UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No.
)
Filed by the Registrant
x
Filed by a Party other than the
Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2))
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x
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to Section 240.14a-12
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EXPRESSJET HOLDINGS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than
the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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April 2, 2010
To Our Stockholders:
On behalf of our Board of Directors, we are pleased to
invite you to attend the ExpressJet Holdings, Inc. 2010 Annual Meeting of Stockholders. As indicated in the attached notice, the meeting will be held at The Houston Marriott North at Greenspoint, 255 N Sam Houston Parkway East, Houston, Texas on
Thursday, May 13, 2010, at 10:00 a.m., local time. At the meeting, we will act on the matters described in the attached proxy statement, and there will be an opportunity to discuss other matters of interest to you as a stockholder.
Due to a regulatory change, shareholders that hold their shares in street name will no longer have their shares automatically
voted by their broker on the election of directors. This makes voting at this years annual meeting more important than ever. Please vote by internet or telephone as described in the attached proxy statement, even if you plan to attend the
meeting in person. Alternatively, you may date, sign and mail the enclosed proxy in the envelope provided. We look forward to seeing you in Houston.
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Sincerely,
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Pat Kelly
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Interim President and Chief Executive Officer
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EXPRESSJET HOLDINGS, INC.
700 North Sam Houston Parkway West
Suite 200
Houston, Texas 77067
NOTICE OF 2010 ANNUAL MEETING OF
STOCKHOLDERS
TO BE HELD MAY 13, 2010
The 2010 Annual Meeting of Stockholders of ExpressJet Holdings, Inc. will be held at The Houston Marriott North at Greenspoint, 255 N Sam Houston Parkway East, Houston, Texas on Thursday, May 13,
2010, at 10:00 a.m., local time, for the following purposes:
1. To elect three members of our Board of Directors,
to serve in Class III, with terms expiring at the 2013 annual stockholders meeting;
2. To consider and act upon a
proposal to ratify the appointment of KPMG LLP as independent auditors of the company and its subsidiaries for 2010; and
3. To consider and act upon any other matters that may properly come before the annual meeting or any adjournment or postponement thereof.
The holders of record of the companys common stock at the close of business on March 22, 2010 are entitled to notice of and to vote at the meeting.
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Sincerely,
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Suzanne Lehman Johnson
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Secretary
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Houston, Texas
April 2, 2010
Please
authorize your proxy and direct your vote even if you plan to attend the meeting in person. You may do so by internet or telephone as described in the attached proxy statement. Alternatively, you may date, sign and mail the enclosed proxy and return
it promptly by mail in the envelope provided. If you mail the proxy, no postage is required if mailed in the United States. If you do attend the meeting in person and want to withdraw your proxy, you may do so as described in the attached proxy
statement and vote in person on all matters properly brought before the meeting.
EXPRESSJET HOLDINGS, INC.
PROXY STATEMENT
2010 Annual Meeting of Stockholders
to be held May 13, 2010
TABLE OF CONTENTS
EXPRESSJET HOLDINGS, INC.
700 North Sam Houston Parkway West
Suite 200
Houston, Texas 77067
PROXY STATEMENT
2010 Annual Meeting of Stockholders
to be held May 13, 2010
THE MEETING
Purpose, Place, Date and
Time
We are providing this proxy statement to you in connection with the solicitation on behalf of our board of directors
of proxies to be voted at the companys 2010 annual stockholders meeting or any adjournment or postponement of that meeting (the Meeting). The Meeting will be held at The Houston Marriott North at Greenspoint, 255 N Sam Houston
Parkway East, Houston, Texas on Thursday, May 13, 2010, at 10:00 a.m., local time, for the purposes set forth in the accompanying Notice of 2010 Annual Meeting of Stockholders. This proxy statement, and the accompanying proxy and 2009
Annual Report, are being first mailed or otherwise delivered to stockholders on or about April 2, 2010.
Record Date, Stockholders Entitled to Vote, Quorum and Vote Required
Holders of
record of our common stock at the close of business on March 22, 2010, the record date for the Meeting, are entitled to notice of and to vote at the Meeting. At the close of business on the record date, ExpressJet had 16,966,157 shares of
common stock outstanding. Subject to certain limitations on voting by non-U.S. citizens (defined below), each share of our common stock is entitled to one vote per share on the matters proposed.
A quorum of stockholders is necessary for a valid meeting. A quorum is comprised of the holders of a majority of the shares entitled to vote
at the Meeting, attending personally or represented by proxy.
Abstentions will be included in determining the number of
shares present at the Meeting for the purpose of determining the presence of a quorum, but they will not be included in the number of votes cast on a matter. As a result, they will not be taken into account in determining the approval of any of the
proposals to be considered at the Meeting.
Broker non-votes will also be considered present for the purpose of determining
the presence of a quorum. Broker non-votes occur when brokers or other nominees who hold shares for another are not permitted under stock exchange rules to vote on a matter without instructions from beneficial owners of the shares and no
instructions are given. Brokers are permitted to vote on the ratification of auditors without instructions from beneficial owners, so we do not anticipate any broker non-votes with respect to Proposal 2. However, brokers are not permitted to vote on
the election of directors without instructions, so broker non-votes could occur with respect to Proposal 1.
Elections of
directors are determined by a plurality of the votes cast. Accordingly, directors who receive the highest number of votes cast will be elected. Broker non-votes are not treated as votes cast; consequently, they will not affect the election of the
companys directors under Proposal 1. Ratification of the appointment of independent auditors requires approval by a majority of the votes cast on Proposal 2.
Voting of Proxies
Although you may use the
enclosed postage-paid envelope to return the proxy or voting form that accompanies this proxy statement, we would prefer that you vote instead by internet or telephone, which saves the company money. Please note that the telephonic voting described
below is not available for shares held by non-U.S. citizens.
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Shares Held of Record.
Stockholders with shares registered in their names at Mellon
Investor Services LLC, our transfer agent and registrar, may authorize a proxy by internet at the following internet address:
http://www.proxyvoting.com/xjt
, or by telephone by calling Mellon at 1-866-540-5760. Proxies submitted
through Mellon by internet or telephone must be received by 11:59 p.m. Eastern time on May 12, 2010. Giving a proxy will not affect your right to vote in person if you decide to attend the Meeting.
Shares Held in a Bank or Brokerage Account.
A number of banks and brokerage firms participate in a program (separate from that
offered by Mellon Investor Services) that also permits stockholders to direct their vote by internet or telephone. If your shares are held in an account at such a bank or brokerage, you may direct the voting of those shares by internet or telephone
by following the instructions on their enclosed voting form. Votes directed by internet or telephone through one of these programs must also be received by 11:59 p.m. Eastern time on May 12, 2010. Directing your vote in this manner will
not affect your right to vote in person if you decide to attend the Meeting; however, you must first request a legal proxy either on the internet or the voting form that accompanies this proxy statement. Requesting a legal proxy prior to the
deadlines described above will automatically cancel any voting directions you have previously given by internet or by telephone with respect to your shares.
The internet and telephone proxy procedures are designed to authenticate stockholders identities, allow stockholders to give their proxy instructions, and confirm that those instructions have been
properly recorded. Stockholders authorizing proxies or directing the voting of their shares by internet should understand that there may be costs associated with electronic access, such as usage charges from internet access providers and telephone
companies that must be borne by the stockholder.
Delivery of One Proxy Statement to Stockholders Sharing an
Address to Reduce Duplicate Mailings
Each year in connection with the annual meeting of stockholders, we are required to
send to each stockholder of record a proxy statement and annual report, and to arrange for a proxy statement and annual report to be provided to each beneficial stockholder whose shares are held by or in the name of a broker, bank, trust or other
nominee. Because some stockholders hold shares of the companys common stock in multiple accounts, this process results in duplicate mailings of proxy materials to stockholders who share the same address. Stockholders may avoid receiving
duplicate mailings and save us the cost of producing and mailing duplicate documents as follows:
Shares Held of
Record
. If your shares are registered in your own name and you are interested in consenting to the delivery of a single proxy statement or annual report, you may contact the companys Secretary by mail at the companys headquarters at
700 North Sam Houston Parkway West, Ste 200, Houston, Texas 77067.
Shares Held in a Bank or Brokerage Account
. If your
shares are not registered in your own name, your broker, bank, trust or other nominee that holds your shares may have asked you to consent to the delivery of a single proxy statement or annual report if there are other ExpressJet stockholders who
share an address with you. If you currently receive more than one proxy statement or annual report at your household, and would like to receive only one copy of each in the future, you should contact your nominee.
Right to Request Separate Copies
. If you consent to the delivery of a single proxy statement and annual report but later decide that
you would prefer to receive a separate copy of the proxy statement or annual report, as applicable, for each stockholder sharing your address, then please notify us or your nominee, as applicable, and we or they will promptly deliver such additional
proxy statements or annual reports. If you wish to receive a separate copy of the proxy statement or annual report for each stockholder sharing your address in the future, you may contact the companys Secretary by mail at the companys
headquarters at 700 North Sam Houston Parkway West, Ste 200, Houston, Texas 77067.
Revocation of Proxies
You can revoke your proxy before it is exercised at the Meeting in any of three ways:
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by submitting written notice to our Secretary before the Meeting that you have revoked your proxy;
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by timely submitting another proxy by internet, telephone or mail that is later dated and, if by mail, that is properly signed; or
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by voting in person at the Meeting, provided you have a valid proxy to do so if you are not the record holder of the shares.
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2
Expenses of Solicitation
ExpressJet will bear the costs of the solicitation of proxies. In addition to the solicitation of proxies by mail, proxies may also be
solicited by internet, telephone, telegram, fax and in person by regular employees and directors of the company, none of whom will receive additional compensation therefor. Arrangements will be made with brokerage houses and other custodians,
nominees and fiduciaries to forward proxy soliciting materials to beneficial owners, and we will reimburse them for their reasonable out-of-pocket expenses incurred in doing so. We have also engaged Morrow & Co., Inc., an outside proxy
solicitor, to assist us in soliciting proxies in conjunction with the Meeting. We estimate the cost of the outside proxy solicitation services will be $6,000.
Other Matters To Be Acted on at the Meeting
At
the Meeting, we will act only on the matters indicated on the accompanying Notice and on procedural matters related to the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS CONTAINED IN THIS PROXY STATEMENT.
3
VOTING RIGHTS AND PRINCIPAL STOCKHOLDERS
We have only one class of voting securities outstanding, common stock, which is entitled to one vote per share subject to the following
limitations. Under U.S. law, no more than 25% of the voting stock of a U.S. air carrier such as the companys wholly owned subsidiary, ExpressJet Airlines, Inc., may be owned or controlled, directly or indirectly, by persons who are not U.S.
citizens. Consequently, the company must be a U.S. citizen. For these purposes, a U.S. citizen means:
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an individual who is a citizen of the United States;
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a partnership, each partner of which is an individual who is a citizen of the United States; or
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a corporation or association organized under the laws of the United States or a state, the District of Columbia, or a territory or possession of the
United States, of which the president and at least two-thirds of the board of directors and other managing officers are citizens of the United States, which is under the actual control of citizens of the United States, and in which at least 75% of
the voting interest is owned or controlled by persons who are citizens of the United States.
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The U.S.
Department of Transportation has broad authority to determine on a case-by-case basis whether an air carrier is effectively owned and controlled by citizens of the United States. Our certificate of incorporation provides that no shares of capital
stock may be voted by or at the direction of persons who are not U.S. citizens unless those shares are registered on a separate stock record maintained by the company for the registration of ownership of capital stock by non-U.S. citizens.
Accordingly, you will be asked to certify to the company when you vote by proxy or in person either that you are a U.S. citizen as defined above, or that your shares have been registered on our foreign stock record. Our bylaws further provide that
no shares will be registered on this record if the amount so registered would exceed U.S. foreign ownership restrictions.
Beneficial Ownership of Common Stock by Certain Persons
The following table sets forth, as of March 22, 2010
(except as noted below), information available to us with respect to persons that beneficially own more than five percent of any class of our voting securities.
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Name and Address of Beneficial Holder
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Title of Class
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Number of Shares
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Percent of Class
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United Air Lines, Inc. (1)
77 W. Wacker Drive
Chicago, IL 60601
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common stock
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2,700,000
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15.91
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%
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Stelliam Investment Management, LP (2)
31 West 52
nd
Street, 16
th
Floor
New York, NY 10019
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common stock
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1,492,300
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8.79
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%
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Renaissance Technologies LLC (3)
800 Third Avenue
New York, NY 10022
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common stock
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1,141,799
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6.72
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%
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Leap Tide Capital Management, Inc. (4)
10451 Mill Run Circle, Suite 400
Owings Mills, MD 21117
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common stock
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882,571
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5.20
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%
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(1)
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Pursuant to a Schedule 13G filed on February 18, 2010, United Air Lines, Inc. reported that it had sole voting and dispositive power as to 2,700,000 shares of
our common stock. United Air Lines, Inc. is a wholly owned subsidiary of UAL Corporation.
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(2)
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Pursuant to a Schedule 13G/A filed on February 11, 2010, Stelliam Investment Management, LP reported that it had sole voting and dispositive power as to
1,492,300 shares of our common stock.
