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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 sec.240.14a-11(c) or sec.240.14a-12
Mesa Air Group, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, no par value
(2) Aggregate number of securities to which transaction applies:
28,259,715
(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):
N/A
(4) Proposed maximum aggregate value of transaction:
N/A
(5) Total fee paid:
N/A
[ ] 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.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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[MESA AIR LOGO]
3753 HOWARD HUGHES PARKWAY
SUITE 200
LAS VEGAS, NEVADA 89109
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 17, 1997
To the Shareholders:
The Annual Meeting of Shareholders of Mesa Air Group, Inc. (the "Company")
will be held on Monday, March 17, 1997 at 10:00 a.m. Mountain Standard Time in
the Red Lion Ballroom at the Red Lion Inn, 501 Camino del Rio, Durango,
Colorado. The purpose of the Annual Meeting is to consider and vote upon the
following matters, as more fully described in the accompanying Proxy Statement:
1. To elect seven directors of the Company to serve until the next
Annual Meeting of Shareholders.
2. To ratify the selection of KPMG Peat Marwick LLP as independent
auditors for the Company during fiscal 1997.
3. To transact such other business as may properly come before the
Annual Meeting or any postponement or adjournments thereof.
The Board of Directors has fixed the close of business on January 17, 1997
as the record date for determination of shareholders entitled to receive notice
of and to vote at the Annual Meeting or any adjournments thereof.
EVEN IF YOU NOW EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE SIGN, DATE AND
MAIL THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. IT IS IMPORTANT THAT THE PROXY BE RETURNED
REGARDLESS OF THE NUMBER OF SHARES OWNED. IF YOU DO ATTEND THE ANNUAL MEETING,
YOU MAY VOTE IN PERSON, IF YOU WISH, WHETHER OR NOT YOU HAVE ALREADY MAILED THE
ENCLOSED PROXY.
By Order of the Board of Directors
/s/ Gary E. Risley
-------------------
GARY E. RISLEY
Secretary
Las Vegas, Nevada
January 27, 1997
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[MESA AIR LOGO]
3753 HOWARD HUGHES PARKWAY
SUITE 200
LAS VEGAS, NEVADA 89109
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MARCH 17, 1997
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Mesa Air Group, Inc., a
Nevada corporation (the "Company" or "Mesa"), for use at the Annual Meeting of
Shareholders (the "Annual Meeting") to be held in the Red Lion Ballroom at the
Red Lion Inn, 501 Camino del Rio, Durango, Colorado, on Monday, March 17, 1997,
at 10:00 a.m., Mountain Standard Time, or any postponement or adjournment
thereof. The Board has fixed the close of business on January 17, 1997 as the
record date for determining the shareholders entitled to notice of, and to vote
at, the Annual Meeting or any adjournments thereof. On the record date, the
Company had outstanding and entitled to vote 28,259,715 shares of Common Stock,
no par value ("Common Stock"). Each share of Common Stock is entitled to one
vote per share. The Common Stock constitutes the only class of capital stock of
the Company issued and outstanding.
The Company's principal executive offices are located at 3753 Howard Hughes
Parkway, Suite 200, Las Vegas, Nevada 89109. The approximate date on which this
Proxy Statement and the accompanying proxy are first being sent to shareholders
is January 27, 1997.
QUORUM AND REQUIRED VOTE
Shares of Common Stock represented by properly executed proxies received by
the Company will be voted at the Annual Meeting in accordance with instructions
thereon. If there are no such instructions, the shares will be voted for the
election of the nominees for director named in this Proxy Statement and the
ratification of the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending September 30, 1997
(collectively, the "Proposals").
Holders of shares of Common Stock entitled to a majority of the votes of
all shares entitled to vote, represented in person or by proxy, will constitute
a quorum at the Annual Meeting. The seven nominees receiving a plurality of
votes by shares represented and entitled to vote at the Annual Meeting, if a
quorum is present, will be elected as Directors of the Company. Cumulative
voting is not permitted by the Company's Articles of Incorporation. An
affirmative vote of a majority of the shares present and voting at the Annual
Meeting is required for approval of all other Proposals being submitted to the
shareholders for their consideration. Abstentions cast by proxy and broker
non-votes are counted towards a quorum. Abstentions and broker non-votes cast by
proxy will have no effect with respect to ratification of the appointment of the
Company's auditors for fiscal 1997.
REVOCABILITY OF PROXIES
Shareholders may revoke their proxy by a later proxy or by giving notice of
such revocation to the Company in writing or at the Annual Meeting before such
proxy is voted. Attendance at the Annual Meeting will not in and of itself
constitute the revocation of a proxy.
