SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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 (S) 240.14a-11(c) or (S) 240.14a-12
Airborne, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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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:
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Notes:
AIRBORNE, INC.
3101 Western Avenue, P.O. Box 662
Seattle, Washington 98111
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD APRIL 24, 2001
Notice is hereby given that the annual meeting of the shareholders of
Airborne, Inc., a Delaware corporation (the "Company"), has been called and
will be held on April 24, 2001, at 10:00 a.m., Seattle time, at The Westin
Hotel, 1900 Fifth Avenue, Seattle, Washington for the following purposes:
1. To elect four directors for terms of three years.
2. To consider and vote upon a proposal to approve the selection of
Deloitte & Touche LLP as independent auditors.
3. To hear and consider reports from officers of the Company.
4. To transact such other business, including consideration of shareholder
proposals, as may properly come before the meeting and any adjournments
thereof.
The foregoing matters are described in more detail in the Proxy Statement
that is attached to this notice.
Only holders of record, as of the close of business on February 20, 2001, of
shares of Common Stock of the Company will be entitled to notice of and to
vote at the meeting and any adjournments thereof.
By order of the Board of Directors
/s/ David C. Anderson
DAVID C. ANDERSON
Secretary
SHAREHOLDERS ARE URGED TO FILL IN, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ENCLOSED ENVELOPE WHETHER OR NOT THEY PLAN TO ATTEND THE MEETING.
PROXY STATEMENT
AIRBORNE, INC.
3101 Western Avenue, P.O. Box 662, Seattle, Washington 98111
ANNUAL MEETING OF SHAREHOLDERS, APRIL 24, 2001
Date of Mailing: March 13, 2001
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Airborne, Inc., a Delaware
corporation, for use at the annual meeting of shareholders to be held at The
Westin Hotel, 1900 Fifth Avenue, Seattle, Washington at 10:00 a.m., Seattle
time, on Tuesday, April 24, 2001, and at any adjournments thereof. As used
herein, "Airborne" or the "Company" refers to Airborne, Inc., or its
predecessor, Airborne Express, Inc., a Delaware corporation formerly known as
Airborne Freight Corporation. Georgeson Shareholder Communications, Inc. of
New York City has been employed to solicit proxies (through approximately 50
of its employees) by mail, telephone, or personal solicitation, for a fee to
be paid by the Company of not more than $8,000. Officers and regular employees
of the Company may solicit proxies by telephone, telegram, and personal calls,
the cost of which will be borne by the Company.
At the annual meeting, the holders of shares of Common Stock of the Company
will (1) elect four directors for terms of three years and until their
successors have been elected and have qualified, (2) consider and vote on a
proposal to approve Deloitte & Touche LLP as independent auditors, (3) hear
and consider reports from officers of the Company, and (4) transact such other
business, including consideration of shareholder proposals, as may properly
come before the meeting and any adjournments thereof.
VOTING AT THE MEETING
Only holders of record, as of the close of business on February 20, 2001 of
shares of Common Stock of the Company will be entitled to notice of and to
vote at the meeting and any adjournments thereof. The Common Stock is the only
class of voting securities of the Company currently outstanding. On February
20, 2001, there were 48,103,545 shares of Common Stock outstanding (exclusive
of 3,240,526 treasury shares), all of which will be entitled to vote at the
annual meeting on April 24, 2001. At the meeting, the presence in person or by
proxy of a majority of the outstanding shares is required for a quorum.
In deciding all matters at the meeting, other than the election of
directors, each shareholder will be entitled to one vote for each share of
stock held on the record date. For the election of directors, cumulative
voting applies, so that each shareholder will have the right to vote the
number of shares owned on the record date for as many persons as there are
directors to be elected; to cumulate such shares and give one nominee as many
votes as the number of directors to be elected (four) multiplied by the number
of shares held; or to distribute such number of votes among as many nominees
and in such amounts as the holder shall determine. For shareholders voting by
proxy, provision is made on the proxy card for instructions as to the manner
of allocating votes.
1
Election of the persons nominated to serve as directors requires a plurality
of all the votes cast for directors. This means that the four individuals who
receive the largest number of votes cast are elected as directors. Approval of
the selection of Deloitte & Touche LLP as independent auditors and each of the
shareholder proposals requires the affirmative vote of a majority of the votes
cast by the holders of shares represented in person or by proxy at the meeting
and entitled to vote thereon.
