notwithstanding any other provision of the Plan to the contrary, including subsection (c) above, in the case of a
non-employee
director, additional limits shall apply such that the maximum grant-date fair value of Stock-based Awards granted in any calendar year during any part of which the director is then eligible under the
Plan shall be $400,000, except that such limit for a
non-employee
chairman of the Board or lead director shall be $500,000, in each case, computed in accordance with FASB ASC Topic 718 (or any successor
provision. The foregoing additional limits related to
non-employee
directors of the Company shall not apply to any Award or shares of Stock granted pursuant to a Directors election to receive an Award or
shares of Stock in lieu of cash retainers or other fees (to the extent such Award or shares of Stock have a fair value equal to the value of such cash retainers or other fees).
(e)
Additional Limitations
.
No more than five percent (5%) of the maximum number of shares of Stock authorized to be issued under the Plan may be issued as
Awards (other than Cash Awards) that specify a vesting date that is less than one year from the date of grant. Accelerated vesting on account of death, disability, or a Change in Control shall not be taken into account in applying the immediately
preceding sentence.
5. ELIGIBILITY AND PARTICIPATION
The Administrator will select Participants from among those
key Employees and directors of, and consultants and advisors to, the Company and its Affiliates who, in the opinion of the Administrator, are in a position to make a significant contribution to the success of the Company and its
Affiliates;
provided
that, subject to such express exceptions, if any, as the Administrator may establish, eligibility shall be further limited to those persons as to whom the use of a Form
S-8
registration statement is permissible; and
provided further
that
non-employee
directors shall not be eligible for Cash Awards under the Plan. Eligibility for ISOs is limited to employees of the Company
or of a parent corporation or subsidiary corporation of the Company as those terms are defined in Section 424 of the Code.
6. RULES APPLICABLE TO AWARDS
(a)
All Awards
(1)
Award
Provisions
.
The Administrator will determine the terms of all Awards, subject to the limitations provided herein. By accepting (or, under such rules as the Administrator may prescribe, being deemed to
have accepted) an Award, the Participant will be deemed to have agreed to the terms of the Award and the Plan. Notwithstanding any provision of this Plan to the contrary, awards of an acquired company that are converted, replaced or adjusted in
connection with the acquisition may contain terms and conditions that are inconsistent with the terms and conditions specified herein, as determined by the Administrator.
(2)
Term of Plan
.
No Awards may be made after April 12, 2026, but previously granted Awards may continue beyond that date in accordance with
their terms.
(3)
Transferability
.
Neither ISOs nor, except as the Administrator
otherwise expressly provides in accordance with the second sentence of this Section 6(a)(3), other Awards may be transferred other than by will or by the laws of descent and distribution, and during a Participants lifetime ISOs (and,
except as the Administrator otherwise expressly provides in accordance with the second sentence of this Section 6(a)(3), other Awards requiring exercise) may be exercised only by the Participant. The Administrator may permit Awards other than
ISOs to be transferred by gift, subject to such limitations as the Administrator may impose.
B-2
|
Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
(4)
Vesting,
Etc
.
The Administrator may determine the time or times at which an Award will
vest or become exercisable and the terms on which an Award requiring exercise will remain exercisable. Without limiting the foregoing, the Administrator may at any time accelerate the vesting or exercisability of an Award, regardless of any adverse
or potentially adverse tax consequences resulting from such acceleration. Unless the Administrator expressly provides otherwise, however, the following rules will apply: immediately upon the cessation of the Participants Employment, each Award
requiring exercise that is then held by the Participant or by the Participants permitted transferees, if any, will cease to be exercisable and will terminate, and all other Awards that are then held by the Participant or by the
Participants permitted transferees, if any, to the extent not already vested will be forfeited, except that:
(A) subject to
(B) and (C) below, all Stock Options and SARs held by the Participant or the Participants permitted transferees, if any, immediately prior to the cessation of the Participants Employment, to the extent then exercisable, will
remain exercisable for the lesser of (i) a period of three months or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon
terminate;
(B) all Stock Options and SARs held by a Participant or the Participants permitted transferees, if any,
immediately prior to the Participants death or termination from Employment by reason of Disability, to the extent then exercisable, will remain exercisable for the lesser of (i) the one year period ending with the first anniversary of the
Participants death or termination of Employment by reason of Disability or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will
thereupon terminate; and
(C) all Stock Options and SARs (whether or not vested) held by a Participant or the Participants
permitted transferees, if any, immediately prior to the cessation of the Participants Employment will immediately terminate upon such cessation if the Administrator in its sole discretion determines that such cessation of Employment has
resulted for reasons which cast such discredit on the Participant as to justify immediate termination of the Award.