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(3)
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Pursuant to a Schedule 13G filed on February 11, 2010, Renaissance Technologies LLC reported that it had sole voting power as to 1,141,799 shares of our common
stock, sole dispositive power as to 1,178,299 shares of our common stock and shared dispositive power as to 30,600 shares of our common stock.
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(4)
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Pursuant to a Schedule 13G filed on May 19, 2009, Leap Tide Capital Management, Inc. reported that it had sole voting and dispositive power as to 882,571 shares of
our common stock. Jan Loeb is the President and a member of the Board of Directors of Leap Tide Capital Management, Inc.
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Beneficial Ownership of Common Stock by Directors and Executive Officers
The following table shows, as of
March 22, 2010, the number of shares of our common stock beneficially owned by each of our current directors and nominees, our executive officers named below in the Summary Compensation Table, and all executive officers and directors as a
group. Except as indicated to the contrary, each individual listed below has sole voting and dispositive power over the shares shown.
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Name of Beneficial Holder
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Amount and Nature of
Beneficial
Ownership
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Percent of Class
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Salvatore J. Badalamenti
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28,388
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(1)
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*
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George R. Bravante, Jr.
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36,133
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(2)
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*
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Janet M. Clarke
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25,675
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(3)
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*
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Charles R. Coble
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80,395
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(4)
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*
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Kim A. Fadel
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23,044
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(3)
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*
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Alan Freudenstein
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43,750
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*
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Judith R. Haberkorn
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35,333
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(1)
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*
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Andrew Jent
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2,644
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(5)
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*
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Suzanne Lehman Johnson
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48,677
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(6)
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*
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Patrick Kelly
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86,557
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(7)
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*
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William F. Loftus
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21,875
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*
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Karen P. Miles
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62,669
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(8)
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*
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Lamphung Ngo-Burns
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66,465
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(9)
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*
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James E Nides
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130,726
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(4)
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*
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James B. Ream
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298,779
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(10)
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1.8
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%
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Bonnie S. Reitz
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35,933
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(1)
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*
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All executive officers and directors as a group (16 persons)
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1,027,043
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(11)
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6.0
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%
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*
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Indicates ownership of less than one percent of the outstanding shares of our common stock.
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(1)
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Includes 1,000 shares that may be purchased under options currently exercisable or becoming exercisable within 60 days, which shares are referred to hereafter as
option shares.
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(2)
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Includes 1,400 option shares.
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(3)
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Includes 2,400 option shares.
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(4)
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Includes 14,750 option shares.
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(5)
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Includes 2,644 option shares
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(6)
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Includes 3,075 options shares.
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(7)
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Includes 800 option shares.
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(8)
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Includes 16,250 option shares.
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(9)
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Includes 6,750 option shares.
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(10)
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Includes 21,250 option shares.
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(11)
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Includes 89,469 option shares.
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5
Securities Authorized for Issuance under Equity Compensation Plans
The following table summarizes our equity compensation under all of our equity compensation plans as of December 31,
2009:
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Plan Category
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(a)
Number of Shares to be
Issued Upon Exercise of
Outstanding Options,
Warrants and Rights
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(b)
Weighted-Average
Exercise Price
of
Outstanding Options,
Warrants and Rights
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(c)
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column
(a))
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Equity compensation plans approved by stockholders
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269,315
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$
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64.97
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714,705
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Equity compensation plans not approved by stockholders
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n/a
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n/a
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n/a
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Total
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269,315
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$
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64.97
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714,705
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As of
December 31, 2009, there were 269,315 options outstanding with a weighted average exercise price of $64.97 and a weighted average term of 4.11 years, and 783,160 restricted shares outstanding and granted under our equity compensation
plans. As of December 31, 2009, there were 714,705 available for future issuance under the 2002 Stock Incentive Plan and 2007 Stock Incentive Plan.
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GENERAL INFORMATION
Board of Directors
Our board of directors currently consists of ten persons, including an independent Chairman, George Bravante. Effective January 1, 2010, James B. Ream retired from his position as President, Chief
Executive Officer and director, and Patrick Kelly, a director of the company, accepted the role of Interim President and Chief Executive Officer. The positions of Chairman of the Board and Chief Executive Officer are presently held by separate
people, due in part to the companys history and culture. The board of directors believes that having two individuals serve in those positions is also presently in the companys best interest. However, the board of directors may reassess
this structure in the future, in order to provide appropriate leadership for the company at that time.
In addition to our
independent Chair, all non-management directors presently serving or who served at any time in 2009, other than William F. Loftus, who received compensation as a consultant prior to joining our board, have been affirmatively determined by the board
to be independent and to have no material relationship with the company or its management under the standards set forth in the Corporate Governance Guidelines (the Guidelines) adopted by our board and the applicable rules of the New York
Stock Exchange (NYSE) and the Securities and Exchange Commission (SEC). The Guidelines are available on our website at
www.expressjet.com
and are available in print to any stockholder who sends a written request
to our Secretary at our principal executive offices. As to independence, the Guidelines provide as follows:
The Board
defines independent director in accordance with Section 303A.02 of the New York Stock Exchange Listed Company Manual. Because it is not possible to anticipate, or explicitly provide for, all circumstances that might signal potential
conflicts of interest, or that might bear on the materiality of a directors relationship to a listed company, the Board is responsible for affirmatively determining that each independent director has no material relationship with the Company
or its affiliates (either directly as a partner, stockholder or officer of an organization that has a relationship with the Company). A relationship will be considered material if in the judgment of the Board it would interfere with the
directors independent judgment, and the Board will consider the issue not merely from the standpoint of the director, but also from that of persons or organizations with which the director has an affiliation.
The independent directors have no relationship with the company other than their positions as directors.
Board Meetings, Attendance and Communications
Regular meetings of our board of directors are typically held five times per year, and special meetings are scheduled when needed. The board held nine meetings in 2009. During 2009, each director attended
at least 75% of the aggregate number of meetings of the board and each committee of which he or she was a member that were held while that person was a director or committee member. Although we have no formal policy relating to directors
attendance at the annual stockholders meeting, the annual meeting of our board typically follows the stockholders meeting and it is anticipated that directors will attend both meetings. With the exception of Andrew Jent, all of our directors then
serving attended our 2009 stockholders meeting.
The independent non-management members of our board of directors met in
executive session (i.e., a session not including our CEO) during the last year in accordance with the boards Corporate Governance Guidelines, which require that the Board do so at least twice each year. As required by the Guidelines, at least
one of those sessions was comprised solely of the independent directors. As set forth in the Guidelines, the director that presides at these sessions rotates among the non-management members of the board in order of seniority (or age, in the case of
directors of equal seniority).
Stockholders or others desiring to communicate directly with the non-management directors or
with any individual director may direct their correspondence to the director(s) at the companys address set forth above or may do so electronically at the following email address:
xjtinternalaudit@expressjet.com
. (Please
indicate in the subject line which directors are the intended recipients.) The companys Secretary reviews all correspondence so received and forwards it to the pertinent directors if it relates to the functions of the board or its committees.
Concerns relating to accounting, internal controls or auditing matters are immediately brought to the attention of our internal audit department and handled in accordance with procedures established by the boards Audit Committee.
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Committees of the Board
Audit Committee
. The committee met 12 times in 2009 and was comprised of five directors determined by the board to be independent and
financially literate (as defined in applicable SEC and NYSE rules): Mr. Badalamenti, who chairs the committee, Ms. Clarke and Messrs. Bravante, Freudenstein and Kelly. Mr. Freudenstein replaced Mr. Jent as a member of the
committee in May 2009, following Mr. Jents resignation from the board of directors. The board of directors has determined that Messrs. Badalamenti and Kelly qualify as audit committee financial experts (as defined in applicable SEC
rules). During his service as Interim President and CEO, beginning January 4, 2010, Mr. Kelly has temporarily stepped down from the Audit Committee.
The board of directors has adopted a written charter for the Audit Committee, a copy of which is available on our website at
www.expressjet.com
and is available in print to any stockholder
who sends a written request to our Secretary at our principal executive offices. As described in greater detail in the charter, the Audit Committee has responsibility to oversee the companys accounting and financial reporting processes as well
as reviews of our interim financial statements and audits of our annual financial statements. The committee has the authority to appoint and otherwise oversee the retention, independence, compensation and work of our independent auditors and to
authorize any audit, audit-related or non-audit services that, in the committees discretion, are deemed appropriate. The committee reviews with management and the companys independent auditors the effectiveness of the accounting and
financial controls of the company and its subsidiaries, and reviews and discusses the companys audited financial statements with management and the independent auditors. See Report of the Audit Committee below. The committee
assesses risks to the company periodically, with a complete report on an annual basis that is delivered directly to the committee by the individuals responsible for day-to-day risk management responsibilities. The committees role is one of
oversight, recognizing that management is primarily responsible for the companys risk management policies. The committee regularly reports to the full board of directors and enhances the boards oversight of risk management.
Human Resources Committee
. The committee met nine times in 2009 and is comprised of five directors determined by the board to be
independent (as defined in applicable NYSE rules): Ms. Clarke, who chairs the committee, Messrs. Badalamenti and Fadel, Ms. Haberkorn and Ms. Reitz. Pursuant to its charter, which is available on our website at
www.expressjet.com
and is available in print to any stockholder who sends a written request to our Secretary at our principal executive offices, the committee has the authority to act on behalf of the board of directors with respect to all
matters relating to the employment of senior officers by ExpressJet and its subsidiaries, including approval of compensation, benefits, incentives and employment agreements. See Executive Compensation Report of the Human Resources
Committee below. The committee is also charged with overseeing the companys general compensation structure, assessing compensation risk, and administering its bonus, incentive and other compensation plans when so directed by the board.
Nominating and Corporate Governance Committee.
The committee met seven times in 2009 and is comprised of five
directors determined by the board to be independent (as defined in applicable NYSE rules): Ms. Haberkorn, who chairs the committee, Ms. Reitz and Messrs. Bravante, Fadel and Kelly. During his service as Interim President and CEO,
beginning January 4, 2010, Mr. Kelly has temporarily stepped down from the Nominating and Corporate Governance Committee. The committees charter is available on our website at
www.expressjet.com
and is available in print to
any stockholder who sends a written request to our Secretary at our principal executive offices. The committee is responsible for identifying individuals qualified to become members of the board of directors, as well as recommending the slate of
directors to be nominated by the board at the annual meeting of stockholders or any director to fill a vacancy on the board. The committee will consider nominations from stockholders; any stockholder desiring to submit a nomination to the committee,
should send the nomination, together with appropriate background and contact information, to the Secretary of the company at the companys address set forth above. Please refer to 2011 Annual Meeting below for information regarding
submitting a nomination for the 2011 Annual Meeting of Stockholders.
The director-qualification criteria established in the
Corporate Governance Guidelines include the following and are applied by the committee to candidates nominated by stockholders and those originating with the board:
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reputation, integrity and (for non-management directors) independence;
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business, government or other professional experience and acumen;
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the number of other public companies for which the person serves as a director and the availability of the persons time and commitment to the
company;
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knowledge of a major geographical area in which the company operates or another aspect of the companys operational environment;
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8
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age (it is the companys policy that no person will be nominated by the board to serve as a director, or be elected by the board to fill a vacancy
on the board, if that person is, or would be on the date of his or her election, age 70 or older);
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tenure as a member of the companys board; and
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the directors history of attendance at board and committee meetings and the directors preparation for and participation in these meetings
(in the case of current directors).
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Consistent with ExpressJets overall commitment to excellence, the
board seeks to enforce the high standards that are the key to the companys success and to provide oversight, as well as strategic insight. The boards policy of considering diversity when evaluating director candidates is implemented as
part of the broad-based consideration of each candidates potential for contributing value as a board member, including a broad range of skills and expertise, which may be demonstrated through differences in perspective based on industry
experience, type of experience, expertise in particular business situations, and insights developed due to the candidates unique life experience, education, viewpoint, and other characteristics. The committee periodically conducts an anonymous
self-evaluation to determine its effectiveness in nominating candidates with a broad range of skills and expertise. Candidates may be identified by the committee through current board members, management, stockholders or other persons. All
candidates, including those recommended by stockholders or other directors, are evaluated according to the criteria described above at regular or special meetings of the committee, and may be considered at any time during the year. If any materials
are provided by a candidate or other party in connection with the nomination of a director candidate, those materials are reviewed by the committee in evaluating that candidate.
In addition, the committee recommends the directors to be appointed to committees of the board (other than the committee itself), including
in the event of vacancies, and the compensation and benefits of non-management members of the board. The committee developed, and the board adopted, the Corporate Governance Guidelines discussed above. The committee also oversees the annual
evaluation of the performance of the board and its committees.
