SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
X Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
X Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Under Rule 240.14a-12
INTERNATIONAL AIRLINE SUPPORT GROUP, 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):
X No fee required.
$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
Fee paid previously with written preliminary materials:
Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
INTERNATIONAL AIRLINE SUPPORT GROUP, INC.
1954 AIRPORT ROAD
SUITE 200
ATLANTA, GEORGIA 30341
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
International Airline Support Group, Inc.
The annual meeting of stockholders of International Airline Support Group,
Inc. will be held at our offices at the address listed above, on Tuesday,
October 15, 2002, at 10:00 a.m., local time, to consider and vote on:
1. The election of three (3) directors to serve until the 2005 annual
meeting of stockholders; and
2. Such other matters as may properly come before the meeting or any
adjournments thereof.
The close of business on September 16, 2002, has been fixed as the record
date for determination of stockholders entitled to notice of, and to vote at,
the annual meeting or any adjournments thereof. A list of stockholders entitled
to vote at the annual meeting will be maintained during the ten-day period
preceding the meeting at our offices located in Atlanta, Georgia. Your
attention is directed to the proxy statement accompanying this notice.
You are cordially invited to attend the annual meeting in person. EVEN IF
YOU PLAN TO ATTEND IN PERSON, YOU ARE REQUESTED TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE. You may revoke your proxy at any
time prior to its use.
By Order of the Board of Directors,
/s/ Qiang Wang
Qiang Wang
Secretary
Atlanta, Georgia
September 19, 2002
INTERNATIONAL AIRLINE SUPPORT GROUP, INC.
1954 AIRPORT ROAD
SUITE 200
ATLANTA, GEORGIA 30341
PROXY STATEMENT
______________________
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 15, 2002
This proxy statement is furnished to the holders of shares of the $.001 par
value per share common stock of International Airline Support Group, Inc. in
connection with the solicitation by our Board of Directors of proxies for use at
the annual meeting of stockholders to be held at our offices at the address
listed above, on Tuesday, October 15, 2002, at 10:00 a.m. local time, and at any
adjournments thereof. This proxy statement and accompanying form of proxy are
first being sent to stockholders on or about September 19, 2002.
We will bear the cost of this solicitation. In addition to solicitation by
mail, some of our officers and employees may solicit proxies in person, by
telephone or otherwise. Our officers and employees will not be paid any
additional compensation for their solicitation efforts. We may also make
arrangements with brokerage houses, custodians, nominees and other fiduciaries
to send proxy materials to their principals at our expense.
ABOUT THE MEETING
WHY AM I RECEIVING THIS PROXY STATEMENT AND PROXY CARD?
You are receiving a proxy statement and proxy card because you own shares of
common stock in International Airline Service Group, Inc. This proxy statement
describes issues on which we would like you, as a stockholder, to vote. It also
gives you information on these issues so that you can make an informed decision.
When you sign the proxy card, you appoint Alexius A. Dyer III and Qiang "John"
Wang as your representatives at the meeting. Mr. Dyer and Mr. Wang will vote
your shares, as you have instructed them on the proxy card, at the meeting.
This way, your shares will be voted whether or not you attend the annual
meeting. Even if you plan to attend the meeting, it is a good idea to complete,
sign and return your proxy card in advance of the meeting just in case your
plans change. If an issue comes up for vote at the meeting that is not on the
proxy card, Mr. Dyer and Mr. Wang will vote your shares, under your proxy, as
recommended by the Board of Directors. If no recommendation is given, the
proxies will vote your shares in accordance with their own discretion.
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the annual meeting, stockholders will elect three Class II directors to serve
a three-year term on our Board of Directors that will expire at the annual
meeting of stockholders in 2005. Stockholders will also act on any other
matters that properly come before the meeting. We do not expect that any other
matters will come before the meeting. No cumulative voting rights are
authorized, and dissenters' rights are not applicable to these matters.
WHO IS ENTITLED TO VOTE?
Only stockholders of record at the close of business on the record date,
September 16, 2002, are entitled to receive notice of the annual meeting and to
vote at the meeting. Each outstanding share of common stock entitles its holder
to cast one vote on each matter to be voted upon. At the close of business on
the record date, 2,156,497 shares of our common stock were outstanding and
entitled to vote at the meeting.
WHO MAY ATTEND THE MEETING?