(5)
Taxes
.
The Administrator will make such provision for the withholding of taxes as it deems necessary. The Administrator may, but need not, hold back shares of Stock from an Award or permit a
Participant to tender previously owned shares of Stock in satisfaction of tax withholding requirements (but not in excess of the minimum withholding required by law).
(6)
Dividend Equivalents,
Etc
.
The Administrator may provide for the payment of amounts in lieu of cash dividends or
other cash distributions with respect to Stock subject to an Award. Any entitlement to dividend equivalents or similar entitlements shall be established and administered consistent either with exemption from, or compliance with the requirements of
Section 409A. Any such dividend equivalents or similar entitlements will be paid only to the extent that the underlying Award has vested.
(7)
Rights Limited
.
Nothing in the Plan will be construed as giving any person the right to be
granted an Award or to continued employment or service with the Company or its Affiliates, or any rights as a stockholder except as to shares of Stock actually issued under the Plan. The loss of existing or potential profit in Awards will not
constitute an element of damages in the event of termination of Employment for any reason, even if the termination is in violation of an obligation of the Company or any Affiliate to the Participant.
(8)
Section 162(m)
.
This Section 6(a)(8) applies to any Performance Award intended to qualify as exempt performance-based
compensation under Section 162(m) other than a Stock Option or SAR. In the case of any Performance Award to which this Section 6(a)(8) applies, the Plan and such Award will be construed to the maximum extent permitted by law in a manner
consistent with qualifying the Award for such exemption. With respect to such Performance Awards, the Administrator will preestablish, in writing, one or more specific Performance Criteria no later than 90 days after the commencement of the
period of service to which the performance relates (or at such earlier time as is required to qualify the Award as exempt performance-based compensation under Section 162(m)). Prior to grant, vesting or payment of the Performance Award, as the
case may be, the Administrator will certify whether the applicable Performance Criteria have been attained and such determination will be final and conclusive. No Performance Award to which this Section 6(a)(8) applies may be
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
B-3
granted after the first meeting of the stockholders of the Company held in 2021 until the listed performance measures set forth in the definition of Performance Criteria (as
originally approved or as subsequently amended) have been resubmitted to and reapproved by the stockholders of the Company in accordance with the requirements of Section 162(m) of the Code, unless such grant is made contingent upon such approval.
(9)
Coordination with Other Plans
.
Awards under the Plan may be granted in tandem
with, or in satisfaction of or substitution for, other Awards under the Plan or awards made under other compensatory plans or programs of the Company or its Affiliates. For example, but without limiting the generality of the foregoing, awards under
other compensatory plans or programs of the Company or its Affiliates may be settled in Stock (including, without limitation, Unrestricted Stock) under the Plan if the Administrator so determines, in which case the shares delivered shall be treated
as awarded under the Plan (and shall reduce the number of shares thereafter available under the Plan in accordance with the rules set forth in Section 4). In any case where an award is made under another plan or program of the Company or its
Affiliates and such award is intended to qualify as exempt performance-based compensation under Section 162(m), and such award is settled by the delivery of Stock or another Award under the Plan, the applicable Section 162(m) limitations under
both the other plan or program and under the Plan shall be applied to the Plan as necessary (as determined by the Administrator) to preserve the availability of such exemption.
(10)
Section 409A
.
Each Award shall contain such terms as the Administrator determines, and shall be construed and administered, such that the Award either (i) qualifies
for an exemption from the requirements of Section 409A, or (ii) satisfies such requirements. Notwithstanding anything to the contrary in the Plan or any Award, if at the time of the Participants termination of Employment, the
Participant is a specified employee, within the meaning of Treasury Regulation
1.409A-1(i),
as determined in the Administrators sole discretion, any and all amounts payable pursuant to any
Award that constitute a deferral of compensation subject to Section 409A and would (but for this provision) be payable within six (6) months following the date of termination of Employment, shall instead be paid on the next business day
following the expiration of such six (6) month period or, if earlier, upon the Participants death; except (A) to the extent of amounts that do not constitute a deferral of compensation within the meaning of Treasury Regulation
Section
1.409A-1(b),
as determined by the Administrator in its reasonable good faith discretion or (B) other amounts or benefits that are not subject to the requirements of Section 409A.
(11)
Certain Requirements of Corporate Law
.
Awards shall be granted and administered consistent
with the requirements of applicable Delaware law (or the corporate law of the state that the Company shall be then incorporated in) relating to the issuance of stock and the consideration to be received therefor, and with the applicable requirements
of the stock exchanges or other trading systems on which the Stock is listed or entered for trading, in each case as determined by the Administrator.
