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SCHEDULE 14A
(RULE 14a-101)
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:
[ ] 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 Pursuant to Rule 14a-11(c) or Rule 14a-12
AVIALL, INC.
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(Name of Registrant as specified in its Charter and Person
Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with 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.
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(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[AVIALL LOGO BLUE]
Aviall, Inc.
Notice of 2001 Annual Meeting
and Proxy Statement
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[AVIALL LOGO BLUE]
PAUL E. FULCHINO
Chairman, President and
Chief Executive Officer
April 30, 2001
Dear Stockholders:
You are cordially invited to attend our Annual Meeting of Stockholders to be
held at 1:00 p.m. on Thursday, June 7, 2001, at Omni Mandalay Hotel, 221 East
Las Colinas, Irving, Texas 75039. All stockholders of record as of April 18,
2001 are entitled to vote at the Annual Meeting.
The proposals to be acted upon at the Annual Meeting include the election of
directors, approval of an amendment to the Aviall, Inc. 1998 Stock Incentive
Plan to increase the number of shares of common stock authorized to be issued
under this Plan and to limit the number of restricted or deferred shares
issuable under the Plan, and the ratification of the appointment of
PricewaterhouseCoopers LLP as the Company's independent auditors for 2001. I
hope you will carefully read these proposals, which are described in the
accompanying Proxy Statement, and vote your shares for each proposal.
It is important that your shares be represented at the Annual Meeting.
Accordingly, even if you plan to attend, please sign, date and promptly mail the
enclosed proxy card in the postage-prepaid envelope.
Sincerely,
/s/ PAUL E. FULCHINO
Paul E. Fulchino
Chairman, President and Chief
Executive Officer
AVIALL, INC., 2075 Diplomat Drive, Dallas, TX 75234-8999 U.S.A.
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PROXY STATEMENT
AVIALL, INC.
2075 DIPLOMAT DRIVE
DALLAS, TEXAS 75234
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is being provided to you in connection with the
solicitation of proxies to be voted at the Annual Meeting of Stockholders of
Aviall, Inc. The Annual Meeting will be held on Thursday, June 7, 2001, starting
at 1:00 p.m., at Omni Mandalay Hotel, 221 East Las Colinas, Irving, Texas 75039.
Proxies are being solicited on behalf of the Board of Directors of Aviall. This
Proxy Statement and the enclosed proxy card are first being mailed on or about
April 30, 2001 to holders of Aviall's common stock entitled to vote at the
Annual Meeting.
A Proxy Committee will vote the shares of common stock represented by each
proxy card returned to Aviall. Jacqueline K. Collier, Jeffrey J. Murphy and
Cornelius Van Den Handel are the members of the Proxy Committee. Any stockholder
giving a proxy may change his or her vote at any time before it is voted at the
Annual Meeting by notifying the Secretary of Aviall in writing, by submitting a
new proxy card dated after the date of the proxy being revoked or by attending
the Annual Meeting and voting in person. Where a stockholder's proxy specifies a
choice with respect to a matter, the shares will be voted accordingly. IF NO
SPECIFICATION IS MADE, THE SHARES WILL BE VOTED FOR THE DIRECTOR NOMINEES
IDENTIFIED BELOW, FOR THE APPROVAL OF THE AMENDMENT TO AVIALL, INC. 1998 STOCK
INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK AUTHORIZED TO BE
ISSUED UNDER THIS PLAN AND FOR THE RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS AVIALL'S INDEPENDENT AUDITORS.
PROCEDURES FOR THE ANNUAL MEETING
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of common stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum at the Annual Meeting. Business at the Annual
Meeting will be conducted in accordance with the procedures determined by the
Chairman of the Annual Meeting and will be limited to matters properly brought
before the Annual Meeting pursuant to the procedures set forth in Aviall's
By-Laws. Those procedures include the requirement that any stockholder who
desires either to bring a stockholder proposal before an annual meeting or to
nominate a person for election as a director at an annual meeting give written
notice to Aviall with respect to the proposal or nominee prior to the Annual
Meeting. The Chairman of the Annual Meeting may decline to acknowledge any
stockholder proposal or any nomination for director not made in accordance with
these procedures.
The Board does not anticipate that any matters other than those described
in this Proxy Statement will be brought before the Annual Meeting. If, however,
other matters are properly brought before the Annual Meeting, proxies will be
voted by the Proxy Committee in accordance with their judgment.
RECORD DATE AND VOTING STOCK
April 18, 2001, has been set as the record date for the purpose of
determining stockholders entitled to notice of, and to vote at, the Annual
Meeting. As of the record date there were 18,483,726 shares of common stock
outstanding. Each outstanding share of common stock is entitled to one vote.
Only recordholders of common stock at the close of business on the record date
are entitled to vote at the Annual Meeting or any adjournment or postponement of
the Annual Meeting.
A majority of the votes cast at the Annual Meeting is required to approve
the actions proposed to be taken at the Annual Meeting. Abstentions and broker
non-votes will be included in determining the number of shares of common stock
present or represented at the Annual Meeting or any adjournment or postponement
of
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the Annual Meeting for purposes of determining whether a quorum exists. However,
abstentions with respect to any proposal brought to a vote at the Annual Meeting
will have the same effect as a vote against that proposal. Broker non-votes are
treated as shares not present for the purposes of the vote with respect to a
specific proposal and therefore will have no effect on the outcome of the vote
on any proposal.
PARTICIPANTS IN THE AVIALL EMPLOYEES' SAVINGS PLAN
If a stockholder is a participant in the Aviall, Inc. Employees' Savings
Plan and holds shares of common stock in the Savings Plan, the proxy card
represents the number of full shares of common stock held for the benefit of the
participant in the Savings Plan as well as any shares of common stock registered
in the participant's name. Thus, a proxy card for such a participant grants a
proxy for shares registered in the participant's name and serves as a voting
instruction for the trustees of the Savings Plan for the account in the
participant's name. Information as to the voting instructions given by
individuals who are participants in the Savings Plan will not be disclosed to
Aviall.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
Aviall has three classes of directors serving staggered three-year terms.
Donald R. Muzyka and Jonathan M. Schofield are currently serving terms that
expire at the Annual Meeting. The Board has nominated Dr. Muzyka and Mr.
Schofield to continue to serve as directors for a term expiring at Aviall's
annual stockholders meeting in 2004.
Below are the names of the nominees and of each director continuing in
office, a description of positions and offices with Aviall, any other principal
occupation, business experience during at least the last five years, certain
other directorships presently held, age and length of service as a director of
Aviall.
THE PERSONS NAMED IN THE PROXY WILL VOTE FOR THE NOMINEES LISTED BELOW
EXCEPT WHERE AUTHORITY HAS BEEN WITHHELD.
NOMINEES FOR DIRECTOR
FOR A TERM EXPIRING AT THE ANNUAL MEETING IN 2004
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DONALD R. MUZYKA Dr. Muzyka, age 62, has been a director of Aviall since
Retired President and Chief 1994. He served as President and Chief Executive Officer of
Executive Officer of Special Metals Corporation ("SMC") from October 1996 until
Special Metals Corporation his retirement in August 2000. He served as President and
Chief Operating Officer of SMC from January 1990 to October
Member -- Audit Committee 1996.
Member -- Compensation and
Nominating
Committee
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JONATHAN M. SCHOFIELD Mr. Schofield, age 60, has been a director of Aviall since
Retired Chairman of Airbus 2001. From December 1992 until his retirement in March 2001,
Industrie of North America Mr. Schofield served as Chairman of the Board of Airbus
Industrie of North America, Inc., a subsidiary of Airbus
Member -- Audit Committee Industrie, a manufacturer of large civil aircraft. From
Member -- Compensation and December 1992 until March 2000, he also served as Chief
Nominating Executive Officer of Airbus Industrie of North America, Inc.
Committee
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DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL MEETING IN 2002
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RICHARD J. SCHNIEDERS Mr. Schnieders, age 53, has been a director of Aviall since
President and Chief Operating 1997. He has served as President of SYSCO Corporation since
Officer of SYSCO Corporation July 2000 and as its Chief Operating Officer since January
2000. He served as an Executive Vice President of SYSCO from
Chairman -- Audit Committee January 1999 to July 2000. Mr. Schnieders is a director of
Member -- Compensation and SYSCO, where he has been employed since 1982.
Nominating
Committee
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BRUCE N. WHITMAN Mr. Whitman, age 67, has been a director of Aviall since
Executive Vice President 1998. He has been an Executive Vice President and director
FlightSafety International, Inc. of FlightSafety International, Inc. since 1962. Mr. Whitman
is also a director of FlightSafety Boeing Training
Member -- Audit Committee International L.L.C., Petroleum Helicopters, Inc., Megadata
Chairman -- Compensation and Corporation and the National Air and Space Museum and a
Nominating member of the Board of Governors of the Civil Air Patrol.
Committee
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DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL MEETING IN 2003
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PAUL E. FULCHINO Mr. Fulchino, age 54, has been a director of Aviall since
Chairman, President and 2000. He has served as Chairman of the Board, President and
Chief Executive Officer Chief Executive Officer of Aviall since January 2000. Mr.
of Aviall Fulchino was President and Chief Operating Officer of BE
Aerospace, Inc., a leading supplier of aircraft cabin
interior products and services, from 1996 to 1999. From 1990
to 1996, Mr. Fulchino was either President or Vice Chairman
of Mercer Management Consulting, Inc., an international
general management consulting firm.