All stockholders as of the record date may attend the meeting. Registration and
seating will begin at 10:00 a.m. Each stockholder may be asked to present valid
picture identification, such as a driver's license or passport. Cameras,
recording devices and other electronic devices will not be permitted at the
meeting. Parking is available at our offices.
Please note that if you hold your shares in "street name" (that is, through a
broker or other nominee), you will need to bring a copy of a brokerage statement
reflecting your stock ownership as of the record date and check in at the
registration desk at the meeting.
HOW DO I VOTE?
You may vote by mail. You do this by signing your proxy card and mailing it in
the enclosed, prepaid and addressed envelope. If you mark your voting
instructions on the proxy card, your shares will be voted as you instruct. If
you return a signed card but do not provide voting instructions, your shares
will be voted "FOR" the three named nominees for the Board of Directors.
You may vote in person at the meeting. Written ballots will be given to anyone
who wants to vote at the meeting. If you hold your shares in "street name"
(through a broker or other nominee), you will need to obtain a proxy from the
broker or bank that holds your shares in order to vote at the meeting.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy card, you can change your vote at
any time before the proxy is exercised by filing with the Secretary a notice of
revocation, submitting a duly executed proxy bearing a later date or voting in
person at the meeting. Attendance at the meeting will not by itself revoke a
previously granted proxy.
WILL MY SHARES BE VOTED IF I DO NOT SIGN AND RETURN MY PROXY CARD?
If your shares are held in street name and you do not sign and return your proxy
card, your brokerage firm may vote your shares under certain circumstances.
These circumstances include certain "routine" matters, such as the election of
our Board of Directors. If you do not vote your proxy, your brokerage firm may
either vote your shares on this matter, or leave your shares unvoted. When a
brokerage firm votes its customers' unvoted shares on routine matters, these
shares are counted for purposes of establishing a quorum to conduct business at
the meeting and for purposes of determining the number of votes required for
approval of a matter.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a majority
of the shares of common stock outstanding on the record date will constitute a
quorum, permitting us to conduct the meeting. Proxies received but marked as
abstentions will be included in the calculation of the number of shares
considered to be present at the meeting.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the recommendations
of the Board of Directors. The Board recommends a vote "FOR" the election of
the three named nominees for the Board of Directors.
With respect to any other matter that properly comes before the meeting, the
proxies will vote your shares as recommended by the Board of Directors. If no
recommendation is given, the proxies will vote your shares in their own
discretion.
WHAT VOTE IS REQUIRED?
The three persons receiving the greatest number of affirmative votes will be
elected as directors. This number is called a "plurality." Consequently, a
vote withheld from a nominee has the same effect as a vote against the nominee.
For any other business that may properly come before the meeting, the
affirmative vote of the holders of a majority of the shares represented at the
meeting in person or by proxy and entitled to vote on the item will be required
for approval.
INFORMATION AS TO DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
STOCK OWNERSHIP
The following table sets forth certain information, including ownership of
our common stock, as of September 16, 2002, with respect to: (i) each director;
(ii) each executive officer and (iii) all directors and executive officers as a
group. The 2001 Board of Directors consisted of five members and two vacancies.
The 2002 Board of Directors will also consist of five members and two vacancies.
The three directors to be elected at the 2002 annual meeting will serve a
three-year term expiring at the 2005 annual meeting. E. James Mueller, F. Dixon
McElwee, Jr. and General Ronald R. Fogleman, are all current directors and have
been nominated for reelection. Alexius A. Dyer III and George Murnane III are
both current directors who will continue to serve on the Board of Directors
until their terms expire in 2003.
NUMBER OF
SHARES OF
OFFICER OR COMMON
NAME AGE POSITION DIRECTOR SINCE STOCK OWNED(3)(4) PERCENT
---- --- -------- ------------- ----------- -------
Alexius A. Dyer III 46 Chairman of
the Board,
President and Chief
Executive Officer 1992 495,480 20.48%
George Murnane III 44 Director 1996 67,609 3.14%
E. James Mueller (1)(2) 56 Director 1991 117,072 5.23%
F Dixon McElwee, Jr.(1)(2) 55 Director 1999 20,000 *
Ronald R. Fogleman(1) 61 Director 2000 20,000 *
Officers and Directors as a Group 720,161 28.32%
_____________________________
* Less than 1%.