(b)
Awards Requiring Exercise
(1)
Time And Manner Of Exercise
.
Unless the Administrator expressly provides otherwise, an
Award requiring exercise by the holder will not be deemed to have been exercised until the Administrator receives a notice of exercise (in a form acceptable to the Administrator) signed by the appropriate person and accompanied by any payment
required under the Award. If the Award is exercised by any person other than the Participant, the Administrator may require satisfactory evidence that the person exercising the Award has the right to do so.
(2)
Exercise Price
.
The exercise price (or the base value from which appreciation is to be
measured) of each Award requiring exercise shall be no less than 100% (in the case of an ISO granted to a
ten-percent
shareholder within the meaning of subsection (b)(6) of Section 422, 110%) of the fair
market value of the Stock subject to the Award, determined as of the date of grant on the basis of the closing price of the Stock on such date, or such higher amount as the Administrator may determine in connection with the grant. Subject to
Section 7, no Stock Option or SAR, once granted, may be repriced nor may any payment or other consideration be made upon the termination, cancellation, voluntary surrender or exchange of any such Stock Option or SAR, in each case, without prior
stockholder approval in accordance with any applicable stock exchange listing standards. Fair market value shall be determined by the Administrator consistent with the applicable requirements of Section 422 and Section 409A.
B-4
|
Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
(3)
Payment Of Exercise Price
.
Where the exercise of an Award is to be accompanied by payment,
payment of the exercise price shall be by cash or check acceptable to the Administrator, or, if so permitted by the Administrator and if legally permissible, (i) through the delivery of shares of Stock that have been outstanding for at least
six months (unless the Administrator approves a shorter period) and that have a fair market value equal to the exercise price, (ii) through a broker-assisted exercise program acceptable to the Administrator, (iii) by other means acceptable
to the Administrator, or (iv) by any combination of the foregoing permissible forms of payment. The delivery of shares in payment of the exercise price under clause (i) above may be accomplished either by actual delivery or by constructive
delivery through attestation of ownership, subject to such rules as the Administrator may prescribe.
(4)
Maximum
Term
.
Awards requiring exercise will have a maximum term not to exceed ten (10) years from the date of grant.
7. EFFECT OF CERTAIN TRANSACTIONS
(a)
Mergers,
etc
.
Except as otherwise provided in an Award, the following provisions shall
apply in the event of a Covered Transaction:
(1)
Assumption or
Substitution
.
If the Covered Transaction is one in which there is an acquiring or surviving entity, the Administrator may provide for the assumption of some or all outstanding Awards or for the grant of
new awards in substitution therefor by the acquiror or survivor or an affiliate of the acquiror or survivor.
(2)
Cash-Out
of Awards
.
If the Covered Transaction is one in which holders of Stock will receive upon consummation a payment (whether cash,
non-cash
or a combination of the foregoing) and in which there is no assumption or substitution, the Administrator may provide for payment (a
cash-out),
with
respect to some or all Awards or any portion thereof, equal in the case of each affected Award or portion thereof to the excess, if any, of (A) the fair market value of one share of Stock (as determined by the Administrator in its reasonable
discretion) times the number of shares of Stock subject to the Award or such portion, over (B) the aggregate exercise or purchase price, if any, under the Award or such portion (in the case of a SAR, the aggregate base value above which
appreciation is measured), in each case on such payment terms (which need not be the same as the terms of payment to holders of Stock) and other terms, and subject to such conditions, as the Administrator determines;
provided
, that the
Administrator shall not exercise its discretion under this Section 7(a)(2) with respect to an Award or portion thereof providing for nonqualified deferred compensation subject to Section 409A in a manner that would constitute an
extension or acceleration of, or other change in, payment terms if such change would be inconsistent with the applicable requirements of Section 409A.
(3)
Acceleration of Certain Awards
.
If the Covered Transaction (whether or not there is an acquiring or surviving entity) is one in which there is no
assumption, substitution or
cash-out,
each Award requiring exercise will become fully exercisable, and the delivery of any shares of Stock remaining deliverable under each outstanding Award of Stock Units
(including Restricted Stock Units and Performance Awards to the extent consisting of Stock Units) will be accelerated and such shares will be delivered, prior to the Covered Transaction, in each case on a basis that gives the holder of the Award a
reasonable opportunity, as determined by the Administrator, following exercise of the Award or the delivery of the shares, as the case may be, to participate as a stockholder in the Covered Transaction;
provided
, that to the extent
acceleration pursuant to this Section 7(a)(3) of an Award subject to Section 409A would cause the Award to fail to satisfy the requirements of Section 409A, the Award shall not be accelerated and the Administrator in lieu thereof
shall take such steps as are necessary to ensure that payment of the Award is made in a medium other than Stock and on terms that as nearly as possible, but taking into account adjustments required or permitted by this Section 7, replicate the
prior terms of the Award.