Compensation of Directors
During 2009, members of the board of directors who were not employees of the company (outside directors) received an annual
retainer of $36,000 per year, which increased to $45,000 if the director chaired the Human Resources or Nominating and Corporate Governance Committees of the board; $49,500 if the director chaired the Audit Committee of the board; or $54,000 if the
director was elected chairman of the board. These fees reflect a 10% reduction which was effective beginning in the last quarter of 2008. For 2009, Mr. Freudenstein received a pro-rated annual retainer of $22,747.25. In 2009, members of the
board also received the meeting fees set forth below:
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$1,800 for each meeting of the board or committee meeting physically attended, with the chairman of the board receiving $2,700; and
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$900 for each board or telephonic board participation;
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From January 1, 2008 to September 11, 2008, outside directors were to receive upon their initial election to the board and at each annual meeting: (i) a non-qualified stock option on the
Effective Dates to purchase such number of shares of the common stock of the Company that will result in such option having a Black-Scholes value of $35,000 on the Effective Dates; and (ii) such number of restricted shares of common stock of
the Company bearing a fair market value of $35,000 on the Effective Dates, to be issued pursuant to the Companys 2002 Stock Incentive Plan or 2007 Stock Incentive Plan. Each of the restricted shares and options vest six months following their
grant date. On September 11, 2008, the amount in each of the foregoing categories was reduced by 10%, along with an across-the-board reduction in board compensation, to $31,500. In addition, the outside directors unanimously voted to forego any
annual grant in 2008, due to the timing of various corporate events as well as a desire to demonstrate a commitment to cost control. In 2009, the board elected to utilize an annual incentive fee in the amount of $63,000 in lieu of an equity grant.
The board then unanimously elected to participate in the ExpressJet Holdings, Inc. 2009 Treasury Stock Purchase Plan, a plan that permitted the directors to purchase shares of the common stock of the Company at full market price in accordance with
the terms of that plan. The Treasury Stock Purchase Plan closely aligns the interests of the Companys directors with the interests of stockholders through the purchase of shares and serves the goal of Company stock ownership by directors.
As is customary in the airline industry, all of our outside directors and their eligible family members receive
space-available (stand-by) flight benefits on our flights during their term as a director. These benefits do not bump fare-paying passengers. Additionally, our outside directors for whom we are able to secure such benefits receive access
to Continental Airlines Presidents Clubs, elite status in Continentals frequent flyer program, travel on our flights, and passes permitting a fixed amount of travel on Continental at no cost to ExpressJet. Some of these benefits may also
include the directors family and a limited number of other individuals. Where required under applicable law, benefits are taxable to the director, subject to our reimbursement of a portion of the taxes.
9
All directors receive reimbursement of expenses incurred in attending meetings. No member of
our board, other than Mr. Ream whose compensation is described under Executive Compensation below, was paid any compensation in 2009 for services as a director of the company other than the standard compensation arrangement for
directors described in this narrative and reimbursement of expenses. Effective January 4, 2010, Mr. Kelly began serving as Interim President and CEO. Mr. Kelly will not receive pay as a director for attending board meetings while
serving as Interim President and CEO. A description of Mr. Kellys compensation for serving as Interim President and CEO is set forth below in the Compensation Discussion and Analysis.
Director Compensation for Fiscal Year 2009
The following table sets forth the aggregate compensation awarded to, earned by, or paid to our non-management directors for 2009.
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Name
|
|
Fees
Earned
or
Paid in
Cash
|
|
Stock
Awards
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|
Option
Awards
|
|
Non-Equity
Incentive Plan
Compensation ($)
|
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Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
|
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All Other
Compensation
(1)
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Total
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Salvatore J. Badalamenti
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$
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147,600
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|
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$
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8,538
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$
|
156,138
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George R. Bravante, Jr.
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$
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157,500
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|
|
|
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|
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$
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7,320
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$
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164,820
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Janet M. Clarke
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$
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142,200
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|
|
|
|
|
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$
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1,778
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$
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143,978
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Kim A. Fadel
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$
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130,500
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|
|
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$
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2,118
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$
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132,618
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Alan Freudenstein
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$
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101,047
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$
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101,047
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Judith R. Haberkorn
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$
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139,500
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|
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$
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6,543
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$
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146,043
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Andrew Jent
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$
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22,500
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|
|
|
|
|
|
|
|
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$
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2,315
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|
$
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24,815
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Patrick Kelly
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|
$
|
135,000
|
|
|
|
|
|
|
|
|
|
$
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1,771
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|
$
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136,771
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William F. Loftus
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|
$
|
108,000
|
|
|
|
|
|
|
|
|
|
|
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|
$
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108,000
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Bonnie S. Reitz
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|
$
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129,600
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|
|
|
|
|
|
|
|
|
$
|
640
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|
$
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130,240
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(1)
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Represents a tax reimbursement payment made to satisfy some of the federal tax obligations corresponding to the value imputed for flight benefits. Pursuant to SEC
rules, the value of flight benefits provided to our directors is not included under All Other Compensation because the total incremental cost to the company of providing such benefits was less than $10,000 for each director.
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Executive Officers
The following table sets forth information with respect to our current executive officers and those who served as executive officers during
2009:
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Name, Age and Position
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Term of Office and Business
Experience
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JAMES B. REAM,
1
age 54,
Former President, Chief Executive Officer and Director
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Mr. Ream was Chief Executive Officer from July 2001 and was President and a director from October 1999 until his retirement effective January 1, 2010. He joined
Continental Airlines in 1994 as Vice President, Finance, responsible for accounting, financial planning and analysis. Mr. Ream was President and Chief Operating Officer from 1996 to 1998 of Continental Micronesia, Inc. and Senior Vice President,
Asia for Continental Airlines from 1998 to 1999. Prior to joining Continental, he held various positions within the finance department of American Airlines, Inc. from 1987-1994.
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1
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Mr. Pat Kelly, a board member, is serving as Interim CEO. Mr. Kellys information is included, along with that of other board members, in the discussion
of Continuing Directors section, below in the discussion of Proposal 1.
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10
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LAMPHUNG NGO-BURNS, age 44,
Vice President and Chief Financial Officer
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Ms. Burns has been Vice President and Chief Financial Officer since September 2008. Prior to that, she was Staff Vice President of Finance and Controller, managing corporate
accounting and division controller functions from mid-2005. From 2002 to mid-2005, she was Senior Director and Controller with responsibilities for accounting, treasury, and tax. She began her career with Ernst & Young, gaining diverse auditing
and accounting experience before joining the airline industry. She worked for American Airlines and Continental Airlines prior to transitioning to ExpressJet.
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CHARLES R. COBLE, age 56,
Vice
President, Field Services, Purchasing and Corporate Real Estate
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Mr. Coble has been Vice President, Field Services, Purchasing and Corporate Real Estate since 1997. Prior to that he held a number of positions with Continental Airlines
beginning in 1975, most recently as Director Airport Services. In his current role, Mr. Coble is responsible for the Companys customer service on a Company-wide basis and also oversees the ground handling and corporate aviation
divisions.
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JAMES E. NIDES, age 59,
Vice
President, Flight Operations and Maintenance
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Mr. Nides has been Vice President, Flight Operations and Maintenance since 2002. Starting his airline career as a pilot with Comair, Mr. Nides served as Chief Pilot, Director of
Operations and Director of Technical Services.
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KAREN P. MILES, age 53,
Former
Vice President, Human Resources and Administration
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Ms. Miles was Vice President, Human Resources and Administration from 2001 until her retirement January 31, 2010. Ms. Miles directed corporate communications and managed all
labor relationships. During her 30 year career, she worked in both human relations and operations areas.
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SUZANNE LEHMAN JOHNSON, age 49
General Counsel and Secretary
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Ms. Johnson has been with the Company since 2005 and has served as General Counsel and Secretary since September 2008. Before joining the Company, Ms. Johnson was employed by the
law firm of Vinson & Elkins, L.L.P. for nine years and Continental Airlines, Inc. for three years. Ms. Johnsons current management responsibilities for ExpressJet include legal affairs, compliance, arbitration, litigation, workers
compensation, labor relations, benefits, corporate communications, and human resources.
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11
COMPENSATION DISCUSSION AND ANALYSIS
The Human Resources Committee (for purposes of this analysis, the Committee) of our board has responsibility for establishing,
implementing and monitoring adherence to our compensation philosophy. The Committee works to ensure that the total compensation paid to the executive officers is fair, reasonable and competitive. Generally speaking, the types of compensation and
benefits provided to executive officers are similar to those provided to our other officers and key employees.
Throughout
this proxy statement, the individuals who served as our chief executive officer and chief financial officer during fiscal 2009, as well as the other individuals included in the Summary Compensation Table, are referred to as the named executive
officers or simply the executives.
Compensation Philosophy and Objectives
Our executive compensation program is designed to attract and retain qualified executives. We believe each element of total compensation that
we offer improves the competitiveness of our program relative to the compensation paid to similarly situated executives in comparably sized airlines and other companies outside the airline industry and plays an integral role in facilitating the
advancement of the companys interests. To that end, the Company believes that executive compensation packages should include both fixed and variable pay elements designed to deliver a competitive total compensation opportunity to executives.
For variable pay elements, the Company uses both cash and stock-based compensation to align executives interests with those of stockholders and to reward performance measured by operating and/or strategic performance and stock price
performance.
Determining Executive Compensation
In establishing the elements of its executive compensation program, the Committee reviews:
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the nature and level of the executive position;
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the labor markets from which qualified individuals are recruited;
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the companies and industries competing for our executives; and
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the performance of individual executives over time.
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The Committee has retained Frederic W. Cook & Co., Inc. (Cook) as its independent compensation consultant since 2006 to review and advise the Committee on its total compensation
program for the executive officers as well as for other key employees. Cook provides the Committee with relevant market data and alternatives to consider when making compensation decisions. Using data prepared by Cook, the Committee reviews the
total compensation levels for our executives relative to total compensation provided at an industry and size-relevant group of companies (Airline Peer Group) as well as general industry indices reflecting comparably sized companies
outside the airline industry with which the Committee believes we compete for talent and for stockholder investment. In addition to reviewing the competitiveness of executive pay levels against peer market data, Cook assisted the company in its
request for new shares for its stock incentive plan, helped to revise the stock incentive plan to be reflective of best practices, prepared the proxy proposal for the stock incentive plan, and assisted with other compensation-related matters in 2009
(e.g., review of employment agreements). Other than services provided to the Committee, Cook provides no additional services to the Company.
The companies comprising the Airline Peer Group for 2009 were:
12
Base salaries, short and long-term incentive pay and other benefits are all targeted at median levels of external market practices among the Airline Peer Group and similarly sized companies other than airlines.
We try to provide competitive base salaries, but seek to focus the majority of executives compensation on variable pay to provide an
incentive for improved performance. We do not have a policy or target for the allocation between either cash and non-cash or short-term and long-term incentive compensation or among various forms of equity compensation. The Committee reviews
information provided by Cook to determine the appropriate level and mix of incentive compensation. Income from incentive compensation is realized as a result of the performance of the Company or, depending on the type of award, the achievement of
established goals.
Role of Individual Pay Components
In connection with our initial public offering in 2002, the elements of our compensation program were determined by Continental Airlines and
were similar to programs it developed with its compensation consultants. Since then, the Committee has worked with its consultants to customize a total compensation program for our executives. A summary of the elements of compensation that we
provide to executive officers is presented below:
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Base Salaries.
Base salaries of our executives are designed to be competitive within the airline industry and within the broader marketplace for
executive talent.
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|
|
|
Annual Cash Bonuses
. Annual cash bonuses are targeted at 40-60% of base salary, depending on the executives level of responsibility and
the Companys achievement of target operating income.
|
|
|
|
Restricted Stock.
Beginning in 2004 we began to move away from the granting of stock options to executives in favor of restricted stock; the
last stock options granted to executives were in 2007. The Committee determined that, compared to stock options, use of restricted stock for its executives presented less compensation risk and would be less dilutive to stockholders. Restricted stock
grants typically vest over a 4-year period.
|
|
|
|
Long Term Incentive Plan.
The long-term incentive plan began in 2006 and provides annual awards of cash or equity or both to executives if
certain performance objectives for the specified year are achieved and the executive is still employed at the end of the designated year. Awards for 2006, 2007 and 2008 consisted of cash.
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Flight Benefits and Tax Reimbursements
. When our executives fly, it serves to closely align their interests with the ultimate consumer of our
services the passengers. Personal air travel also places the importance of passenger service in proper context and allows them to observe operations first-hand. Thus, as is customary in the airline industry, the executives and their eligible
family members receive space-available (stand-by) flight benefits, and some positive space travel, on flights of ExpressJet and some partner airlines. The executives are also entitled to participate in frequent flyer and airport lounge programs. The
Committee has determined these flight benefits present no incremental cost to the Company due to the nature of the Companys business operations and present a significant business advantage through the perspective that air travel gives our
executives. However, certain flight pass benefits associated with non-business travel do trigger imputed income to the executives under federal income tax rules, which the Company reimburses through corresponding tax-reimbursement payments. We
believe that negating the impact of imputed income to our executives is an important element of the flight benefits we provide our executives.
|
While salaries are designed to provide basic compensation and financial stability to the executives, the purpose of annual cash bonuses is primarily to encourage the executives to focus on the execution
of the operating plan approved by our board of directors for the current year. Equity awards of restricted stock are designed to align executives interests with those of stockholders and thereby strengthen their concern for the welfare of our
company over the longer term. Unlike the annual cash bonuses, which are paid based on achievement of a targeted operating income, the value of restricted stock is inherently linked to the performance of our common stock. Our Long Term Incentive Plan
was used to encourage the executives to remain with the company in the near term during difficult transition years by subjecting awards to a vesting schedule and paying them out if the executive is still employed at the end of the designated year.