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SOLICITATION
The cost of solicitation of proxies will be paid by the Company. In
addition to solicitation by mail, officers, directors and regular employees of
the Company may solicit proxies by telephone, telefax or in person without
additional compensation. Brokerage houses, bank nominees, fiduciaries and other
custodians will be requested to forward soliciting material to the beneficial
owners of shares held of record by them and will be reimbursed for their
reasonable expenses.
ELECTION OF DIRECTORS
(PROPOSAL ONE)
The Company's Articles of Incorporation provide that the number of
Directors shall be fixed from time to time by the Board of Directors. The number
of Directors is currently fixed at seven.
The seven nominees named herein have been recommended for election as
Directors for a term of one year or until their successors have been elected and
qualified. All nominees are currently members of the Board. It is intended that
proxies received in response to this solicitation will be voted for the election
of the seven persons so nominated, unless otherwise specified. If, for any
reason, any nominee shall become unavailable for election or shall decline to
serve, persons named in the Proxy may exercise discretionary authority to vote
for a substitute nominee proposed by the Board. No circumstances are presently
known which would render a nominee named herein unavailable.
The following Directors have been nominated for reelection:
LARRY L. RISLEY, age 52, is Chief Executive Officer and Chairman of the
Board of Directors of Mesa, positions he has held since Mesa was incorporated in
1983. Mr. Risley also served as President of Mesa from 1983 through January 13,
1995. From April 1979 until August 1982, Mr. Risley was President of Mesa
Aviation Services, Inc., the fixed base operator at Farmington, New Mexico.
E. JANIE RISLEY, age 50. From August 1982 until June 1990, Ms. Risley was
Executive Vice President and the Vice President responsible for personnel
management, reservations, and station operations. Since retiring in July 1990,
Ms. Risley has continued to serve as a member of Mesa's Board of Directors, a
position she has held since 1983.
Larry L. Risley and E. Janie Risley are husband and wife.
J. CLARK STEVENS, age 46, has been a director of Mesa since May 1995. Mr.
Stevens was named President of Mesa in January 1995 and continues to serve in
that capacity. From February 1993 until January 1995, Mr. Stevens was President
of the Company's FloridaGulf Airlines division, and from December 1992 until
February 1993, Mr. Stevens served as Vice President -- DFW Division with Simmons
Airlines dba American Eagle. From September 1990 to December 1992, he served as
Executive Vice President of MetroFlight, Inc. dba American Eagle ("Metro"). In
1991, Metro filed for bankruptcy under Chapter 11 of the United States
Bankruptcy Code. Metro emerged from bankruptcy during 1992. Prior to his service
at Metro from August 1975 to September 1990, Mr. Stevens served as President of
Chaparral Airlines, Inc.
JACK BRALY, age 55, has served as a director of Mesa since December 1993.
Mr. Braly is currently serving as President of Sino Swearingen, a corporate jet
manufacturer located in San Antonio, Texas. He served as Vice President and
General Manager -- North American Aircraft Modification of Rockwell
International Corporation from June 1994 to August 1996. Mr. Braly served as the
President of Beech Aircraft Corporation from March 1991 until July 1993. Mr.
Braly began with Beech in 1978 and worked in various management positions
including Vice President of Operations and Vice President of Manufacturing prior
to becoming President in March 1991.
BLAINE M. JONES, age 42, has served as a director since January 1986. Mr.
Jones served as President of Mountain West Airlines, a wholly owned division of
Mesa, from July 1994 until March 1995 and held the position of Chief Financial
Officer of the Company from April 1985 through March 1994 and Treasurer from
December 1985 through March 1994.
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GEORGE W. PENNINGTON, age 68, has been a director of Mesa since January
1986. Mr. Pennington is President of Farmer Family Center, Inc., a retail
supermarket; President of REDROX, Inc., a real estate development company; and
general partner of Pennington Partnerships, a real estate development company,
all located in Bloomfield, New Mexico.
RICHARD C. POE, age 62, has been a director of Mesa since January 1986. He
has been President and Chief Executive Officer of Dick Poe Chrysler-Plymouth,
Inc. since 1962 and of Dick Poe Pontiac-Toyota, Inc. since 1980. He is also a
director of M Bank, El Paso, Texas.
The Board of Directors held three meetings during the fiscal year ended
September 30, 1996. Each of the directors attended all of the meetings held
during the year.