(1) Member of Audit Committee.
(2) Member of the Compensation Committee.
(3) Includes the following shares of common stock subject to options
exercisable presently or within sixty days: Mr. Dyer, 262,724; Mr. Mueller,
84,072; Mr. Elwee, 20,000; and General Fogleman, 20,000.
(4) Includes the following shares of restricted common stock: Mr. Dyer,
50,000.
DIRECTORS AND EXECUTIVE OFFICERS
ALEXIUS A. DYER III has been Chief Executive Officer and Chairman of the
Board since February 1995 and President since February 1994. Mr. Dyer has been
a director since 1992. From February 1991 to February 1994, Mr. Dyer served as
Executive Vice President. Mr. Dyer currently serves as a member of the Board in
Class III, for a term expiring in 2003.
GEORGE MURNANE III is currently Executive Vice President of Mesa Air Group,
Inc., a regional commuter air carrier. Mr. Murnane was Chief Operating Officer
of the Company from March 1999 through December 2001. He has served as a
director since October 1996 and held various executive-officer positions with us
from July 1996 through December 2001. From March 1996 through June 1996, Mr.
Murnane served as a consultant for companies in the aviation industry. From
October 1995 through February 1996, he served as Executive Vice President and
Chief Operating Officer of Atlas Air, Inc., an air cargo company. From 1986 to
1995, he was affiliated with the New York investment banking firm of Merrill
Lynch & Co., most recently as a director in the firm's Transportation Group.
Mr. Murnane is a member of the Board of Directors of Mesa Air Group, Inc. and
the President of Barlow Management, Inc., the general partner of Barlow Partners
II, L.P., a shareholder of Mesa. Mr. Murnane currently serves as a member of
the Board in Class III for a term expiring in 2003.
E. JAMES MUELLER has been a director since 1991. Mr. Mueller has been a
principal with J.M. Associates, Inc., a business development consulting firm,
since January 1992. We have entered into a commission agreement with J.M.
Associates, Inc., pursuant to which J.M. Associates, Inc. is compensated for
originating transactions for us. Mr. Mueller currently serves as a member of
the Board of Directors in Class II and has been re-nominated for election as a
Class II director for a term expiring in 2005.
F. DIXON MCELWEE, has been Senior Vice President of Frozen Food Express
Industries, Inc., a motor carrier specializing in the transportation of
perishable commodities, since September 1998. From May 1995 until July 1998,
Mr. McElwee was Executive Vice President and Chief Financial Officer of
Cameron-Ashley Building Products. Mr. McElwee currently serves as a member of
the Board of Directors in Class II and has been re-nominated for election as a
Class II director for a term expiring in 2005.
GENERAL RONALD R. FOGLEMAN, USAF (retired), has been a member of the Board
of Directors since 2000. General Fogleman retired from the USAF on September 1,
1997, after thirty-four years of active commissioned service. He is currently
president and chief operating officer of both B Bar J Cattle & Consulting
Company and Durango Aerospace Incorporated, international aviation consulting
firms, and a partner in Laird and Company, LLC, a New York investment firm. In
addition, General Fogleman serves on the board of directors for DERCO Aerospace,
EAST Inc., Mesa Air Group, MITRE Corporation, Maingate.com, North American
Airlines, Rolls-Royce North America and World Airways. General Fogleman
currently serves as a member of the Board of Directors in Class II, and has been
re-nominated for election as a Class II director for a term expiring at the
annual meeting to be held in 2005.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of our common stock, as of September 16, 2002, by each
person who was known by us to own beneficially more than 5% of our outstanding
common stock as of such date, based on information available to us. Except as
otherwise indicated, each person has sole voting and dispositive power with
respect to the shares beneficially owned by such person.
NAME AND ADDRESS SHARES BENEFICIALLY OWNED % OF SHARES
---------------- ------------------------- -----------
OUTSTANDING
-----------
Ameristock Corporation(1)
P.O. Box 6919
Moraga, California 94570 506,588 23.49%
Alexius A. Dyer III(2)
1954 Airport Road, Suite 200
Atlanta, Georgia 30341 495,480 20.48%
Lloyd I. Miller III(3)
4550 Gordon Drive
Naples, Florida 34102 252,000 11.69%
Northeast Investors Trust(4)
50 Congress Street
Boston, Massachusetts 02109-4096 224,540 10.41%
(1) Based on Amendment No. 4 to a Schedule 13D filed on May 3, 2002.
