SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to section 240.14a-11(c) or
Section 240.14a-12
ATLANTIC COAST AIRLINES HOLDINGS, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
[ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1) or
Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and O-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 O-11 (set forth
maximum amount on which filing fee is calculated and state
how it was determined):
_______________________________________________________
4. Proposed maximum aggregate value of transaction:
_______________________________________________________
5. Total fee paid:
_______________________________________________________
[ ] Fee previously paid by written preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule O-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.:
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3. Filing Party:
_______________________
4. Date Filed:
_______________________
ATLANTIC COAST AIRLINES HOLDINGS, INC.
45200 Business Court
Dulles, Virginia 20166
April 23, 2001
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Atlantic Coast Airlines Holdings, Inc., to be
held on Wednesday, May 30, 2001, at 10:00 a.m. local time, at the
Hyatt Reston Town Center, 1800 Presidents Street, Reston,
Virginia.
This year we are asking you to elect nine directors of the
Company to serve until the 2001 Annual Meeting and to amend the
Company's Restated Certificate of Incorporation to increase the
number of shares of stock that the Company is authorized to
issue. We are also asking that you ratify the Board of Directors'
selection of independent auditors for the year ending December
31, 2001. The Board of Directors recommends that you vote FOR
each of these proposals.
At the Annual Meeting, the Board of Directors will also
report on the Company's affairs and provide a discussion period
for questions and comments. The Board of Directors appreciates
and encourages stockholder attendance and participation.
Whether or not you plan to attend the Annual Meeting, it is
important that your shares be represented. Accordingly, we
request that you complete, sign, date and promptly return the
enclosed proxy card in the postage-paid envelope that is
provided.
Thank you for your cooperation.
Sincerely,
Kerry B. Skeen
Chairman of the Board of
Directors
ATLANTIC COAST AIRLINES HOLDINGS, INC.
45200 Business Court
Dulles, Virginia 20166
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 30, 2001
To the Stockholders of
ATLANTIC COAST AIRLINES HOLDINGS, INC.:
NOTICE IS HEREBY GIVEN that the annual meeting of
stockholders (the "Meeting") of Atlantic Coast Airlines Holdings,
Inc., a Delaware corporation (the "Company"), will be held on
Wednesday, May 30, 2001, at 10:00 a.m., local time, at the Hyatt
Reston Town Center, 1800 Presidents Street, Reston, Virginia, for
the following purposes, as more fully described in the
accompanying Proxy Statement:
1) To elect nine directors to serve for the coming year and
until their successors are elected;
2) To amend the Company's Restated Certificate of
Incorporation to increase the total number of shares that
the Company is authorized to issue;
3) To ratify the Board of Directors' selection of the
Company's independent auditors for the fiscal year ending
December 31, 2001; and
4) To transact such other business as may properly come before
the Meeting or any adjournment or postponement thereof.
Only holders of record of the Company's common stock,
par value $0.02 per share (the "Common Stock"), at the close of
business on April 6, 2001 are entitled to receive notice of and
to vote at the Meeting. A list of such holders will be open for
examination by any stockholder during regular business hours for
a period of ten days prior to the Meeting at the offices of the
Company, located at 45200 Business Court, Dulles, Virginia.
All stockholders are cordially invited to attend the
Meeting. In order to ensure that your Common Stock is represented
at the Meeting, regardless of whether you intend to attend in
person, please complete, date and sign the enclosed proxy and
return it promptly in the accompanying postage-paid envelope.
By order of the Board of
Directors
Richard J. Kennedy
Vice President, Secretary and
General Counsel
April 23, 2001
ATLANTIC COAST AIRLINES HOLDINGS, INC.
45200 Business Court
Dulles, Virginia 20166
_________________________
PROXY STATEMENT
_________________________
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Atlantic
Coast Airlines Holdings, Inc. (the "Company") for use at the
Company's annual meeting of stockholders, to be held at 10:00
a.m., local time, on Wednesday, May 30, 2001, at the Hyatt
Reston Town Center, 1800 Presidents Street, Reston, Virginia, and
at any adjournment or postponement thereof (the "Meeting"). This
Proxy Statement and the accompanying proxy card (the "Proxy
Card"), together with a copy of the Company's 2000 Annual Report,
are first being mailed on or about April 20, 2001, to persons who
were holders of record of the Company's Common Stock, par value
$0.02 per share (the "Common Stock"), at the close of business on
April 6, 2001 (the "Record Date").
Agenda and Voting at the Meeting
At the Meeting, the holders of shares of Common Stock as of
the Record Date will be asked to elect nine members to the Board
of Directors for the coming year; to amend the Company's Restated
Certificate of Incorporation to increase the total number of
shares which the Company has authority to issue to 171,000,000
shares; to ratify the Board of Directors' selection of KPMG LLP,
Certified Public Accountants, as the Company's independent
auditors for the fiscal year ending December 31, 2001; and to
transact such other business as may properly come before the
Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed April 6, 2001 as the Record
Date, and only holders of record of the Common Stock at the close
of business on the Record Date are entitled to notice of, and to
vote at, the Meeting. On the Record Date, there were outstanding
and entitled to vote approximately 42,878,000 shares of the
Common Stock.
The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of the Common Stock is
necessary to constitute a quorum at the Meeting. Nominees to the
Board of Directors will be elected by the affirmative vote of a
plurality of the shares of the Common Stock present and voting at
the Meeting. This means that the nine nominees who receive the
largest number of votes cast "FOR" will be elected as directors
at the Meeting. Holders of record of Common Stock on the Record
Date are entitled to vote for nine director nominees, but may not
cumulate their votes in favor of any one nominee. Approval of
the proposed amendment to the Company's Restated Certificate of
Incorporation requires an affirmative vote of at least a majority
of the shares outstanding as of the Record Date. Approval of the
other proposal to be raised at the Meeting requires an
affirmative vote of at least a majority of the shares present and
entitled to be voted at the Meeting. On each of these matters,
holders of record of Common Stock on the Record Date are entitled
to one vote for each share of Common Stock held, except as
described below under "Foreign Ownership of Shares."
In accordance with Delaware law, abstentions are counted as
"shares present" for purposes of determining the presence of a
quorum and have the effect of a vote "against" any matter as to
which they are specified. Shares held by brokers who have not
received voting instructions from their customers and who do not
have discretionary authority to vote on a particular proposal
("broker non-votes") are not considered "shares present" and
therefore have the same effect as shares voted against the
proposed amendment to the Company's Restated Certificate of
Incorporation but will not affect the outcome of the vote on the
other proposals.
Proxies
If the enclosed Proxy Card is properly executed and returned
in time for the Meeting, the shares of Common Stock represented
thereby will be voted in accordance with the instructions given
thereon. If no instructions are given, shares will be voted
"FOR" all of the Board's nominees for election to the Board of
Directors and "FOR" each of the other matters discussed in this
Proxy Statement. Proxies will extend to, and be voted at, any
adjournment or postponement of the Meeting.
The Board of Directors does not presently intend to
introduce any business at the Meeting other than as set forth in
this Proxy Statement, and has not been informed that any other
business is to be presented at the Meeting. Should any other
matter properly come before the Meeting, however, the persons
named as proxies in the accompanying Proxy Card or their duly
authorized and constituted substitutes intend to vote or act
thereon in accordance with their best judgment.
Any stockholder who has executed and returned a Proxy Card
and who for any reason wishes to revoke or change his or her
proxy may do so at any time before the proxy is exercised by (i)
giving written notice to the Secretary of the Company at the
above address, (ii) voting the shares represented by such proxy
in person at the Meeting, or (iii) delivering a later dated proxy
at any time before the Meeting. Attendance at the Meeting will
not, by itself, revoke a proxy. Any stockholder whose shares are
held through a bank, brokerage firm or other nominee and who
provides voting instructions on a form received from the nominee
may revoke or change his or her voting instructions only by
contacting the nominee who holds his or her shares.