COMMITTEES
The Company has an Audit Committee which consists of Jack Braly, Chairman,
Blaine M. Jones and Richard C. Poe. The principal functions of the Audit
Committee include the review of the annual financial statements, reports and
recommendations regarding the adequacy of internal accounting controls made by
the independent auditors, the Company's internal auditor, and such other matters
with respect to the accounting, auditing and financial reporting procedures as
it may deem appropriate or as may be brought to its attention. The Audit
Committee had three meetings during fiscal 1996.
The Company has a Compensation Committee which consists of Jack Braly,
Chairman, Richard C. Poe and George W. Pennington. The principal functions of
the Compensation Committee are to review and to make recommendations to the
Board of Directors as to the compensation of executive officers and to
administer compensation programs including the granting or ratification of
options to persons subject to Section 16 of the Securities Exchange Act of 1934.
The Compensation Committee had one meeting in fiscal 1996.
The Company does not have a formal nominating committee. The Board of
Directors performs the function of nominating persons for election to the Board.
COMMON STOCK OWNERSHIP AND COMPENSATION
For information concerning Common Stock ownership of the nominees for
director, see "COMMON STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL
OWNERS" herein. For information concerning the compensation of directors and
executive officers, see "Compensation of Executive Officers and Directors."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION AS DIRECTORS EACH
OF THE NOMINEES NAMED IN THE PROXY STATEMENT.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
(PROPOSAL TWO)
For fiscal year 1996, the Board of Directors of the Company retained KPMG
Peat Marwick LLP as independent auditors for the Company. The representatives of
KPMG Peat Marwick LLP will be present at the Annual Meeting, will have the
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions.
KPMG Peat Marwick LLP has been selected by the Board of Directors as the
Company's independent auditors for fiscal year 1997. KPMG Peat Marwick LLP has
served as the independent auditors of the Company from 1985 through fiscal year
1996.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE RATIFYING THE APPOINTMENT OF KPMG
PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR FISCAL YEAR 1997.
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COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
THE REPORT OF THE COMPENSATION COMMITTEE AND THE FIVE-YEAR SHAREHOLDER
RETURN COMPARISON AND PERFORMANCE GRAPH AND RELATED EXPLANATION AND FOOTNOTES
SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY FILINGS UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED (THE "EXCHANGE ACT"), NOTWITHSTANDING STATEMENTS MADE WITHIN THE
COMPANY'S PREVIOUS FILINGS THAT ALL SUBSEQUENT FILINGS, IN WHOLE OR IN PART,
INCLUDE, WITHOUT LIMITATION, THIS PROXY STATEMENT.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee consists of three non-employee directors of the
Company and has responsibility for allocation of cash compensation and options
to senior executive officers of the Company. The Compensation Committee
primarily administers the Company's Omnibus Plan, employee stock option plans,
and employee stock purchase plans. In those instances in which Rule 16b-3 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires
grants or awards of stock options to be made by a "disinterested" committee, the
Compensation Committee is solely responsible for the administration of such
plans. The full Board of Directors regularly reviews the Compensation Committee
decisions relating to executive compensation. The Compensation Committee has
allocated certain compensation decisions to the Chairman of the Board of the
Company.
Commencing early in 1995, at the direction of the Board, the Compensation
Committee undertook a review of the Company's salary and benefit program and a
study of the executive compensation policies of other regional air carriers. The
Committee engaged an independent compensation consultant to assist it in these
undertakings. Based upon its study and review and the recommendations of the
compensation consultant, the Committee concluded and recommended to the Board of
Directors new levels of base compensation and related structured bonus plan (the
"Compensation Plan") and an Employee Stock Option Plan (the "Stock Option
Plan"), collectively the "Omnibus Plan", as a replacement for existing salaries
and the Company's bonus program. The Omnibus Plan, as proposed, was adopted by
the Board of Directors on December 1, 1995, was made effective October 1, 1994,
and approved by the shareholders of the Company on April 8, 1996. The
Compensation Plan and Stock Option Plan were based on the compensation factors
referred to in this report as they applied to the various executive positions
included in the Omnibus Plan without assigning to each factor the relative
importance of such factor. The Compensation Committee was unable to secure
sufficient data from competitor or peer publicly held regional or commuter
airlines to determine whether the base salaries so established were at the low,
medium or high range of compensation paid by those in the comparative group.
Based on the limited data available, the Compensation Committee believes that
the base salaries, bonus ranges and stock options provided in the Omnibus Plan
fall between the medium and high range of the general industry group.