Shareholders may withhold their vote from one or more of the nominees for
director and may abstain from voting on the selection of Deloitte & Touche LLP
as independent auditors and the shareholder proposals. Votes that are withheld
in the election of directors will be excluded in determining whether a nominee
has received a plurality of the votes cast. If a shareholder abstains from
voting on the proposal to approve the selection of Deloitte & Touche LLP as
independent auditors or any shareholder proposal, the abstention will have no
effect on the proposal.
Brokerage firms holding shares in street name for customers are required to
vote such shares in the manner directed by their customers. In the absence of
timely directions, firms who are members of the New York Stock Exchange will
have discretion to vote their customers' shares on election of directors and
the selection of Deloitte & Touche LLP as independent auditors. However, the
shareholder proposals are non-discretionary, and brokers who receive no
instructions from their customers will not be able to vote those customers'
shares on those proposals. Under applicable Delaware law, such broker non-
votes will have no effect on the shareholder proposals.
All shares represented by the enclosed proxy, if it is returned prior to the
meeting, will be voted in the manner specified by the shareholder. Unless a
shareholder provides specific instructions to withhold votes from, or to
allocate them to, one or more nominees for director, the persons named in the
proxy will be authorized to vote the shares represented thereby FOR the
election of the nominees for director and in their discretion to cumulate
votes and allocate them among the nominees to the extent and the manner
necessary to assure the election of all of the nominees. If any listed nominee
becomes unavailable, the persons named in the proxy may vote for any
substitute designated by the Nominating Committee of the Board; however,
management at this time has no reason to anticipate that this will occur. To
the extent specific instructions are not given with respect to approval of the
selection of Deloitte & Touche LLP as independent auditors, the shares
represented by the proxy will be voted FOR approval. To the extent specific
instructions are not given with respect to the shareholder proposals, the
shares represented by the proxy will be voted AGAINST these proposals.
You may revoke your proxy at any time before it has been voted by voting in
person at the meeting, by giving written notice of revocation to the Secretary
of the Company, or by giving a later dated proxy at any time before the
voting.
2
To the best of the Company's knowledge, as of February 20, 2001,
shareholders owning over 5% of the outstanding Common Stock of the Company
were as follows:
Holders of Common Stock
Percentage of
Number of Common Stock
Name and Address Shares Outstanding
---------------- --------- -------------
Franklin Resources, Inc. 6,104,487 12.7%
777 Mariners Island Blvd.
San Mateo, California 94404
Vanguard PRIMECAP Fund 3,400,000 7.1%
P.O. Box 2600
Valley Forge, PA 19482
Westport Asset Management, Inc. 2,617,400 5.4%
253 Riverside
Westport, CT 06880
Information in this table is based on reports on Schedule 13G, or amendments
thereto, filed with the Securities and Exchange Commission.
ELECTION OF DIRECTORS
The Company's Bylaws provide for no fewer than eight and no more than twelve
directors, as determined from time to time by the Board. The Company's Board
currently consists of ten members, divided into three classes with terms
expiring at the April annual meeting as follows:
Class A (four positions with terms expiring in 2001):
Carl D. Donaway
Harold M. Messmer, Jr.
Mary Agnes Wilderotter
Rosalie J. Wolf
Class B (three positions with terms expiring in 2002):
Robert G. Brazier
James H. Carey
Andrew B. Kim
Class C (three positions with terms expiring in 2003):
Robert S. Cline
Richard M. Rosenberg
William Swindells
At the annual meeting, four persons will be elected to fill the Class A
positions, generally for terms of three years, to hold office until the annual
meeting of shareholders in the year their terms expire (2004) and until their
respective successors have been elected and shall have qualified as
3
provided by the Bylaws. Mr. Donaway, Mr. Messmer, Ms. Wilderotter and Ms. Wolf
are present directors of the Company and have been nominated to continue as
directors.
Nominees for Directors to Serve a Three-Year Term
Class A (Terms to Expire in 2004)
Carl D. Donaway, age 49, President and Chief Operating Officer of the Company.
Mr. Donaway has served as President and Chief Operating Officer of the
Company since August 2000. He was appointed Senior Executive Vice President
of the Company in February 2000. Prior to that time, he was President and
Chief Executive Officer of ABX Air, Inc., the Company's wholly-owned
airline subsidiary, and Vice President, Business Analysis, and Vice
President, Customer Service, of the Company. Mr. Donaway has been a
director of the Company since August 2000.
Harold M. Messmer, Jr., age 55, Chairman and Chief Executive Officer, Robert
Half International Inc. (personnel services).
Mr. Messmer has been Chairman and Chief Executive Officer of Robert Half
International Inc. since 1987. Mr. Messmer is also a director of Health
Care Property Investors, Inc. and Spieker Properties, Inc. Mr. Messmer, a
director of the Company since 1989, serves as Chairman of the Nominating
Committee and a member of the Compensation Committee.