Foreign Ownership of Shares
The Federal Aviation Act prohibits non-United States
citizens from owning more than 25 percent of the voting interest
of a company such as the Company, which owns a United States air
carrier. The Company's certificate of incorporation provides
that shares of the Company's capital stock may be voted by or at
the direction of persons who are not United States citizens
provided that such shares are registered on a separate stock
registry maintained by the Company for non-United States holders
(the "Foreign Stock Registry"). Any holder of Common Stock who
is not a United States citizen may request that its shares be
registered for purposes of voting at the Meeting by checking the
appropriate box on the proxy card. Any such holder may also
request that its shares be maintained on the Foreign Stock
Registry by providing separate written notice to the Secretary of
the Company. If shares representing more than 25% of outstanding
shares are registered for any meeting, precedence will be given
to foreign holders who demonstrate that their shares were
maintained on the Foreign Stock Registry prior to the meeting.
The Company does not anticipate that these provisions will
operate to limit voting rights at the Meeting. The enclosed
proxy card contains a statement that by signing the proxy card or
voting, the stockholder certifies that it is a United States
citizen as that term is defined in the Federal Aviation Act or
that the shares represented by the proxy card have been
registered on the Company's Foreign Stock Registry or are
requested to be registered for purposes of voting at the Meeting.
Under Section 40102(a)(15) of the Federal Aviation Act, the
term "citizen of the United States" is defined as: (i) an
individual who is a citizen of the United States, (ii) a
partnership each of whose partners is an individual who is a
citizen of the United States, and (iii) 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, and in which at least 75 percent
of the voting interest is owned or controlled by persons that are
citizens of the United States.
PROPOSAL ONE: ELECTION OF DIRECTORS
The nine individuals set forth in the table below are the
Company's nominees for election to the Board of Directors at the
Meeting. Directors are elected for terms of one year and until
the next annual meeting of stockholders, and serve until
resignation or succession by election or appointment. Each of
the nominees has consented to being named as a nominee in this
Proxy Statement and has agreed to serve if elected. If any
nominee becomes unavailable for election at the time of the
Meeting or is not able to serve if elected, the persons voting
the proxies solicited hereby may in their discretion vote for a
substitute nominee or the Board of Directors may choose to reduce
the number of directors. The Board of Directors has no reason to
believe that any nominee will be unavailable or unable to serve.
Each of the nominees currently serves on the Company's Board of
Directors.
The following table sets forth each nominee's name, age as
of April 13, 2001 and position with the Company, and the year in
which each nominee first became a director:
Name Age Position Director
Since
Kerry B. Skeen 48 Chairman of the Board of 1991
Directors, Chief
Executive Officer and
Director
Thomas J. Moore 44 President, Chief 1997
Operating Officer and
Director
C. Edward Acker 72 Director 1991
Robert E. Buchanan 58 Director 1995
Susan MacGregor 55 Director 1997
Coughlin
Daniel L. McGinnis 62 Director 2000
James C. Miller III 58 Director 1995
Judy Shelton 46 Director 2000
John M. Sullivan 65 Director 1995
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
EACH OF THE NOMINEES. PROXIES SOLICITED BY THE BOARD OF
DIRECTORS WILL BE VOTED FOR EACH OF THE NOMINEES UNLESS
STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES.
Background of Nominees
The following is a brief account of the business experience
of each of the nominees for election to the Board of Directors.
There are no family relationships among the nominees or special
understandings pursuant to which the nominees have been nominated
as directors of the Company.
Kerry B. Skeen. Mr. Skeen is a co-founder of the Company
and has been Chairman of the Board of Directors since January
2000, a Director since October 1991, and Chief Executive Officer
since March 1995. He was President from October 1992 through
December 1999, Executive Vice President from October 1991 to
October 1992, and Chief Operating Officer from October 1992
through March 1995. Mr. Skeen was President of the Atlantic
Coast division of WestAir Commuter Airlines, Inc. ("WestAir")
from 1989 until it was acquired by the Company in 1991. From
1987 to 1989, Mr. Skeen was Vice President of Marketing and Sales
of WestAir and, in 1989 was named Senior Vice President of
WestAir. Mr. Skeen's affiliation with the regional airline
industry began in 1983 when he directed the development and
marketing activities of Delta Air Lines, Inc.'s regional airline
program, "The Delta Connection."
Thomas J. Moore. Mr. Moore became President of the Company
in January 2000 and has been a Director and Chief Operating
Officer since April 1997. He was Executive Vice President from
April 1997 through December 1999, and was Senior Vice President
of Maintenance and Operations from June 1994 until April 1997.
Prior to joining the Company, Mr. Moore spent nearly ten years
with Continental Airlines in Houston, Texas, where he served at
different times in the positions of staff vice president, senior
director of technical planning, director of financial planning
and division controller.
C. Edward Acker. Mr. Acker is a co-founder of the Company
and has been a Director since October 1991. He was Chairman of
the Board of Directors from April 1993 through December 1999,
Chief Executive Officer from October 1991 to March 1995, Vice
Chairman from October 1991 to April 1993, and President from
October 1991 to October 1992. Mr. Acker continues to serve in an
advisory capacity to the Chairman and is an employee of Atlantic
Coast Jet, Inc., a subsidiary of the Company. Mr. Acker served
as Chairman and Chief Executive Officer of Pan American World
Airways, Inc. from 1981 until 1988. Since 1988, Mr. Acker has
served as Chairman of The Acker Group, a private company which
acts as both principal and adviser in airline-related
transactions; and as a partner in Elsbury & Acker, an oil and
natural gas exploration company. From February 1995 until
February 1996, Mr. Acker served as Chairman and Chief Executive
Officer of BWIA International Airways, Ltd. From 1993 to the
present, he has served as Chairman of the Board and President of
Air Assets, Inc.
Robert E. Buchanan. Mr. Buchanan has been a Director since
March 1995. Mr. Buchanan is President of Buchanan Companies, LLC,
a metropolitan Washington, D.C. real estate firm specializing in
commercial and residential development, construction and property
management in suburban Washington. Mr. Buchanan presently serves
on the Board of Directors of the Washington Airports Task Force
and the Economic Development Commission of Loudoun County,
Virginia (former Chairman), which is home to the Company's
corporate office and its hub at Washington-Dulles International
Airport. He is also a member of advisory board for George
Washington University's Virginia campus and a Trustee for the
Greater Washington Initiative.
Susan MacGregor Coughlin. Mrs. Coughlin has been a Director
since October 1997. Mrs. Coughlin has been the Chief Operating
Officer and Director of the ATA Foundation since April 1998 and
previously was the President of Air Safety Management Associates,
an aviation consulting firm, since October 1997. From August
1995 to October 1997 she was President and Chief Operating
Officer of BDM Air Safety Management Corp., which designs and
develops air traffic control systems, and from April 1994 to
August 1995 was a Senior Vice President and General Manager of
BDM Federal, Inc. She served as a member of the National
Transportation Safety Board from 1990 to 1994, where she was
appointed to two consecutive terms as Vice Chairman in 1990 and
1992 and served as Acting Chairman in 1992. She held various
positions with the U.S. Department of Transportation from 1987 to
1990 and from 1981 to 1983, and with the Export-Import Bank of
the U.S. from 1983 to 1987.
Daniel L. McGinnis. Mr. McGinnis has been a Director since
March 2000. Since June 1999 he has been President, CEO and
Director of Sotas, Inc., a developer and manufacturer of
telecommunications equipment that is majority owned by Safeguard
Scientifics, Inc. From August 1998 until January 1999 he was
Senior Vice President of Tellabs Inc. and General Manager of the
N.E.T.S. Group of Tellabs. He was with Coherent Communications
from 1988 to 1998, joining as President and serving as Chief
Executive Officer beginning in 1994. Previously, he served as
division controller for Bausch & Lomb, and held senior
engineering and sales management positions at Air Products &
Chemicals, Clark, Ltd. (U.K.) and Hercules, Inc. He serves on
the boards of directors of Loudoun Healthcare, Inc. and CASC, a
subsidiary of Loudoun Healthcare. He also is a member of
advisory board for George Washington University's Virginia campus
and is an active member of the Northern Virginia Roundtable and
the Washington Airports Task Force.