Under the Compensation Plan, salaries for all executive officers and key
employees have been capped. Bonuses for executive officers and key employees are
limited to prescribed percentages of base salary, based upon the percentage
growth in earnings per share. Growth in earning per share ("EPS") is categorized
at four levels: Minimum -- any growth in EPS during the prior fiscal year;
Threshold -- 7.0% to 12.9% growth in EPS; Target 13.0% to 17.9% growth in EPS
and Maximum -- 18.0% or greater growth in EPS. The Compensation Plan provides
that the Chairman of the Board is entitled to receive a cash bonus of 15%, 30%,
60% and 120% if the Minimum, Threshold, Target and Maximum, respectively, levels
of EPS are reached. Other executive officers and key employees, other than key
employees of a division or subsidiary, receive cash bonuses of from 3.75 percent
to 100 percent, graded as to each position at the four levels of EPS. Division
and subsidiary employee bonuses are based on earnings before taxes and interest
divided by total revenues of the division or subsidiary (the "Rate of Return").
The Rate of Return has been categorized at four levels: Minimum -- a Rate of
Return of five to nine and nine-tenths percent; Threshold -- a Rate of Return of
10 to 12.9 percent; Target -- a Rate of Return of 13 to 17.9 percent and
Maximum -- a Rate of Return of 18 percent or more. Under the Compensation Plan,
division and subsidiary key employees are entitled to cash bonuses of seven and
one-half percent to 100 percent of base salary, depending upon the level of the
Rate of Return. The Compensation Committee has directed management to
re-evaluate the compensation of key
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employees of divisions under the "Omnibus Plan," whose responsibilities will
change with the proposed consolidation of operating divisions.
In addition to the bonus component of the Plan, the approximate 150,000
options granted to Mr. Risley pursuant to the Stock Option Plan during fiscal
1996 provide incentive to Mr. Risley to increase shareholder return. While Mr.
Risley's bonus is now capped at a maximum of 120 percent of salary, he can
participate in a return on the appreciation of the Common Stock of the Company
through exercise of his options.
Since salary and bonuses are capped under the Compensation Plan, an
integral part of the Omnibus Plan is the issuance of stock options on an
annualized basis to key employees under the Stock Option Plan.
The Stock Option Plan provides for options to be issued to officers and key
employees on an annualized basis which vest at the rate of approximately
one-third per year. The options have a 10-year term and are subject to standard
option provisions such as are included in existing Company plans and exclude the
requirement of continued employment and provisions to deal with termination of
employment due to retirement, death or disability. Under the plan, options will
be issued at the low selling price of the Company's Common Stock on the date of
grant.
The total number of options granted under the Stock Option Plan in 1996 was
663,400. At the present time, all positions determined to be key positions are
not filled.
The Compensation Committee believes that the Omnibus Plan, which provides
for established salary levels, a limit on cash bonuses and provides for the
issuance of stock options to officers and key employees related to the
appreciation of the Company's Common Stock, provides equitable incentives to
increase the profitability of the Company.
Compensation Committee
Jack Braly, Chairman
George W. Pennington
Richard C. Poe
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COMPENSATION SUMMARY OF EXECUTIVE OFFICERS
The following table sets forth certain compensation paid or accrued by the
Company during the fiscal year ended September 30, 1996 to the Chief Executive
Officer and the three most highly compensated executive officers of the Company
whose total annual salary and bonuses exceeded $100,000.
LONG-TERM COMPENSATION
------------------------------------------------
ANNUAL COMPENSATION AWARDS
---------------------------------- --------------------- PAYOUT
OTHER RESTRICTED ------------------------
ANNUAL STOCK LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARD(S)(1) OPTIONS PAYOUT COMPENSATION(2)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- ----------------------------- ---- ------- --------- ------------ ----------- ------- ------ ---------------
Larry L. Risley.............. 1996 350,000 420,000 -- -- 150,000 -- 4,750
Chairman of the Board 1995 350,000 -- 300,000 4,620
and Chief Executive Officer 1994 153,000 2,595,313 -- 350,000 -- 5,125
J. Clark Stevens............. 1996 235,000 235,000 80,000 4,750
Chief Operating Officer 1995 198,000 -- -- 180,000 -- 4,846
and President 1994 50,962 117,414 -- 60,000 -- 1,583
Gary E. Risley............... 1996 150,000 150,000 50,000 4,076
Vice President of Legal 1995 150,000 -- -- 110,000 -- 5,151
Affairs and Secretary 1994 46,000 391,018 75,000 2,212
W. Stephen Jackson........... 1996 150,000 150,000 50,000 4,615
Chief Financial Officer, 1995 150,000 -- -- 150,000 -- 3,080
Vice President Finance 1994 27,885 125,000
and Treasurer -- -- -- --
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(1) As of December 1, 1996, Larry L. Risley owned 503,766 shares of Mesa Common
Stock, Gary E. Risley owned 15,300 shares of Mesa Common Stock, J. Clark
Stevens owned 2,000 shares of Mesa Common Stock, and W. Stephen Jackson
owned 2,400 shares of Mesa Common Stock.