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ARTHUR E. WEGNER Mr. Wegner, age 63, has been a director of Aviall since
Retired Executive Vice President 2000. He served as Executive Vice President of Raytheon
of Raytheon Company Company and Chairman of Raytheon Aircraft Company, a
subsidiary of Raytheon Company, from January 2000 until his
Member -- Audit Committee retirement in August 2000. Prior to assuming that position,
Member -- Compensation and Mr. Wegner was an Executive Vice President of Raytheon
Nominating Company and Chairman and Chief Executive Officer of Raytheon
Committee Aircraft Company.
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BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
BOARD OF DIRECTORS. The Board currently consists of six members. Mr.
Wegner was appointed to the Board in May 2000 and Mr. Schofield was appointed to
the Board in January 2001. During 2000, the Board of Directors held eight
meetings. The Board has established standing Audit and Compensation and
Nominating Committees to assist the Board in the discharge of its
responsibilities. The Board may also appoint other committees for specialized
functions. All of the Directors of Aviall are independent directors (as that
term is defined in Aviall's By-Laws) other than Mr. Fulchino. Aviall's By-Laws
provide that a majority of the Board and each member of the Compensation and
Nominating Committee be an independent director. Each Director attended at least
75% of the Board and applicable committee meetings held during the period he was
a member of the Board in 2000.
AUDIT COMMITTEE. The current members of the Audit Committee are Mr.
Schnieders (Chairman), Dr. Muzyka, Mr. Schofield, Mr. Wegner and Mr. Whitman.
The Audit Committee met three times in 2000. The Audit Committee is responsible
for recommending an accounting firm to serve as Aviall's independent auditors,
reviewing the annual audit of Aviall, reviewing audit and any nonaudit fees paid
to Aviall's independent auditors, reviewing the scope and results of internal
audit activities and reviewing compliance with Aviall's conflict of interest and
business ethics policies as well as compliance with major regulatory
requirements. The Audit Committee reports its findings and recommendations to
the Board for appropriate action. A report of the Audit Committee appears
elsewhere in this Proxy Statement. In addition, a copy of the current Audit
Committee Charter, which was adopted by the Board of Directors in May 2000, is
included as Appendix A to this Proxy Statement.
COMPENSATION AND NOMINATING COMMITTEE. The current members of the
Compensation and Nominating Committee are Mr. Whitman (Chairman), Dr. Muzyka,
Mr. Schnieders, Mr. Schofield and Mr. Wegner. During 2000, the Compensation
Committee met seven times. The Compensation Committee supervises Aviall's
compensation policies, administers incentive plans, reviews officers' salaries
and bonuses, approves significant changes in employee benefits and recommends to
the Board such other forms of compensation as it deems appropriate. The
Compensation Committee also considers nominations for prospective Board members.
The Compensation Committee considers nominees recommended by other directors,
stockholders and management who provide the Board with information with respect
to a suggested candidate for Board membership. Written nominations by
stockholders for directors will be considered, provided they are received by the
Secretary of Aviall at its principal executive offices pursuant to timely
advance written notice in accordance with Aviall's By-Laws (not less than 70
days nor more than 90 days prior to the first anniversary of the previous year's
annual meeting, subject to certain exceptions) and contain all information
specified in such By-Laws, including the identity and address of the nominating
stockholder, the class and number of shares of common stock which are owned by
such stockholder and all information regarding the proposed nominee that would
be required to be included in a proxy statement soliciting proxies for the
proposed nominee. Aviall's By-Laws also provide that all members of the
Compensation Committee shall be independent directors who are not otherwise
affiliated with Aviall. The report by the Compensation Committee discussing
compensation for Aviall's senior executives appears elsewhere in this Proxy
Statement.
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COMPENSATION OF DIRECTORS
Directors who are not employees of Aviall are entitled to receive an annual
retainer of $24,375 (the "Annual Retainer"), plus $1,000 for each Board or
committee meeting attended. Directors who are employees of Aviall or any of its
subsidiaries do not receive any fees for their Board or committee service.
Directors are also reimbursed for expenses incurred in attending Board and Board
committee meetings.
Directors who are not employees of Aviall are eligible to participate in
Aviall's Directors Stock Plan. Under the Directors Stock Plan, each eligible
director may make an election to receive shares of common stock in lieu of the
Annual Retainer. All eligible directors participated in the Directors Stock Plan
during 2000 and elected to participate in 2001. The number of shares of common
stock granted to a participant is the nearest number of whole shares of common
stock which can be purchased for $30,000 (the "Share Value"), based on the mean
of the highest and lowest sale price for the common stock on the grant date as
reported on the New York Stock Exchange. In the event that there is an increase
or decrease in the Annual Retainer, the Share Value adjusts automatically so
that the ratio between the Share Value and the Annual Retainer is maintained.
Under the Directors Stock Plan, common stock is granted automatically on the
first business day in July of any calendar year to each eligible director who
has elected to participate in the Directors Stock Plan at least six months prior
to that date.
A director who receives a grant of common stock pursuant to the Directors
Stock Plan is entitled to receive dividends on and to vote such shares. However,
the director's ownership rights in such shares do not vest until six months
after the date of grant and then only if the director continues to serve on the
Board at that date. However, a participating director who has completed a full
term of service prior to the end of such six-month period, or whose service
during such six-month period was interrupted due to death or disability, will be
vested in a pro rata number of such shares.
Further, under the Directors Stock Plan, non-employee directors are
eligible to receive options to purchase up to 3,000 shares of Aviall common
stock on the first trading day of July each year. On July 3, 2000, each of Dr.
Muzyka, Mr. Schnieders, Mr. Wegner and Mr. Whitman were granted options to
purchase 3,000 shares of Aviall common stock at an exercise price of $5.03. The
options have a 10-year term and vest on the first anniversary of the grant date.
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BENEFICIAL OWNERSHIP OF COMMON STOCK
As of March 31, 2001, the directors of Aviall, the Chief Executive Officer
of Aviall, the other four most highly compensated executive officers of Aviall
at December 31, 2000 and all current directors and executive officers of Aviall
as a group, beneficially owned common stock as set forth in the following table.
For purposes of this Proxy Statement, Paul E. Fulchino, Charles M. Kienzle,
Bruce Langsen, Jeffrey J. Murphy and James T. Quinn are referred to as the
"named executive officers."
TOTAL SHARES
BENEFICIALLY
NAME OWNED SHARES(1) OPTION SHARES(2) OWNED(3) PERCENTAGE
- ---- --------------- ---------------- ------------------ ----------
Paul E. Fulchino(4).................... 84,173 166,667 250,840 1.3%
Donald R. Muzyka....................... 15,693 0 15,693 *
Richard J. Schnieders.................. 14,747 0 14,747 *
Jonathan M. Schofield.................. 0 0 0 *
Arthur E. Wegner....................... 0 0 0 *
Bruce N. Whitman....................... 54,747 0 54,747 *
Charles M. Kienzle(5).................. 32,453 176,618 209,071 1.1%
Bruce Langsen(6)....................... 31,218 151,240 182,458 1.0%
Jeffrey J. Murphy(7)................... 38,090 193,724 231,814 1.2%
James T. Quinn(8)...................... 12,409 104,562 116,971 *
All current directors and executive
officers as a group (14 persons)..... 334,196 995,611 1,329,807 6.8%
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* Less than one percent
1. Represents shares of common stock owned by such individuals, including shares
owned pursuant to the Aviall Employees' Savings Plan and the Directors Stock
Plan.
2. Represents shares that may be acquired within 60 days of March 31, 2001,
through the exercise of stock options.
3. Unless otherwise noted, the holders of the shares of common stock included in
this table have sole voting and investment power with respect to all shares.
4. Includes 21,473 shares of restricted common stock for which Mr. Fulchino has
sole voting power and no investment power.
5. Includes 7,379 shares of restricted common stock for which Mr. Kienzle has
sole voting power and no investment power.
6. Includes 16,239 shares of restricted common stock for which Mr. Langsen has
sole voting power and no investment power.
7. Includes 15,464 shares of common stock held jointly by Mr. Murphy and his
spouse. Mr. Murphy has shared voting and investment power with respect to
these shares. Also includes 11,926 shares of restricted common stock for
which Mr. Murphy has sole voting power and no investment power.
8. Includes 5,739 shares of restricted common stock for which Mr. Quinn has sole
voting power and no investment power.
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The following table sets forth information regarding the number and
percentage of shares of common stock held by all persons and entities who are
known by Aviall to beneficially own five percent or more of Aviall's outstanding
common stock. The information regarding beneficial ownership of common stock by
the entities identified below is included in reliance on a report filed with the
Securities and Exchange Commission by such entity, except that the percentage is
based upon Aviall's calculations made in reliance upon the number of shares
reported to be beneficially owned by such entity in such report and the number
of shares of common stock outstanding on March 31, 2001.