13
Role of Human Resources Committee and Chief Executive Officer in Establishing
Compensation
The Committee oversees our general compensation structure and administers our bonus, incentive and other
compensation plans. In determining annual compensation packages, the Committee seeks to establish compensation packages and programs that appropriately encourage the executives. As part of this process, our chief executive officer provides input to
the Committee on an ongoing basis regarding the airline industry job market, the overall performance of our employees, and the appropriate salary and incentive plan compensation necessary to retain the other executive officers. At the request of the
Committee, management provides information to Cook from time to time with respect to its views on compensation. Although the Committee weighs the input of Cook and management, it acts independently in its decisions and is guided by its own judgment.
The Committee works closely with its independent compensation consultants to provide total compensation packages capable of
securing and incenting high-caliber employees and to ensure that the components of executives pay packages are reasonable. In establishing executive compensation packages, the Committee reviews tally sheets (which detail the value of an
executives salary, bonuses, equity awards, and other benefits, including retirement, termination of employment and a change in control of the company under various circumstances) and competitive pay data as described above to confirm that the
overall amount payable to executives is reasonable and that their compensation packages are appropriately structured relative to relevant industry peers.
Compensation of Named Executive Officers for 2009
Base Salaries
As discussed above, the Committee works with its consultants to customize a compensation
structure and appropriate compensation elements for our executives. As part of the Committees annual compensation review, it determined to moderately increase salaries in March 2007, although not to their pre-April 2005 levels.
Effective July 17, 2008, in connection with certain cost-savings initiatives undertaken in connection with our amended capacity purchase agreement with Continental, the Committee approved reductions in the base salaries of management and
executives by 5% across the board, in addition to reductions in the value of various benefits. At his request, Mr. Ream reduced his base salary by 10%. The reductions for the named executive officers are summarized below:
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|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
2007 Base
Salary
|
|
2008 Base
Salary (4)
|
|
Percentage
Decrease (5)
|
|
|
2009 Base
Salary
|
Patrick Kelly (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
James B. Ream (2)
|
|
$
|
352,000
|
|
$
|
337,333
|
|
10
|
%
|
|
$
|
316,800
|
Lamphung Ngo-Burns (3)
|
|
$
|
175,000
|
|
$
|
174,792
|
|
1
|
%
|
|
$
|
180,000
|
Charles R. Coble
|
|
$
|
200,000
|
|
$
|
195,833
|
|
5
|
%
|
|
$
|
190,000
|
Suzanne L. Johnson (6)
|
|
$
|
154,750
|
|
$
|
150,450
|
|
3
|
%
|
|
$
|
166,042
|
James E. Nides
|
|
$
|
200,000
|
|
$
|
195,833
|
|
5
|
%
|
|
$
|
190,000
|
Karen P. Miles (7)
|
|
$
|
190,000
|
|
$
|
186,042
|
|
5
|
%
|
|
$
|
180,500
|
(1)
|
Mr. Kelly is a member of the Board. Effective January 4, 2010, he began also serving as interim Chief Executive Officer until a replacement for Mr. Ream
can be hired. To compensate Mr. Kelly for this interim role, the Committee approved a monthly salary of $50,000. However, consistent with concessions to the Companys labor groups and as part of the Companys overall cost-saving
initiatives, Mr. Kelly requested that the offered salary be reduced by 10% to $45,000 and the Committee agreed.
|
(2)
|
Mr. Ream retired from the Company effective January 1, 2010.
|
(3)
|
Includes salary related to her promotion to Chief Financial Officer effective as of September 11, 2008.
|
(4)
|
Annualized average salary, taking into account base salary reduction effective July 17, 2008, of 10% for Mr. Ream and 5% for the other executives.
|
(5)
|
Reflects average percentage decrease from annual salary January 1, 2008 to January 1, 2009 generated by base salary reduction effective July 17, 2008, of
10% for Mr. Ream and 5% for the other executives per company-wide cost reductions in 2008.
|
14
(6)
|
On November 19, 2009, Ms. Johnson was promoted from her previous role of Staff Vice President, General Counsel and Secretary to Vice President and General
Counsel per the Companys report on form 8-K dated November 19, 2009.
|
(7)
|
Ms. Miles retired from the Company effective January 31, 2010 and was paid per the terms of a transitional agreement announced in the Companys report on
form 8-K dated June 23, 2009 and filed with the Companys annual report.
|
Annual Cash Bonuses
No bonuses have been paid under the Management Bonus Plan for the years 2007, 2008, and 2009.
If a bonus were paid under the Management Bonus Plan, it would be paid in cash. The target bonuses for the executives named in the Summary
Compensation Table have historically ranged from 40-60% of base salary; while the Committee can specify a higher percentage, it cannot exceed 100% of an executives base salary. The bonus is based on a single measurement: the companys
operating income for the year. Operating income was the performance metric selected by Continental Airlines at the time of our initial public offering. The Committee has retained the measure since it believes it to be readily understood and accepted
by participants and consistent with promoting stockholder value. If operating income is at least 75% of the target operating income approved by the Committee, then payment is made on a sliding scale of 75% to whatever percentage actual operating
income bears to the target operating income; provided that no payment will be made if operating income is less than 75% of target operating income.
For 2009, Mr. Reams target bonus was 60% of his base salary and the target bonus for all of the other named executives was 40% of base salary. Mr. Reams target bonus was higher than
our other named executive officers to reflect the additional responsibilities and duties associated with being our CEO. The target operating income approved by the Committee for 2009 was break-even with the stipulation that no bonus would be paid
for negative results (a loss). The Committee believed this target was challenging, but achievable. However, the Companys actual 2009 operating income was negative and therefore no annual bonus payments were made for 2009.
Equity Awards
The Committee also makes equity awards to help align the executives long-term interests with those of stockholders. Equity is awarded annually in an amount deemed to be competitive with other
companies in the Airline Peer Group and comparably sized companies outside the airline industry; consequently, the grant date value is not intended to equate to a specific portion of the executives base salary.
Equity awards take the form of stock options and restricted stock and are made under the 2002 and 2007 stock incentive plans. These
incentive plans provide in part that the Committee may grant awards to the executives in the form of stock options or restricted stock. The 2007 incentive plan also provides that the Committee may grant awards in the form of performance units, stock
appreciation rights, or any other right, interest or option related to shares or other property, including cash. Stock options granted under the 2002 and 2007 incentive plans generally contain an exercise price equal to the fair market value of the
underlying common stock on the date of grant, vest over a four-year period for employees and expire seven years after the date of grant. Restricted stock granted under the 2007 incentive plan generally vest over a four-year period.
Annual awards of restricted stock or stock options to executives are made at the Committees meeting held on the day of the annual
stockholders meeting, which we have historically held in May. The Committee awards newly hired or promoted executives initial awards of restricted stock or stock options as closely as possible to their date of hire or promotion.
Long Term Incentive Awards
The Long Term Incentive Plan was implemented to provide additional incentives for executives to remain with the company and, initially, to manage it through the diversification required by Continental
Airlines notice in December 2005 that it would terminate 25% of the flying we perform under our capacity purchase agreement (the source of significantly all of our revenue at that time) beginning in December 2006. Awards under the
plan were for single-year cycles, payable in cash, stock, or a combination of cash and stock, the form and amount of which is based on the discretion of the Committee. To receive the award, the executive typically must be employed on the last day of
the designated year; however, the executive would still receive the award if he or she terminates employment without cause, dies or becomes disabled. The current cycle of the plan is for a single year as well and concludes at the end of 2010.
15
Flight Benefits
Flight benefits remain consistent with the level initially established by Continental Airlines in connection with our initial public
offering; since they are of the type provided to executives at other companies in the airline industry, we have not deemed it necessary either to increase or decrease them. Flight benefits are not related to the other pay elements awarded to
executives, but rather, as noted above, serve to align our executives interests with the ultimate consumer of our services, the passengers, and to allow them to observe our services and operations first-hand.
Perquisites
Other than flight benefits, detailed above in the Role of Individual Pay Components and the corresponding tax reimbursements identified in the below Summary Compensation Table, we provide no other perquisites or personal benefits to our
executive officers.
Potential Payments Upon Termination or Change in Control
The description of amounts payable to the executives due to a termination or a change in control are set forth under Compensation of
Executive Officers Potential Payments Upon Termination or Change in Control, following the Options Exercised and Stock Vested table, below.
Retirement of Our CEO and Certain Employment Agreements
We have employment agreements with each of the executive officers listed in the Summary Compensation Table, below, that provide for an annual salary and participation in any benefit programs we maintain. Mr. Reams employment
agreement permitted him to participate in any cash bonus program we maintained at or above the maximum level made available to any other executive. His agreement had a three-year term and automatically renewed for additional three-year periods,
unless notice of non-renewal was given by either party at least six months prior to the end of a term. Pursuant to Mr. Reams agreement that was entered into at the time of our initial public offering, it was required that we make a
gross-up payment to him if any payment or benefit he received from us, under his employment agreement or otherwise, became subject to an excise or other special additional tax, including any interest, taxes or penalties imposed with respect to such
taxes; the purpose of the payment was to put him in the same after-tax position he would have been had the taxes not been imposed. Pursuant to their employment agreements, payments to our other executives would be reduced to the degree necessary to
avoid the imposition of such an excise tax.
Each executive has agreed that he or she will not, in any geographic area or
market where we conduct business or have conducted business during the previous 12 months:
|
|
|
engage in the regional airline business in the United States;
|
|
|
|
render any advice or services to, or otherwise assist, any person engaged in any regional airline business in the United States; or
|
|
|
|
induce any of our employees to terminate his or her employment with us or hire or assist in the hiring of any such employee.
|
However, the executives may serve as a director, officer, employee, consultant or advisor of a major,
mainline airline so long as their duties are principally related to the business of that airline other than the provision of regional airline services. These non-competition obligations extend until the second anniversary of the respective
executives termination of employment. Additional information regarding the termination and change-in-control provisions of the executive officers employment agreements are set forth below under Potential Payments Upon Termination
or Change in Control, following the Option Exercises and Stock Vested Table.
On January 1, 2010,
following 15 years of combined service to ExpressJet and its former parent, Continental Airlines, Inc., Mr. Ream retired from the Company. Pursuant to the terms of the Companys stock incentive plans, Mr. Reams unvested shares
of restricted stock vested upon his retirement. In addition, he received the payment he had earned and vested in as of December 31, 2009 under the Long Term Incentive Plan, as well as continuation of certain insurance and flight benefits per
the terms of his agreement. Mr. Ream did not receive any severance payment, and no additional agreement for compensation or benefits was executed upon his retirement.
16
Deductibility of Executive Compensation
As part of its role, the Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the
Internal Revenue Code, which denies publicly held companies tax deductions in certain circumstances for annual compensation exceeding $1 million paid to certain of their executive officers. No deduction is permitted for this compensation unless
it is based on performance criteria established by a committee of outside directors and approved by the companys stockholders. Our stock options are intended to qualify as performance-based compensation under Section 162(m). However,
neither our restricted stock nor the bonuses available under the management bonus plan or Long Term Incentive Plan were so designed. Nevertheless, we believe that all compensation paid or awarded to date will be deductible by the company. The
Committee has the authority to approve compensation or changes to plans, programs or awards in the future that could cause the compensation or awards not to qualify for tax deductions under Section 162(m).
COMPENSATION COMMITTEE REPORT
The Human Resources Committee of the board of directors, which functions as the companys Compensation Committee, has reviewed and discussed the Compensation Discussion and Analysis section of this
proxy statement with management. Based on this review and discussion, the committee recommended to the board that the Compensation Discussion and Analysis be included in this proxy statement.