(4)
Termination of Awards Upon Consummation of Covered
Transaction
.
Each Award will terminate upon consummation of the Covered Transaction, other than the following: (i) Awards assumed pursuant to Section 7(a)(1) above; (ii) Awards converted
pursuant to the proviso in Section 7(a)(3) above into an ongoing right to receive payment other than Stock; and (iii) outstanding shares of Restricted Stock (which shall be treated in the same manner as other shares of Stock, subject to
Section 7(a)(5) below).
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
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B-5
(5)
Additional Limitations
.
Any share of Stock and any cash or other property
delivered pursuant to Section 7(a)(2) or Section 7(a)(3) above with respect to an Award may, in the discretion of the Administrator, contain such restrictions, if any, as the Administrator deems appropriate to reflect any performance or
other vesting conditions to which the Award was subject and that did not lapse (and were not satisfied) in connection with the Covered Transaction. In the case of Restricted Stock that does not vest in connection with the Covered Transaction, the
Administrator may require that any amounts delivered, exchanged or otherwise paid in respect of such Stock in connection with the Covered Transaction be placed in escrow or otherwise made subject to such restrictions as the Administrator deems
appropriate to carry out the intent of the Plan.
(b) Changes in and Distributions With Respect to Stock
(1)
Basic Adjustment Provisions
.
In the event of a stock dividend, stock split
or combination of shares (including a reverse stock split), recapitalization or other change in the Companys capital structure that constitutes an equity restructuring within the meaning of FASB ASC Topic 718 (or any successor provision), the
Administrator shall make appropriate adjustments to the maximum number of shares specified in Section 4(a) that may be delivered under the Plan and to the maximum share limits described in Section 4(c), and shall also make appropriate
adjustments to the number and kind of shares of stock or securities subject to Awards then outstanding or subsequently granted, any exercise prices relating to Awards and any other provision of Awards affected by such change.
(2)
Certain Other Adjustments
.
The Administrator may also make adjustments of
the type described in Section 7(b)(1) above to take into account distributions to stockholders other than those provided for in Section 7(a) and 7(b)(1), or any other event, if the Administrator determines that adjustments are appropriate to
avoid distortion in the operation of the Plan and to preserve the value of Awards made hereunder, having due regard for the qualification of ISOs under Section 422, the requirements of Section 409A, and for the performance-based
compensation rules of Section 162(m), where applicable.
(3)
Continuing Application of Plan
Terms
.
References in the Plan to shares of Stock will be construed to include any stock or securities resulting from an adjustment pursuant to this Section 7.
8. LEGAL CONDITIONS ON DELIVERY OF STOCK
The Company will not be obligated to deliver any shares of
Stock pursuant to the Plan or to remove any restriction from shares of Stock previously delivered under the Plan until: (i) the Company is satisfied that all legal matters in connection with the issuance and delivery of such shares have been
addressed and resolved; (ii) if the outstanding Stock is at the time of delivery listed on any stock exchange or national market system, the shares to be delivered have been listed or authorized to be listed on such exchange or system upon
official notice of issuance; and (iii) all conditions of the Award have been satisfied or waived. If the sale of Stock has not been registered under the Securities Act of 1933, as amended, the Company may require, as a condition to exercise of
the Award, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of such Act. The Company may require that certificates evidencing Stock issued under the Plan bear an appropriate legend reflecting
any restriction on transfer applicable to such Stock, and the Company may hold the certificates pending lapse of the applicable restrictions.
9. AMENDMENT AND TERMINATION
The Administrator may at any time or times amend the Plan or any outstanding Award for any purpose which may at the time be permitted by law, and may at any time
terminate the Plan as to any future grants of Awards;
provided
, that except as otherwise expressly provided in the Plan the Administrator may not, without the Participants consent, alter the terms of an Award so as to affect
materially and adversely the Participants rights under the Award, unless the Administrator expressly reserved the right to do so at the time of the Award. Any amendments to the Plan shall be conditioned upon stockholder approval only to the
extent, if any, such approval is required by law (including the Code and applicable stock exchange requirements), as determined by the Administrator.
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Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
10. OTHER COMPENSATION ARRANGEMENTS
The existence of the Plan or the grant of any Award will not
in any way affect the Companys right to award a person bonuses or other compensation in addition to Awards under the Plan.
