UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE l4A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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ATLAS AIR WORLDWIDE HOLDINGS, INC. | ||||
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![]() Shareholder Engagement Shareholder Engagement Proxy Season 2015 Proxy Season 2015 |
![]() Executive Summary 2 Pay for Performance Alignment Shareholder Outreach and Responsiveness Business Performance Commitment to Best Practices Capital Allocation Strategy We made changes to our compensation program as a result of shareholder engagement, including changes being implemented in 2014 after last year’s vote In late 2014 – early 2015, we reached out to nearly 75% of shares outstanding to discuss governance and compensation matters We delivered strong performance in 2014 with total shareholder return of 21.3%, significantly exceeding peers; this strong performance has continued into 2015 We executed on a strategic plan that positioned us to capitalize on market improvement and the strong operating leverage of our model We remain committed returning value to shareholders; in 2014, we maintained a strong cash position and repurchased 1.8% of outstanding shares (after repurchasing 6.5% in the prior year) More than 65% of total compensation opportunity is performance-based, including majority of long-term compensation Robust process for setting performance metrics to align with our short- and long- term operating plans, budget and anticipated market conditions Payouts strongly linked to company performance: 2012 – 2014 long-term (3 year) performance awards vested at 25% (50% of target) while 2014 annual incentive payout was 2x target, reflecting performance during respective periods We maintain strong, well-balanced governance practices, including a highly qualified board, independent board leadership, and best practices that promote accountability and protect shareholder rights |
![]() Following extensive shareholder outreach in 2013 and the first half of 2014, we continued to maintain an active dialogue with our shareholders over the last year In late 2014 – early 2015, we reached out to holders of nearly 75% of our outstanding shares to help our Board better understand the evolving perspectives of our shareholders regarding the Company’s governance and compensation practices In response to these outreach efforts, we held in person or telephonic meetings with holders of approximately 55% of our outstanding shares We continue to engage extensively with our investors to solicit their points of view and consider further improvement Shareholder Outreach and Engagement 3 We value our shareholders’ input and continue to solicit feedback |
![]() Strong Performance in 2014 4 The Company performed well in 2014, delivering strong stock price performance and total shareholder return We executed on our strategic initiatives to strengthen and diversify our business mix, expand our customer base, generate cost savings through operating efficiencies, and enhance our portfolio of assets and services Our results reflected the strength of our ACMI and Charter businesses, growth in Dry Leasing, progress in our efficiency and productivity initiatives, and an increase in the average utilization of our operating fleet during the year as we capitalized on improving market demand Operating Revenue $1.8 billion 9% v. 2013 2014 Total Shareholder Return Financial Results Net Income $106.8 million EPS $4.25 14% v. 2013 16% v. 2013 1 All calculations as of 12/31/2014. AAWW and Russell TSR calculations reflect change in share price plus returns of capital, including dividends and share repurchases; S&P SmallCap 600 reflects only change in index value 1 |
![]() Strong TSR Performance for 2014 & 2015 AAWW and Russell 2000 Total Shareholder Return (TSR) calculations reflect change in share price plus returns of capital, including dividends and share repurchases. S&P SmallCap 600 reflects only change in index value. All calculations are as of May 15, 2015. Last Year Through The Present Last 12 Months 5 |
![]() ~70-75% of AAWW block hours ACMI Provide outsourced cargo and passenger aircraft operating solutions, including aircraft, crew, maintenance and insurance. Customers assume fuel, demand and yield (rate) risk and most other operational fees and costs CMI (Crew, Maintenance and Insurance) Provides outsourced cargo and passenger aircraft operating solutions, including the provision of crew, maintenance and insurance, while customers provide the aircraft and assume fuel, demand and yield risk and most other operational fees and costs We are a leading global provider of outsourced aircraft and aviation services, operating the world’s largest fleet of Boeing 747 freighters, as well as Boeing 747 and 767 passenger aircraft and Boeing 767 freighters ACMI (Aircraft, Crew, Maintenance, and Insurance) A Diverse Service Provider of Global Airfreight 6 ~25-30% of AAWW block hours Provides cargo and passenger aircraft charter services to customers including the U.S. Military Air Mobility Command, brokers, freight forwarders, direct shippers, airlines, sports teams and fans, and private charter customers Charter Revenue not tied to block hours Provide cargo and passenger aircraft and engine leasing solutions Significantly growing part of our business Dry Leasing Reportable Segments |
![]() Disciplined Capital Allocation Strategy 7 2014 Actions Share Repurchases Paid down ~$200 million of debt Acquired three 777Fs for Dry Leasing Maintained strong cash position Repurchased 1.8% of outstanding shares (after repurchasing 6.5% the prior year) Remaining authority for up to $45 million Repurchases do not affect EPS or other incentive metric calculations We are committed to creating, enhancing and returning value to our shareholders through the disciplined execution of our capital allocation strategy |
![]() Changes to Compensation Program for 2014 and Beyond in Response to Shareholder Feedback 8 In response to shareholder feedback last year, our Compensation Committee made significant changes to our 2014 compensation program to further link pay and performance and enhance market alignment CEO Compensation Benchmarking 2014 CEO long-term incentive plan (LTI) award grants targeted at median of benchmark peer group; all future CEO total direct compensation pay decisions targeted at median of peers Annual Bonus Performance Metrics Further decreased individual performance element weight for CEO to 20% in 2014 (versus 30% in 2013) Annual CEO incentive objective weightings include: 60% EPS, 20% customer service and 20% individual Peer Group Revised the 2014 peer group to consist of 20 companies in industries similar to ours, with median revenue size approximately equal to AAWW revenues (including revenues of Polar) Multiple Peer Groups Single new representative and relevant peer group to benchmark 2014 compensation Incentive Plans Performance Metrics Long-term incentive plan metrics changed from relative to absolute measures tied to our long-term business strategy and metrics important to shareholders (ROIC and EBITDA). Clawback Adopted incentive plan clawback policy Change-in-Control Provisions Only legacy “single trigger” agreements remain outstanding. Beginning in 2014, all equity and other long-term incentive awards under our incentive plan include “double trigger” change-in-control provisions As of 2015, less than one half of all outstanding long-term grants are subject to single-trigger change-in-control arrangements; once the outstanding awards vest or expire by their terms, there will be no remaining single- trigger arrangements |