(2) These amounts represent both vested and non-vested Registrant contributions
to the individual named executive officer's 401(k) plan. Under the Company's
401(k) plan, employees may contribute up to 15% of their annual
compensation, as defined. The Company currently makes matching contributions
of 50% of employees' contribution (including officers) with a cap of 10% of
the employees' annual compensation. Contributions by the Company to its
401(k) plans for the year ended September 30, 1996 was $1,286,746.
OPTIONS
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
--------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL POTENTIAL REALIZABLE
SECURITIES OPTIONS/ VALUE AT ASSUMED ANNUAL
UNDERLYING SARS RATES OF STOCK PRICE
OPTIONS/ GRANTED TO APPRECIATION
SARS EMPLOYEES EXERCISE OF FOR OPTION TERM
GRANTED IN FISCAL BASE PRICE EXPIRATION -----------------------
NAME (#) YEAR ($/SH) DATE 5% (S) 10% (S)
(a) (b) (c) (d) (e) (f) (g)
- ----------------------- ---------- ---------- ----------- ---------- -------- ----------
Larry L. Risley........ 150,000 22.6% $ 10.50 4/01/06 $787,500 $1,575,000
J. Clark Stevens....... 80,000 12.1% $ 10.50 4/01/06 $420,000 $ 840,000
Gary Risley............ 50,000 7.5% $ 10.50 4/01/06 $262,500 $ 525,000
W. Stephen Jackson..... 50,000 7.5% $ 10.50 4/01/06 $262,500 $ 525,000
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AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SEPTEMBER 30, SEPTEMBER 30,
1996 1996
---------------- -----------------
SHARES ACQUIRED ON VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE(1) UNEXERCISABLE(1)
- --------------------- ------------------ ----------------- ---------------- -----------------
Larry L. Risley...... -0- -0- 633,333/466,667 $598,000/$125,000
J. Clark Stevens..... -0- -0- 113,332/193,334 $ 42,500/$ 85,002
Gary E. Risley....... 40,000 $ 249,192 136,666/148,334 $114,666/$ 50,835
W. Stephen Jackson... -0- -0- 49,999/150,001 $ 43,749/$ 87,500
- ---------------
(1) Based on the closing price of the Common Stock on September 30, 1996 at
$9.125.
COMPENSATION OF DIRECTORS
Each outside director receives a salary of $10,000 per year, along with the
payment of $1,000 per meeting attended in person; $500 for each committee
meeting attended in person; $500 for each telephone Board meeting attended and
reimbursement of all expenses associated with attending committee or Board of
Directors meetings. In addition, each outside director was granted 3,000 options
in fiscal 1996 pursuant to a stock option plan which automatically grants 3,000
options to each outside director on an annual basis. Options granted to Messrs.
Poe, Pennington, Jones and Braly were granted on December 9, 1995 at an exercise
price of $9.13 per share and were fully vested on December 8, 1996.
Each outside director also participates in the Company's Outside Directors
Stock Option Plan (the "Formula Plan"). Other than initial grants under this
plan, grants pursuant to the Formula Plan are contingent on improved returns for
the shareholders. Each outside director is granted 10,000 options as of the
first business day of the month following appointment to the Board. (The date of
the first grant of option is referred to herein as the "Initial Grant Date").
Each outside director receives a grant of an additional 10,000 options (the
"Second Grant") if: (1) the director is still serving as a director of the
Company on the date of the Second Grant; and (2) either the annual percentage
increase in shareholder return:
(a) exceeds seven percent for any fiscal year within four years of the
Initial Grant Date (the "Target Percent"), provided that the effective date
of the grant shall be delayed until the second anniversary of the Initial
Grant Date if the Target Percent is achieved in the first two fiscal years
following the Initial Grant Date, or
(b) exceeds an aggregate of 10 percent for any two consecutive fiscal
years within four years after the Initial Grant Date (the "Alternative
Target Percent").
Each outside director receives a third grant of an additional 10,000
options (the "Third Grant") if: (1) the director is still serving as a director
of the Company on the date of the Third Grant; and (2) either the annual
percentage increase in shareholder return:
(a) exceeds seven percent for any fiscal year within six years of the
Initial Grant Date (the "Additional Target Percent"), provided that the
effective date of the grant shall be delayed until the fourth anniversary
of the Initial Grant Date if the Additional Target Percent is achieved in
the first four fiscal years following the Initial Grant Date, or
(b) exceeds an aggregate of 10 percent for any two consecutive fiscal
years within six years after the Initial Grant Date (the "Additional
Alternative Target Percent").