AMOUNT AND NATURE PERCENT
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
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Dimensional Fund Advisors Inc. 1,336,400 7.2%(1)
Artisan Partners Limited Partnership 1,188,759 6.4%(2)
Neuberger Berman, Inc. and Neuberger Berman, LLC 1,147,900 6.2%(3)
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1. According to a Schedule 13G filed by Dimensional Fund Advisors Inc.,
Dimensional Fund Advisors has sole voting and dispositive power with respect
to 1,336,400 shares of common stock. In the Schedule 13G, Dimensional
reported it acts as an investment advisor to funds which hold the shares in
the ordinary course of business and that the funds are the actual owners of
the shares. The business address of Dimensional Fund Advisors Inc. is 1299
Ocean Avenue, 11th Floor, Santa Monica, CA 90401.
2. According to a Schedule 13G filed by Artisan Partners Limited Partnership,
Artisan Partners has shared voting and dispositive power with respect to
1,188,759 shares of common stock. In Schedule 13G, Artisan reported that it
acts as an investment advisor to funds which hold the shares in the ordinary
course of business and that it does not have any economic interest in the
shares. The business address of Artisan Partners is 1000 North Water Street,
#1770, Milwaukee, Wisconsin 53202.
3. According to a Schedule 13G filed by Neuberger Berman, Inc. and Neuberger
Berman, LLC, these firms have sole voting power with respect to 372,300
shares of common stock, shared voting power with respect to 754,100 shares of
common stock and shared dispositive power with respect to 1,147,900 shares of
common stock. In the Schedule 13G, Neuberger Berman Inc. and Neuberger
Berman, LLC reported that they act as an investment manager for various funds
which hold the shares in the ordinary course of business, that these firms do
not have any economic interest in the shares, that the actual owners of such
shares are their clients and their clients have the sole right to receive and
the power to direct the receipt of dividends or proceeds from the sale of the
shares. The business address of each of Neuberger & Berman, Inc. and
Neuberger & Berman, LLC is 605 Third Ave., New York, New York 10158.
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COMPENSATION AND NOMINATING COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
INTRODUCTION
The Compensation and Nominating Committee has responsibility for Aviall's
executive compensation practices and policies. The Committee is currently
composed of five outside directors who are not officers or employees of Aviall
or its subsidiaries. With the exception of the Directors Stock Plan, the
Committee members are not eligible to participate in the compensation plans or
programs administered by the Committee. Two members of the Committee, Arthur E.
Wegner and Jonathan M. Schofield, joined the Board and the Committee subsequent
to the determination of the compensation arrangements for the Company's
executives for 2000 and as a result did not participate in the Committee's
deliberations regarding these arrangements.
EXECUTIVE PAY POLICY
The Company's compensation programs are intended to attract, retain and
motivate the key people necessary to lead Aviall to achieve its strategic
objective of increased stockholder value over the long term, reflecting the
Committee's belief that executive compensation should seek to align the
interests of Aviall's executives with those of its stockholders. The program
utilizes three components: (a) base salary, (b) short-term incentives and (c)
long-term compensation in the form of both stock options and restricted stock.
In establishing compensation, the Compensation Committee seeks to provide a
mix of base salary and incentive compensation that provides executives with a
competitive total compensation package. The Compensation Committee sets
compensation in this manner to ensure that Aviall's compensation practices do
not put it at a competitive disadvantage in retaining and attracting key
executives while ensuring an appropriate cost structure for Aviall. During 2001,
the Committee intends to undertake a review of the Company's compensation
structure, including the mix of base salary and incentive compensation.
BASE SALARY
Effective January 1, 2000, Paul E. Fulchino, was elected Chairman,
President and Chief Executive Officer of Aviall. In connection with his election
to these positions, Mr. Fulchino entered into an Employment Agreement with
Aviall. See "Compensation of Executive Officers -- Employment and Severance
Arrangements -- Employment Agreement." Pursuant to the terms of his Employment
Agreement, Mr. Fulchino's base salary for 2000 was $450,000. With the exception
of one executive officer who assumed additional responsibilities in 1999, the
base salaries of the Company's executive officers for 2000 remained at the same
levels as the prior year.
SHORT-TERM INCENTIVE PROGRAM
Under the 2000 short-term incentive program, Mr. Fulchino was eligible to
receive an aggregate bonus award of up to 100% of his base salary subject to the
Company meeting specific objectives. Each of Aviall's other executive officers
were eligible to earn a bonus award of up to either 150% or 120% of his or her
base salary. These bonus awards were payable two-thirds in cash and one-third in
restricted stock. In January 2001, Mr. Fulchino was awarded a cash bonus of
$265,740 and was granted 21,473 shares of restricted common stock. The
restricted stock vests on the third anniversary of the grant date and are
otherwise subject to the terms of Aviall's 1998 Stock Incentive Plan.
STOCK OPTIONS
The Stock Incentive Plan is administered by the Board and the Committee and
is designed to provide incentive compensation to Aviall's executive officers and
other key management personnel. The grants are long-term incentives for future
performance, which are designed to align the interests of management with those
of Aviall's stockholders.
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Pursuant to his Employment Agreement, Mr. Fulchino was granted options to
purchase 500,000 shares of common stock in December 1999. At its March 2000
meeting, the Committee approved grants of stock options to certain other
executive officers and key employees. The number of options granted to specific
individuals was dependent on the individual's current performance potential for
promotion and expected impact on the future performance of Aviall. All grants
were made at fair market value at the time of grant. One third of these options
vest each year commencing on the first anniversary of their grant.
STOCK OWNERSHIP
At the recommendation of the Committee in 1993, the Board approved
voluntary executive stock ownership guidelines for Aviall's chief executive
officer, executive officers and certain other executives. The guidelines are
intended to encourage executives to become substantial stockholders. Under the
guidelines, Aviall's chief executive officer is expected to own shares of common
stock with an aggregate value of three times his or her then-current base salary
within five years of appointment to such position. Within such time period, all
other executive officers are expected to own shares of common stock with a value
of 1.5 times their base salary and the remaining executives are expected to own
shares having a value of one-half times their annual base salary. The Committee
reviews the progress of the Company's executives against these guidelines
annually.
The Committee periodically reviews the potential impact of the $1 million
deduction limitation on executive compensation for the top five executives which
was implemented as part of the Omnibus Budget Reconciliation Act of 1993. Due,
in part, to Aviall's existing net operating loss carryforward, the Committee
currently believes that no action is necessary at this time. The Compensation
Committee intends to continue to evaluate Aviall's potential exposure to the
deduction limitation on an annual basis.
This report is submitted by the members of the Compensation and Nominating
Committee of the Board.
THE COMPENSATION AND NOMINATING COMMITTEE OF THE BOARD
Bruce N. Whitman Donald R. Muzyka Richard J. Schnieders
Chairman
Jonathan M. Schofield Arthur E. Wegner
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COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation paid
or accrued for the benefit of the named executive officers for services rendered
to Aviall during Aviall's last three fiscal years.
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------------- -----------------------------------
OTHER ANNUAL RESTRICTED SHARES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) STOCK AWARDS(2) OPTIONS/SARS(3) COMPENSATION(4)
- --------------------------- ---- -------- -------- --------------- --------------- ----------------- ---------------
Paul E. Fulchino(5) 2000 $448,269 $265,740 $9,346 $132,864 0 $11,878
President and Chief 1999 0 0 0 0 500,000 0
Executive Officer
Charles M. Kienzle 2000 175,000 80,500 -- 40,250 25,000 400
Senior Vice President, 1999 175,000 0 -- 0 35,000 400
Operations 1998 175,000 23,450 -- 9,778 30,000 400
Bruce Langsen 2000 175,000 134,313 -- 67,153 30,000 400
President of ILS 1999 175,000 208,442 -- 0 45,000 400
1998 168,269 144,580 -- 60,256 40,000 400
Jeffrey J. Murphy 2000 177,000 96,996 -- 48,498 20,000 569
Senior Vice President, 1999 177,000 0 -- 0 35,000 553
Law and Human Resources 1998 177,000 109,739 -- 45,735 30,000 540
James T. Quinn 2000 165,385 64,487 -- 32,243 25,000 400
Vice President, Sales 1999 133,846 0 -- 0 35,000 400
and Marketing 1998 115,000 14,168 -- 5,907 30,000 400
- ---------------
1. Includes amounts reimbursed for the payment of income taxes related to
relocation expenses and insurance premiums paid by the Company in 2000 and
taxable to Mr. Fulchino. Other perquisites and personal benefits furnished
to the named executive officers do not meet the disclosure thresholds
established under SEC regulations and are not included in this column.
2. The grants of restricted stock in 1998 and 2000 reflected in the table above
were made pursuant to Aviall's annual incentive compensation program. That
program provided for incentive compensation to be paid two-thirds in cash
and one-third in restricted stock. The restricted stock vests on the third
anniversary of the grant date. Recipients of restricted stock awards are
entitled to receive any dividends paid with respect to these shares. The
dollar amounts shown for 2000 were determined based upon a price of $6.1875,
the closing price of the common stock on January 19, 2001, the grant date.