James C. Miller III. Dr. Miller has been a Director since
March 1995. He has been associated with Citizens for a Sound
Economy since 1988, first as Chairman, and since 1993 as
Counselor. He is also Co-Chairman of the Tax Foundation, a
member of the Board of the Progress & Freedom Foundation, and a
Member of the Board of Visitors of George Mason University. He
is a Director of Washington Mutual Investors Fund, the Tax Exempt
Fund of Maryland, the Tax Exempt Fund of Virginia, and the Law
and Economics Consulting Group. From 1985 to 1988, he served as
Director of the Office of Management and Budget and as a member
of President Reagan's cabinet. From 1981 to 1985, he was
Chairman of the Federal Trade Commission. Dr. Miller wrote his
Ph.D. dissertation on airline scheduling and is the co-author of,
among other works, a Brookings Institution volume on airline
regulation.
Judy Shelton. Dr. Shelton has been a Director since January
2000. Dr. Shelton is an economist who specializes in
international finance and monetary issues, and is the author of
books and opinion articles on global financial matters that have
been published worldwide. She has been Professor of
International Finance at DUXX Graduate School of Business
Leadership, Monterrey, Mexico, since 1996, and served as a staff
economist for the National Commission on Economic Growth and Tax
Reform from 1995 to 1996, and was Senior Research Fellow at the
Hoover Institution from 1991 to 1995. She is a director of
Hilton Hotels Corporation and of Empower America, and is on the
editorial board of the Cato Journal published by the Cato
Institute.
John M. Sullivan. Mr. Sullivan has been a Director since
January 1995. Mr. Sullivan joined the accounting firm of Arthur
Andersen & Co. in 1958, and was a Partner from 1970 until his
retirement from the firm in 1992. He served as International Tax
Director for General Motors Corporation from 1992 to 1994, and is
currently a financial and tax consultant. He is also a director
of Encompass Services Corporation.
Committees and Board Meetings
During 2001, there were four regular meetings of the Board
of Directors and three meetings by telephone conference. Each
nominee attended 75% or more of the aggregate of the meetings of
the Board and of the Board's committees on which he or she
served.
The Board has two standing committees -- an Audit Committee
and a Compensation Committee. Their functions are described
below.
Audit Committee. The role of the Audit Committee is governed
by a Charter of Responsibilities and Functions adopted by the
Board of Directors in January 2000, a copy of which is attached
as Appendix A to this Proxy Statement. Each of the members of
the Audit Committee is "independent" as defined in Rule
4200(a)(14) of the National Association of Securities Dealers'
listing standards. Pursuant to its Charter, the Audit
Committee's functions include the following: recommending to the
Board of Directors and evaluating the firm of independent
certified public accountants to be appointed as auditors of the
Company; reviewing any relationships between the independent
auditor and the Company; reviewing and discussing with management
and the independent auditors the financial statements of the
Company; reviewing the adequacy of the Company's internal
controls; reviewing any significant changes in the accounting
policies of the Company; and, reviewing any material contingent
liabilities. In its review of non-audit service fees paid to the
Company's independent auditors, the Committee considered the
possible effect of the performance of such services on the
auditors' independence. The Audit Committee held five meetings
during 2000. The current members of the Audit Committee are Mrs.
Coughlin, Mr. McGinnis, and Mr. Miller, who serves as Chairman.
Compensation Committee. The role of the Compensation
Committee is governed by a Charter of Responsibilities and
Functions adopted by the Board of Directors. Pursuant to this
Charter, the Compensation Committee develops and administers a
comprehensive compensation policy for senior management; oversees
the establishment and administration of compensation programs for
the Company's employees generally; reviews annually the
performance of the executive officers of the Company; makes
grants under and otherwise administers the Company's equity-based
plans and bonus plans; reviews, establishes and approves salaries
and other employment and severance arrangements for senior
management; and, recommends, adopts and implements compensation
and other benefits for members of the Board of Directors.
Certain of these functions are subject to consultation with,
advice from or ratification by the Board of Directors as the
Committee determines appropriate. The Compensation Committee
held seven meetings during 2000. The current members of the
Compensation Committee are Dr. Shelton, Mr. Sullivan, Mr.
Buchanan and Mr. Acker, who serves as Chairman.
Directors' Compensation
Directors, with the exceptions noted below, received an
annual fee of $20,000 for serving as Directors. Directors also
are reimbursed for out-of-pocket expenses incurred in attending
meetings of the Board of Directors or committees thereof.
Messrs. Skeen and Moore, as officers of the Company, do not
receive compensation for their service on the Board and Mr.
Acker, as an employee of a subsidiary of the Company, does not
receive cash compensation but does receive stock options as
described below. Non-employee directors are entitled to certain
flight benefits made available to employees of the Company.
All outside directors and, commencing in 2001, Mr. Acker,
also receive as additional compensation options to purchase
shares of the Company's Common Stock, which options vest at the
end of the year if the individual continues to serve as a
Director as of the end of the year of the grant or if the
Director retires by not standing for re-election at the annual
meeting of the stockholders. For each of 2000 and 2001, these
directors were granted options for 12,000 shares. The option
exercise price for these grants is equal to the closing price of
the Company's Common Stock reported for the date prior to the
date of the grant. The number of shares indicated above has been
adjusted to reflect the two-for-one common stock split paid as a
stock dividend on February 23, 2001.
PROPOSAL TWO: RATIFY AMENDMENT OF THE
RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
On January 25, 2001, the Board of Directors adopted
resolutions (i) proposing that the Company's Restated Certificate
of Incorporation be amended to increase the number of shares of
Common Stock that the Company is authorized to issue, subject to
stockholder approval of the amendment (the "Stock Amendment"),
(ii) declaring the Stock Amendment to be advisable and in the
best interests of the Company and its stockholders; and (iii)
calling for submission of the Stock Amendment for approval by the
Company's stockholders at the Meeting.
Introduction
The Company's Restated Certificate of Incorporation
currently authorizes the issuance of (i) 65,000,000 shares of
Common Stock, with a par value of two cents ($.02) per share
("Common Stock"); (ii) 6,000,000 shares of Class A-Non-Voting
Common Stock, with a par value of two cents ($.02) per share
("Class A Non-Voting Common"); and (iii) 5,000,000 shares of
Preferred Stock, with a par value of two cents ($.02) per share
("Preferred Stock").
Current Use of Shares. As of April 1, 2001, the Company had
approximately 52.5 million shares of Common Stock outstanding or
committed and approximately 12.5 million shares remaining
available for other purposes. The issued or committed shares
included approximately 42.9 million shares outstanding, and 9.6
million shares reserved for future issuance under the Company's
various benefit plans.
Effect of Recent Stock Split on Number of Authorized Shares.
As part of the same resolution in which the Board of Directors
proposed the Stock Amendment, the Board approved a two-for-one
common stock split payable as a stock dividend on February 23,
2001 to stockholders of record on February 9, 2001. This stock
split required the issuance of shares previously authorized but
unissued, with the result that the Company has presently
allocated approximately 81% of its authorized shares.
Proposed Amendment to Restated Certificate of Incorporation
The Board of Directors has adopted resolutions setting forth
(i) the proposed amendment to Paragraph 1 of Article IV of the
Company's Restated Certificate of Incorporation; (ii) the
advisability of the Stock Amendment; and (iii) a call for
submission of the Stock Amendment for approval by the Company's
stockholders at the Meeting.