(2) Based on Amendment No. 1 to a Schedule 13D filed on May 16, 2002 and a
Form 5 filed on July 15, 2002. Includes 262,724 shares that are subject to
options that are exercisable presently or within sixty days. Mr. Dyer is the
Chairman of the Board, President and Chief Executive Officer.
(3) Based on Amendment No. 2 to a Schedule 13G filed on February 7, 2002.
Mr. Miller has sole voting and dispositive power with respect to 174,400 shares
of common stock and shares voting and dispositive power with respect to 77,600
shares of common stock, which are owned of record by certain trusts of which Mr.
Miller is the trustee.
(4) Based on Amendment No. 2 to a Schedule 13G , filed on February 7, 2002,
filed by Northeast Investors Trust, a registered investment company.
EXECUTIVE COMPENSATION
The following sets forth certain information regarding the aggregate cash
compensation paid to our Chief Executive Officer during fiscal 2000, 2001 and
2002. Our Chief Executive Officer is our only executive officer.
SUMMARY COMPENSATION TABLE
LONG -TERM
COMPENSATION
ANNUAL
COMPENSATION AWARDS PAYOUTS
NAME AND PAID RESTRICTED OPTIONS/
PRINCIPAL POSITION YEAR SALARY($) BONUS ($) STOCK AWARDS ($) SARS(#) LTIP PAYOUTS ($)
- ------------------ ---- --------- --------- ----------- ------- ------------
Alexius A. Dyer III 2002 197,892 48,403 42,500 75,000 --
Chairman of the Board, 2001 190,631 125,673 -- -- --
President and Chief 2000 183,842 194,677 -- -- --
Executive Officer
STOCK OPTION GRANTS AND VALUES IN 2002
The following table sets forth certain information with respect to stock
options granted to our Chief Executive Officer during fiscal 2002 and the
potential realizable value of such options.
POTENTIAL
REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES % OF TOTAL ANNUAL RATES OF
UNDERLYING OPTIONS/SARS AVERAGE STOCK PRICE
OPTIONS/ GRANTED TO EXERCISE APPRECIATION FOR
SARS GRANTED EMPLOYEES IN BASE PRICE EXPIRATION OPTION
-------
TERM
- ----
NAME # FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- ----- -- ------------- --------- ----- -------- --------
Alexius A. Dyer III 75,000 24% $0.55
December 24, 2011 25,950 65,738
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES TABLE
The following table sets forth certain information with respect to the
value of options owned by our Chief Executive Officer at May 31, 2002. Our
Chief Executive Officer did not exercise any options during fiscal 2002.
NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS AT FY-END(#) VALUE
OF UNEXERCISED IN-THE-MONEY OPTIONS AT FY-END ($)(1)
NAME EXERCISABLE/ UNEXERCISABLE EXERCISABLE/ UNEXERCISABLE
- ---- -------------------------- -------------------------
Alexius A. Dyer III 262,724/0 $66,750/0
(1) Based on the closing price of our common stock on the American Stock
Exchange on May 31, 2002 of $1.44 per share.
EMPLOYMENT AGREEMENTS
As of July 25, 2001, we entered into a Second Amended and Restated
Employment Agreement with Alexius A. Dyer III, President, Chief Executive
Officer and Chairman. The employment agreement provides for an employment term
that expires at the close of business on October 1, 2005, subject to automatic
one-year renewal terms. Either we or Mr. Dyer may terminate the agreement by
written notice to the other on or before October 1, 2004, or any October 1
thereafter with respect to a renewal term. Pursuant to his employment
agreement, Mr. Dyer will receive a base salary of not less than $192,000 per
annum for each year during the term, subject to specified annual cost-of-living
increases. The Board of Directors may increase the base salary as it deems
appropriate. During the term of the employment agreement and any extension
thereof, Mr. Dyer shall serve as a member of the Board.
Mr. Dyer's employment agreement also provides that he is entitled to an
annual bonus during the stated term in an amount not less than 5% of our net
income before extraordinary and non-recurring items and income taxes, and before
giving effect to any bonuses paid to our employees, including the bonus paid to
Mr. Dyer. Items of revenue and expense attributable to the sale of aircraft are
not considered extraordinary or non-recurring items. Mr. Dyer is also entitled
to receive medical and life insurance benefits, paid vacation and benefits
payable upon his disability.