![]() Robust Target-Setting Process 9 The Compensation Committee sets the annual performance targets for performance-based executive compensation in the beginning of each year At the time they are set, the Committee believes each target is challenging to achieve under anticipated market conditions; tied directly into annual budget and publicly disclosed outlook If targets are achieved, it means the Company has successfully met the significant challenges posed by business conditions, competition, and a volatile global market In setting each target, the Compensation Committee reviews and considers the following factors through a bottoms-up process that starts with department budgets and plans throughout the Company: (1) Short- and long-term operating plans and budget (2) Publicly disclosed outlook and financial targets (3) Company and market performance history (4) Economic and air freight industry conditions (5) Anticipated difficulty of each target 1 Target performance is set in line with the Company’s publicly disclosed outlook, which ensures transparency and rewards management at target only if it is successful in achieving financial results that align with expectations communicated to the market |
![]() Approach to Setting Challenging 2014 Metrics 10 The rigor of our targets derives from their alignment with our financial plan — which takes into account all relevant factors that may influence our results for the coming year, positively or negatively — and not how they compare to the prior year Our target setting process takes into account prior year results, short-term volatility of our business and the market generally to ensure that our employees are incentivized appropriately to achieve challenging goals 1 Aligning Targets with Financial Plan and Market Conditions Reasons for Decline in 2014 Target v. 2013 Results Transparency to Shareholders Regarding Target Setting We communicated clearly on the expected decline in earnings related to a decline in military spending to shareholders and the broader market in February 2014 Throughout the year, we were able to redeploy the three returned aircraft in new long-term contracts Specifically, the 2014 target was set early in the year, and was lower than the 2013 results due to several important factors, including: (1) Anticipated continued strong contraction in military spending on outsourced airlift (2) Anticipated challenges to redeploying three aircraft that were returned from a long-term contract with British Airways (3) Three consecutive years of essentially no growth in the global airfreight market |
![]() Close Link Between Pay and Performance 11 Our Compensation Program: Aligns annual incentives with key annual financial objectives that directly tie to our strategy Aligns long-term incentive awards with executive retention and our shareholders’ interests Creates a pay mix portfolio with an appropriate balance of fixed and variable pay, as well as performance- based pay having short-term and long-term components 1 Represents maximum total compensation opportunity in 2014 that was performance-based, including 43.2% in performance-based long-term incentive opportunity and 24.1% in annual incentive opportunity. 2014 CEO Compensation Opportunity 2014 Payouts Reflect Performance Outcomes Performance-Based Long-Term Incentive (for 3 year period 2012-2014) Payout at 25% (50% of target), reflecting a challenging operating environment in 2012 and 2013 Annual Incentive (2014) Payout at 2x target, reflecting our strong 2014 performance 1 |
![]() Effective Compensation Policies and Procedures 12 Significant “At Risk” Compensation: >65% of maximum total CEO and total other NEOs target compensation is “at risk” “Clawback” Policy: Adoption of a “clawback” of annual incentive compensation to discourage imprudent risk taking “Double Trigger” Vesting Acceleration: “Double trigger” in long-term equity and cash performance incentive awards No Change of Control Gross Ups: Change of control payments are not grossed up for tax purposes Extended Vesting Requirements: Time-based equity award agreements provide for a four-year vesting schedule Limited Perquisites: Strict limits on perquisites No Adjustments for Shareholder Buybacks: Shareholder buybacks are not factored in EPS calculation for AIP purposes No Repricing: Repricing of underwater stock options not allowed Stock Ownership Requirements: Minimum stock ownership guidelines and recommended holding periods for stock No Hedging or Pledging of Shares: Insiders prohibited from hedging and pledging activities involving Company stock Risk Management: Compensation program design does not promote excessive risk taking Independent Compensation Consultant: Retained by our independent Compensation Committee No Grants of Stock Options: Equity awards with either performance-based vesting or extended time-vesting requirements 162(m) Compliant: AIP compensation is designed to qualify as performance-based compensation under Section 162(m) Performance Assessment: The Compensation Committee annually assesses its own performance |
![]() Annually elected directors Majority voting for uncontested Director elections; adopted new voting standard, effective at our 2015 annual meeting Separate CEO and Chairman positions, with a strong independent Chairman role; appointed a new Chairman, Frederick McCorkle as of May 2014 All board committees are 100% independent; appointed a new Chair of the Compensation Committee, Carol Hallett All directors are independent (except our CEO) No poison pill in place Ongoing dialogue with shareholders Continued Commitment to Corporate Governance Best Practices 13 1 2 3 4 5 6 7 |
![]() Our Board includes an appropriate balance of experience, tenure, diversity, leadership, skills and qualifications in areas of importance to our Company Given the diversity of our operations, it is important to bring experience from all areas key to understanding our business Balance of Skills, Diversity and Experience 14 Strategic Planning Mergers and Acquisitions Capital Structure Civil and Governmental Aviation Legal, Regulatory and Government Affairs Corporate Governance Global Operations Transportation and Security Finance and Risk Management International and National Trade Military Affairs Procurement and Distribution Board of Directors’ Expertise |