The following is the text of Paragraph 1 of article IV of
the Restated Certificate of Incorporation of the Company, as
proposed to be amended:
1. The total number of shares which the Corporation shall
have the authority to issue is 171,000,000 shares, which
shall consist of (i) 160,000,000 shares of Common Stock
("Common"), par value $.02 per share; (ii) 6,000,000
shares of Class A Non-Voting Common Stock, par value $.02
per share ("Class A Non-Voting Common" and, together with
the Common, the "Common Stock"); and (iii) 5,000,000
shares of preferred stock, par value $.02 per share
("Preferred Stock").
* * *
Purpose and Effect of the Stock Amendment
The Board of Directors believes that it is in the Company's
best interests to increase the number of shares of Common Stock
that the Company is authorized to issue in order to give the
Company additional flexibility to maintain a reasonable stock
price through stock splits and stock dividends and to issue
Common Stock for other proper corporate purposes that may be
identified in the future, including without limitation to raise
equity capital, to adopt additional employee benefit plans or
reserve additional shares for issuance under such plans, and to
make acquisitions through the use of Common Stock.
Other than as permitted or required under the Company's
employee benefit plans and outstanding options, the Board of
Directors has no immediate plans, understandings, agreements or
commitments to issue additional Common Stock for any purposes.
However, no additional action or authorization by the Company's
stockholders would be necessary prior to the issuance of
additional shares unless required by applicable law or the rules
of any stock exchange or national securities association trading
system on which the Common Stock is then listed or quoted.
Under the Company's Restated Certificate of Incorporation,
the Company's stockholders do not have preemptive rights with
respect to Common Stock. Thus, should the Board of Directors
elect to issue additional shares of Common Stock, existing
stockholders would not have any preferential rights to purchase
the newly issued shares. In addition, if the Board of Directors
elects to issue additional shares of Common Stock, such issuance
could have a dilutive effect on the earnings per share, voting
power and shareholdings of current stockholders.
The Stock Amendment could, under certain circumstances, have
an anti-takeover effect, although this is not its intention. For
example, in the event of a hostile attempt to take control of the
Company, it may be possible for the Company to endeavor to impede
the attempt by issuing shares of the Common Stock, thereby
diluting the voting power of the other outstanding shares and
increasing the potential cost to acquire control of the Company.
The Stock Amendment therefore may have the effect of discouraging
unsolicited takeover attempts. However, the Board of Directors
is not aware of any attempt or proposal to take control of the
Company.
Vote Necessary to Approve the Amendment
The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock is necessary to approve the
Stock Amendment.
Recommendation of the Board
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE PROPOSAL TO AMEND THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
THAT THE COMPANY IS AUTHORIZED TO ISSUE TO 160,000,000. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THIS
PROPOSAL UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES.
PROPOSAL THREE: RATIFICATION OF INDEPENDENT AUDITORS
The Board has selected KPMG LLP, Certified Public
Accountants, as the Company's independent auditors for the fiscal
year ending December 31, 2001 and as a matter of corporate
governance is requesting stockholders to ratify that selection.
In the event that the Board's selection of auditors is not
ratified by a majority of the shares of Common Stock voting
thereon, the Board will review its future selection of auditors.
A representative of KPMG LLP is expected to attend the
Meeting and will have the opportunity to make a statement and/or
respond to appropriate questions from stockholders present at the
Meeting.
Disclosure of Auditor Fees
The following is a description of the fees billed to the
Company by KPMG during the year ended December 31, 2000:
Audit Fees: Audit fees paid by the company to KPMG in
connection with KPMG's audit of the company's annual financial
statements for the year ended December 31, 2000 and KPMG's review
of the company's interim financial statements included in its
quarterly reports on Forms 10-Q during that year totaled
approximately $169,000.
Financial Information Systems Design and Implementation Fees:
The Company did not engage KPMG to provide advice regarding
financial information systems design and implementation during
the year ended December 31, 2000.
All Other Fees: Fees billed to the Company by KPMG during the
year ended December 31, 2000 for audit-related and non-audit
services other than those described above totaled approximately
$369,000. Other fees consisted primarily of tax consulting
services, tax compliance services, and employee benefit plan
auditing.
Vote Necessary to Approve Ratification
The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock present and entitled to vote
at the Meeting is necessary to ratify the Board's selection of
KPMG LLP as the Company's independent auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN
FAVOR OF THE RATIFICATION OF THE SELECTION OF KPMG LLP AS
AUDITORS. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE
VOTED FOR THIS PROPOSAL UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN
THEIR PROXIES.
EXECUTIVE OFFICERS
The following table sets forth the name, age as of April 6,
2001 and position of each executive officer of the Company:
Officer
Name Age Position Since
Kerry B. Skeen 48 Chairman of the Board 1991
of Directors and Chief
Executive Officer
Thomas J. Moore 44 President, Chief 1994
Operating Officer and
Director
Richard J. Surratt 40 Senior Vice President, 1999
Chief Financial
Officer, Treasurer and
Assistant Secretary
Michael S. Davis 36 Senior Vice President - 1995
Chief Operating
Officer, Atlantic Coast
Jet
William R. Lange 56 Senior Vice President - 2000
Operations
Richard J. Kennedy 46 Vice President, General 1996
Counsel and Secretary
David W. Asai 45 Vice President - 1998
Financial Planning,
Controller and
Assistant Secretary
Background of Executive Officers
The following is a brief account of the business experience
of each of the executive officers of the Company other than
Messrs. Skeen and Moore, each of whose background is described
above. There are no family relationships or special
understandings pursuant to which such persons have been appointed
as executive officers of the Company.
Richard J. Surratt. Mr. Surratt has served as Senior Vice
President, Chief Financial Officer, Treasurer and Assistant
Secretary since December 1999. From 1990 until joining the
Company Mr. Surratt was with Mobil Corporation. During that time
he held a number of executive management positions in corporate
finance, accounting and new business development. Most recently
he was Director in the Mergers and Acquisitions Group,
functioning as the lead finance member for that team. Prior to
that position he served as Treasurer of Latin America for the
company. In addition to his experience at Mobil, he also spent
six years in various management and engineering positions with
Advanced Marine Enterprises. Mr. Surratt is a Certified Public
Accountant.
Michael S. Davis. Mr. Davis has been Senior Vice President
and Chief Operating Officer of ACJet since July 2000. He was
Senior Vice President - Customer Service for ACA from May 1995 to
July 2000. From 1993 until that time, he served as Vice
President, Customer Service, for Business Express Airlines, Inc.
Previously, from 1986 to 1993, he served in a variety of
positions with USAir, Inc., including Station Manager in Boston,
Passenger Service Manager in Philadelphia, Ramp Operations
Manager in Dayton and various positions in Pittsburgh.
William R. Lange. Mr. Lange has served as Senior Vice
President - Operations since October 2000, having joined ACA in
February 2000 as Senior Vice President - Technical Operations for
ACA, and been appointed a Senior Vice President of the Company in
July 2000. From 1997 until December 1999, he served as Executive
Vice President for World Airways, Inc., prior to which he served
for four years as Executive Vice President and COO for Jetstream
Aircraft, Inc. From 1973 through 1992, Mr. Lange held a variety
of positions with Pan American World Airways, Inc. including
System Director Scheduling, General Manager System Control, Vice
President Planning, and President and COO of Pan Am Express, Inc.
Richard J. Kennedy. Mr. Kennedy has served as General
Counsel and Secretary since May 1996 and was named Vice President
in November 1997. From 1991 until joining the Company he was
with British Aerospace Holdings, Inc., where he served in various
capacities including contract negotiation, aircraft finance, and
financial restructuring. Previously he was a private attorney in
Washington, D.C. for over ten years.
David W. Asai. Mr. Asai has served as Vice President -
Financial Planning, Controller and Assistant Secretary since
January 1998. From December 1994 until that time, he served as
Vice President, Controller and Chief Accounting Officer at Reno
Air, Inc. From July 1992 to November 1994, Mr. Asai was Vice
President - Finance and Chief Financial Officer of Spirit
Airlines, Inc. From 1981 to June 1992, Mr. Asai was employed by
Midway Airlines, Inc. in various capacities, including Director
of Financial Planning and Analysis. Mr. Asai is a Certified
Public Accountant.