The dollar amounts shown for 1998 were determined based upon a price of
$11.1875 per share, the closing price of the common stock on January 26,
1999, the grant date. As of December 31, 2000, the aggregate number of
shares of restricted stock and their value (based upon a price of $5.0625,
the closing price of common stock on December 29, 2000) held by each named
executive officer was as follows: Mr. Fulchino, no restricted shares, Mr.
Kienzle, 9,624 restricted shares and $48,722; Mr. Langsen, 12,449 restricted
shares and $63,023; Mr. Murphy, 12,938 restricted shares and $65,499; and
Mr. Quinn, 4,444 restricted shares and $22,498.
3. Grants of stock options vest one-third each year commencing on the first
anniversary of the grant. No named executive officer received stock options
granted in tandem with SARs.
4. For 2000 this column represents (a) moving expenses of $11,106 for Mr.
Fulchino, (b) premiums for supplemental long-term disability insurance
payments in the amount of $772 for Mr. Fulchino, (c) contributions to
Aviall's Employees' Savings Plan in the amount of $400 for each named
executive officer other than Mr. Fulchino, who was not eligible to
participate in this plan in 2000, and (d) premiums for compensatory
split-dollar insurance payments in the amount of $169 for Mr. Murphy.
5. Mr. Fulchino joined Aviall on December 21, 2000 and became Chairman,
President and Chief Executive Officer of Aviall effective January 1, 2000.
The stock option award granted to Mr. Fulchino in 1999 was made pursuant to
his Employment Agreement with the Company. See "Compensation of Executive
Officers -- Employment and Severance Arrangements -- Employment Agreement."
EMPLOYMENT AND SEVERANCE ARRANGEMENTS
EMPLOYMENT AGREEMENT. Aviall is a party to an Employment Agreement with
Paul E. Fulchino pursuant to which he serves as Aviall's Chairman, President and
Chief Executive Officer. Under the Employment Agreement, Mr. Fulchino receives
an annual base salary of at least $450,000 and is eligible to receive incentive
compensation of not less than 100% of his base salary (although he is not
guaranteed any specific amount of incentive pay). Mr. Fulchino is also entitled
to supplemental term life insurance of $900,000, supplemental long-term
disability insurance such that he would receive 60 percent of his base salary
should he become permanently disabled, and other employee benefits made
available to Aviall's senior executives. The Employment Agreement has a
three-year term, expiring on December 31, 2002. In the event of an involuntary
termination of his employment (other than for cause or his death or disability),
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Mr. Fulchino would receive severance pay in an amount equal to the greater of
two times his then-current base salary or the base salary for the remainder of
the term of the Employment Agreement. Pursuant to the Employment Agreement, on
December 21, 1999, Mr. Fulchino was granted options to purchase 500,000 shares
of common stock at an exercise price of $7.3125, the fair market value of the
common stock on the grant date. This option grant has a ten-year term and the
options vest one-third each year commencing on the first anniversary of the
grant date.
SEVERANCE AGREEMENTS. Aviall is a party to Severance Agreements with each
of its executive officers, including Paul E. Fulchino, that become operative
only upon a change of control. The Severance Agreements provide that if, within
a two-year period following a change of control, Aviall terminates the
employment of such executive for reasons other than death, disability or cause,
or the executive terminates employment with Aviall for good reason, the
executive is entitled to receive a severance payment in an amount equal to a
multiple of his or her (a) then-current base salary, and (b) an amount equal to
the greater of the executive's (1) incentive compensation for the current fiscal
year (assuming the Company had reached target performance for that year), or (2)
incentive compensation paid or payable to the executive for the most recently
completed fiscal year. The executive is also entitled to continue to receive
health and life insurance benefits for a period of one year following his or her
termination following a change of control. The Severance Agreements further
provide that if any amount payable thereunder or otherwise to the executive is
determined to be an "excess parachute payment" under the Internal Revenue Code,
such executive would be entitled to receive an additional payment (net of income
taxes) to compensate such executive for the excise tax imposed by the Code on
such payment. The multiple of base salary and incentive compensation referred to
above is two or three times for each of the executive officers.
SEVERANCE PAY PLAN. Aviall maintains a Severance Pay Plan for the benefit
of all full-time employees, including executive officers. The Severance Pay Plan
provides that if Aviall terminates an eligible employee's employment for any
reason other than cause, the employee is entitled to receive severance pay in an
amount determined in accordance with the terms of the plan. For executive
officers, the severance pay is an amount equal to one or two times (a) the
executive's then-current base salary and (b) the greater of (1) the executive's
target incentive payment for the year in which his employment was terminated and
(2) the executive's incentive payment for the most recently completed fiscal
year. Payments under the Severance Pay Plan are made in installments (a one or
two-year period for executive officers) unless the employee's employment is
terminated within one year following a change in control. In that circumstance,
the severance payment is made in a lump sum. The Severance Pay Plan provides
that in the event that an employee is terminated under circumstances in which he
is entitled to receive severance payment under any written agreement (including
the Employment and Severance Agreements referred to in the preceding
paragraphs), the employee is not entitled to receive the benefits intended to be
provided under the Severance Pay Plan.
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OPTION/SAR GRANTS IN 2000
The following table provides information regarding the grant of stock
options to the named executive officers in 2000.
INDIVIDUAL GRANTS
------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENTAGE OF AT ASSUMED ANNUAL RATES
SECURITIES TOTAL OPTIONS/ OF STOCK PRICE
UNDERLYING SARS APPRECIATION
OPTIONS/ GRANTED TO EXERCISE FOR OPTION TERM(2)
SAR EMPLOYEES PRICE PER EXPIRATION ---------------------------
NAME GRANTED(1) IN 2000 SHARE DATE 0% 5% 10%
---- ---------- -------------- --------- ---------- --- -------- --------
Paul E. Fulchino............... 0 -- -- -- -- -- --
Charles M. Kienzle............. 25,000 6.4% $8.9375 03/14/10 $ 0 $140,519 $356,102
Bruce Langsen.................. 30,000 7.7% 8.9375 03/14/10 0 168,622 427,322
Jeffrey J. Murphy.............. 20,000 5.1% 8.9375 03/14/10 0 112,415 284,881
James T. Quinn................. 25,000 6.4% 8.9375 03/14/10 0 140,519 356,102
- ---------------
1. Each of the options shown in the table above vest one third each year,
beginning on the first anniversary of the date of the grant. No options
granted to the named executive officers in 2000 were granted in tandem with
SARs. For each of Mr. Kienzle and Mr. Quinn, 8,333 options are incentive
stock options and the remainder are nonqualified stock options. For Mr.
Langsen, 10,000 options are incentive stock options and the remainder are
nonqualified stock options. For Mr. Murphy, 6,667 are incentive stock options
and the remainder are nonqualified stock options.
2. The potential realizable value set forth in the table above illustrates the
values that would be realized upon exercise of the option immediately prior
to the expiration of its term, assuming the specified compounded rates of
appreciation on the common stock over the term of the option. The use of the
assumed 5% and 10% annual rates to stock price appreciation are established
by the Securities and Exchange Commission and is not intended by the Company
to forecast possible appreciation of the price of its common stock.
AGGREGATED OPTION/SAR EXERCISES IN 2000
AND DECEMBER 31, 2000 OPTION/SAR VALUES
The following table provides information, regarding the exercise of Aviall
options during 2000 and unexercised options held as of December 31, 2000 for
each of the named executive officers.
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS AT
AT DECEMBER 31, 2000 DECEMBER 31, 2000(1)
SHARES ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- -------- ----------- ------------- ----------- -------------
Paul E. Fulchino............ 0 $0 166,667 333,333 $0 $0
Charles M. Kienzle.......... 0 0 146,617 58,334 0 0
Bruce Langsen............... 0 0 112,906 73,334 0 0
Jeffrey J. Murphy........... 0 0 165,390 53,334 0 0
James T. Quinn.............. 0 0 74,561 58,334 0 0
- ---------------
1. This value was determined based upon a price of $5.0625 per share of Aviall's
common stock, the closing price on December 29, 2000, multiplied by the
number of shares of common stock issuable upon exercise of these options.
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RETIREMENT BENEFITS
Aviall covers substantially all regular domestic full-time employees,
including executive officers, under the Aviall, Inc. Retirement Plan. Benefits
payable under the Retirement Plan are based on an employee's career earnings
with Aviall and its subsidiaries. At normal retirement age of 65, a participant
is entitled to a monthly pension benefit payable for life. The annual pension
benefit, when paid in the form of a life annuity with no survivor's benefits, is
generally equal to the sum of 1.45% of the first $15,600 of compensation and
bonus received, plus 1.85% of the portion of the compensation and bonus in
excess of $15,600 during each such year while a Retirement Plan member.
Retirement Plan benefits vest at the earlier of the completion of five
years of credited service or upon reaching age 65. However, that in the event of
a change of control of Aviall, all participants will be fully vested and the
term "accrued benefit" will include the value of early retirement benefits for
any participant age 45 or above or with 10 or more years of service. These
benefits are not subject to any reduction for Social Security benefits or other
offset amounts. An employee's pension benefits may be paid in certain
alternative forms having actuarially equivalent values.