Mary Agnes Wilderotter, age 46, President and Chief Executive Officer, Wink
Communications (telecommunications).
Ms. Wilderotter has been President, Chief Executive Officer and a
director of Wink Communications since January 1997. From August 1995 to
January 1997, she was Executive Vice President of National Operations for
AT&T Wireless Services Inc., and Chief Executive Officer of Claircom, its
aviation communications division. From October 1991 to August 1995, Ms.
Wilderotter was President of the California/Nevada/Hawaii Region for McCaw
Cellular Communications Inc. She is a director of American Tower
Corporation; Electric Lightwave Inc.; Gaylord Entertainment; and The
McClatchy Company. Ms. Wilderotter has been a director of the Company since
1996 and is a member of the Nominating Committee.
Rosalie J. Wolf, age 59, Managing Director, Laurel Management Company L.L.C.
(investment advisor).
Ms. Wolf joined Laurel Management Company L.L.C. as a Managing Director
and member in 2001. In 2000, she founded and was the Managing Member of
Botanica Capital Partners LLC, a private equity business. Ms. Wolf was
Treasurer and Chief Investment Officer of The Rockefeller Foundation from
1994 to 2000. Ms. Wolf serves on the Board of Trustees of TIAA-CREF and is
a director of The Sanford C. Bernstein Fund Inc. She has been director of
the Company since 1999 and is a member of the Audit Committee.
4
Continuing Directors--Not Standing for Election This Year
Class B (Terms to Expire in 2002)
Robert G. Brazier, age 63, Vice Chairman of the Company.
Mr. Brazier has served as Vice Chairman of the Company since August 2000.
Prior to that time, he served as President of the Company since 1978 and as
Chief Operating Officer since 1973. Mr. Brazier has been a director of the
Company since 1974 and is a member of the Executive Committee.
James H. Carey, age 68, Managing Director, Briarcliff Financial Associates
(private financial advisory firm).
Mr. Carey has been Managing Director of Briarcliff Financial Associates
since 1991. He served as Chief Executive Officer of National Capital
Benefits Corporation, a viatical settlement company, from March 1994 to
December 1995. Mr. Carey is a director of the S.G. Cowen Group of Mutual
Funds and the Midland Company. He has been a director of the Company since
1978 and is a member of the Compensation Committee.
Andrew B. Kim, age 64, Advisory Director, Sit/Kim International Investment
Associates, Inc. (investment company).
Mr. Kim served as President of Sit/Kim International Investment
Associates, Inc., from 1989 to 1999 when he retired. Mr. Kim is a director
of Ilshin Investment Corp. and Dong-A Venture Investment in Seoul, Korea;
Asia Foods in Shanghai, China; and the Vertical Group of New York. Mr. Kim
has been a director of the Company since 1994 and serves as Chairman of the
Audit Committee and a member of the Nominating Committee.
Class C (Terms to Expire in 2003)
Robert S. Cline, age 63, Chairman and Chief Executive Officer of the Company.
Mr. Cline has served as Chairman and Chief Executive Officer of the
Company since 1984. Prior to that time, he served as Vice Chairman,
Executive Vice President, Chief Financial Officer, Senior Vice President-
Finance and Vice President-Finance. He serves as a director of Safeco
Corporation and Esterline Technologies Corp. Mr. Cline, a director of the
Company since 1973, is Chairman of the Executive Committee.
Richard M. Rosenberg, age 70, Chairman and Chief Executive Officer (Retired)
of BankAmerica Corporation and Bank of America, NT&SA.
Mr. Rosenberg served as Chairman, President and Chief Executive Officer
of Bank of America from 1990 to 1996 when he retired. Mr. Rosenberg serves
as a director of Northrop Grumman Corporation. Mr. Rosenberg, a director of
the Company since 1988, is Chairman of the Compensation Committee and a
member of the Executive Committee.
5
William Swindells, age 70, Chairman, Willamette Industries, Inc. (forest
products).
Mr. Swindells has served as Chairman of the Board of Directors of
Willamette Industries, Inc., since 1985 and as its Chief Executive Officer
from 1985 to 1996 and from November 1997 to December 1998. He is a director
of Oregon Steel Mills. Mr. Swindells has been a director of the Company
since 1994 and is a member of the Audit Committee.
BOARD OF DIRECTORS AND COMMITTEES
The full Board of Directors met six times during 2000. No incumbent member
attended fewer than 75% of the meetings of the Board of Directors and Board
committees of which he or she was a member during 2000.