EXECUTIVE COMPENSATION
The following table sets forth information regarding the
compensation of the individual who served as the Company's Chief
Executive Officer during 2000, and the Company's four other most
highly compensated executive officers serving as executive
officers at December 31, 2000. Bonus amounts reflect amounts
earned for the specified year regardless of when paid. All share
and share-related amounts have been adjusted to reflect the
Company's May 15, 1998 and February 23, 2001 two-for-one stock
splits.
Summary Compensation Table
Annual Compensation Long Term
Compensation Awards
Other All
Name and Annual Restricted Securities Other
Current Year Salary Bonus Compen- Stock Underlying Compen-
Position sation Awards Options sation
(1) (2) (3) (3) (4)
Kerry B. 2000 $403,462 $59,949 $74,675 $439,063 200,000 $395,000
Skeen
Chairman of 1999 316,539 224,966 40,564 - 600,000 395,000
the Board
and Chief 1998 295,000 356,360 29,206 653,854 346,000 147,500
Executive
Officer
Thomas J. 2000 253,402 37,930 32,743 210,750 100,000 187,500
Moore
President 1999 200,000 117,800 10,493 - 340,000 150,000
and Chief
Operating 1998 184,942 180,307 12,674 326,927 146,000 60,000
Officer
Michael S. 2000 171,577 25,717 14,772 158,063 50,000 81,000
Davis
Senior Vice 1999 140,846 83,328 6,497 - 130,000 81,000
President
Customer 1998 136,654 131,610 6,706 196,146 80,200 28,000
Service
Richard J. 2000 164,283 24,644 19,546 158,063 80,000 32,400
Surratt (5)
Senior Vice 1999 8,723 - - - 70,000 -
President,
Treasurer 1998 - - - - - -
and Chief
Financial
Officer,
William B. 2000 133,825 22,529 9,029 105,375 50,000 -
Lange (6)
Senior Vice 1999 - - - - - -
President
Operations 1998 - - - - - -
______________
(1) Includes income from certain medical expense and tax
reimbursement payments and, for Mr. Skeen, automobile allowances
of $15,250 in 2000 and 1999.
(2) In 1998, shares of restricted stock were granted in exchange
for cancellation of previously granted in-the-money stock
options. The restricted stock value reported is based on a grant
date closing stock price of $8.50 per share. In 2000, shares of
restricted stock were granted to certain executive officers.
Shares granted in 2000 vest over three years based on continued
employment, subject to acceleration if the Company's stock price
increases by at least 25% from the date of grant. Although the
Company has not traditionally paid cash dividends, shares of
restricted stock would be entitled to participate if dividends
were declared. Year-end value of restricted stock held by
Messrs. Skeen, Moore, Davis, Surratt, and Lange was $1,139,799,
$559,660, $372,576, $183,937 and $122,625, respectively, based on
a year-end stock price of $20.4375 per share. Based on the
Company's stock price performance, all of these shares vest in
April 2001.
(3) Number of options reported in the table for 1998 includes
in-the-money options that were cancelled in 1998 upon the grant
of restricted stock described in note 2, above, as follows: Mr.
Skeen, options for 200,000 shares were cancelled; Mr. Moore,
options for 100,000 shares were cancelled; and Mr. Davis, options
for 60,000 shares were cancelled.
(4) Represents the total amount of premiums paid by the Company
in 2000 for split dollar life insurance under the Company's
deferred compensation agreements in the amount of $395,000 for
Mr. Skeen, $150,000 for Mr. Moore, $81,000 for Mr. Davis, and
$32,400 for Mr. Surratt.
(5) Mr. Surratt joined the Company as Senior Vice President,
Chief Financial Officer, Treasurer and Assistant Secretary in
December 1999.
(6) Mr. Lange joined the Company as Senior Vice President -
Technical Operations for ACA in February 2000 and became Senior
Vice President of the Company in July 2000 and Senior Vice
President - Operations in October 2001.
The following table sets forth information regarding grants of
stock options by the Company during the fiscal year ended
December 31, 2000, to the individuals named in the Summary
Compensation Table above. All share and share-related amounts
have been adjusted to reflect the Company's May 15, 1998 and
February 23, 2001 two-for-one stock splits.
Option Grants in Last Fiscal Year
% of
Total
Number Options Potential
of Granted Realizable Value
Name Securities to at Assumed
Underlying Employee Exercise Annual Rates of
Options in Fiscal Price Expiration Stock Price
Granted Year (2) Date Appreciation (3)
5% 10%
Kerry B. 200,000(1) 15.74% $13.38 June 26,2010 $1,682,922 $4,264,855
Skeen
Thomas J. 100,000(1) 7.87% 13.38 June 26,2010 841,461 2,132,427
Moore
Michael S. 50,000(1) 3.93% 13.38 June 26,2010 420,731 1,066,214
Davis
Richard J. 30,000(1) 2.36% 13.38 June 26,2010 252,438 639,728
Surratt 50,000(1) 3.93% 16.38 October 25,2010 515,065 1,305,275
William B. 10,000(1) 0.79% 9.13 March 2, 2010 57,418 145,509
Lange 40,000(1) 3.15% 12.94 April 19,2010 325,516 824,921
(1) Options vest in equal portions over a four year period and
become fully exercisable upon a change in control. Number of
shares covered by option grants and exercise price have been
adjusted for the February 23, 2001 two-for-one stock split.
(2) Exercise Price equals market price of the Company's Common
Stock on the date of grant.
(3) Assumed value at the end of ten year period pursuant to SEC-
mandated calculations, although these percentages do not
necessarily reflect expected appreciation or actual period of
holding by executive.
The following table provides information regarding the
exercise of options during the year ended December 31, 2000, and
the number and value of unexercised options held at December 31,
2000, by the individuals named in the Summary Compensation Table
above. All share and share-related amounts have been adjusted to
reflect the Company's May 15, 1998 and February 23, 2001 two-for-
one stock splits.
Aggregate Option Exercises in 2000 and Option Values at December 31, 2000
Number of Securities Value of
Underlying Unexercised
Shares Unexercised In-the-Money Options
Acquired Options at FY-End (2) at FY-End (2)
on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
(1)
Kerry B. 365,964 $5,135,265 252,668 720,000 $2,459,978 $5,778,125
Skeen
Thomas 118,000 1,240,236 283,282 367,000 4,075,540 3,187,375
J.Moore
Michael 90,000 1,180,937 189,680 147,500 2,854,529 1,208,750
S. Davis
Richard -- -- 17,500 132,500 181,563 954,688
J. Surratt
William 4,000 30,494 6,000 40,000 67,500 297,500
B. Lange
(1) Based on difference between option exercise price and
market price of Common Stock on date of exercise.
(2) Based upon a market value of the Common Stock of
$20.4375 per share as of December 31, 2000.
Employment Agreements
Under an agreement between the Company and Kerry B. Skeen,
which was amended and restated as of December 28, 1999 (the
"Skeen Agreement"), the Company has agreed to employ Mr. Skeen as
Chief Executive Officer for a three year term that is
automatically extended unless terminated. The Skeen Agreement
provides for a minimum annual base salary of $435,000, which
amount may be increased from time to time by the Board's
Compensation Committee. The Skeen Agreement further provides
deferred compensation at a rate of 100% of the annual base salary
subject to ten year graduated vesting, and provides that
Mr. Skeen shall participate in any bonus plan provided to
executive officers generally and in employee benefit and medical
plans and other arrangements as the Compensation Committee shall
determine. In addition, the Skeen Agreement provides that Mr.
Skeen shall be granted options covering a minimum of 200,000
shares per year (adjusted for the February 23, 2001 two-for-one
stock split).