The maximum annual benefit under a qualified pension plan is currently
$140,000 beginning at the Social Security retirement age (currently age 65). The
maximum compensation and bonus that may be taken into account in determining
annual retirement accruals is currently $170,000. Aviall maintains a
non-qualified, unfunded benefit plan, called the Benefit Restoration Plan, which
covers those participants of the Retirement Plan, including those named below,
whose benefits are reduced by the Internal Revenue Code or other United States
laws. A participant in the Benefit Restoration Plan is entitled to a benefit
equal to the difference between the amount of benefits the participant is
entitled to without reduction and the amount of benefits the participant is
entitled to after the reductions.
The following table sets forth estimated annual pension benefits (in the
form of a single life annuity) assuming each named executive officer remains
continuously employed at current compensation levels until retirement at the
normal retirement date (age 65).
NAME AMOUNT(1)
- ---- ---------
Paul E. Fulchino............................................ $89,501
Charles M. Kienzle.......................................... 84,465
Bruce Langsen............................................... 66,170
Jeffrey J. Murphy........................................... 75,529
James T. Quinn.............................................. 56,324
- ---------------
1. These amounts include benefits under the Retirement Plan and the Benefit
Restoration Plan combined.
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STOCK PERFORMANCE
The following graph compares the cumulative stockholder return on Aviall's
common stock with the S&P 500 Stock Index and the S&P SmallCap Aerospace/Defense
Index. The comparison assumes $100 was invested as of December 31, 1995 and the
reinvestment of all dividends.
COMPARISON OF CUMULATIVE STOCKHOLDER RETURN
STOCK PERFORMANCE GRAPH
- ----------------------------------------------------------------------------------------------------------------
31-Dec-95 31-Dec-96 31-Dec-97 31-Dec-98 31-Dec-99 31-Dec-00
- ----------------------------------------------------------------------------------------------------------------
AVIALL 100 8.67 159.33 125.33 87.34 53.99
S&P 500 100 122.96 163.98 210.85 255.21 231.98
S&P Smallcap Aerospace/Defense 100 142.65 176.24 213.77 107.32 110.08
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APPROVAL OF AN AMENDMENT
TO THE AVIALL, INC. 1998 STOCK INCENTIVE PLAN
(PROPOSAL NO. 2)
On March 29, 2001 the Board adopted, subject to approval by Aviall's
stockholders, an amendment to the Aviall, Inc. 1998 Stock Incentive Plan to
increase the number of shares of common stock authorized to be issued by 400,000
shares. The proposed amendment further provides that no more than 20 percent of
the shares presently available for issuance under the Plan will be issued as
Restricted Shares, Deferred Shares or Performance Shares. Currently, 1,840,000
shares of common stock are authorized for issuance under the Plan, of which
options covering 1,524,956 shares have been issued, leaving 315,044 shares
reserved for issuance under the Plan.
If the proposed amendment to the Incentive Plan is approved by the
stockholders at the Annual Meeting, a total of 715,044 shares would be available
for issuance under the Incentive Plan. Of these shares, no more than 143,008
shares would be available for issuance as Restricted Shares, Deferred Shares or
Performance Shares.
The Board believes that it is in the best interests of the Company to
attract and retain the services of experienced and knowledgeable employees. The
Plan is designed to provide an incentive to officers and other key employees of
the Company and its subsidiaries and is intended to align the interests of these
officers and other employees with those of Aviall's stockholders. In order for
the Plan to continue to serve its purpose, the Board has determined that an
increase in the number of shares available for issuance is necessary and in the
best interests of Aviall's stockholders.
PLAN SUMMARY
GENERAL. The Plan was approved by the Company's stockholders at the 1998
Annual Meeting. The Plan affords the Board and the Compensation Committee the
ability to design management incentives that are responsive to the Company's
needs. The Plan permits the grant of awards consisting of not only stock options
and stock appreciation rights, but also restricted and deferred shares (which
may include performance criteria), as well as performance shares and performance
units.
SHARES AVAILABLE UNDER THE PLAN. If the amendment is approved by Aviall's
stockholders and subject to adjustment as provided in the Plan, the number of
shares of common stock that may be issued or transferred (a) upon the exercise
of Option Rights or Appreciation Rights, (b) as Restricted Shares, (c) as
Deferred Shares, (d) in payment of Performance Shares or Performance Units that
have been earned, and (e) in payment of dividend equivalents paid with respect
to awards made under the Plan may not exceed 2,240,000 shares of common stock
plus any shares relating to awards that expire, are forfeited or transferred as
payment of the Option Price or in satisfaction of any withholding amount.
The aggregate number of shares of common stock actually issued or
transferred by the Company upon the exercise of Incentive Stock Options ("ISO")
may not exceed 2,240,000 shares. Further, no Participant may be granted Option
Rights or Appreciation Rights, in the aggregate, for more than 300,000 shares of
common stock during any year, subject to adjustment as provided in the Plan. In
no event may any Participant receive an award of Performance Shares or
Performance Units in any calendar year having an aggregate maximum value as of
their respective Dates of Grant in excess of $400,000, subject to adjustment as
provided in the Plan.
ELIGIBILITY. Officers and key employees of the Company and its
subsidiaries, as well as any person who has agreed to serve in any such
capacity, may be selected by the Board to receive benefits under the Plan.
OPTION RIGHTS. Option Rights may be granted which entitle the optionee to
purchase shares of common stock at a price not less than fair market value. The
option price is payable (a) in cash at the time of exercise; (b) by the actual
or constructive transfer to the Company of nonforfeitable, unrestricted shares
of common stock owned by the optionee having a value at the time of exercise at
least equal to the option price; (c) by surrender of any other award under the
Plan having a value at the time of exercise at least equal to the option price;
or (d) a combination of such payment methods. Any grant of Option Rights may
provide for deferred
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payment of the option price from the proceeds of sale through a bank or broker
of some or all of the shares of common stock to which the exercise relates.
The Board may, at or after the date of grant of any Option Rights (other
than the grant of an ISO), provide for the payment of dividend equivalents to
the optionee on a current, deferred or contingent basis or may provide that such
equivalents be credited against the option price.
No Option Right shall be exercisable more than ten years from the date of
grant. Each grant must specify the period of continuous employment with the
Company or any subsidiary that is necessary before the Option Rights will become
exercisable and may provide for the earlier exercise of such Option Rights in
the event of a Change in Control or other similar transaction or event.
Successive grants may be made to the same optionee whether or not Option Rights
previously granted remain unexercised. Any grant of Option Rights may specify
Management Objectives (as described below) that must be achieved as a condition
to exercise such rights.
APPRECIATION RIGHTS. An Appreciation Right is a right, exercisable by
surrender of the related Option Right (if granted in tandem with Option Rights)
or by itself (if granted as a Free-Standing Appreciation Right), to receive from
the Company an amount equal to 100%, or such lesser percentage as the Board may
determine, of the spread between the strike price (or Option Price if Tandem
Appreciation Right) and the then-current value of the shares of common stock.
Any grant may specify that the amount payable on exercise of an Appreciation
Right may be paid by the Company in cash, in shares of common stock, or in any
combination thereof, and may either grant to the optionee or retain in the Board
the right to elect among those alternatives.
Any grant may specify that such Appreciation Right may be exercised only in
the event of, or earlier in the event of, a Change in Control or other similar
transaction or event. Any grant of Appreciation Rights may specify Management
Objectives that must be achieved as a condition to exercise such rights.
RESTRICTED SHARES. A grant of Restricted Shares involves the immediate
transfer by the Company to a Participant of ownership of a specific number of
shares of common stock in consideration of the performance of services. The
Participant is entitled immediately to voting, dividend and other ownership
rights in such shares. The transfer may be made without additional consideration
or in consideration of a payment by the Participant that is at or less than
then-current Market Value per share, as the Board may determine.
Restricted Shares must be subject to a "substantial risk of forfeiture"
within the meaning of IRC Section 83 for at least one year. An example would be
a provision that the Restricted Shares would be forfeited if the participant
ceased to serve the Company as an officer or key employee during a specified
period of years. In order to enforce these forfeiture provisions, the
transferability of Restricted Shares will be prohibited or restricted in a
manner and to the extent prescribed by the Board for the period during which the
forfeiture provisions are to continue. The Board may provide for a shorter
period during which the forfeiture provisions apply in the event of a Change in
Control.
Any grant of Restricted Shares may specify Management Objectives which, if
achieved, will result in termination or early termination of the restrictions
applicable to such shares. Any such grant must also specify in respect of such
specified Management Objectives, a minimum acceptable level of achievement and
must set forth a formula for determining the number of Restricted Shares on
which restrictions will terminate if performance is at or above the minimum
level, but below full achievement of the specified Management Objectives.
DEFERRED SHARES. A grant of Deferred Shares constitutes an agreement by
the Company to deliver shares of common stock to the participant in the future
in consideration of the performance of services, but subject to the fulfillment
of such conditions during the Deferral Period as the Board may specify. During
the Deferral Period, the participant has no right to transfer any rights under
his or her award and no right to vote such shares, but the Board may, at or
after the date of grant, authorize the payment of dividend equivalents on such
shares on either a current or deferred or contingent basis, either in cash or in
additional shares of common stock. Awards of Deferred Shares may be made without
additional consideration or in consideration of a payment by such participant
that is less than the market value per share at the date of award.