Human Resources Committee
Janet M. Clarke,
Chair
Salvatore J. Badalamenti
Kim
A. Fadel
Judith R. Haberkorn
Bonnie
S. Reitz
17
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table for Fiscal Year Ended December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Stock
Awards (1)
|
|
Option
Awards (1)
|
|
Non-Equity
Incentive
Plan
Compensation
(2)
|
|
All Other
Compensation
(3)
|
|
Total
|
James B. Ream
President and Chief Executive Officer
|
|
2009
|
|
$
|
316,800
|
|
$
|
0
|
|
$
|
438,071
|
|
$
|
0
|
|
$
|
79,200
|
|
$
|
36,784
|
|
$
|
870,855
|
|
2008
|
|
$
|
344,347
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
293,883
|
|
$
|
30,882
|
|
$
|
669,112
|
|
2007
|
|
$
|
351,733
|
|
$
|
0
|
|
$
|
91,800
|
|
$
|
278,456
|
|
$
|
302,167
|
|
$
|
31,639
|
|
$
|
1,055,795
|
|
|
|
|
|
|
|
|
|
Lamphung Ngo-Burns
Vice President and Chief Financial Officer
|
|
2009
|
|
$
|
180,000
|
|
$
|
0
|
|
$
|
232,085
|
|
$
|
0
|
|
$
|
45,000
|
|
$
|
35,839
|
|
$
|
492,924
|
|
2008
|
|
$
|
178,283
|
|
$
|
0
|
|
$
|
21,735
|
|
$
|
0
|
|
$
|
87,500
|
|
$
|
36,245
|
|
$
|
323,763
|
|
2007
|
|
$
|
176,202
|
|
$
|
0
|
|
$
|
45,961
|
|
$
|
139,228
|
|
$
|
86,458
|
|
$
|
33,260
|
|
$
|
481,109
|
|
|
|
|
|
|
|
|
|
Charles R. Coble
Vice President Field Services, Purchasing and Corporate Real Estate
|
|
2009
|
|
$
|
190,000
|
|
$
|
0
|
|
$
|
242,757
|
|
$
|
0
|
|
$
|
47,500
|
|
$
|
38,723
|
|
$
|
518,980
|
|
2008
|
|
$
|
199,828
|
|
$
|
0
|
|
$
|
72,450
|
|
$
|
0
|
|
$
|
123,113
|
|
$
|
45,872
|
|
$
|
441,263
|
|
2007
|
|
$
|
202,447
|
|
$
|
0
|
|
$
|
64,321
|
|
$
|
208,842
|
|
$
|
125,107
|
|
$
|
36,990
|
|
$
|
637,707
|
|
|
|
|
|
|
|
|
|
Suzanne L. Johnson
Vice President General Counsel and Secretary
|
|
2009
|
|
$
|
166,042
|
|
$
|
0
|
|
$
|
201,080
|
|
$
|
0
|
|
$
|
42,708
|
|
$
|
22,367
|
|
$
|
432,197
|
|
2008
|
|
$
|
150,450
|
|
$
|
0
|
|
$
|
13,685
|
|
$
|
0
|
|
$
|
78,663
|
|
$
|
12,041
|
|
$
|
254,839
|
|
2007
|
|
$
|
154,750
|
|
$
|
0
|
|
$
|
30,600
|
|
$
|
87,018
|
|
$
|
78,000
|
|
$
|
10,808
|
|
$
|
361,176
|
|
|
|
|
|
|
|
|
|
James E Nides
Vice President Flight Operations And Maintenance
|
|
2009
|
|
$
|
190,000
|
|
$
|
0
|
|
$
|
242,757
|
|
$
|
0
|
|
$
|
47,500
|
|
$
|
30,281
|
|
$
|
510,538
|
|
2008
|
|
$
|
199,828
|
|
$
|
0
|
|
$
|
72,450
|
|
$
|
0
|
|
$
|
123,113
|
|
$
|
34,681
|
|
$
|
430,072
|
|
2007
|
|
$
|
202,447
|
|
$
|
0
|
|
$
|
64,321
|
|
$
|
208,842
|
|
$
|
125,107
|
|
$
|
39,213
|
|
$
|
639,930
|
|
|
|
|
|
|
|
|
|
Karen P. Miles
Vice President Human Resources And Administration
|
|
2009
|
|
$
|
180,500
|
|
$
|
0
|
|
$
|
232,620
|
|
$
|
0
|
|
$
|
45,125
|
|
$
|
25,521
|
|
$
|
483,766
|
|
2008
|
|
$
|
189,833
|
|
$
|
0
|
|
$
|
72,450
|
|
$
|
0
|
|
$
|
116,957
|
|
$
|
34,760
|
|
$
|
414,000
|
|
2007
|
|
$
|
191,548
|
|
$
|
0
|
|
$
|
64,321
|
|
$
|
208,842
|
|
$
|
118,309
|
|
$
|
44,276
|
|
$
|
627,296
|
(1)
|
These amounts represent the grant date fair value of equity-based awards granted by the Company during 2009, determined in accordance with FASB ASC Topic 718. For
a detailed discussion of our grant date fair value calculation methodology, including assumptions and estimates inherent therein, please refer to our Annual Report on Form 10-K for the year ended December 31, 2009 filed with the SEC on
March 2, 2010. Such discussion is found in our Form 10-K in Footnote 12 of the Consolidated Financial Statements.
|
(2)
|
Represents amounts earned under the companys Management Bonus Plan and Long Term Incentive Plan. As detailed below in the Grants of Plan-Based Awards
table for 2008, no amounts were paid under the Management Bonus Plan.
|
(3)
|
The amount reflected in this column for 2009 represents the value of:
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ream
|
|
Coble
|
|
Nides
|
|
Ngo-Burns
|
|
Johnson
|
|
Miles
|
(a) a tax reimbursement for the value imputed for flight benefits:
|
|
$
|
22,084
|
|
$
|
24,023
|
|
$
|
24,015
|
|
$
|
21,139
|
|
$
|
12,567
|
|
$
|
24,017
|
(b) matching contributions to our 401(k) plan:
|
|
$
|
14,700
|
|
$
|
14,700
|
|
$
|
6,266
|
|
$
|
14,700
|
|
$
|
9,800
|
|
$
|
1,504
|
(a)
|
As is customary in the airline industry, all of our named executive officers and their eligible family members receive space-available flight benefits. These benefits
do not bump fare-paying passengers. There is no incremental cost to providing these flight benefits because these costs are fixed due to the nature of our business. However, for tax purposes, income is imputed to our named executive
officers based on the Standard Industry Fare Level rates. The above dollar amounts represent imputed income and corresponding tax reimbursement payments made to our outside directors.
|
Grants of Plan-Based Awards for Fiscal Year Ended December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
Stock
Awards:
Number of
Shares
of Stock
or Units (3)
(#)
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh)
|
|
Grant
Date Fair
Value
of
Stock and
Option
Awards
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
|
|
|
James B. Ream
|
|
|
|
$
|
142,560
|
(1)
|
|
$
|
190,080
|
(1)
|
|
$
|
316,800
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
79,200
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5-22-09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69,445
|
|
|
|
$
|
|
|
$
|
100,001
|
|
|
1-4-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73,334
|
|
|
|
$
|
|
|
$
|
338,070
|
|
|
|
|
|
|
|
|
|
Lamphung Ngo-Burns
|
|
|
|
$
|
54,000
|
(1)
|
|
$
|
72,000
|
(1)
|
|
$
|
180,000
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
45,000
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5-22-09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,778
|
|
|
|
$
|
|
|
$
|
40,000
|
|
|
1-4-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,667
|
|
|
|
$
|
|
|
$
|
192,085
|
|
|
|
|
|
|
|
|
|
Charles R. Coble
|
|
|
|
$
|
57,000
|
(1)
|
|
$
|
76,000
|
(1)
|
|
$
|
190,000
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
47,500
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5-22-09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,778
|
|
|
|
$
|
|
|
$
|
40,000
|
|
|
1-4-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,982
|
|
|
|
$
|
|
|
|
S202,757
|
|
|
|
|
|
|
|
|
|
Suzanne L. Johnson
|
|
|
|
$
|
49,813
|
(1)
|
|
$
|
66,417
|
(1)
|
|
$
|
166,042
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
42,708
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5-22-09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,362
|
|
|
|
$
|
|
|
$
|
25,001
|
|
|
1-4-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,195
|
|
|
|
$
|
|
|
$
|
176,079
|
|
|
|
|
|
|
|
|
|
James E. Nides
|
|
|
|
$
|
57,000
|
(1)
|
|
$
|
76,000
|
(1)
|
|
$
|
190,000
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
47,500
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5-22-09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,778
|
|
|
|
$
|
|
|
$
|
40,000
|
|
|
1-4-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,982
|
|
|
|
$
|
|
|
$
|
202,757
|
|
|
|
|
|
|
|
|
|
Karen P. Miles
|
|
|
|
$
|
54,150
|
(1)
|
|
$
|
72.200
|
(1)
|
|
$
|
180,500
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
45,125
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5-22-09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,778
|
|
|
|
$
|
|
|
$
|
40,000
|
|
|
1-4-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,783
|
|
|
|
$
|
|
|
$
|
192,620
|
(1)
|
Represents amounts that could have been earned under our Management Bonus Plan. As indicated in the Compensation Discussion and Analysis, no amounts were paid under the
plan for 2007, 2008, and 2009.
|
(2)
|
Represents the cash portion paid under our Long Term Incentive Plan. The company elected to pay a portion of the Long Term Incentive Plan in stock issued in 2010.
|
(3)
|
Restricted stock award made to executives pursuant to our 2007 Stock Incentive Plan.
|
19
Outstanding Equity Awards at Fiscal Year End December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Option
Exercise
Price
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
|
|
|
Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested (1)
|
Charles R. Coble
|
|
2,000
|
|
|
|
|
$
|
114.90
|
|
5-7-10
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
|
$
|
126.60
|
|
5-5-11
|
|
|
|
|
|
|
|
|
1,500
|
|
|
|
|
$
|
112.40
|
|
4-1-12
|
|
|
|
|
|
|
|
|
2,000
|
|
|
|
|
$
|
89.90
|
|
5-11-12
|
|
|
|
|
|
|
|
|
2,813
|
|
937
|
(2)
|
|
$
|
54.00
|
|
5-3-13
|
|
|
|
|
|
|
|
|
3,000
|
|
3,000
|
(3)
|
|
$
|
61.20
|
|
5-23-14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,678
|
(4)
|
|
$
|
152,688
|
|
|
|
|
|
|
|
Suzanne Lehman Johnson
|
|
200
|
|
|
|
|
$
|
89.90
|
|
5-11-12
|
|
|
|
|
|
|
|
|
750
|
|
250
|
(2)
|
|
$
|
54.00
|
|
5-3-13
|
|
|
|
|
|
|
|
|
1,250
|
|
1,250
|
(3)
|
|
$
|
61.20
|
|
5-23-14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,249
|
(5)
|
|
$
|
87,960
|
|
|
|
|
|
|
|
Karen P. Miles
|
|
2,000
|
|
|
|
|
$
|
114.90
|
|
5-7-10
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
|
$
|
126.60
|
|
5-5-11
|
|
|
|
|
|
|
|
|
1,500
|
|
|
|
|
$
|
112.40
|
|
4-1-12
|
|
|
|
|
|
|
|
|
2,000
|
|
|
|
|
$
|
89.90
|
|
5-11-12
|
|
|
|
|
|
|
|
|
2,813
|
|
937
|
(2)
|
|
$
|
54.00
|
|
5-3-13
|
|
|
|
|
|
|
|
|
3,000
|
|
3,000
|
(3)
|
|
$
|
61.20
|
|
5-23-14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,678
|
(4)
|
|
$
|
152,688
|
|
|
|
|
|
|
|
Lamphung Ngo-Burns
|
|
300
|
|
|
|
|
$
|
114.90
|
|
5-7-10
|
|
|
|
|
|
|
|
|
200
|
|
|
|
|
$
|
108.20
|
|
9-1-11
|
|
|
|
|
|
|
|
|
750
|
|
|
|
|
$
|
112.40
|
|
4-1-12
|
|
|
|
|
|
|
|
|
500
|
|
|
|
|
$
|
89.90
|
|
5-11-12
|
|
|
|
|
|
|
|
|
1,500
|
|
500
|
(2)
|
|
$
|
54.00
|
|
5-3-13
|
|
|
|
|
|
|
|
|
2,000
|
|
2,000
|
(3)
|
|
$
|
61.20
|
|
5-23-14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,165
|
(6)
|
|
$
|
140,575
|
|
|
|
|
|
|
|
James E. Nides
|
|
2,000
|
|
|
|
|
$
|
114.90
|
|
5-7-10
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
|
$
|
126.60
|
|
5-5-11
|
|
|
|
|
|
|
|
|
1,500
|
|
|
|
|
$
|
112.40
|
|
4-1-12
|
|
|
|
|
|
|
|
|
2,000
|
|
|
|
|
$
|
89.90
|
|
5-11-12
|
|
|
|
|
|
|
|
|
2,813
|
|
937
|
(2)
|
|
$
|
54.00
|
|
5-3-13
|
|
|
|
|
|
|
|
|
3,000
|
|
3,000
|
(3)
|
|
$
|
61.20
|
|
5-23-14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,678
|
(4)
|
|
$
|
152,688
|
|
|
|
|
|
|
|
James B. Ream
|
|
3,500
|
|
|
|
|
$
|
114.90
|
|
5-7-10
|
|
|
|
|
|
|
|
|
2,500
|
|
|
|
|
$
|
126.60
|
|
5-5-11
|
|
|
|
|
|
|
|
|
4,250
|
|
|
|
|
$
|
112.40
|
|
4-1-12
|
|
|
|
|
|
|
|
|
3000
|
|
|
|
|
$
|
89.90
|
|
5-11-12
|
|
|
|
|
|
|
|
|
4,000
|
|
4,000
|
|
|
$
|
61.20
|
|
5-23-14
|
|
70,195
|
|
|
|
338,340
|
20
(1)
|
Determined by multiplying the $4.82 closing market price of our common stock on December 31, 2009 by the number of shares in the prior column.