Under the Skeen Agreement, if Mr. Skeen's employment is
terminated by the Company without cause, or if he terminates his
own employment with good reason (including any termination by the
Company or by Mr. Skeen within twelve months after a change in
control), or upon Mr. Skeen's death or disability, then: (1) all
of Mr. Skeen's options become immediately exercisable; (2) he is
paid his year-to-date bonus plus three times his annual bonus;
(3) he is paid his full base salary, deferred compensation, and
insurance benefits for 36 months; and (4) he will become fully
vested in any deferred compensation. Upon a change in control of
the Company, as defined in the Skeen Agreement, Mr. Skeen would
receive the amounts and benefits of his severance compensation
whether or not his employment is terminated, and certain
insurance and other benefits would be extended. The Skeen
Agreement also provides for additional benefits during the term
of the Skeen Agreement and following any change in control. As
discussed below in the Report of the Compensation Committee on
Executive Compensation, the Company has agreed to amend the Skeen
Agreement to clarify the effect of ACA's restructuring of its
agreement with United Airlines and to provide for certain
retirement benefits.
Under an agreement between the Company and Thomas J. Moore,
which was amended and restated as of December 28, 1999 (the
"Moore Agreement"), the Company has agreed to employ Mr. Moore as
President and Chief Operating Officer for a one year term that is
continuously extended unless terminated. The Moore Agreement is
substantially similar to the Skeen Agreement except that: the
minimum annual base salary is $275,000; the deferred compensation
rate is a lesser percentage of base salary; the minimum annual
stock option grant is 100,000 shares (adjusted for the February
23, 2001 two-for-one stock split); the severance compensation is
two years of base pay and bonus (or three years upon a change in
control); unexercisable options do not become exercisable except
in the event of a change in control; and, the disability period
prior to termination is six months.
Under separate agreements between the Company and Mr. Davis
and Mr. Surratt (both of which were restated effective December
28, 1999, and to be executed with Mr. Lange (collectively, the
"Officer Agreements"), the Company agreed to employ Mr. Davis as
Senior Vice President - Customer Service and Mr. Surratt as
Senior Vice President, Chief Financial Officer, Treasurer and
Assistant Secretary, and will agree to employ Mr. Lange as Senior
Vice President - Operations, each for a one year term. The
Officer Agreements provide for automatic twelve month extensions
unless earlier terminated, and for annual base salaries, which
may be and, for officers subject to Officer Agreements in the
past, have been increased from time to time by the Compensation
Committee to amounts above that specified in the original
agreements. The Officer Agreements provide that Messrs. Davis,
Surratt and Lange shall participate in any bonus plan provided to
executive officers generally, in the Company's deferred
compensation program, and in employee benefit and medical plans
and other arrangements as the Compensation Committee shall
determine. In the event of termination by the Company "without
cause", the terminated officer shall receive his full base salary
and major medical insurance coverage for a period of twelve
months, and a portion of any annual bonus shall be prorated to
the date of termination. Change in control provisions are
similar to the Moore Agreement except that compensation would be
at a rate of two years of base pay and bonus.
Deferred compensation for all of the executive officers
under the foregoing agreements is presently funded in the form of
life insurance. By separate agreement, upon termination of
employment the Company will release to the officer its interest
in the life insurance policy, including earnings from invested
funds in an amount equal to the specified vested percentage
(which shall be 100% upon a change in control) of the premiums
paid by the Company.
For all executive officers and other vice presidents, in the
event that any payments made in connection with a change in
control would be subjected to the excise tax imposed on excess
parachute payments by the Internal Revenue Code, the Corporation
will "gross-up" the employee's compensation for all such excise
taxes and any federal, state and local income tax applicable to
such excise tax, penalties and interest thereon. In the event of
a change in control, all vice presidents would receive
compensation in the form of one years' salary, bonus, and
insurance, and all options held by them would become fully
exercisable.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Compensation for Messrs. Skeen, Moore, Davis, Surratt, and
Lange (the "Senior Executive Officers") consists primarily of
base salary, bonus, stock-based awards and participation in a
deferred compensation program. Consistent with previous years'
compensation practices, in 2000 the Compensation Committee
maintained a policy of using primarily operational and financial
performance criteria, along with other discretionary factors, as
a basis for setting the compensation of its executive officers.
The Committee reviewed and considered performance measures for
year-to-date improvements by the Company's executive officers and
also used industry performance averages as a comparison factor.
Agreements between the Company and each of the Senior
Executive Officers establish minimum base salaries and other
compensation and benefits. Following the takeover of one
regional carrier and announced acquisition of another regional
air carrier by Delta Airlines in 1999, these agreements were
amended to provide one-time compensation in the event of a change
in control based on a sliding scale proportionate to rank, to
continue certain benefits for a specified period, and to provide
protection against potential excise taxes.
Senior Executive Officers participate in the Senior
Management Incentive Plan ("SMIP"), under which they may receive
a percentage of their salary as bonus. During 2000 SMIP payments
were based on percentage improvements in the Company's earnings
per share over the prior year, on price performance of the
Company's stock relative to its peer group members, each in
comparison to targets established by the Committee, and on
achievement of start-up of ACJet by a specified date. Maximum
payouts range from 100% for the Chief Executive Officer to lesser
percentages for other participants. For 2000, although certain
SMIP targets were met, participants did not receive any payout
under the program in light of the restricted stock grants
discussed below. Senior Executive Officers also participate with
all other management employees in the Company's Management
Incentive Plan ("MIP"), which provides for additional bonus
compensation based on the attainment of specified levels of
profit margin and operating performance. The 2000 MIP bonus was
in the middle one-third of the maximum payout and represented a
composite rate made up of actual performance in each of the goal
categories.
In November 2000 the Committee granted restricted stock to
the Senior Executive Officers. This grant was approved in
recognition of the substantial contributions of these individuals
in developing the Company's future growth opportunities and to
motivate these executives to remain with the Company and enhance
stockholder value. Accordingly, the Committee structured the
restricted stock to vest over three years, but to vest all of the
stock as early as five months following the grant provided that
the Company's stock price increased by at least 25% from the day
of the grant.
In November 2000 the Committee agreed to amend Mr. Skeen's
employment agreement (the "Skeen Agreement") to provide certain
retirement benefits for Mr. Skeen and to clarify the effect under
the Skeen Agreement of ACA's restructuring of its agreement with
United Airlines. Under the new retirement provisions, to be
incorporated into the Skeen Agreement by a subsequent amendment,
Mr. Skeen will be eligible to retire at any time after January 1,
2005 and to receive benefits through age 75 or for 15 years,
whichever is greater. Benefits will include consulting fees of
90% of Mr. Skeen's last base salary for 5 years, 75% for the
second five years, and 50% thereafter, as well as continuation of
certain other benefits provided in the Skeen Agreement. The
Committee also considered whether Mr. Skeen may have rights under
the Skeen Agreement as a result of a change in his duties
following ACA's restructuring of its agreement with United
Airlines, and Mr. Skeen has committed to waive any such rights as
part of the amendment of the Skeen Agreement.
The primary factors considered in determining Mr. Skeen's
compensation were his performance with respect to the achievement
of key strategic, financial, and leadership development
objectives. These included his role in the development of the
strategy to initiate a significant expansion of the Company's
business. Mr. Skeen's compensation for 2000 consisted primarily
of the base salary, deferred compensation, an annual bonus under
MIP, and option grants totaling 200,000 shares, and the grant of
25,000 shares of restricted stock (share amounts adjusted for the
February 23, 2001 two-for-one stock split). His base salary was
increased to $435,000 effective October 1, 2000. The only stock
options granted to him were contractual options pursuant to his
employment agreement. The primary factors considered in the
amendment to the Skeen Agreement to provide specific retirement
benefits were to provide incentives for Mr. Skeen to continue in
his current role for an extended period and to maintain a
continuing role with the Company thereafter, to provide an
incentive for Mr. Skeen to waive certain potential rights under
his employment agreement, and to conform to industry standards.