Pursuant to his employment agreement, if Mr. Dyer is terminated without cause
prior to the end of the term of his employment agreement, we are required to pay
to him a lump sum in an amount equal to the sum of (i) the greater of the salary
for the remaining term of his employment agreement or an amount equal to two
times his then prevailing base salary and (ii) an amount equal to the sum of his
bonus for the prior year, to the extent not already paid, plus an amount equal
to two times the average of the two prior years' bonuses. Mr. Dyer is also
entitled to the continuation of the benefits he was receiving at the time of his
termination for eighteen months following his termination.
If Mr. Dyer is terminated without cause, all options to purchase shares of our
common stock that he owns that are not fully vested will immediately vest. Mr.
Dyer may elect to exercise the stock options or to require us to pay him a lump
sum in an amount equal to the value of the options that he does not exercise.
Mr. Dyer's employment agreement includes a formula for determining the value of
the unexercised stock options.
We are required to pay Mr. Dyer an amount in addition to those specified above
if any payment due to him upon his termination without cause is subject to the
federal excise tax on "golden parachute" payments. The amount we are required
to pay shall be sufficient to provide Mr. Dyer, on an after-tax basis, with an
amount equal to the amounts to be paid to him without regard to the excise tax.
Mr. Dyer may elect to terminate his employment with us following the occurrence
of a change of control or a change of his responsibilities. He may exercise his
right to terminate his employment by resignation on not less than ninety days'
prior written notice given within eighteen calendar months after a change of
control or a change of his responsibilities, as the case may be. If Mr. Dyer
elects to terminate his employment with us following a change of control or a
change of his responsibilities, he will be entitled to receive the payments and
benefits that would be due him upon his termination without cause, as described
above.
COMPENSATION OF DIRECTORS
The non-employee members of our Board of Directors received a $10,000 fee
for their service on the Board during fiscal 2002, plus options to purchase
10,000 shares of common stock, pursuant to a Director's Compensation Plan that
was adopted during fiscal 1995 and amended during fiscal 2000. Directors are
also reimbursed for expenses incurred in connection with the attendance of Board
meetings.
CERTAIN TRANSACTIONS
In December 1995, we entered into a commission agreement with J.M.
Associates, Inc., a business development consulting firm of which Mr. Mueller is
a principal. The commission agreement is non-exclusive and provides that J.M.
Associates will receive commissions of between 3% and 4% of lease revenues or
the purchase or sale price of completed parts acquisitions or sales with parties
introduced to us by J.M. Associates. In fiscal 2002, we made no payments to Mr.
Mueller for services rendered to us under this agreement and in connection with
Mr. Mueller's participation in our outside consulting activities.
We believe the terms of such transactions were no less favorable than could
be obtained from unaffiliated third parties. Any future transactions between us
and our officers or directors are subject to approval by a majority of our
disinterested directors.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors consists of Mr.
Mueller and Mr. McElwee, both of whom are non-employee members of the Board of
Directors. The Compensation Committee is responsible for administering the 1996
Long-Term Incentive and Share Award Plan.
EXECUTIVE COMPENSATION POLICIES
Generally, our executive compensation program is designed to be competitive
with that offered by other companies against which we compete for executive
resources. At the same time, we link a significant portion of executive
compensation to the achievement of our short and long-term financial and
strategic objectives and to the performance of our common stock. Our executive
compensation program consists of three primary elements: base salary, annual
incentive bonus and stock options or other stock benefits. Base salary is
intended to be competitive in the marketplace. However, although the
Compensation Committee considers competitive data, salaries are determined
subjectively by the Compensation Committee rather than by reference to any
specific target group of companies. Subject to the terms of any applicable
employment agreement, base salary is reviewed at least annually and adjusted
based on changes in competitive pay levels, the executive's performance as
measured against individual and company-wide goals, as well as changes in the
executive's role with us. The Compensation Committee awards incentive bonuses
to the named executive officers based on the achievement of certain targets and
objectives in a manner consistent with the terms of their employment agreements.