|
(2)
|
The options were scheduled to vest in 25% increments on each of May 3, 2007, 2008, 2009 and 2010.
|
(3)
|
The options were scheduled to vest in 25% increments on each of May 23, 2008, 2009, 2010 and 2011.
|
(4)
|
Of the unvested shares of restricted stock remaining outstanding as of December 31, 2009, (a) 525 are scheduled to vest in 50% increments on May 23, 2010
and 2011, (b) 3,375 are scheduled to vest in 1,125 increments on May 22, 2010, 2011 and 2012, and (c) 27,778 are scheduled to vest in 25% increments on May 22, 2010, 2011, 2012 and 2013.
|
(5)
|
Of the unvested shares of restricted stock remaining outstanding as of December 31, 2009, (a) 250 are scheduled to vest in 125 increments on May 23, 2010
and 2011, (b) 637 are scheduled to vest in one-third increments on May 22, 2010, 2011 and 2012, and (c) 17,362 are scheduled to vest in 25% increments on May 22, 2010, 2011, 2012 and 2013.
|
(6)
|
Of the unvested shares of restricted stock remaining outstanding as of December 31, 2009, (a) 375 are scheduled to vest in 50% increments on May 23, 2010
and 2011, (b) 1,012 are scheduled to vest in one-third increments on May 22, 2010, 2011 and 2012, and (c) 27,778 are scheduled to vest in 25% increments on May 22, 2010, 2011, 2012 and 2013.
|
Option Exercises and Stock Vested for Fiscal Year Ended December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of Shares
Acquired on Exercise
(#)
|
|
Value Realized on
Exercise ($)
|
|
Number of Shares
Acquired on Vesting
(#)
|
|
Value Realized
Vesting (1)
|
James B. Ream
|
|
0
|
|
0
|
|
73,584
|
|
$
|
338,442
|
Lamphung Ngo-Burns
|
|
0
|
|
0
|
|
42,242
|
|
$
|
192,915
|
Charles R. Coble
|
|
0
|
|
0
|
|
45,495
|
|
$
|
204,939
|
Suzanne L. Johnson
|
|
0
|
|
0
|
|
38,577
|
|
$
|
176,630
|
James E. Nides
|
|
0
|
|
0
|
|
45,495
|
|
$
|
204,939
|
Karen P. Miles
|
|
0
|
|
0
|
|
43,296
|
|
$
|
194,802
|
(1)
|
Determined by multiplying the number of shares of stock that vested during 2009 by the closing market price of our common stock on the vesting date, as applicable, for
tax purposes.
|
Potential Payments Upon Termination or Change in Control
As discussed above under Compensation, Discussion and Analysis, we have employment agreements with each of Ms. Ngo-Burns,
Ms. Miles, Ms. Johnson and Messrs. Ream, Coble and Nides. These employment agreements may be terminated by us or by our executives at any time.
On December 1, 2009, we announced that Mr. Ream would retire from the Company effective January 1, 2010, after providing 15 years of combined service to our Company and its former parent,
Continental Airlines, Inc. The employment agreement covering Mr. Reams retirement was entered into at the time of our initial public offering, could not be unilaterally amended, and was not amended since our initial public offering except
to comply with certain changes in the law. The benefits Mr. Ream received under his employment agreement due to his retirement consisted of:
|
(i)
|
(A) accelerated vesting of 70,195 shares of restricted stock he held having a value of $234,724 (based on our stock price of $4.82 as of December 31, 2009),
(B) accelerated vesting of stock options to acquire 4,000 shares of stock having an in-the-money value of $0 (based on the exercise price of $61.20 exceeding our stock price of $4.82), and (C) an extension of the
post-termination exercise period to one year (within which Mr. Ream must exercise or forfeit his stock options);
|
|
(ii)
|
outplacement services for 12 months with an estimated value as of December 31, 2009 of $54,400;
|
|
(iii)
|
payout of the award Mr. Ream earned under our Long-Term Incentive Plan, consisting of $79,200 in cash plus 73,334 shares of stock having a value of $358,603 (based
on our stock price of $4.82 as of December 31, 2009);
|
21
|
(iv)
|
healthcare continuation coverage for Mr. Ream and his eligible dependents for the remainder of Mr. Reams life, including medical, health, dental, life
insurance, disability, vision care, accidental death and dismemberment, and prescription drugs, having an estimated value of $79,790; and
|
|
(v)
|
lifetime flight benefits on any airline operated by us or Continental Airlines, Inc., including (A) space available travel to Mr. Ream and eligible family
members, (B) positive space travel up to an annual value of $50,000 plus a tax gross-up of up to $10,000 (each subject to annual adjustment) relating to the value of any such positive space travel, (C) participation in Continental
Airlines frequent flyer program, and (D) participation in Continental Airlines airport lounge program.
|
In connection with his retirement, Mr. Ream did not receive any severance payment and no additional agreement for compensation or benefits was executed.
As to our other executives, if our Company terminated any of their employment for any reason other than
|
|
|
his or her material breach of the agreement, or
|
|
|
|
cause (defined as gross negligence, willful misconduct, or abuse of alcohol or drugs rendering him or her unable to perform),
|
then that executive would be entitled to the following benefits if the date of his or her employment termination was either
before the date of a change in control of our Company or more than 18 months following such change in control:
|
(i)
|
flight benefits estimated to be approximately $330,000 for each of Ms. Miles and Ms. Johnson and Messrs. Coble and Nides as of December 31, 2009.
However, Ms. Ngo-Burns does not have any similar lifetime flight benefits;
|
|
(ii)
|
insurance coverage limited up to 24 months, which benefits are valued at approximately $15,639 for Ms. Ngo-Burns, $42,952 for Ms. Johnson, $52,579 for
Messrs Coble, $19,263 for Messrs Nides and $57,669 for Ms. Miles;
|
|
(iii)
|
outplacement services for twelve months, valued at approximately $30,600 for Ms. Ngo-Burns, $28,227 for Ms. Johnson, $32,300 for Messrs Coble and Nides, and
$30,685 for Ms. Miles as of December 31, 2009;
|
|
(iv)
|
continued monthly salary payments for 24 months, combined value at approximately $360,000 for Ms. Ngo-Burns, $332,084 for Ms. Johnson, $380,000 for
Messrs Coble, $380,000 for Messrs Nides, and $361,000 for Ms. Miles as of December 31, 2009; and
|
|
(v)
|
at the discretion of our board of directors or its Human Resources Committee, a bonus, the value of which cannot currently be calculated.
|
However, if any of the executives were terminated by the Company for a reason other than death, incapacity, material breach or cause, or if
their termination of employment was due to a constructive termination, defined below, and in either case within 18 months following a change in control (or, in the case of termination by the Company, prior to a change in control to
avoid the change in control provisions of the employment agreement), our executive officers generally would each be entitled to (i), (ii), (iii) and (v), above, plus a lump-sum cash payment equal to the sum of: (x) a pro rata bonus payment
under the Companys Management Bonus Plan, plus (y) two times the executives base salary then in effect, plus (z) two times the amount of the target bonus under the Management Bonus Plan. As of December 31, 2009, such
aggregate bonus for each of our executive officers other than Messr Ream would be valued at approximately $504,000 for Ms. Ngo-Burns, $464,917 for Ms. Johnson, $532,000 for Messrs Coble, $532,000 for Messrs Nides, and $504,401 for
Ms. Miles.
For purposes of the above, the term constructive termination means:
|
|
|
the assignment to him or her of duties materially inconsistent with those associated with his or her position,
|
|
|
|
a material diminution in the nature or scope of his or her authority,
|
22
|
|
|
our conduct preventing him or her from performing his or her duties,
|
|
|
|
our requiring him or her to be permanently based outside a major urban center in Texas,
|
|
|
|
actions by us that materially adversely affect his or her corporate amenities, or
|
|
|
|
our material breach of the agreement,
|
Our executive officers would not be entitled to any tax gross-up due to benefits they receive.
COMPENSATION RISK MANAGEMENT
The companys
compensation policies and practices are described in the Compensation Discussion and Analysis section above. The Human Resources Committee worked jointly with the Audit Committee to assess the compensation practices of the company and to
analyze whether such compensation practices pose any material risk to the company. Following this analysis, it was determined that such policies and practices do not create risks that are reasonably likely to have a material adverse effect on the
company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As described above, each member of the Human Resources Committee of the board has been determined by the board to be independent. None of
these directors is or has been in the past an officer or employee of the company or any of its subsidiaries and none has any interlocking or other relationship with the company or its management requiring disclosure.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is currently comprised of four non-employee members of the board of directors. The board has reviewed any relationships that members of the Audit Committee may have with the company
and its management, as well as their background and qualifications. The board has determined that the members of the committee are independent and financially literate and that Mr. Badalamenti qualifies as an audit committee financial expert,
in accordance with the applicable definitions under the rules of the SEC and/or the NYSE.
The committee has a written charter
that is available on the companys website at
www.expressjet.com
. The committee reviews the charter annually and reports to the board on its adequacy in light of applicable NYSE and SEC rules. The board has adopted the charter,
consistent with those rules, and the company furnishes a written affirmation to the NYSE each year relating to the matters addressed in the foregoing paragraph and to the adequacy of the committees charter.
As required by its charter, the committee has:
|
(a)
|
reviewed and discussed with management and the companys independent registered auditors the audited financial statements of the company as of and for each of the
three years in the period ended December 31, 2009, and the audit of internal controls over financial reporting as of December 31, 2009, included in the companys annual report;
|
|
(b)
|
reviewed and discussed with the independent registered auditors the matters required to be discussed by the statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended (AICPA, Professional Standards, Vol. 1 A.U. section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T, and applicable SEC regulations;
|
|
(c)
|
received from the independent registered auditors the written disclosures and the letter delineating all relationships between such auditors and the company and the
other matters required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, as adopted by the Public Company Accounting Oversight Board in Rule 3600T;
|
|
(d)
|
reviewed and discussed with the independent registered auditors their independence; and
|
|
(e)
|
recommended to the board, based on the foregoing reviews and discussions, that the audited financial statements be included in the companys annual report on Form
10-K for the year ended December 31, 2009 for filing with the SEC.
|
23
Throughout the year, the committee meets with various employees and has access to all of the
companys employees. In addition to meeting with the independent registered auditors, who are appointed by and report directly to the committee, the committee is authorized to and may from time to time retain outside legal, accounting or other
advisors if it deems it necessary.
During the last year, the committee discussed with the companys internal and
independent registered auditors the overall scope and plans for their respective audits, the results of their examinations, their evaluations of the companys internal controls, and the overall quality of the companys financial reporting.
In addition, the committee reviewed with the independent registered auditors their judgment as to the quality, and not just the acceptability, of the companys accounting policies, and determined that the non-audit services provided by the
independent registered auditors to the company are compatible with maintaining the independence of the independent registered auditors.
Although the committee is charged with overseeing the companys accounting and financial reporting processes and the audit of its financial statements, the charter makes clear that it is not the duty
of the committee to plan or conduct audits or to determine that the companys financial statements are complete, accurate and in accordance with generally accepted accounting principles. Management is responsible for the companys
financial reporting process including its system of internal controls, and for the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States. The independent registered auditors
are responsible for expressing an opinion on those financial statements and opinions on managements assessment of internal control and the effectiveness of internal controls over financial reporting.
We have relied, without independent verification, on managements representation that the financial statements have been prepared with
integrity and objectivity and in conformity with accounting principles generally accepted in the United States. We have also relied on the representations of the independent registered auditors in their report on the companys financial
statements. Our oversight does not provide us with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and procedures designed to
assure compliance with accounting standards and applicable laws and regulations. Furthermore, our reviews and discussions with management and the independent registered auditors do not assure that the companys financial statements are
presented in accordance with generally accepted accounting principles or that the audit of the companys financial statements has been carried out in accordance with standards promulgated by the Public Company Accounting Oversight Board.
Audit Committee
Salvatore
J. Badalamenti, Chairman
George R. Bravante, Jr.
Janet M. Clarke
Alan H. Freudenstein
24
REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED
PERSONS
We review any transaction in which the company, a subsidiary of the company, and our directors, executive
officers or their immediate family members or any nominee for director or a holder of more than 5% of any class of our voting security are a participant and the amount of the transaction exceeds $120,000. Our General Counsel is primarily responsible
for the development and implementation of processes and controls to obtain information from directors and officers with respect to a related party transaction, including information provided to management in the annual director and officer
questionnaires.
CODE OF ETHICS
ExpressJets board has approved the Principles of Conduct, which are applicable to all directors, officers and employees of
the company, including the principal executive officer, the principal financial officer and the principal accounting officer. The Principles of Conduct are available on our website at
www.expressjet.com
and in print without charge to
any stockholder who sends a written request to the companys Secretary at our principal executive offices. We will post any amendments to or waivers of this code for our directors or executive officers, including the principal executive
officer, principal financial officer and principal accounting officer, at this location on our website.