11. MISCELLANEOUS
(a)
Waiver of Jury Trial
.
By accepting an Award under the Plan, each Participant waives any
right to a trial by jury in any action, proceeding or counterclaim concerning any rights under the Plan and any Award, or under any amendment, waiver, consent, instrument, document or other agreement delivered or which in the future may be delivered
in connection therewith, and agrees that any such action, proceedings or counterclaim shall be tried before a court and not before a jury. By accepting an Award under the Plan, each Participant certifies that no officer, representative, or attorney
of the Company has represented, expressly or otherwise, that the Company would not, in the event of any action, proceeding or counterclaim, seek to enforce the foregoing waivers.
(b)
Limitation of Liability
.
Notwithstanding anything to the contrary in the Plan, neither the Company, nor any Affiliate, nor the
Administrator, nor any person acting on behalf of the Company, any Affiliate, or the Administrator, shall be liable to any Participant or to the estate or beneficiary of any Participant or to any other holder of an Award by reason of any
acceleration of income, or any additional tax, asserted by reason of the failure of an Award to satisfy the requirements of Section 422 or Section 409A or by reason of Section 4999 of the Code; provided, that nothing in this Section
11(b) shall limit the ability of the Administrator or the Company to provide by separate express written agreement with a Participant for a
gross-up
payment or other payment in connection with any such tax or
additional tax.
(c)
Forfeiture
.
Awards held by a Participant are subject to
forfeiture, termination and rescission, and a Participant will be obligated to return to the Company payments received with respect to Awards, in each case (a) to the extent provided in a Participants Award, (b) in accordance with
any applicable Company clawback or recoupment policy, as such policy may be amended and in effect from time to time, or (c) as otherwise required by law or applicable stock exchange listing standards, including, without limitation, Section 10D
of the Securities Exchange Act of 1934, as amended. Each Participant, by accepting an Award pursuant to the Plan, agrees to return the full amount required under this Section 11(c) at such time and in such manner as the Administrator shall determine
in its sole discretion and consistent with applicable law. The Company will not be responsible for any adverse tax or other consequences to a Participant that may arise in connection with this Section 11(c).
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
B-7
EXHIBIT A
Definition of Terms
The following terms, when used in the Plan, will have the meanings and be subject to the provisions set forth below:
Administrator:
The Compensation Committee, except that the Compensation Committee may delegate (i) to one or more of its members
such of its duties, powers and responsibilities as it may determine; (ii) to one or more officers of the Company the power to grant rights or options to the extent permitted by Section 157(c) of the Delaware General Corporation Law; and
(iii) to such Employees or other persons as it determines such ministerial tasks as it deems appropriate. In the event of any delegation described in the preceding sentence, the term Administrator shall include the person or persons
so delegated to the extent of such delegation.
Affiliate:
Any corporation or other entity that stands in a relationship to the
Company that would result in the Company and such corporation or other entity being treated as one employer under Section 414(b) and Section 414(c) of the Code.
Award:
Any or a combination of the following:
(i) Stock Options.
(ii) SARs.
(iii) Restricted Stock.
(iv) Unrestricted Stock.
(v) Stock Units, including Restricted Stock Units.
(vi) Performance Awards.
(vii) Cash Awards, including Cash Awards that are Performance
Awards.
(viii) Awards (other than Awards described in (i) through (vii) above) that are convertible into or otherwise
based on Stock.
Board:
The board of directors of the Company.
Cause:
In the case of any Participant who is party to an employment, severance-benefit, change in control or similar agreement with the Company or any of its Affiliates that contains a definition
of Cause, the definition set forth in such agreement shall apply with respect to such Participant under the Plan during the term of such agreement. In the case of any other Participant, except as expressly provided otherwise in an Award
agreement, Cause shall mean: (i) the Participants refusal or failure (other than during periods of illness or Disability) to perform the Participants material duties and responsibilities to the Company or its
subsidiaries, (ii) the conviction or plea of guilty or
nolo contendere
of the Participant in respect of any felony, other than a motor vehicle offense, (iii) the commission of any act which causes material injury to the reputation,
business or business relationships of the Company or any of its subsidiaries including, without limitation, any breach of written policies of the Company with respect to trading in securities, (iv) any other act of fraud, including, without
limitation, misappropriation, theft or embezzlement, or (v) a violation of any applicable material policy of the Company or any of its subsidiaries, including, without limitation, a violation of the laws against workplace discrimination.
Cash Award:
An Award denominated in cash.