We do not make annual stock option or other stock benefit grants to all
executives. Rather, the Compensation Committee determines each year which, if
any, executives will receive benefits, based on individual performance and each
executive's existing stock option position.
EXECUTIVE OFFICER COMPENSATION
Alexius A. Dyer III, President, Chief Executive Officer and Chairman
entered into an amended and restated employment agreements during fiscal 2001.
See "Management -- Employment Agreements." The base compensation, incentive
bonus and stock option agreements entered into by us with Mr. Dyer was
determined by arm's-length negotiations between the Compensation Committee and
Mr. Dyer. The Compensation Committee believes that the specific base
compensation, incentive bonus and stock option arrangements were necessary to
attract management of the caliber sought by the Board. Future adjustments of
such arrangements will be made in accordance with the general principles
outlined above.
The Company paid Mr. Dyer his bonus in fiscal 2002 calculated under the
terms of his employment agreement. The Board of Directors is also permitted to
award discretionary cash bonuses to our senior executives who are designated as
"Senior Executives" by the Board of Directors. The Board of Directors is given
the discretion to make bonuses subject to conditions and to establish forfeiture
conditions, in each case as the Board deems appropriate. In fiscal 2002, the
Board did not award a discretionary cash bonus to Mr. Dyer.
COMPENSATION OF THE PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN
The compensation of Mr. Dyer was determined, as noted above, based on the
terms of his employment agreement, which was negotiated at arm's-length. The
Board of Directors awarded Mr. Dyer options to purchase 75,000 shares of common
stock during the fiscal 2002. The Board also granted Mr. Dyer 50,000 shares of
restricted stock during fiscal 2002. The Board of Directors did not award a
discretionary cash bonus to Mr. Dyer during fiscal 2002.
This report by the Compensation Committee shall not be deemed to be incorporated
by reference by a general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or the Exchange Act
and shall not otherwise be deemed filed under such Acts.
Respectfully submitted by
The Compensation Committee:
F. Dixon McElwee, Jr.
E. James Mueller
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee at any time during the
last fiscal year served as an officer of, or was employed by, us. Furthermore,
none of our executive officers currently serves as a director or member of the
compensation committee of any other entity or any other committee of the Board
of Directors of any other entity performing similar functions.
PERFORMANCE GRAPH
The following graph sets forth the total return on a $100 investment in
each of (i) our common stock, (ii) the AMEX Major Market Index and (iii) a Peer
Group, from May 31, 1997 through May 31, 2002. The Peer Group consists of AAR
Corp., Aviall, Inc., Aviation Sales, Inc., Aviation Distributors, Inc., and
Kellstrom, Inc. (price data on Aviation Distributors, Inc. was not available
until 1997 and its year-to-year performance does not affect the performance of
the Peer Group until 1998). Our common stock closed at $1.44 per share on May
31, 2002.
[GRAPHIC OMITED]
[GRAPHIC OMITED]
YLF PEER GROUP AMEX
May 31, 1997 100 100 100
--- --- ---
May 31, 1998 181 141 122
May 28, 1999 92 119 144
May 31, 2000 58 41 139
May 31, 2001 18 40 140
May 31, 2002 32 29 138
ELECTION OF DIRECTORS
Under our Restated and Amended Certificate of Incorporation and our Amended
and Restated Bylaws, the number of our directors is fixed at seven members; and
the number of directors constituting the Board shall not be changed without the
affirmative vote of at least 75% of the issued and outstanding shares of the
common stock. The directors are elected at the annual meeting of stockholders.
The Certificate and the Bylaws provide for a Board of Directors divided into
three classes, as nearly equal in size as possible, having staggered terms of
three years. As a result, approximately one-third of the Board will be elected
each year. Pursuant to the Certificate and the Bylaws, the Board has nominated
the persons set forth below as Class II directors to serve a three-year term
that will expire at the annual meeting of stockholders in 2005.
F. DIXON MCELWEE, JR.
E. JAMES MUELLER
GENERAL RONALD R. FOGLEMAN
Management and the Board recommend the election of Messrs. McElwee, Mueller
and Fogleman, for the office of Class II director to hold office for a
three-year term and until their successors are duly elected and qualified. In
addition to the three nominees, there are two other directors continuing to
serve on the Board, Mr. Alexius A. Dyer III and Mr. George Murnane III, whose
terms expire in 2003. There are currently two vacancies on the Board. We have
not nominated anyone to fill such vacancies.