Options granted to the outside directors on the Initial Grant Date become
exercisable one year after the Initial Grant Date and when the fair market value
(as defined by the Formula Plan) of the Common Stock has increased by three
percent from the Initial Grant Date.
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All other options become exercisable immediately upon satisfaction of the
following conditions: six months after the date the option was granted, and when
the fair market value of the shares (as defined in the Formula Plan) has
increased by seven percent from the date the option was granted.
With respect to options granted on the Initial Grant Date, the exercise
price of the options granted under the Formula Plan may not be less than the
fair market value of the Common Stock on the date of the grant. With respect to
options granted on the Second Grant Date, the option price per share may not be
less than the fair market value of the shares on the last business day of the
fiscal year that the Company achieves the Target Percent or the Alternative
Target percent. With respect to options granted on the Third Grant Date, the
option price per share may not be less than the fair market value of the shares
as of the last business day of the fiscal year that the Company achieves the
Additional Target percent or the Additional Alternative Target percent.
Pursuant to the Formula Plan, Messrs. Poe and Pennington received 10,000
options each on December 15, 1995 which vested on June 17, 1996. The 10,000
options granted to Mr. Jones during fiscal 1995 vested on April 3, 1996. The
exercise price of Mr. Jones' options is $6.00 per share and the exercise price
of Messrs. Poe and Pennington's options is $9.25 per share.
Each director who is not an employee of the Company also receives free
travel on Mesa for himself and certain family members and through arrangements
with certain major air carriers receives free or reduced-fare travel on those at
no cost to the Company. The Company believes that the directors' use of free air
travel is "de minimis" and therefore did not maintain any records of their
travel during fiscal 1996.
Directors hold office until the next annual meeting of shareholders or
until their successors are elected and qualified.
During fiscal 1996 the Company paid legal fees and expenses aggregating
approximately $183,000 incurred in connection with the defense of a
shareholders' derivative action on behalf of the Company and a class action
suit, as a nominal defendant, the directors of the Company, a former director
and a non-director officer. The aggregate amount paid has not been allocated
between the Company and the individuals who are being indemnified pursuant to
indemnification agreements and Nevada law.
COMPENSATION COMMITTEE INTERLOCKS
Richard C. Poe, Jack Braly and George W. Pennington all served as members
of the Compensation Committee during the fiscal year ended September 30, 1996.
None of these directors held any executive officer position or other employment
with the Company prior to or during such service nor did any executive officer
serve on any other company's compensation committee.
RELATED PARTY TRANSACTIONS POLICY
Under Nevada law the Company may, under certain circumstances, enter into
business arrangements with directors or other related parties. The Board of
Directors has adopted a policy of doing so only where the interest, if known, of
the director or related party is disclosed and the arrangements are approved by
a majority of disinterested directors and are on terms at least as favorable as
available from unaffiliated third parties. Presently, the Company is not a party
to any related party contracts or arrangements.
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FIVE-YEAR SHAREHOLDER RETURN COMPARISON
Set forth below is a graph comparing the five-year cumulative shareholder
return on the Common Stock of Mesa Air Group, Inc. against the five-year
cumulative total return on the CRSP Index for NASDAQ Stock Market (US Companies)
and the CRSP Index for NASDAQ Stocks (SIC 4510-4519) (an index composed of
NASDAQ companies engaged in air transportation, and includes regional airlines
whose stocks trade on NASDAQ) for the periods indicated. The graph assumes an
initial investment of $100.00 and reinvestment of dividends, if any.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
MESA AIR GROUP, INC.
NASDAQ STOCKS (SIC
MEASUREMENT PERIOD MESA AIR GROUP, NASDAQ STOCK MAR- 4 510-4519 US
(FISCAL YEAR COVERED) INC. KET (US COMPANIES) COMPANIES)
09/30/91 100.0 100.0 100.0
09/30/92 314.3 112.1 127.1
09/30/93 532.4 146.8 216.4
09/30/94 182.1 148.0 182.5
09/29/95 280.0 204.4 332.7
09/30/96 250.8 242.6 297.4
LEGEND
SYMBOL CRSP TOTAL RETURNS INDEX FOR: 09/30/91 09/30/92 09/30/93 09/30/94
- -------------- -------------------------------------------------------- --------- --------- --------- ---------
-------- M Mesa Air Group, Inc. 100.0 314.3 532.4 182.1
-- -- -- -- * Nasdaq Stock Market (US Companies) 100.0 112.1 146.8 148.0
----------- O NASDAQ Stocks (SIC 4510-4519 US Companies) 100.0 127.1 216.4 182.5
Air Transportation, Scheduled, and Air Courier Services
SYMBOL 09/29/95 09/30/96
- -------------- --------- ---------
<
-------- 280.0 250.8
-- -- -- -- 204.4 242.6
----------- 332.7 297.4
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 09/30/91.