During the first quarter of 2000 Mr. Skeen repaid a loan that had
been made to him by the Company in May 1999 in the amount of $2
million, bearing interest at prime, and repayable within one
year.
Section 162(m) of the Internal Revenue Code, disallows
corporate tax deductions for compensation in excess of $1 million
paid to each of the five highest paid officers of the Company
unless such compensation is deemed performance related within the
meaning of Section 162(m). SMIP and MIP bonuses and stock
options granted to executive officers under the Company's plans
are designed so that compensation realized by the executives can
qualify as "performance based compensation" which is not subject
to Section 162(m). However, in order to maintain flexibility in
motivating and compensating Company executives, the Committee has
not adopted a policy that all compensation will qualify as
"performance based compensation."
Compensation
Committee
C. Edward Acker,
Chairman
Robert E. Buchanan
Dr. Judy Shelton
John M. Sullivan
Compensation Committee Interlocks and Insider Participation
During 2000 Mr. Acker served as an officer of one of the
Company's subsidiaries, and together with Dr. Shelton and with
Messrs. Buchanan and Sullivan, served on the Compensation
Committee.
AUDIT COMMITTEE REPORT
The Audit Committee reviews the Company's financial
reporting process on behalf of the Board. Management has the
primary responsibility for the financial statements and the
reporting process. The Company's independent auditors are
responsible for expressing an opinion on the conformity of the
Company's audited consolidated financial statements to accounting
principles generally accepted in the United States of America.
The Audit Committee members do not serve as professional
accountants or auditors and their functions are not intended to
duplicate or to certify the activities of management and the
independent auditors. The Committee serves a board-level
oversight role where it receives information from, consults with
and provides its views and directions to management and the
independent auditors on the basis of the information it receives
and the experience of its members in business, financial and
accounting matters.
In this context, the Audit Committee reviewed and discussed
with management and the independent auditors the audited
financial statements for the year ended December 31, 2000 (the
"Audited Financial Statements"). The Audit Committee has
discussed with the independent auditors the matters required to
be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees). In addition, the Audit
Committee has received from the independent auditors the written
disclosures required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees)
and discussed with them their independence from the Company and
its management.
Following the reviews and discussions referred to above, the
Audit Committee recommended to the Board that the Audited
Financial Statements be included in the Company's Annual Report
on SEC Form 10-K for the year ended December 31, 2000, for filing
with the Securities and Exchange Commission.
Audit Committee
James C. Miller III, Chairman
Susan MacGregor Coughlin
Daniel L. McGinnis
Company Stock Performance Graph
The graph below compares the cumulative total return on
Atlantic Coast Airlines Holdings, Inc. ("ACAI") Common Stock for
the last five fiscal years with the cumulative total return on
the Nasdaq Market Index and the peer group index selected by the
Company. The comparison assumes an investment of $100 each in
the Company's Common Stock, the Nasdaq Market Index and the peer
group on December 31, 1995, with dividends reinvested when they
are paid. The companies included in the peer group are Mesa Air
Group, Inc., Mesaba Holdings, Inc., Midway Airlines Corporation,
and SkyWest Airlines, Inc. The peer group does not include
Comair Holdings, Inc., which was included in the peer group in
prior years but was acquired during 2000. In the calculation of
the annual cumulative stockholder return of the peer group index,
the stockholder returns of the companies included in the peer
group are weighted according to their stock market
capitalization.
Cumulative Total Retur
12/95 12/96 12/97 12/98 12/99 12/00
ATLANTIC COAST AIRLINES
HOLDINGS, INC. 100.00 119.51 309.76 487.80 463.41 797.56
PEER GROUP 100.00 123.04 150.69 212.51 394.92 237.62
NASDAQ STOCK MARKET (U.S.) 100.00 99.94 148.56 228.94 164.54 280.66
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information, as of December 31, 2000
(except as noted otherwise), concerning beneficial ownership of the Common
Stock by each person known by the Company, based upon Schedule 13D/G filings
with the SEC, to own beneficially more than five percent of the outstanding
shares of the Common Stock. Except as noted otherwise, all amounts
reflected in the table represent shares in which the beneficial owners have
sole voting and investment power. Share information has been adjusted to
reflect the two-for-one stock split paid as a stock dividend on February
23, 2001.
Number of Shares
Beneficially Owned
Name Shares Percent
Gordon A. Cain 4,220,800 9.9%
Eight Greenway Plaza
Suite 702
Houston, TX 77046
Franklin Resources, Inc. 3,842,600 (1) 9.0%
777 Mariners Island Boulevard
San Mateo, CA 94404
Vanguard Horizon Funds - Vanguard 3,200,000 (2) 7.5%
Capital Opportunity Fund
P.O. Box 2600
Valley Forge, PA 19482
(1) Based solely upon Amendment No. 4 to Franklin Resources, Inc.'s Schedule
13G, which they filed on February 1, 2001, which has been adjusted for the
two-for-one stock split paid as a stock dividend on February 23, 2001.
(2) Based solely upon Amendment No. 1 to Vanguard Horizon Funds - Vanguard
Capital Opportunity Fund's Schedule 13G, which they filed on
February 12, 2001, which has been adjusted for the two-for-one stock split
paid as a stock dividend on February 23, 2001.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information, as of April 1, 2001,
concerning beneficial ownership of the Company's Common Stock by (i) each
director of the Company, (ii) each executive officer of the Company named in
the Summary Compensation Table, and (iii) all directors and executive officers
of the Company as a group. Except for the effect of community property laws
and as noted otherwise all amounts reflected in the table represent shares
in which the beneficial owners have sole voting and investment power.
All share information reflects the two-for-one stock split paid as a stock
dividend on February 23, 2001.
Number of Shares
Beneficially Owned (1)
Name Shares Percent
Kerry B. Skeen 717,256 1.7%
Thomas J. Moore 363,654 *
C. Edward Acker 1,300,400 3.0%
Robert E. Buchanan 60,000 *
Susan MacGregor Coughlin 25,660 *
Daniel L. McGinnis 5,950 *
James C. Miller III 52,000 *
Judy Shelton 8,000 *
John M. Sullivan 16,000 *
Michael S. Davis 217,014 *
Richard J. Surratt 36,500 *
William B. Lange 6,000 *
All directors and executive officers
as a group (14 persons) 2,944,376 6.6%
* Less than one percent.
(1) Includes options and restricted stock that are exercisable on or within
60 days after April 1, 2001, as follows: Mr. Skeen, 367,668 shares;
Mr. Moore, 330,283 shares; Mr., Acker, 700,000 shares; Mr. Buchanan, 28,000
shares; Mrs. Coughlin, 28,000 shares; Mr. McGinnis, 12,000 shares,
Mr. Miller, 28,000 shares; Dr. Shelton, 12,000 shares, Mr. Sullivan, 28,000
shares; Mr. Davis, 221,181 shares, Mr. Lange, 22,000 shares, and
Mr. Surratt, 26,500 shares.
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors, executive officers and persons who own more than
ten percent of the Common Stock to file with the Securities Exchange
Commission, the Nasdaq Stock Market and the Company reports on Forms 4 and
Forms 5 reflecting transactions affecting beneficial ownership.
Based solely upon its review of the copies of such forms received by it,
the Company believes that, during fiscal year 2000, all persons complied
with such filing requirements except that Mr. Skeen did not timely file a
Form 4 to report an exercise of an option to purchase certain shares.
EXPENSES OF SOLICITATION
The costs of the solicitation of proxies will be borne by the Company.
Such costs include preparation, printing and mailing of the Notice of
Annual Meeting of Stockholders, this Proxy Statement, the enclosed Proxy
Card and the Company's 2000 Annual Report, and the reimbursement of
brokerage firms and others for reasonable expenses incurred by them in
connection with the forwarding of proxy solicitation materials to
beneficial owners. The solicitation of proxies will be conducted primarily
by mail, but may also include telephone, facsimile or oral communications
by directors, officers or regular employees of the Company acting without
special compensation.