The Board has no reason to believe that any of the nominees for the office
of director will be unavailable for election as director. However, if at the
time of the annual meeting any of the nominees should be unable or decline to
serve, the persons named in the enclosed proxy card will vote as recommended by
the Board to elect substitute nominees or vote to allow the vacancy created
thereby to remain open until filled by the Board, as recommended by the Board.
In no event, however, can a proxy be voted to elect more than five directors.
The Board of Directors recommends a vote "FOR" this proposal.
ADDITIONAL INFORMATION
PROPOSALS FOR 2003 MEETING
We anticipate that our 2003 annual meeting will be held during October
2003. Any proposal of stockholders that is intended to be presented at the
Company's 2003 annual meeting of stockholders must be received at our principal
executive offices no later than May 22, 2003 and must comply with all other
applicable legal requirements in order to be included in our proxy statement and
form of proxy for that meeting. According to our Amended and Restated Bylaws,
only such business as shall have been properly brought before a meeting of our
stockholders may be conducted at the meeting. For business to be properly
brought before a meeting by a stockholder, the stockholder must have given
notice of the business proposed to be conducted at the meeting to us not less
than 30 days nor more than 60 days prior to the meeting. However, if we provide
less than 40 days' notice or prior public disclosure of the date of the meeting,
a notice given by the stockholder not later than the close of business on the
tenth day following the day on which notice of the date of the meeting was
mailed or publicly disclosed will be timely. A notice must be delivered to or
mailed and received at our principle executive offices within the times set
forth above. Our principal executive offices are located at 1954 Airport
Boulevard, Suite 200, Atlanta, Georgia 30341. The notice must contain a brief
description of the business desired to be brought before the meeting, the name
and address of the stockholder proposing the business, as appearing on our stock
transfer records, the number of shares of common stock that the stockholder
beneficially owns and any material interest of the stockholder in the business.
COMMITTEES AND MEETINGS
The Board of Directors of the Company acted by unanimous written consent
three times during the year ended May 31, 2002.
The Audit Committee, which consists of Messrs. McElwee, Fogleman and Mueller,
held one meeting during fiscal 2002. The primary function of the Audit
Committee is to assist the Board of Directors in fulfilling its oversight
responsibilities with respect to the financial reports and other financial
information provided by us to our stockholders and others, our system of
internal controls, and our audit, accounting and financial reporting processes
generally. The members of the Audit Committee are independent within the
meaning of the listing standards of the American Stock Exchange, Inc. The Audit
Committee has adopted a charter, a copy of which was attached to the proxy
statement for our 2001 annual meeting of stockholders.
The Compensation Committee, which consists of Messrs. Mueller and McElwee, acted
by unanimous written consent twice during fiscal 2002. The functions of the
Compensation Committee are (i) to monitor compensation of all management staff,
(ii) to review and approve compensation of the Chief Executive Officer and to
offer advice and guidance concerning the compensation of other senior management
and (iii) to administer our stock option plan.
We do not maintain a standing nominating committee or other committee performing
similar functions.
No director attended fewer than 75% of the aggregate of (i) the total number of
meetings of the Board of Directors and (ii) the total number of meetings held by
all committees on which he serves.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our officers and directors, and persons who own more than ten percent of a
registered class of our equity securities, to file reports of ownership and
changes in ownership on Forms 3, 4 and 5 with the Securities and Exchange
Commission. Officers, directors and greater than ten percent stockholders are
required by law to furnish us with copies of all Forms 3, 4 and 5 they file.
Based solely on our review of the copies of such forms we have received and
representations from certain reporting persons, we believe that our officers,
directors and greater than ten percent beneficial owners complied with all
filing requirements applicable to them with respect to transactions during
fiscal 2002, except that General Fogleman, a director, inadvertently failed to
file on a timely basis a report on Form 5 with respect to one transaction.
INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Grant Thornton LLP as independent
accountants of the Company for fiscal 2003. A representative of Grant Thornton
LLP is not expected to attended the 2002 Annual Meeting.
AUDIT FEES
The aggregate fees billed by Grant Thornton LLP for professional services
rendered for the audit of our annual financial statements for the fiscal year
ended May 31, 2002 and the reviews of the financial statements included in the
Company's Quarterly Reports on Form 10-Q for that year were $103,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees filled by Grant Thornton LLP or any of its affiliates
for professional services relating to financial information systems design and
implementation for the fiscal year ended May 31, 2002.