B-8
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Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
Change in Control:
A change in control event (as that term is defined in Section
1.409A-3(i)(5)
of the Treasury Regulations) with respect to the Company, which generally will include the consummation of following events, subject to such additional rules and requirements as may be set forth
in the Treasury Regulations and related guidance:
(i) a transfer or issuance of stock of the Company, where stock in the Company remains
outstanding after the transaction, and one person, or more than one person acting as a group (as determined under the Treasury Regulations), acquires ownership of stock in the Company that, together with stock held by such person or group,
constitutes more than 50% of the total fair market value or total voting power of the stock of the Company (however, if a person or group is considered to own more than 50% of the total fair market value or 30% of the total voting power of the stock
of the Company, the acquisition of additional stock by the same person or group will not be considered a change in control for purposes of the Plan;
(ii) the acquisition by a person or group, during the
12-month
period ending on the date of the most recent acquisition by such person or group, of ownership of stock
possessing 30% or more of the total voting power of the Company (however, if a person or group is considered to control the Company within the meaning of this sentence (i.e., owns stock of the Company possessing 30% of the total voting power of the
Company), then the acquisition of additional control will not be considered a change in control for purposes of the Plan;
(iii) the
replacement of a majority of members of the Companys Board of Directors during any
12-month
period by directors whose appointment or election is not endorsed by a majority of the members of the
Companys Board of Directors before the appointment or election; or
(iv) the acquisition by a person or group, during the
12-month
period ending on the date of the most recent acquisition by such person or group, of assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair
market value of all the assets of the Company, as determined under the Treasury Regulations (however, a transfer of assets to certain related persons, as provided under the Treasury Regulations, or to an entity that is controlled by the shareholders
of the Company immediately after the transfer, will not be considered a change in control for purposes of the Plan).
Change in Control
Termination:
Unless expressly provided otherwise in an Award agreement, the termination of a Participants Employment following a Change in Control (i) by the Company and its subsidiaries not for Cause, (ii) by the
Participant for Good Reason, or (iii) by reason of the Participants death or Disability.
Code:
The U.S.
Internal Revenue Code of 1986 as from time to time amended and in effect, or any successor statute as from time to time in effect.
Compensation Committee:
The Compensation Committee of the Board.
Company:
Atlas Air Worldwide Holdings, Inc.
Covered
Transaction:
Any consummation of (i) a consolidation, merger, or similar transaction or series of related transactions, including a sale or other disposition of stock, in which the Company is not the surviving corporation
or which results in the acquisition of all or substantially all of the Companys then outstanding common stock by a single person or entity or by a group of persons and/or entities acting in concert, (ii) a sale or transfer of all or
substantially all the Companys assets, or (iii) a dissolution or liquidation of the Company. Where a Covered Transaction involves a tender offer that is reasonably expected to be followed by a merger described in clause (i) (as determined
by the Administrator), the Covered Transaction shall be deemed to have occurred upon consummation of the tender offer.
Disability:
In the case of any Participant who is party to an employment, severance-benefit, change in control or similar agreement with the Company or any of its Affiliates that contains a definition of Disability, the definition set forth in such
agreement shall apply with respect to such Participant under the Plan during the term of such agreement. In the case of any other Participant, except as expressly provided otherwise in an Award agreement, Disability shall mean such
Participants having been continuously disabled from performing duties assigned to the Participant for a period of not less than six consecutive calendar months, in which case such Disability shall be deemed to have commenced on the date
following the end of such six consecutive calendar months.
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
|
B-9
Effective Date:
The date on
which the stockholders of the Company approve the Plan.
Employee:
Any person who is employed by the Company or an
Affiliate.
Employment:
A Participants employment or other service relationship with the Company and its
Affiliates. Employment will be deemed to continue, unless the Administrator expressly provides otherwise, so long as the Participant is employed by, or otherwise is providing services in a capacity described in Section 5 to the Company or its
Affiliates. If a Participants employment or other service relationship is with an Affiliate and that entity ceases to be an Affiliate, the Participants Employment will be deemed to have terminated when the entity ceases to be an
Affiliate unless the Participant transfers Employment to the Company or its remaining Affiliates. In construing the Plan or any Award relating to the payment of nonqualified deferred compensation (subject to 409A) upon a termination or
cessation of Employment, references to termination or cessation of employment, separation from service, retirement or similar or correlative terms shall be construed to require a separation from service (as defined in Section
1.409A-1(h)
of the Treasury Regulations after giving effect to the presumptions contained therein).