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Deferred Shares must be subject to a Deferral Period of at least one year,
as determined by the Board at the date of the award, except that the Board may
provide for a shorter Deferral Period in the event of a Change in Control.
PERFORMANCE SHARES AND PERFORMANCE UNITS. A Performance Share is the
equivalent of one share of common stock and a Performance Unit is the equivalent
of $1.00. A Participant may be granted any number of Performance Shares or
Performance Units, subject to the limitations set forth under "Shares Available
Under the Plan." The Participant will be given one or more Management Objectives
to meet within a specified period (the "Performance Period"). The specified
Performance Period shall be a period of time not less than one year, except in
the case of a Change in Control, if the Board shall so provide. A minimum level
of acceptable achievement will also be established by the Board. If by the end
of the Performance Period, the specified Management Objectives have been
achieved, the participant will be deemed to have fully earned the Performance
Shares or Performance Units. The grant may provide that if the Management
Objectives have not been achieved, but the predetermined minimum level of
acceptable achievement has been attained or exceeded, the participant will be
deemed to have partly earned the Performance Shares or Performance Units in
accordance with a predetermined formula. To the extent earned, the Performance
Shares or Performance Units will be paid to the participant at the time and in
the manner determined by the Board in cash, shares of common stock or any
combination thereof. The grant may provide for the payment of dividend
equivalents thereon in cash or in shares of common stock on a current, defined
or contingent basis.
MANAGEMENT OBJECTIVES. The Plan requires that the Board establish
"Management Objectives" for purposes of Performance Shares and Performance
Units. When so determined by the Board, Option Rights, Appreciation Rights,
Restricted Shares and dividend credits may also specify Management Objectives.
Management Objectives may be described in terms of either Company-wide
objectives or objectives that are related to the performance of the individual
participant or subsidiary, division, department, region or function within the
Company or a subsidiary in which the participant is employed. Management
Objectives applicable to any award to a participant who is, or is determined by
the Board likely to become, a Covered Employee, shall be limited to specified
levels of or growth in (a) cash flow/net assets ratio; (b) debt/capital ratio;
(c) return on total capital; (d) return on equity; (e) return on net assets; (f)
earnings per share; (g) revenue; (h) total return to stockholders; (i) earnings
before interest and taxes; or (j) earnings before interest, taxes, depreciation
and amortization. Except where a modification would result in an award no longer
qualifying as performance based compensation within the meaning of IRC Section
162(m), the Board may modify such Management Objectives, in whole or in part, as
the Board deems appropriate and equitable.
ADMINISTRATION AND AMENDMENTS. The Plan is to be administered by the
Board, except that the Board has the authority under the Plan to delegate any or
all of its powers under the Plan to a committee (or subcommittee thereof)
consisting of not less than two directors.
The Board is authorized to interpret the Plan and related agreements and
other documents. The Board may make awards to other officers and key employees
under any or a combination of all of the various categories of awards that are
authorized under the Plan, or in its discretion, make no awards. The Board may
amend the Plan from time to time without further approval by the stockholders of
the Company except where required by applicable law or the rules and regulations
of a national securities exchange. The Company reserves authority to offer
similar or dissimilar benefits in plans that do not require stockholder
approval.
The Board may provide for special terms for awards to Participants who are
foreign nationals or who are employed by the Company or any of its subsidiaries
outside of the United States of America as the Board may consider necessary or
appropriate to accommodate differences in local law, tax policy or custom.
TRANSFERABILITY. In general, no Option Right or Appreciation Right or
other derivative security is transferable by an optionee or recipient except,
upon death, by will or the laws of descent and distribution. However, awards may
be transferred without consideration to members of the participant's immediate
family, or to trusts the only beneficiaries of which, or to partnerships the
only partners of which, are members of the participant's immediate family. Any
such transfer will require prior notice to the Company and acceptance of any
conditions imposed thereon by the Company or the Board. Except as otherwise
determined by the Board
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on a case-by-case basis, Option Rights and Appreciation Rights are exercisable
during the optionee's or recipient's lifetime only by him or her or by his or
her guardian or legal representative.
The Board may specify at the Date of Grant that part or all of the shares
of common stock that are (a) to be issued or transferred by the Company upon
exercise of Option Rights or Appreciation Rights, upon termination of the
Deferral Period applicable to Deferred Shares or upon payment under any grant of
Performance Shares or Performance Units or (b) no longer subject to the
substantial risk of forfeiture and restrictions on transfer, shall be subject to
further restrictions on sale or transfer.
ADJUSTMENTS. The maximum number of shares that may be issued and delivered
under the Plan, the number of shares covered by outstanding Option Rights and
Appreciation Rights, and the prices per share applicable thereto, are subject to
adjustment in the event of stock dividends, stock splits, combinations of
shares, recapitalizations, mergers, consolidations, spin-offs, reorganizations,
liquidations, issuances of rights or warrants, and similar events. In the event
of any such transaction or event, the Board, in its discretion, may provide in
substitution for any or all outstanding awards under the Plan such alternative
consideration as it, in good faith, may determine to be equitable in the
circumstances and may require the surrender of all awards so replaced. The Board
may also make or provide for such adjustments in the numbers of shares specified
in "Shares Available Under the Plan," above, as the Board may determine
appropriate to reflect any transaction or event described above.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of certain of the federal income tax
consequences of certain transactions under the Plan based on federal income tax
laws currently in effect. This summary is not intended to be complete and does
not describe state, local or foreign tax consequences.
TAX CONSEQUENCES TO PARTICIPANTS
NON-QUALIFIED STOCK OPTIONS. In general, (a) no income will be recognized
by an optionee at the time a non-qualified Option Right is granted; (b) at the
time of exercise of a non-qualified Option Right, ordinary income will be
recognized by the optionee in an amount equal to the difference between the
option price paid for the shares and the fair market value of the shares, if
unrestricted, on the date of exercise; and (c) at the time of sale of shares
acquired pursuant to the exercise of a non-qualified Option Right, appreciation
(or depreciation) in value of the shares after the date of exercise will be
treated as either short-term or long-term capital gain (or loss) depending on
how long the shares have been held. Such long-term capital gain may be eligible
for reduced rates if applicable holding period requirements are satisfied.
INCENTIVE STOCK OPTIONS. No income generally will be recognized by an
optionee upon the grant or exercise of an ISO. If shares of common stock are
issued to the optionee pursuant to the exercise of an ISO, and if no
disqualifying disposition of such shares is made by such optionee within two
years after the date of grant or within one year after the transfer of such
shares to the optionee, then upon sale of such shares, any amount realized in
excess of the option price will be taxed to the optionee as a long-term capital
gain and any loss sustained will be a long-term capital loss. Such long-term
capital gain may be eligible for reduced rates if applicable holding period
requirements are satisfied.
If shares of common stock acquired upon the exercise of an ISO are disposed
of prior to the expiration of either holding period described above, the
optionee generally will recognize ordinary income in the year of disposition in
an amount equal to the excess (if any) of, the fair market value of such shares
at the time of exercise (or, if less, the amount realized on the disposition of
such shares if a sale or exchange) over the option price paid for such shares.
Any further gain (or loss) realized by the participant generally will be taxed
as short-term or long-term capital gain (or loss) depending on the holding
period.
APPRECIATION RIGHTS. No income will be recognized by a participant in
connection with the grant of a tandem Appreciation Right or a free-standing
Appreciation Right. When the Appreciation Right is exercised, the participant
normally will be required to include as taxable ordinary income in the year of
exercise an
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amount equal to the amount of cash received and the fair market value of any
unrestricted shares of common stock received on the exercise.
RESTRICTED SHARES. The recipient of Restricted Shares generally will be
subject to tax at ordinary income rates on the fair market value of the
Restricted Shares (reduced by any amount paid by the participant for such
Restricted Shares) at such time as the shares are no longer subject to
forfeiture or restrictions on transfer for purposes of IRC Section 83
("Restrictions"). However, a recipient who so elects under IRC Section 83(b)
within 30 days of the date of transfer of the shares will have taxable ordinary
income on the date of transfer of the shares equal to the excess of the fair
market value of such shares (determined without regard to the Restrictions) over
the purchase price, if any, of such Restricted Shares. If a Section 83(b)
election has not been made, any dividends received with respect to Restricted
Shares generally will be treated as compensation that is taxable as ordinary
income to the participant.
DEFERRED SHARES. No income generally will be recognized upon the award of
Deferred Shares. The recipient of a Deferred Share award generally will be
subject to tax at ordinary income rates on the fair market value of unrestricted
shares of common stock on the date that such shares are transferred to the
participant under the award (reduced by any amount paid by the participant for
such Deferred Shares), and the capital gains/loss holding period for such shares
will also commence on such date.
PERFORMANCE SHARES AND PERFORMANCE UNITS. No income generally will be
recognized upon the grant of Performance Shares or Performance Units. Upon
payment in respect of the earn-out of Performance Shares or Performance Units,
the recipient generally will be required to include as taxable ordinary income
in the year of receipt an amount equal to the amount of cash received and the
fair market value of any nonrestricted shares of common stock received.