25
Proposal 1:
ELECTION OF DIRECTORS
It is the intention of the persons named in the enclosed form of proxy, unless otherwise instructed, to vote duly executed proxies for the election of the nominees for director listed below. Pursuant to
our bylaws, directors will be elected by a plurality of the votes duly cast at the Meeting. We do not expect the nominees to be unavailable to serve for any reason, but if that should occur before the Meeting, we anticipate that proxies will be
voted for other nominees to be selected by the board of directors.
General
Our board of directors currently consists of nine persons, four Class III directors with terms expiring at the Meeting, two Class I
directors with terms expiring at the 2011 annual meeting of stockholders, and three Class II directors with terms expiring at the 2012 annual meeting of stockholders. There is no family relationship between the nominees for director and any
other director or executive officer. Mr. Loftus, a member of Class III, voluntarily elected not to stand for reelection at the expiration of his term in May 2010. As part of the Companys overall cost-cutting initiatives, the board of
directors has decreased the size of the board by one, effective upon the expiration of Mr. Loftus term in May 2010, thereby reducing associated expenses.
At the Meeting, stockholders will vote on the nominees for Class III listed below. The Class III directors elected at the Meeting will serve until the annual meeting of stockholders in 2013 or
until their respective successors have been duly elected and have qualified. The following table shows (i) the nominees names and ages, (ii) the period for which each has served as a director, (iii) all positions and offices
with ExpressJet currently held by the nominees and their principal occupations and business experience during the last five years, (iv) qualifications that led to selection of the nominee as a director, (v) other directorships held by the
nominees during the last five years, and (vii) the standing committees of the board of directors on which they serve.
Nominees to
Serve Three-Year Terms Expiring at the 2013 annual meeting (Class III Directors)
|
|
|
Name, Age, Position and Committee Memberships
|
|
Term of Office and Business
Experience
|
|
|
SALVATORE J. BADALAMENTI, age 50,
Director (Audit Committee, Chair; Human Resources Committee)
|
|
Mr. Badalamenti has been a director since October 2006. He retired from Kohlberg Kravis Roberts & Co. (a management buyout
firm) in 1999, having served in a number of positions there since 1985, most recently as Chief Financial Officer.
The board sought Mr. Badalamentis participation as a director due to his extensive financial experience at the corporate, partnership, non-profit, public, and private levels in order to serve as one
of the Boards financial experts. As Chair of the Audit Committee, Mr. Badalamenti has diligently applied the traits that led to his selection, including financial acumen, attention to detail, knowledge of rules and regulations governing
the financial reporting of a publicly traded company, risk management, and financial strategic oversight. Mr. Badalamenti possesses an in-depth understanding of finance from his prior service as a Chief Financial Officer for Kohlberg Kravis
Roberts & Co. which he has utilized in his review and oversight of the companys financial matters.
|
|
|
KIM A. FADEL, age 57,
Director
(Human Resources Committee; Nominating and Corporate Governance Committee)
|
|
Mr. Fadel has been a director since May 2002. He retired in December 2007 as Managing Counsel, Retail Markets for BellSouth
Telecommunications, Inc. d/b/a AT&T of the Southeast, a position he held since 2006. He was Chief CounselSmall Business Services for BellSouth Corporation from 2000-2006.
Preparing for the launch of ExpressJet Airlines in 2002, Continental Airlines
determined that Mr. Fadels experience as Chief Counsel, Small Business Services, at BellSouth Corporation, a Fortune 500 corporation, was relevant particularly given his background as the chief business counsel for a major corporate division
with profit and loss responsibility with $2.5 billion in revenues in a mass market commodity services industry; this industry was both regulated at the federal and state level and subject to significant
|
26
|
|
|
|
|
competition. Mr. Fadel was instrumental with a turnaround growth strategy that led to this division becoming the small business leader in the telecommunications carrier
industry. Mr. Fadel has applied his knowledge and experience on legal, regulatory, and business matters during his tenure as a director with the ExpressJet.
|
|
|
JUDITH R. HABERKORN, age 63,
Director (Human Resources Committee; Nominating and Corporate Governance Committee, Chair)
|
|
Ms. Haberkorn has been a director since June 2006. She retired in June 2000 from Bell Atlantic Corp. (telecommunications) and its
predecessors, having served in a number of positions there since 1968, most recently as PresidentConsumer Sales & Service. Ms. Haberkorn is also currently a director of Armstrong World Industries, Inc. and Computer Sciences
Corporation. Within the last five years she has additionally served as a director on the boards of Enesco Corporation, MCI, and the advisory board of Norfolk Southern Railroad.
Multiple talents and assets led the board to recruit and select Ms. Haberkorn for board
membership. With her management experience at Bell Atlantic Corp., Ms. Haberkorn brings to the board demonstrated senior-level leadership experience. Through her various positions at Bell Atlantic Corp., Ms. Haberkorn also brings to the
board a broad understanding of operations, sales, marketing, brand management, and general communications matters that affect large companies, which are areas that are critical to the airline industry. Ms. Haberkorns broad experience as a
director makes her the ideal candidate to advise the board on various governance issues and to serve as the Chair of the Nominating and Governance Committee. Her insights into executive compensation issues and strategies as a result of both her
business and board director experience bring value to the companys Human Resources Committee. Finally, her decisive analysis of complex problems and practical approach to resolving issues is invaluable in the context of managing a
publicly-traded company.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF THE
NOMINEES NAMED ABOVE, WHICH IS DESIGNATED AS PROPOSAL NO. 1 ON THE ENCLOSED PROXY.
Incumbent Directors
The following describes incumbent directors of the company whose terms will expire at the end of the terms described below. The following
table shows (i) the incumbent directors names and ages, (ii) the period for which each has served as a director, (iii) all positions and offices with ExpressJet currently held by the incumbent directors and their principal
occupations and business experience during the last five years, (iv) other directorships held by the incumbent director and (v) the standing committees of the board of directors on which they serve.
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Name, Age, Position and Committee Memberships
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Term of Office and Business
Experience
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Directors Serving a Term Expiring at the 2010 Annual Meeting (Class III Director).
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WILLIAM F. LOFTUS, age 71,
Director
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Mr. Loftus has been a director since September 2008. He is the managing director of LoftusGroup LLC, a management and consulting firm.
Prior to founding the LoftusGroup in 1999, he held senior executive positions in several Fortune 100 companies and served as Senior Vice President and Chief Financial Officer of USAir Inc. His recent consultant assignments have included positions as
Chief Executive Officer, Chief Financial Officer and Chief Restructuring Officer in numerous situations, including serving as Executive Vice President and Chief Financial Officer for Hawaiian Airlines.
Mr. Loftus was selected as a director in accordance with an agreement dated March 17,
2008 between the company and Hayman Advisors, L.P. and its affiliates, pursuant to which Hayman agreed to cease efforts related to a proxy solicitation and withdraw its own nominations to the board for the 2008 annual meeting. He is not standing for
reelection at the 2010 annual meeting.
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Directors Serving a Term Expiring at the 2011 Annual Meeting (Class I Directors).
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PATRICK KELLY, age 52,
(Audit
Committee; Nominating and Corporate Governance Committee; Interim President and CEO)
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Mr. Kelly has served on ExpressJets Audit Committee and Nominations and Corporate Governance Committee, but is currently serving
as Interim President and Chief Executive Officer. Mr. Kelly is the former Chief Financial Officer of Vignette Inc. (software), where he worked from July 2006 to July 2009. Prior to that, he was the Director of Global Facilities Planning for
Dell Inc. (computer manufacturing) from February 2005 to June 2006; self-employed from July 2004 to February 2005; Chief Financial Officer of Trilogy Software 1998-2004.. Prior to joining Trilogy, he was Chief Financial Officer of Sabre, a global
travel distribution company, for three years and had worked for American Airlines for 11 years.
Mr. Kellys experience with public and private companies as a chief financial officer, his airline and travel industry experience, his analytical business skills, and his leadership ability led to
his election to the board of ExpressJet. These same qualities made him an ideal candidate for the role of Interim President and Chief Executive Officer. Mr. Kelly has been an asset in this role, with 25 years of business experience,
including airline industry experience both from the ExpressJet Board for the past 2 years and from his 11 years with American Airlines. In addition, Mr. Kelly has 12 years of experience as a Chief Financial Officer for private and public
companies, including Sabre, one of the worlds leading global travel distribution companies. Mr. Kellys most recent role as Chief Financial Officer of Vignette, Inc. (NasdaqGS:VIGN), an Austin-based content management software
company which merged with Open Text Corporation in July 2009, provided him with a strong up to date foundation in public company strategy. With Mr. Kellys guidance in the interim role, ExpressJet is well-prepared to continue its solid
performance while considering candidates to fill the CEO role on a long term basis. At the time that the CEO role is filled, Mr. Kelly will return to his board service with the additional insights earned through his in-depth work in the
company.
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BONNIE S. REITZ, age 57,
(Human Resources Committee; Nominating and Corporate Governance Committee)
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Ms. Reitz has been a director since July 2006. She is the founder of Inside Out Culture to Customer, a consulting company
(April 2003-present) and previously served as Senior Vice PresidentSales and Distribution of Continental Airlines, Inc. (1996-March 2003). Ms. Reitz has served as Director of PNM Resources, Inc., where she has been Chair of the
HR and Governance committees for five years. She also serves on the board of FareLogix, a privately held travel distribution company that is changing travel distribution opportunities through the innovative use of technology.
The board selected Ms. Reitz as a director due to her extensive business sector
experience and acumen, including thirty three years of airline and travel distribution experience. Ms. Reitzs in-depth experience in the travel industry ranges from top executive management and strategic roles to front line ticket sales and
operational positions as well as management and executive strategic and financial experience. Ms. Reitzs extensive knowledge of the travel industry offers the Board a deep understanding of our business and an ability to communicate with
management regarding key operational issues that greatly enhances the boards overall effectiveness. Due to her knowledge, Ms. Reitz is a tremendous asset to the boards Human Resources and Nomination and Governance Committees. Her
director experiences with PNM Resources, Inc. and FareLogix compliment her ability to serve on the ExpressJet board.
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Directors Serving a Term Expiring at the 2012 Annual Meeting (Class II Directors).
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GEORGE R. BRAVANTE, JR., age 51,
Chairman of the Board (Audit Committee; Executive Committee; Nominating and Corporate Governance Committee)
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Mr. Bravante has been a director since July 2004 and has been our independent Chairman since 2005. He is the founder and General
Partner of Bravante-Curci Investors, LP, a merchant bank focusing on real estate investments in California. He has held this position since 1996. From 1994-1996, Mr. Bravante was President and Chief Operating Officer of Colony Advisors, Inc., a
real estate asset management company, and President and Chief Operating Officer of American Real Estate Group, Inc. where he was primarily responsible for the strategic management, restructuring and disposition of assets.
Mr. Bravante was elected to the board based on his financial and strategic business
knowledge, including investment strategy, consumer marketing, distribution, and sales. The Board has also determined that Mr. Bravantes broad executive experience provides him with key skills in working with directors, understanding board
processes and functions, responding to financial, strategic and operational challenges and opportunities of our business and overseeing management. Furthermore, the Board believes that the depth and breadth of Mr. Bravantes exposure to
complex financial and strategic issues throughout his career make him a valuable asset to our Audit Committee. The Board has concluded that all of these attributes make him the ideal person to lead the board as our independent (non-executive)
Chairman.
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JANET M. CLARKE, age 57,
Director (Audit Committee; Human Resources Committee, Chair)
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Ms. Clarke has been a director since May 2002 and has served in various roles and committees. She has been Chair of the Human
Resources Committee since 2002. Ms. Clarke is the founder of Clarke Littlefield LLC (a marketing technologies advisory firm) and has served as its President since June 2003 and previously from 2001 to 2002. She was the Chief Marketing
Officer of DealerTrack, Inc. (September 2002 to June 2003). Ms. Clarke was the Chair and Chief Executive Officer of KnowledgeBase Marketing, a subsidiary of Young and Rubicam, Inc., from February 2000 through
February 2001. Ms. Clarke served as Managing Director, Global Database Marketing at Citibank for Citigroups consumer business from May 1997 until February 2000. Ms. Clarke is also a director of Asbury Automotive
Group, Inc. and Cox Enterprises, Inc. Former board service during the past five years includes Cox Communications, Inc., Gateway Corporation, and eFunds Corporation. Ms. Clarke was elected to the board due to her marketing and strategic
business expertise, as well as her expertise in compensation analysis. As a long-standing board member, she also possesses extensive knowledge of the industry and an in-depth understanding of ExpressJets corporate history.
The board selected Ms. Clarke in May 2002 and its judgment has consistently been
affirmed through her contributions each year. Ms. Clarke offers significant business experience to the board in the areas of marketing and marketing technology, as a result of the various senior management positions she has held in large
corporations and at Clarke Littlefield. In addition, her broad range of experience as a director and deep understanding of board oversight and diligence requirements lend valued support to the board as a whole. Ms. Clarkes valuable
experience regarding executive compensation makes her a tremendous asset as our Human Resource Committee Chair. Further, as a long-standing board member, Ms. Clarke possesses an in-depth understanding of ExpressJets corporate history,
including not only compensation, but strategic and financial matters.