STOCKHOLDER PROPOSALS
Securities and Exchange Commission regulations permit stockholders to
submit certain types of proposals for inclusion in the Company's proxy
statement. Any such proposals for the Company's Annual Meeting of
Stockholders to be held in 2002 must be submitted to the Company on or
before December 24, 2001, and must comply with the requirements of
Securities and Exchange Commission Rule 14a-8 in order to be eligible for
inclusion in proxy materials relating to that meeting. Such proposals
should be sent to: Atlantic Coast Airlines Holdings, Inc.,
Attn: Secretary, 45200 Business Court, Dulles, Virginia 20166.
The submission of a stockholder proposal does not guarantee that it will
be included in the Company's proxy statement.
Alternatively, stockholders of record may introduce certain types of
proposals that they believe should be voted upon at the Annual Meeting or
nominate persons for election to the Board of Directors. Under the
Company's Bylaws, unless the date of the 2002 Annual Meeting of
Stockholders is advanced by more than 30 days or delayed (other than as a
result of adjournment) by more than 30 days from the anniversary of the
2001 Annual Meeting, notice of any such proposal or nomination must be
provided in writing to the Secretary of the Company no later than March 1,
2002 and not before January 30, 2002. Stockholders wishing to make such
proposals or nominations must in addition satisfy other requirements under
the Company's Bylaws. If the stockholder does not also comply with the
requirements of Rule 14a-4 under the Securities Exchange Act of 1934, the
Company may exercise discretionary voting authority under proxies it
solicits to vote in accordance with its best judgement on any such
proposal submitted by a stockholder.
___________________________
Please complete, date, sign and return promptly the accompanying Proxy
Card in the postage-paid envelope enclosed for your convenience. Signing
and returning the Proxy Card will not prevent record holders or beneficial
holders who obtain a valid proxy from voting in person at the Meeting.
April 23, 2001
Dulles, Virginia
Appendix A
ATLANTIC COAST AIRLINES HOLDINGS, INC.
AUDIT COMMITTEE CHARTER
1. Members. The Board of Directors shall appoint an Audit Committee of at
least three members, consisting entirely of "independent" directors of the
Board, and shall designate one member as chairperson. For purposes hereof,
"independent" shall mean a director who meets the National Association of
Securities Dealers, Inc. ("NASD") definition of "independence."
Each member of the Company's audit committee must be financially literate
and one member of the audit committee shall have accounting or related
financial management expertise, both as provided in the NASD rules.
2. Purposes, Duties, and Responsibilities. The Audit Committee shall
represent the Board of Directors in discharging its responsibility relating
to the accounting, reporting, and financial practices of the Company and
its subsidiaries, and shall have general responsibility for surveillance
of internal controls and accounting and audit activities of the Company
and its subsidiaries. Specifically, the Audit Committee shall:
(i) Recommend to the Board of Directors, and evaluate, the firm of
independent certified public accountants to be appointed as auditors of the
Company, which firm shall be ultimately accountable to the Board of
Directors through the Audit Committee.
(ii) Review with the independent auditors their audit procedures, including
the scope, fees and timing of the audit, and the results of the annual
audit examination and any accompanying management letters.
(iii) Review with management and with the independent auditors the results
of any significant matters identified as a result of the independent
auditors' interim review procedures prior to the filing of each 10(Q) or as
soon thereafter as possible. The Audit Committee Chair may perform this
responsibility on behalf of the Audit Committee.
(iv) Review the written statement from the outside auditor of the Company
concerning any relationships between the auditor and the Company or any
other relationships that may adversely affect the independence of the
auditor and assess the independence of the outside auditor as required
under Independent Standard Boards Standard No. 1.
(v) Review and discuss with management and the independent auditors the
audited financial statements of the Company, including an analysis of the
auditors' judgment as to the quality of the Company's accounting principles.
(vi) Review the adequacy of the Company's internal controls.
(vii) Review significant changes in the accounting policies of the Company
and proposed accounting and financial reporting rule changes that may have a
significant impact on the Company's financial statements.
(viii) Review material pending legal proceedings involving the Company and
other contingent liabilities.
(ix) Review the adequacy of the Audit Committee Charter on an annual basis.
3. Meetings. The Audit Committee shall meet as often as may be deemed
necessary or appropriate in its judgement, generally four times each year,
either in person or telephonically. The Audit Committee shall meet in
executive session with the independent auditors at least annually. The
Audit Committee may create subcommittees who shall report to the Audit
Committee. The Audit Committee shall report to the full Board of Directors
with respect to its meetings. The majority of the members of the Audit
Committee shall constitute a quorum.
ATLANTIC COAST AIRLINES HOLDINGS, INC.
Proxy solicited by the Board of Directors for Annual Meeting - May 30, 2001.
Each of the undersigned, revoking all other proxies heretofor given, hereby
constitutes and appoints Richard J. Surratt and Richard J. Kennedy, and each
of them, with full power of substitution, as proxy or proxies to represent
and vote all shares of Common Stock, par value $.02 per share (the "Common
Stock") owned by the undersigned at the Annual Meeting and any adjournments
or postponements thereof. The Company's stock may be voted by or at the
direction of non-U.S. citizens, provided that shares they own have been
registered and the Company's Foreign Stock Registry or are registered for
voting at the Annual Meeting. See reverse side to request that shares
be so registered. By signing below, the undersigned represents that it is
a U.S. citizen (as defined in the Proxy Statement) or that the shares
represented by this proxy have been registered in the Company's Foreign
Stock Registry or are requested to be registered for this Annual Meeting.
The Board of Directors recommends a vote FOR Items 1, 2 and 3 to be voted
upon at the Annual Meeting:
1. Election of all nominees listed to the Board of Directors, except as noted
(write the names of the nominees, if any, for whom you withhold authority to
vote). Nominees: Kerry B. Skeen, Thomas J. Moore, C. Edward Acker, Robert
E. Buchanan, Susan MacGregor Coughlin, Daniel L. McGinnis, James C. Miller
III, Judy Shelton and John M. Sullivan.
FOR all nominees __ WITHHOLD AUTHORITY to vote for all nominees __
__ For all except: ______________________________.
2. To approve amendment to the Company's Certificate of Incorporation to
increase the Company's authorized shares to 171,000,000.
FOR __ AGAINST __ ABSTAIN __
3. To ratify selection of KPMG LLP as the Company's independent auditors for
the current year.
FOR __ AGAINST __ ABSTAIN __
X PLEASE MARK VOTES AS IN THIS EXAMPLE (Continued and to be signed and
dated on the reverse side)
THE SHARES REPRESENTED HEREBY WILL BE VOTED IN ACCORDANCE WITH THE DIRECTIONS
GIVEN IN THIS PROXY. IF NOT OTHERWISE DIRECTED HEREIN, SHARES REPRESENTED
BY THIS PROXY WILL BE VOTED FOR ITEM 1 (ELECTION OF DIRECTORS), FOR ITEM 2
(AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION) AND FOR ITEM 3
(RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS). IF ANY OTHER
MATTERS ARE PROPERLY BROUGHT BEFORE THE ANNUAL MEETING, PROXIES WILL BE
VOTED ON SUCH MATTERS AS THE PROXIES NAMED HEREIN, IN THEIR SOLE DISCRETION,
MAY DETERMINE.
PLEASE MARK, SIGN, DATE AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE.
Date _________________________, 2001.
Signature ___________________________
Title _______________________________
___________________________________
(Signature, if Held Jointly)
Please sign exactly as name appears hereon. Please manually date this card.
When signing as an attorney, executor, administrator, trustee or guardian,
give full title as such. If a corporation, sign in full corporate name by
President or other authorized officer. If a partnership, sign in
partnership name by authorized person.
__ Check box to request that shares be registered for voting by a non-U.S.
citizen at the Annual Meeting.