SPECIAL RULES APPLICABLE TO OFFICERS AND DIRECTORS. In limited
circumstances where the sale of stock received as a result of a grant or award
could subject an officer or director to suit under Section 16(b) of the Exchange
Act, the tax consequences to the officer or director may differ from the tax
consequences described above. In these circumstances, unless a special election
under IRC Section 83(b) has been made, the principal difference (in cases where
the officer or director would otherwise be currently taxed upon his receipt of
the stock) usually will be to postpone valuation and taxation of the stock
received so long as the sale of the stock received could subject the officer or
director to suit under Section 16(b) of the Exchange Act of 1934, but no longer
than six months.
TAX CONSEQUENCES TO THE COMPANY OR SUBSIDIARY
To the extent that a participant recognizes ordinary income in the
circumstances described above, the Company or subsidiary for which the
participant performs services will be entitled to a corresponding deduction
provided that, among other things, the income meets the test of reasonableness,
is an ordinary and necessary business expense, is not an "excess parachute
payment" within the meaning of IRC Section 2806 and is not disallowed by the $1
million limitation on certain executive compensation under IRC Section 162(m).
MARKET VALUE OF THE SECURITIES
The market value of Aviall's common stock is $7.91, based on the closing
price of Aviall's common stock on April 19, 2001.
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE AVIALL,
INC. 1998 STOCK INCENTIVE PLAN.
19
23
AUDIT COMMITTEE REPORT
On May 15, 2000, the Board of Directors adopted a new Audit Committee
Charter, a copy of which is included as Appendix A to this Proxy Statement. The
Audit Committee is currently composed of five outside directors who are not
officers or employees of Aviall or its subsidiaries. All members of the Audit
Committee are independent as defined by the New York Stock Exchange's listing
standards.
The Audit Committee has reviewed and discussed with the Company's
management and PricewaterhouseCoopers LLP, the Company's independent auditors,
the audited financial statements of the Company contained in the Company's
Annual Report to Stockholders on Form 10-K for the year ended December 31, 2000.
The Audit Committee has also discussed with the Company's independent auditors
the matters required to be discussed pursuant to SAS No. 61 and SAS No. 90
(Codification of Statements on Auditing Standards, Communication with Audit
Committees).
The Audit Committee has also received and reviewed the written disclosures
and the letter from PricewaterhouseCoopers LLP required by Independence
Standards Board Standard No. 1 ("Independence Discussions with Audit
Committees"), and has discussed with PricewaterhouseCoopers LLP their
independence.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000, filed with the Securities and Exchange Commission.
This report is submitted by the members of the Audit Committee of the
Board.
THE AUDIT COMMITTEE OF THE BOARD
Richard J. Schnieders Donald R. Muzyka Arthur E. Wegner
Chairman
Jonathan M. Schofield Bruce N. Whitman
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24
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL NO. 3)
On March 29, 2001, upon recommendation of the Audit Committee, the Board
unanimously selected, subject to ratification by Aviall's stockholders,
PricewaterhouseCoopers LLP to continue to serve as independent auditors for
Aviall and its subsidiaries for the fiscal year ending December 31, 2001.
PricewaterhouseCoopers has served as Aviall's independent auditors since 1994.
Representatives of PricewaterhouseCoopers are expected to be present at the
Annual Meeting and will have the opportunity to make statements and to respond
to appropriate questions raised at the Annual Meeting.
FEES BILLED TO AVIALL BY PRICEWATERHOUSECOOPERS
AUDIT FEES. Fees related to the fiscal year ended December 31, 2000 audit
of the Company's annual financial statements and review of those financial
statements included in the Company's quarterly reports on Form 10-Q totaled
$316,000, of which $175,000 had been billed as of February 28, 2001.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. The Company
did not engage PricewaterhouseCoopers to provide advice to the Company regarding
financial information systems design and implementation during the fiscal year
ended December 31, 2000.
ALL OTHER FEES. Fees billed to Aviall by PricewaterhouseCoopers for all
other non-audit services rendered to Aviall during the fiscal year ended
December 31, 2000, including tax related services, as of February 28, 2001
totaled $513,000. The Audit Committee considered whether the provision of
non-audit services by PricewaterhouseCoopers is compatible with maintaining
PricewaterhouseCoopers' independence with respect to Aviall.
THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS AS INDEPENDENT AUDITORS.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires Aviall's directors and executive officers, and persons who own more
than 10% of Aviall's common stock, to file with the SEC initial reports of
ownership and reports of changes in ownership of the common stock beneficially
owned by them. Directors, executive officers and greater than 10% stockholders
are required to furnish the Company with copies of all Section 16(a) reports
that they file with the SEC.
To Aviall's knowledge, based solely on review of copies of such reports
furnished to the Company or written representations from certain reporting
persons, during the year ended December 31, 2000, all Section 16(a) filing
requirements applicable to the directors, executive officers and greater than
10% stockholders were complied with by such persons.
COST OF SOLICITING PROXIES
The cost of solicitation of proxies, including expenses to prepare and mail
this Proxy Statement, will be paid by Aviall. Aviall has retained Morrow & Co.
to assist in soliciting proxies. For its services, Morrow will receive a fee of
$7,500. Morrow will also be reimbursed its reasonable out-of-pocket expenses.
Aviall does not otherwise expect to pay any compensation for the solicitation of
proxies, but will reimburse brokers and nominees for their reasonable expenses
for sending proxy material to principals and obtaining their proxies. In
addition to soliciting proxies by mail, directors, officers and employees of
Aviall may solicit proxies in person, by telephone or by other means.
ANNUAL REPORT ON FORM 10-K
UPON THE WRITTEN REQUEST OF ANY STOCKHOLDER, AVIALL WILL FURNISH, WITHOUT
CHARGE, A COPY OF AVIALL'S ANNUAL REPORT ON FORM 10-K, AS FILED WITH THE SEC. IF
YOU WOULD LIKE A COPY OF THIS ANNUAL REPORT, PLEASE CONTACT THE COMPANY, 2055
DIPLOMAT DRIVE, DALLAS, TEXAS 75234, ATTENTION: INVESTOR RELATIONS.
21
25
SUBMISSION OF STOCKHOLDER PROPOSALS FOR
AVIALL'S ANNUAL MEETING OF STOCKHOLDERS IN 2002
Pursuant to SEC regulations, in order to be included in Aviall's Proxy
Statement for Aviall's 2002 Annual Meeting of Stockholders, stockholder
proposals must be received at the principal office of Aviall, 2055 Diplomat
Drive, Dallas, Texas 75234, Attention: Secretary, no later than December 31,
2001, as well as meet all other SEC requirements. In addition, Aviall's By-Laws
provide that any stockholder who desires either to bring a stockholder proposal
before an annual meeting or to present a nomination for director at an annual
meeting of stockholders must give advance notice to Aviall's Secretary regarding
the proposal or nominee. The By-Laws generally require that written notice be
delivered to the Secretary of Aviall not less than 70 days nor more than 90 days
prior to the anniversary of the preceding year's annual meeting of stockholders
and contain certain information regarding the stockholder desiring to present a
proposal or make a nomination and, in the case of a nomination, information
regarding the proposed director nominee. A copy of the By-Laws is available upon
request from the Secretary of Aviall.
AVIALL, INC.
/s/ JEFFREY J. MURPHY
Jeffrey J. Murphy
Senior Vice President, Law and Human
Resources, Secretary and General
Counsel
Dallas, Texas
April 30, 2001
22
26
APPENDIX A
AVIALL, INC.
AUDIT COMMITTEE CHARTER
FUNCTION OF THE COMMITTEE
The Committee will assist the Board in fulfilling the Board's oversight
responsibilities relating to accounting for the Company's financial position and
results of operations, as well as such other matters as may from time to time be
specifically delegated to the Committee by the Board.
While the Committee has the powers and responsibilities set forth in this
Charter and the Company's Restated Certificate of Incorporation, it is not the
responsibility of the Committee to plan or conduct audits or to determine that
the Company's financial statements are complete and accurate or are in
compliance with generally accepted accounting principles, which is the
responsibility of management and the outside auditor. Likewise, it is not the
responsibility of the Committee to conduct investigations, to resolve disputes,
if any, between management and the outside auditor or to assure compliance with
laws or the Company's corporate compliance program or code of ethics.
COMPOSITION OF THE COMMITTEE
Requirements. The Committee will consist of at least three Board members.
Each member of the Committee must be independent of management and free from any
relationship with the Company that would interfere with the exercise of
independent judgment as a Committee member. In determining independence, the
Board will observe the requirements of Rules 303.01 and 303.02 of the NYSE
Listed Company Manual.
Each member of the Committee must be financially literate or must become
financially literate within a reasonable period of time after appointment to the
Committee. The Board will determine, in its business judgment, whether a
director meets the financial literacy requirement.
At least one member of the Committee must have accounting or related
financial management expertise, as determined by the Board in its business
judgment.
Appointment. The Board will appoint the members of the Committee. The
Board will appoint a Chairman of the Committee. The Chairman of the Committee
will, in consultation with the other members of the Committee, the Company's
outside auditors and the appropriate officers of the Company, be responsible for
ensuring sufficient meetings of the Committee are held and supervising the
conduct thereof.