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ALAN H. FREUDENSTEIN, age 45,
(anticipated to be appointed to the Audit Committee)
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Mr. Freudenstein has been a director since 2009. He is a Managing Director of Credit Suisse where he manages private equity investments
on behalf of the investment bank. Mr. Freudenstein currently serves as a director of a number of companies, including: ICON Health & Fitness, US Health Group, ENSYN Renewables Inc., ESP Technologies Corp and DynamicOps LLC. Prior to joining the
Credit Suisse in 2000, Mr. Freudenstein was a Managing Director at Bankers Trust Company, where he was responsible for incubation and venture investments within the new world ventures group. Mr. Freudenstein was previously a management
consultant at Booz Allen & Hamilton and an equity research analyst at Salomon Brothers.
Mr. Freudenstein was selected as a director in accordance with an agreement dated February 23, 2009 between the company and Credit Suisse. He has contributed to the board process through his strength
in financial analysis and business strategy, as well as an in-depth understanding of the stockholder perspective and investor relations.
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Proposal 2:
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Audit Committee of the board of directors
desires to continue to engage the services of KPMG LLP for the fiscal year ending December 31, 2010. Accordingly, the Audit Committee has appointed KPMG to audit the financial statements of ExpressJet and its subsidiaries for fiscal 2010 and
report on those financial statements, subject to stockholder approval. Stockholders are being asked to vote upon the ratification of the appointment. If stockholders do not ratify the appointment of KPMG, the Audit Committee will reconsider their
appointment.
On November 4, 2008, the Audit Committee of the Board of Directors of ExpressJet Holdings, Inc. (the
Company) dismissed Ernst & Young LLP (Ernst & Young) as the Companys independent registered public accounting firm starting with the annual audit for the calendar year ending December 31, 2009. On
November 26, 2008, the Company engaged KPMG LLP to serve as the Companys independent registered public accounting firm for the fiscal year ending December 31, 2009. The reports of Ernst & Young on the financial statements of
the Company for the years ended December 31, 2008 and 2007 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the Companys two most
recent fiscal years and subsequent interim period through the filing of the Annual Report for the year ended December 31, 2009 (Annual Report), there have been no disagreements with Ernst & Young on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Ernst & Young would have caused it to make reference to the subject matter of such
disagreements in their reports on the financial statements for such years. Further, there have been no reportable events as defined under Item 304 of Regulation S-K. With the filing of the Companys 2008 Annual Report,
Ernst & Youngs dismissal became effective.
Fees paid to ExpressJets independent auditors during the last
two years were as follows:
Audit Fees.
Ernst & Youngs fees billed for professional services rendered
for (i) the audit of the companys consolidated financial statements and matters related to our capacity purchase agreements and segment reporting included in our annual report on Form 10-K and managements assessment of the
effectiveness of its internal control over financial reporting in compliance with the Sarbanes-Oxley Act, (ii) reviews of the financial statements included in our quarterly reports on Form 10-Q and (iii) services associated with SEC
registration statements, periodic reports and other documents filed with the SEC or issued in connection with securities offerings (such as comfort letters and consents) during 2008 were $1,347,898. Additional fees billed by Ernst & Young
for professional services during 2009 were $80,600.
KPMG LLPs fees billed for professional services rendered for
(i) the audit of the companys consolidated financial statements and matters related to our capacity purchase agreements and segment reporting included in our annual report on Form 10-K and managements assessment of the effectiveness
of its internal control over financial reporting in compliance with the Sarbanes-Oxley Act, (ii) reviews of the financial statements included in our quarterly reports on Form 10-Q and (iii) services associated with SEC registration
statements, periodic reports and other documents filed with the SEC or issued in connection with securities offerings (such as comfort letters and consents) during 2009 and 2008 were $827,047 and $0 respectively.
Audit-Related Fees.
Audit-related fees refer to costs associated with the financial statement audits or our employee benefit plans
and not reported under Audit Fees above. No audit-related fees were paid to Ernst & Young or KPMG LLP during 2009 and 2008 as these services were provided by another audit firm.
Tax Fees.
Tax fees billed by Ernst & Young during 2008 totaled $73,717, for tax planning, review of federal, state, local
and international income, franchise and other tax returns and miscellaneous tax related services. Additional fees billed by Ernst & Young for tax services during 2009 totaled $119,741.
Tax fees billed by KPMG LLP during 2009 and 2008 totaled $175,942 and $0 respectively, for tax planning, review of federal, state, local and
international income, franchise and other tax returns and miscellaneous tax related services.
All Other Fees.
No other
fees were billed by KPMG or Ernst & Young during 2009 or 2008.
The Audit Committee has considered whether the
provision of the non-audit services described above by an external auditor is compatible with maintaining the independent auditors independence, and determined that these non-audit services are compatible with the required independence. The
Audit Committee is required by its charter to approve all services to be provided to the company by the independent auditors. This includes the pre-approval of (i) all audit services and (ii) any significant (i.e., not de minimis)
non-audit services. The Audit Committee has delegated to its chairman, the authority to pre-approve certain of these services, which services are then presented to the full committee at its next regular meeting.
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Representatives of KPMG will attend the Meeting to respond to appropriate questions and may
choose to make a statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF
THE INDEPENDENT AUDITORS, WHICH IS DESIGNATED AS PROPOSAL NO. 2 ON THE ENCLOSED PROXY.
OTHER
MATTERS
We have not received notice as required under our bylaws of any other matters to be proposed at the Meeting.
Consequently, the only matters to be acted on at the Meeting are those described in this proxy statement, along with any necessary procedural matters related to the Meeting. As to procedural matters, or any other matters that are determined to be
properly brought before the Meeting calling for a vote of the stockholders, it is the intention of the persons named in the accompanying proxy, unless otherwise directed in that proxy, to vote on those matters in accordance with their best judgment.
Section 16(a) Beneficial Ownership Reporting Compliance
Each director, executive officer (and, for a specified period, certain former directors and executive officers) and each holder of more than
ten percent of a class of our equity securities is required to report to the SEC his or her pertinent position or relationship, as well as transactions in those securities, by specified dates. Based solely upon a review of reports on Forms 3 and 4
(including any amendments) furnished to us during our most recent fiscal year and reports on Form 5 (including any amendments) furnished to us with respect to our most recent fiscal year, and written representations from officers and directors
that no Form 5 was required, we believe that all filings applicable to our officers, directors and beneficial owners required by Section 16(a) of the Exchange Act were filed on a timely basis during 2009.
2011 Annual Meeting
Any stockholder who wants to present a proposal at the 2011 annual meeting of stockholders and to have that proposal set forth in the proxy statement and form of proxy mailed in conjunction with that
annual meeting must submit the proposal in writing to the Secretary of the company at our principal executive offices by December 3, 2010 to be considered for inclusion in the proxy statement and form of proxy relating to that meeting.
Our bylaws require that for nominations of persons for election to the board of directors or the proposal of business not
included in our notice of the meeting to be considered by the stockholders at an annual meeting, a stockholder must give timely written notice. To be timely for the 2011 annual meeting of stockholders, that notice must be delivered to the
companys Secretary at our principal executive offices not less than 45 days and not more than 75 days prior to April 5, 2011. However, if the 2011 annual meeting of stockholders is advanced by more than 30 days, or delayed
by more than 30 days, from May 13, 2011, then the notice must be delivered not later than the close of business on the later of (a) the ninetieth day prior to the 2011 annual meeting or (b) the tenth day following the day on
which public announcement of the date of the 2011 annual meeting is first made. The notice must contain and be accompanied by certain information as specified in the bylaws. We recommend that any stockholder desiring to make a nomination or submit a
proposal for consideration obtain a copy of our bylaws, which are available on our website at
www.expressjet.com
or may be obtained without charge through a written request addressed to the Secretary at our principal executive offices.
EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE BY INTERNET OR TELEPHONE AS DESCRIBED ABOVE IN THE PROXY STATEMENT, OR
SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED PROXY.
You can view our Annual Report on Form 10-K for the year ended
December 31, 2009, including exhibits, or fill out our online request to get a copy of the 10-K (excluding exhibits) by mail, free of charge, by visiting Investor Relations at
www.expressjet.com
or sending your
request to Investor Relations, 700 North Sam Houston Parkway West, Ste 200, Houston, TX 77067. We will furnish to interested security holders a copy of any exhibit to the 10-K, if requested in writing and accompanied by payment of reasonable fees
relating to our furnishing the exhibit. Requests for copies should be addressed to the companys Secretary at the companys headquarters at 700 North Sam Houston Parkway West, Ste 200, Houston, Texas 77067.
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YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
We encourage you to take advantage of Internet or telephone voting.
Both are available 24 hours a day, 7 days a week.
Internet and telephone voting is available through 11:59 PM Eastern Time on May 12, 2010.
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INTERNET
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EXPRESSJET HOLDINGS, INC.
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http://www.proxyvoting.com/xjt
Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site.
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OR
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TELEPHONE
1-866-540-5760
Use any touch-tone telephone to vote your proxy. Have your proxy card in
hand when you call.
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If you vote your proxy by Internet or by telephone, you do NOT need
to mail back your proxy card.
To vote by mail, mark, sign and date your
proxy card and return it in the enclosed postage-paid envelope.
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Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.
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71151
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FOLD AND DETACH HERE
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Please mark your votes as
indicated in this example
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x
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FOR
ALL
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WITHHOLD
FOR ALL
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*EXCEPTIONS
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FOR
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AGAINST
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ABSTAIN
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1.
To elect three Class III directors to serve terms expiring at the 2013 annual stockholders
meeting.
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¨
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2.
To consider and act upon a proposal to ratify the appointment of KPMG LLP as independent
auditors of the company and its subsidiaries for 2010.
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¨
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Nominees:
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01 Kim A. Fadel
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02 Judith R. Haberkorn
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03 Salvatore J. Badalamenti
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(INSTRUCTIONS: To withhold authority to vote for
any individual nominee, mark the Exceptions box above and write that nominees name in the space provided below.)
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*Exceptions
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Mark Here for Address Change or Comments
SEE REVERSE
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¨
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Signature
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Signature
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Date
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NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
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You can now
access your ExpressJet Holdings, Inc. account online.
Access your
ExpressJet Holdings, Inc. account online via Investor ServiceDirect
®
(ISD).
BNY Mellon Shareowner Services, the transfer agent for ExpressJet Holdings, Inc., now
makes it easy and convenient to get current information on your shareholder account.
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View account status
View certificate history
View book-entry information
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View payment history for dividends
Make address changes
Obtain a duplicate 1099 tax
form
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Visit us on the web at
http://www.bnymellon.com/shareowner/isd
For Technical Assistance Call 1-877-978-7778 between
9am-7pm
Monday-Friday Eastern Time
Investor ServiceDirect
®
Available 24 hours per day, 7 days per week
TOLL FREE NUMBER: 1-800-370-1163
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Choose
MLink
SM
for fast, easy and secure 24/7 online
access to your future proxy materials, investment plan statements, tax documents and more. Simply log on to
Investor ServiceDirect
®
at
www.bnymellon.com/shareowner/isd
where step-by-step instructions will prompt you through enrollment.
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Important notice regarding the Internet
availability of proxy materials for the Annual Meeting of Stockholders.
The Proxy Statement and the 2010 Annual Report to Stockholders are available at:
http://www.expressjet.com
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q
FOLD AND DETACH HERE
q
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EXPRESSJET HOLDINGS,
INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
May 13, 2010
This Proxy Is Solicited on Behalf
of the Board of Directors
The
undersigned hereby authorizes T. Patrick Kelly and Suzanne L. Johnson, and each of them, with full power of substitution, to represent and vote the stock of the undersigned in ExpressJet Holdings, Inc. as directed and, in their sole discretion, on
all other matters that may properly come before the Annual Meeting of Stockholders to be held on May 13, 2010, and at any adjournment or postponement thereof, as if the undersigned were present and voting thereat. The undersigned acknowledges
receipt of the notice of annual meeting and proxy statement with respect to such annual meeting. Pursuant to federal law and the Certificate of Incorporation of ExpressJet Holdings, Inc., voting stock is subject to certain foreign ownership
restrictions. By signing below, the undersigned represents that it is a U.S. Citizen as that term is defined in the companys proxy statement or that the shares of stock represented by this Proxy have been registered on the
companys Foreign Stock Record.
Whether or not
you expect to attend the annual meeting, please vote your shares. As explained on the other side of this proxy, you may vote by internet or by telephone, or you may execute and return this proxy, which may be revoked at any time prior to its
use.
This proxy, when properly executed, will
be voted in the manner directed by the undersigned stockholder(s). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS NAMED ON THE OTHER SIDE OF THIS PROXY (PROPOSAL 1), AND FOR THE
RATIFICATION OF INDEPENDENT AUDITORS (PROPOSAL 2).
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Address Change/Comments
(Mark the corresponding box on the reverse
side)
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BNY MELLON SHAREOWNER SERVICES
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P.O. BOX 3550
SOUTH
HACKENSACK, NJ 07606-9250
(Continued and to be marked, dated and
signed, on the other side)
71151
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