ALL OTHER FEES
The aggregate fees billed by Grant Thornton LLP or any of its affiliates
for professional services rendered to us, other than the fees for services
described above under "Audit Fees" and "Financial Information Systems Design and
Implementation Fees," for the fiscal year ended May 31, 2002 were $14,000.00.
These fees were billed for the following services: federal and state tax
preparation and advice and general accounting issues.
REPORT OF THE AUDIT COMMITTEE
Our Audit Committee is responsible for, among other things, reviewing with
Grant Thornton LLP, our independent auditors, the scope and results of their
audit engagement. In connection with the fiscal 2002 audit, the Audit Committee
has:
- - reviewed and discussed with management our audited financial statements
included in our Annual Report on Form 10-K for the year ended May 31, 2002;
- - discussed with Grant Thornton LLP the matters required to be discussed by
Statement of Accounting Standards No. 61, as amended;
- - considered whether the provision of non-audit services by Grant Thornton
LLP is compatible with maintaining the independent auditor's independence; and
- - received from and discussed with Grant Thornton LLP the communications
from Grant Thornton LLP required by independence Standards Board Standard No. 1
regarding Grant Thornton LLP's independence.
Based on the review and the discussions described above, the Audit
Committee has recommended to the Board of Directors that the audited financial
statements be included in our Annual Report on Form 10-K for the year ended May
31, 2002 for filing with the Securities and Exchange Commission.
The Audit Committee has adopted a charter, a copy of which was attached to the
information statement for our 2001 annual meeting of stockholders.
The members of the Audit Committee have been determined to be independent
in accordance with the requirements of the American Stock Exchange.
Respectfully submitted by
The Audit Committee:
F. Dixon McElwee, Jr.
General Ronald R. Fogelman
E. James Mueller
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Our audited financial statements, supplementary financial information,
management's discussion and analysis of financial condition and results of
operations and quantitative and qualitative disclosures about market risk are
incorporated herein by reference to our Annual Report on Form 10-K for the year
ended May 31, 2002.
INTERNATIONAL AIRLINE SUPPORT GROUP, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 15, 2002
The undersigned hereby appoints Alexius A. Dyer III and Qiang Wang, and
each of them, proxies with full power of substitution and resubstitution, for
and in the name of the undersigned to vote all shares of International Airline
Support Group, Inc. which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders to be held at the
offices of the Company, 1954 Airport Road, Suite 200, Atlanta, Georgia 30341, at
10:00 a.m., local time, on October 15, 2002, and at any adjournment thereof,
upon the matters described in the accompanying Notice of Annual Meeting and
Proxy Statement, receipt of which is hereby acknowledged, and upon any other
business that may properly come before the meeting or any adjournment thereof.
Said proxies are directed to vote on the matters described in the Notice of
Annual Meeting and Proxy Statement as follows, and otherwise in their discretion
upon such other business as may properly come before the meeting or any
adjournment thereof.
1. To elect Messrs. E. James Mueller, F. Dixon McElwee, Jr. and Ronald R.
Fogleman as Class II Directors to serve a three-year term that will expire at
the annual meeting of stockholders in 2005:
FOR AGAINST ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF MESSRS. MUELLER,
MCELWEE AND FOGLEMAN AS CLASS II DIRECTORS.
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH
THE NOMINEE'S NAME ABOVE.
2. In the discretion of the proxies, on any other matter that may properly
come before the meeting or any adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED, THE
PROXY WILL BE VOTED FOR THE PROPOSALS.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. IF YOU ATTEND
THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. WHERE MORE THAN ONE OWNER IS
SHOWN ABOVE, EACH SHOULD SIGN. WHEN SIGNING IN A FIDUCIARY OR REPRESENTATIVE
CAPACITY, PLEASE GIVE FULL TITLE. IF THIS PROXY IS SUBMITTED BY A CORPORATION,
IT SHOULD BE EXECUTED IN THE FULL CORPORATE NAME BY A DULY AUTHORIZED OFFICER.
IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
Date: , 2002
Signature of Shareholder
Print Name
Date: , 2002
Signature of Shareholder
Print Name