9
12
COMMON STOCK OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of December 1, 1996 by all directors,
by each person who is known by the Company to be the beneficial owner of more
than five percent of the outstanding Common Stock, by each executive officer
named in the Summary Compensation Table and by all directors and executive
officers as a group.
The number of shares beneficially owned by each director or executive
officer is determined under rules of the Securities and Exchange Commission (the
"Commission"), and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership includes
any shares as to which the individual has the sole or shared voting power or
investment power and also any shares which the individual has the right to
acquire within 60 days of December 1, 1996 through the exercise of any stock
option or other right. Unless otherwise indicated, each person has sole
investment and voting power (or shares such powers with his or her spouse) with
respect to the shares set forth in the following table. In certain instances,
the number of shares listed includes, in addition to shares owned directly,
shares held by the spouse or children of the person, or by a trust or estate of
which the person is a trustee or an executor or in which the person may have a
beneficial interest.
NUMBER OF SHARES OF
COMMON STOCK BENEFICIALLY OWNED
--------------------------------------------------
VESTED
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OPTIONS(1) TOTAL(1) PERCENT(1)
- --------------------------------------------- --------- ---------- --------- -------
Larry L. Risley(2)........................... 503,966 750,000 1,253,966 4.0%
Farmington, New Mexico 87401
E. Janie Risley(2)........................... -- -- -- --
Farmington, New Mexico 87401
Jack Braly................................... -- 16,000 16,000 .1%
San Antonio, Texas 78216
Blaine M. Jones.............................. 6,464 16,000 22,464 .1%
3405 Northridge Court
Farmington, New Mexico 87401
George W. Pennington......................... 46,124 56,000 102,124 .4%
401 West Broadway
Bloomfield, New Mexico 84712
Richard C. Poe............................... 238,496 56,000 294,496 1.0%
6501 Montana
El Paso, Texas 79925
J. Clark Stevens............................. 2,000 124,666 126,666 .4%
Farmington, New Mexico 87401
Gary E. Risley............................... 15,300 164,999 180,299 1.0%
Farmington, New Mexico 87401
W. Stephen Jackson........................... 2,400 66,666 69,066 .2%
Farmington, New Mexico 87401
JP Morgan & Co. Inc.......................... 3,074,275 -- 3,074,275 10.9%
60 Wall Street
New York, NY 10260
Nicholas Applegate Capital Management........ 1,640,000 -- 1,640,000 5.8%
600 West Broadway
San Diego, CA 92101
State of Wisconsin........................... 3,192,000 -- 3,192,000 11.4%
P.O. Box 7842
Madison, WI 53707
All directors and officers as a group........ 814,750 1,250,331 2,065,081 7.3%
- ---------------
(1) Includes options vested on December 1, 1996 and options which will become
vested on or before February 1, 1997. This table is based upon information
supplied by executive officers, directors and principal stockholders and
Schedules 13D and 13G filed with the SEC.
(2) Larry L. Risley and E. Janie Risley are husband and wife, and since New
Mexico is a community property state Ms. Risley has a beneficial interest in
Mr. Risley's shares and shares dispositive and voting powers with Mr.
Risley.
10
13
OTHER BUSINESS
So far as is presently known, there is no business to be transacted at the
Annual Meeting other than that referred to in the Notice of Annual Meeting of
Shareholders, and it is not anticipated that other matters will be brought
before the Annual Meeting. If other matters should properly be brought before
the Annual Meeting, it is intended that the proxy holders may vote or act in
accordance with the Company's Board of Directors' recommendation on such
matters.
ADDITIONAL INFORMATION
LATE FILINGS DURING FISCAL YEAR 1996
George W. Pennington and Richard C. Poe, directors of the Company, were two
months late in filing Form 5's reporting the receipt of an aggregate of 20,000
options to purchase shares of the Common Stock of the Company which were
automatically issued under the Company's Formula Plan on December 15, 1995.