OUTSIDE AUDITOR
The outside auditor for the Company is ultimately accountable to the Board
and the Committee. The Committee and the Board have the ultimate authority and
responsibility to select, evaluate, and where appropriate, replace the outside
auditor. Alternatively, the Committee and the Board may nominate the outside
auditor to be proposed for shareholder approval in any proxy statement.
RESPONSIBILITIES OF THE COMMITTEE
The Committee will:
1. Recommend Outside Auditors: Recommend to the Board annually, and
at other appropriate times, the firm to be retained as the Company's
outside auditors.
2. Review Independence of Outside Auditors: In connection with
recommending the firm to be retained as the Company's outside auditors,
review the information provided by management and the outside auditors
relating to the independence of such firm, including, among other things,
information related to the non-audit services provided and expected to be
provided by the outside auditors.
A-1
27
The Committee is responsible for (1) ensuring that the outside auditor
submits on a periodic basis to the Committee a formal written statement
delineating all relationships between the auditor and the Company
consistent with Independence Standards Board Standard No. 1, a copy of
which is attached hereto, (2) actively engaging in dialogue with the
outside auditor with respect to any disclosed relationship or services that
may impact the objectivity and independence of the outside auditor and (3)
recommending that the Board take appropriate action in response to the
outside auditors' report to satisfy itself of the outside auditors'
independence.
3. Review Audit Plan: Review with the outside auditors their plans
for, and the scope of, their annual audit and other examinations.
4. Conduct of Audit: Discuss with the outside auditors the matters
required to be discussed by Statement on Auditing Standards No. 61 relating
to the conduct of the audit.
5. Review Audit Results: Review with the outside auditors the report
of their annual audit, or proposed report of their annual audit, the
accompanying management letter, if any, the reports of their reviews of the
Company's interim financial statements conducted in accordance with
Statement on Auditing Standards No. 71, and the reports of the results of
such other examinations outside of the course of the outside auditors'
normal audit procedures that the outside auditors may from time to time
undertake.
6. Review Financial Statements: Review with appropriate officers of
the Company and the outside auditors the annual financial statements of the
Company prior to public release thereof. The Chairman of the Committee
will, as necessary, review with appropriate officers of the Company and
outside auditors the quarterly financial statements of the Company prior to
public release thereof.
7. Review Internal Audit Plans: Review with the senior internal
auditing executive the plans for and the scope of ongoing audit activities.
8. Review Internal Audit Reports: Review with the senior internal
auditing executive the annual report of the audit activities, examinations
and results thereof of the internal auditing department.
9. Review Systems of Internal Accounting Controls: Review with the
outside auditors, the senior internal auditing executive, the General
Counsel and, if and to the extent deemed appropriate by the Chairman of the
Committee, members of their respective staffs, the adequacy of the
Company's internal accounting controls, the Company's financial, auditing
and accounting organizations and personnel and the Company's policies and
compliance procedures with respect to business practices.
10. Review Recommendations of Outside Auditors: Review with the
senior internal auditing executive recommendations made by the outside
auditors and the senior internal auditing executive, as well as such other
matters, if any, as such persons or other officers of the Company may
desire to bring to the attention of the Committee.
11. Securities Exchange Act: Obtain assurance from the outside
auditor that Section 10A of the Securities Exchange Act has not been
implicated.
12. Review Other Matters: Review such other matters in relation to
the accounting, auditing and financial reporting practices and procedures
of the Company as the Committee may, in its own discretion, deem desirable
in connection with the review functions described above.
13. Board Reports: Report its activities to the Board in such manner
and at such times as it deems appropriate.
14. Regulatory Matters: Review compliance with regulatory
requirements which have a material impact on the Company's operations.
15. Conflict of Interests: Review compliance with the Company's
conflict of interest and business ethics policies.
A-2
28
MEETINGS OF THE COMMITTEE
The Committee shall meet at least four times annually, or more frequently
as it may determine necessary, to comply with its responsibilities as set forth
herein. The Committee may request any officer or employee of the Company or the
Company's outside legal counsel or outside auditor to attend a meeting of the
Committee or to meet with any members of, or consultants to, the Committee. The
Committee may meet with management, the outside auditors and others in separate
private sessions to discuss any matter that the Committee, management, the
outside auditors or such other persons believe should be discussed privately.
CONSULTANTS
The Committee may retain, at such times and on such terms as the Committee
determines in its sole discretion and at the Company's expense, special legal,
accounting or other consultants to advise and assist it in complying with its
responsibilities as set forth herein.
ANNUAL REPORT
The Committee will prepare, with the assistance of management, the outside
auditors and outside legal counsel, a report for inclusion in the Company's
proxy or information statement relating to the annual meeting of security
holders at which directors are to be elected that complies with the requirements
of the federal securities laws.
ANNUAL REVIEW OF CHARTER
The Committee will review and reassess, with the assistance of management,
the outside auditors and outside legal counsel, the adequacy of the Committee's
charter at least annually.
A-3
29
2770-PS-2001
30
THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.
Regardless of whether you plan to attend the Annual Meeting of Stockholders, you
can be sure your shares are represented at the Annual Meeting by promptly
returning your proxy in the enclosed envelope, or voting by telephone or the
Internet by following the instructions on the reverse side.
DETACH HERE
PROXY
AVIALL, INC.
PLEASE DATE AND SIGN ON REVERSE SIDE AND RETURN IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
The undersigned acknowledge(s) receipt of the Proxy Statement of Aviall,
Inc. relating to the 2001 Annual Meeting of Stockholders (the "Annual Meeting")
and hereby constitute(s) and appoint(s) Jacqueline K. Collier, Jeffrey J. Murphy
and Cornelius Van Den Handel, attorneys and proxies of the undersigned, with
full power of substitution and resubstitution to each and with all the powers
the undersigned would possess if personally present, to vote for and in the name
and place of the undersigned all shares of Common Stock of Aviall, Inc. held or
owned by the undersigned, or standing in the name of the undersigned, at the
Annual Meeting to be held on Thursday, June 7, 2001, commencing at 1:00 p.m., at
the Omni Mandalay Hotel, 221 East Las Colinas, Irving, Texas, or any adjournment
or postponement thereof, upon the matters referred to in the Proxy Statement for
the Annual Meeting as stated below and on the reverse side. The proxies are
further authorized to vote, in their discretion, upon such other business as may
properly come before the Annual Meeting or any adjournment or postponement
thereof. A majority of said attorneys and proxies present and acting at the
Annual Meeting (or if only one shall be present and act, then that one) shall
have, and may exercise, all the powers of all said attorneys and proxies
hereunder.
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF AVIALL,
INC. UNLESS OTHERWISE SPECIFIED ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED
FOR THE NOMINEES OF THE BOARD OF DIRECTORS LISTED ON THE REVERSE SIDE, FOR THE
APPROVAL OF AN AMENDMENT TO THE AVIALL, INC. 1998 STOCK INCENTIVE PLAN TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK AUTHORIZED TO BE ISSUED UNDER THIS
PLAN AND FOR THE RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS AVIALL, INC.'S
INDEPENDENT AUDITORS. DISCRETIONARY AUTHORITY IS HEREBY CONFERRED AS TO ALL
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
31
AVIALL, INC.
c/o EquiService
P.O. Box 9398
Boston, MA 02205-9398
VOTE BY TELEPHONE VOTE BY INTERNET
- ----------------- ----------------
It's fast, convenient, and immediate! It's fast, convenient, and your vote is immediately
Call Toll-Free on a Touch-Tone Phone confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683)
- ------------------------------------------------ ----------------------------------------------------
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy Statement and 1. Read the accompanying Proxy Statement and
Proxy Card. Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683) http://www.eproxyvote.com/avl
3. Enter your 14-digit Voter Control Number 3. Enter your 14-digit Voter Control Number located
located on your Proxy Card above your name. on your Proxy Card above your name.
4. Follow the recorded instructions. 4. Follow the instructions provided.
- ------------------------------------------------ ----------------------------------------------------
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime! Call 1-877-PRX-VOTE anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
DETACH HERE
Please mark
[X] votes as in
this example.
This Proxy when executed will be voted in the manner directed herein. If no
direction is made this Proxy will be voted FOR the election of the Director
nominees, FOR Proposal 2 and FOR Proposal 3.
- --------------------------------------------------------------------------------------------------------------------
1. Election of two Directors to serve until 2. Approval of an amendment to FOR AGAINST ABSTAIN
Aviall, Inc.'s 2004 Annual Meeting of the Aviall, Inc. 1998 Stock [ ] [ ] [ ]
Stockholders. Incentive Plan to increase the
NOMINEES: Donald R. Muzyka and number of shares of common
Jonathan M. Schofield. stock authorized to be
issued thereunder.
FOR WITHHELD
BOTH [ ] [ ] FROM BOTH
NOMINEES NOMINEES
3. Ratification of FOR AGAINST ABSTAIN
PricewaterhouseCoopers LLP [ ] [ ] [ ]
as independent auditors.
[ ]
---------------------------------------
For both nominees except as noted above
- --------------------------------------------------------------------------------------------------------------------
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
IMPORTANT: Whether or not you expect to attend the meeting in
person, please date, sign and return this proxy. Please sign
exactly as your name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such.
Signature: Date: Signature: Date:
------------------ ------------ ---------------------------------- -----------------