Good
Reason:
In the case of any Participant who is party to an employment, severance-benefit, change in control or similar agreement with the Company or any of its Affiliates that contains a definition of Good Reason, the definition
set forth in such agreement shall apply with respect to such Participant under the Plan during the term of such agreement. In the case of any other Participant, except as expressly provided otherwise in an Award agreement, Good Reason
shall mean: (i) a material reduction in the Participants duties and responsibilities from those of the Participants most recent position with the Company, (ii) a reduction of the Participants aggregate salary, benefits
and other compensation (including any incentive opportunity) from that which the Participant was most recently entitled during Employment other than in connection with a reduction as part of a general reduction applicable to all similarly-situated
employees of the Company, or (iii) a relocation of the Participant to a position that is located greater than 40 miles from the location of such Participants most recent principal location of employment with the Company; provided,
however, that the Participant will be treated as having resigned for Good Reason only if he or she provides the Company with a notice of termination within 90 days of the initial existence of one of the conditions described above, following which
the Company shall have 30 days from the receipt of the notice of termination to cure the event specified in the notice of termination and, if the Company fails to so cure the event, the Participant must terminate his or her Employment not later than
30 days following the end of such cure period.
ISO:
A Stock Option intended to be an incentive stock option
within the meaning of Section 422. Each option granted pursuant to the Plan will be treated as providing by its terms that it is to be a
non-incentive
stock option unless, as of the date of grant, it is
expressly designated as an ISO.
Participant:
A person who is granted an Award under the Plan.
Performance Award:
An Award subject to Performance Criteria. The Committee in its discretion may grant Performance Awards that are intended to
qualify for the performance-based compensation exception under Section 162(m) and Performance Awards that are not intended so to qualify. Such Award may be granted at a target level, subject to a future payout of a multiple of target, subject to
specified Performance Criteria.
Performance Criteria:
Specified criteria, other than the mere continuation of Employment or the mere
passage of time, the satisfaction of which is a condition for the grant, exercisability, vesting or full enjoyment of an Award. For purposes of Awards that are intended to qualify for the performance-based compensation exception under
Section 162(m), a Performance Criterion will mean an objectively determinable measure of performance relating to any or any combination of the following (measured either absolutely or by reference to an index or indices and determined either on
a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combinations thereof): sales; revenues; assets; expenses; earnings before or after deduction for all or any portion
of interest, taxes, depreciation, or amortization, whether or not on a continuing operations or an aggregate or per share basis (basic or fully diluted); return on equity, investment, capital or assets; one or more operating ratios such as earnings
before interest, taxes, and/or depreciation and amortization;
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Atlas Air Worldwide Holdings,
Inc.
2017 Notice & Proxy Statement
borrowing levels, leverage ratios or credit rating; market share; capital expenditures; cash flow; free cash flow, cash flow, return on investment (discounted or otherwise), net cash provided by
operations, or cash flow in excess of cost of capital; stock price; stockholder return; sales of particular products or services; customer acquisition or retention; acquisitions and divestitures (in whole or in part); economic value added; strategic
business criteria, consisting of one or more objectives based on meeting specific market penetration, geographic business expansion goals, facility construction or completion goals, geographic facility relocation or completion goals, cost targets,
customer satisfaction, supervision of litigation or information technology; joint ventures and strategic alliances; spin-offs,
split-ups
and the like; reorganizations; or recapitalizations, restructurings,
financings (issuance of debt or equity) or refinancings. A Performance Criterion and any targets with respect thereto determined by the Administrator need not be based upon an increase, a positive or improved result or avoidance of loss. To the
extent consistent with the requirements for satisfying the performance-based compensation exception under Section 162(m), the Administrator may provide in the case of any Award intended to qualify for such exception that one or more of the
Performance Criteria applicable to such Award will be adjusted in an objectively determinable manner to reflect events (for example, but without limitation, acquisitions or dispositions) occurring during the performance period that affect the
applicable Performance Criterion or Criteria.
Plan:
The Atlas Air Worldwide Holdings, Inc. Amended and Restated 2016
Incentive Plan as from time to time amended and in effect.
Prior Plan:
The Atlas Air Worldwide Holdings, Inc. 2007
Incentive Plan, as amended.
Restricted Stock:
Stock subject to restrictions requiring that it be redelivered or offered
for sale to the Company if specified conditions are not satisfied.
Restricted Stock Unit:
A Stock Unit that is, or as to
which the delivery of Stock or cash in lieu of Stock is, subject to the satisfaction of specified performance or other vesting conditions.
SAR:
A right entitling the holder upon exercise to receive an amount (payable in cash or in shares of Stock of equivalent value)
equal to the excess of the fair market value of the shares of Stock subject to the right over the base value from which appreciation under the SAR is to be measured.
Section
409A:
Section 409A of the Code.
Section
422:
Section 422 of the Code.
Section
162(m):
Section 162(m) of the Code.