Otherwise, all individuals filed reports with the U.S. Securities and Exchange
Commission in a timely manner for the fiscal year 1996. The late filing of these
reports was primarily due to the late delivery by the Company of documentation
evidencing the granting of such options.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Shareholder proposals for consideration at the next Annual Meeting, which
the Company expects to hold in March 1998, must be received by the Company no
later than September 30, 1997 in order for them to be included in the Company's
proxy materials and form of proxy for the 1998 Annual Meeting. In order to be
included, proposals must be proper under law and must comply with the rules and
regulations of the U.S. Securities and Exchange Commission.
MISCELLANEOUS
Representatives of KPMG Peat Marwick LLP, Mesa's independent auditors, will
be present at the Annual Meeting with the opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions.
The financial statements for the Company for fiscal year 1996 are contained
in the Company's Annual Report on Form 10-K.
By Order of the Board of Directors
LOGO
GARY E. RISLEY
Secretary
Las Vegas, Nevada
January 27, 1997
11
14
PROXY
MESA AIR GROUP, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS, MARCH 17, 1997
The undersigned hereby appoints Larry L. Risley and Gary E. Risley, or
either of them, as proxies with full power of substitution to represent the
undersigned and to vote all shares of Common Stock of Mesa Air Group, Inc. (the
"Company") which the undersigned is entitled to vote at the Annual Meeting of
Shareholders to be held on March 17, 1997 or any adjournments thereof.
1. Election of seven Directors to serve until the next annual Meeting of
Shareholders and until their successors are elected and shall duly qualify:
WITHHOLD
FOR AGAINST AUTHORITY
---------- ---------- ----------
Larry L. Risley
-------- -------- --------
E. Janie Risley
-------- -------- --------
Jack Braly
-------- -------- --------
Blaine M. Jones
-------- -------- --------
WITHHOLD
FOR AGAINST AUTHORITY
---------- ---------- ----------
George W. Pennington
-------- -------- --------
Richard C. Poe
-------- -------- --------
J. Clark Stevens
-------- -------- --------
2. PROPOSAL to ratify the selection of KPMG Peat Marwick LLP as independent
auditors for fiscal 1997.
FOR ________ AGAINST ________ ABSTAIN ________
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting or any adjournments
thereof.
15
This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE NOMINEES TO THE BOARD OF DIRECTORS AND FOR THE ADOPTION OF
PROPOSAL 2.
MESA'S BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF THE
NOMINEES TO THE BOARD OF DIRECTORS AND "FOR" PROPOSAL 2 TO RATIFY THE
SELECTION OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS FOR FISCAL 1997.
Please sign exactly as name appears on the mailing label. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
Dated:
-----------------------------------
-----------------------------------
Signature
-----------------------------------
Signature, if held jointly
(If a corporation, please sign in
full corporate name by President or
other authorized officer. If a
partnership, please sign in the
partnership name by an authorized
person.)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY BY USING THE ENCLOSED
ENVELOPE.
16
[MESA AIR LOGO]
Larry L. Risley
Chief Executive Officer
Airline Operations:
- - America West Express
- - Mesa Airlines
- - United Express
- - USAir Express
Non-Airline Operations:
- - Four Corners Aviation
- - Desert Turbine Services
- - Mesa Airlines
Pilot Development
- - Regional Aircraft Services
January 27, 1997
Dear Shareholder:
Enclosed you will find the notice of the Annual
Meeting of Shareholders of Mesa Air Group, Inc. (the
"Company") to be held on Monday, March 17, 1997 at 10:00
a.m. Mountain Standard Time in the Red Lion Ballroom at
the Red Lion Inn, 501 Camino del Rio, Durango, Colorado.
At the Annual Meeting you will be asked:
1. To elect seven directors of the Company to
serve until the next Annual Meeting of Shareholders.
2. To ratify the selection of KPMG Peat Marwick
LLP as independent auditors for the Company during
fiscal 1997.
3. To transact such other business as may properly
come before the Annual Meeting or any postponement or
adjournment thereof.
Each of the proposals is more fully described in the
accompanying Proxy Statement which I urge you to read
carefully. The Board of Directors has unanimously approved
and recommends a vote "FOR" each of the proposals.
Our agenda for the Annual Meeting will also
include presentations on the past accomplishments and
future objectives of the Company.
It is important that your shares be represented
at the Annual Meeting. Whether or not you attend
personally, I urge you to sign, date and return the
enclosed Proxy at your earliest convenience.
Kindest regards,
/s/ Larry L. Risley
-----------------------------------------
By Larry L. Risley, Chairman of the Board
and Chief Executive Officer
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY
- - 3753 Howard Hughes Parkway - Suite 200 - Las Vegas, Nevada 89109