Stock:
Common Stock of the Company, par value $0.01 per share.
Stock Option:
An option entitling the holder to acquire shares of Stock upon payment or satisfaction of the exercise price.
Stock Unit:
An unfunded and unsecured promise, denominated in shares of Stock, to deliver Stock or cash measured by the value of Stock in the future.
Unrestricted Stock:
Stock not subject to any restrictions under the terms of the Award.
Atlas Air Worldwide Holdings, Inc.
2017 Notice &
Proxy Statement
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Using a
black ink
pen, mark your votes with an
X
as shown in this example. Please do not write outside the designated areas.
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PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
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Proposals The Board of Directors recommends a vote
FOR
all the nominees listed,
FOR
Proposal Nos. 2, 3 and 5 and
FOR
every one
(1) year with respect to Proposal No. 4.
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01 - Robert F. Agnew
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02 - Timothy J. Bernlohr
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2. Ratification of the selection of PricewaterhouseCoopers LLP as the Companys registered public accounting
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3. Advisory vote to approve Named Executive Officer compensation.
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5. Approval of an amendment to our 2016 Incentive Plan to increase the number of shares that are available for
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Change of Address
Please print your new address below.
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Comments
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Meeting Attendance
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Mark the box to the right if you plan to attend the Annual Meeting.
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Authorized Signatures This section must be completed for your vote to be counted.
Date and Sign Below
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Please sign exactly as name appears on this Proxy. Joint owners each should sign. When signing as attorney, executor, administrator, trustee or guardian, please give the full title. If
signing in the name of a Corporation or partnership, please sign full corporate or partnership name and indicate title of authorized signatory.
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Date (mm/dd/yyyy) Please print date below.
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Signature 1 Please keep signature within the box.
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Signature 2 Please keep signature within the box.
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Proxy Atlas Air Worldwide Holdings, Inc.
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2000 Westchester Avenue, Purchase, New York 10577
Proxy for the Annual Meeting of Shareholders May 24, 2017
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Adam R. Kokas, Spencer Schwartz, and Michael W. Borkowski, and each of them, with full power of
substitution in each, as proxies and authorizes them to vote all shares of common stock that the undersigned is entitled to vote at the Annual Meeting of Shareholders of Atlas Air Worldwide Holdings, Inc., to be held at our principal executive
offices located at 2000 Westchester Avenue, Purchase, New York 10577 on Wednesday, May 24, 2017 at 10:00 a.m., local time, and at any adjournment or postponement of the meeting, as indicated below.
Please date, sign and return this proxy promptly. This Proxy, when properly executed and returned, will be voted in the
manner directed herein by the undersigned shareholder. If no direction is given, this Proxy will be voted
FOR
the election as directors of all of the nominees listed on the reverse side,
FOR
the ratification of the selection of
PricewaterhouseCoopers LLP as the Companys independent registered public accounting firm,
FOR
the advisory vote to approve Named Executive Officer compensation,
FOR
every one (1) year regarding the frequency of the advisory
shareholder vote to approve the compensation of the Companys Named Executive Officers and
FOR
the approval of an amendment to our 2016 Incentive Plan to increase the number of shares that are available for issuance of awards under such
plan, all as described in the Proxy Statement. The undersigned authorizes the Proxies to vote, in their discretion, upon any other matters as may properly come before the Annual Meeting.
The Board of Directors recommends a vote
FOR
the election as directors of the persons named in Proposal No. 1,
FOR
the ratification of the selection of PricewaterhouseCoopers LLP as the Companys independent registered public accounting firm as set forth in Proposal No. 2,
FOR
the advisory vote to approve Named Executive Officer
compensation as set forth in Proposal No. 3,
FOR
every one (1) year regarding the frequency of the advisory shareholder vote to approve the compensation of the Companys Named Executive Officers as set forth in Proposal
No. 4 and
FOR
the approval of an amendment to our 2016 Incentive Plan to increase the number of shares that are available for issuance of awards under such plan as set forth in Proposal No. 5.
IMPORTANT: TO BE SIGNED AND DATED ON THE REVERSE SIDE
Certification:
Pursuant to federal law and Atlas Air Worldwide Holdings, Inc.s certificate of incorporation and
by-laws,
voting stock is subject to certain foreign ownership
restrictions. By signing on the reverse side, you represent that (1) you are a United States citizen as that term is defined by federal aviation law, or (2) the shares of stock represented by this Proxy have been registered on the foreign
stock record of the Company, as provided in the
by-laws.
Atlas Air Worldwide (NASDAQ:AAWW)
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Atlas Air Worldwide (NASDAQ:AAWW)
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