Board Committees
The Board has a standing Audit Committee, Compensation Committee, Nominating
Committee and Executive Committee. Each committee, other than the Executive
Committee, consists exclusively of non-employee directors.
Audit Committee. The Audit Committee is composed currently of Mr. Kim,
Chairman; Mr. Swindells; and Ms. Wolf. The committee is charged with reviewing
and approving the scope of the audit of the books and accounts of the Company
and its subsidiaries, recommending the employment and retention of a firm of
independent auditors to conduct such audit, reviewing the Company's financial
reporting and control systems and reporting to the Board thereon. The
committee met three times during 2000.
Compensation Committee. The Compensation Committee is composed currently of
Mr. Rosenberg, Chairman; Mr. Carey; and Mr. Messmer. It is charged with the
review of and recommendation to the full Board on matters relating to salaries
of officers and all other forms of executive and key employee compensation and
benefits; evaluating the performance of the Chief Executive Officer;
considering, when appropriate, the appointment of a new Chief Executive
Officer and candidates for appointment to other offices; and recommending the
level and form of compensation for non-employee directors. The committee met
four times during 2000.
Nominating Committee. The Nominating Committee is composed currently of
Mr. Messmer, Chairman; Mr. Kim; and Ms. Wilderotter. It is charged with
searching for and recommending to the Board potential nominees for Board
positions. The committee met once during 2000.
Any shareholder recommendations for nominations to the Board of Directors
for consideration by the Nominating Committee for the 2002 Annual Meeting
should be forwarded to Mr. Harold M. Messmer, Jr., Chairman, Nominating
Committee, Airborne, Inc., P.O. Box 662, Seattle, Washington 98111-0662, so as
to be received no later than November 13, 2001.
Executive Committee. The Executive Committee currently consists of Mr.
Cline, Chairman; Mr. Brazier; and Mr. Rosenberg. It is authorized to act in
lieu of the full Board on various matters between Board meetings.
6
Director Compensation
Non-employee directors received an annual fee of $22,000 in 2000 plus $1,500
for each Board and Committee meeting attended.
The Company has a Directors Stock Option Plan ("Option Plan") and Director
Stock Bonus Plan ("Bonus Plan") for non-employee directors of the Company. The
Option Plan provides each such director annual grants of options to acquire
2,000 shares of the Company's Common Stock at an exercise price equal to the
closing sales price on the New York Stock Exchange on the date of grant. Under
the Bonus Plan, each director receives an annual award of shares of the
Company's Common Stock having a value of $6,000 on the award date. The
issuance of shares is deferred until the director retires or otherwise ceases
to be a director of the Company.
7
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information as to the shares of Common Stock
beneficially owned (or deemed to be beneficially owned pursuant to the rules
of the SEC) by each director of the Company, by the Chief Executive Officer
and the five other most highly compensated executive officers of the Company
(the "named executive officers") and by all directors and executive officers
as a group:
Common Stock of
the Company Percentage of
Beneficially Owned Common Stock
Name as of 2/20/01 Outstanding
- ---- ------------------ -------------
Directors
James H. Carey............................. 16,432 /1/,/2/ *
Andrew B. Kim.............................. 42,204 /1/,/2/ *
Harold M. Messmer, Jr. .................... 25,032 /1/,/2/ *
Richard M. Rosenberg....................... 27,032 /1/,/2/ *
William Swindells.......................... 21,882 /1/,/2/ *
Mary Agnes Wilderotter..................... 11,003 /1/,/2/ *
Rosalie J. Wolf............................ 5,473 /1/,/2/ *
Named Executive Officers
Robert S. Cline/3/ ........................ 662,209 /5/ 1.37%
Robert G. Brazier/3/ ...................... 779,013 /5/ 1.61%
Carl D. Donaway/3/ ........................ 89,098 /5/ *
Kent W. Freudenberger/4/ .................. 133,000 /5/ *
Kenneth J. McCumber........................ 47,363 /5/ *
Lanny H. Michael........................... 43,321 /5/ *
All Directors and Executive Officers as a
Group (16 persons)........................ 1,964,559 /6/ 4.00%
- --------
* Less than 1% of Common Stock outstanding.
/1/Includes shares subject to options granted under the Company's stock option
plans as follows: Mr. Carey, 14,000; Mr. Kim, 16,000: Mr. Messmer, 20,000;
Mr. Rosenberg, 20,000; Mr. Swindells, 8,000; Ms. Wilderotter, 10,000 and
Ms. Wolf, 4,000.
/2/Includes 1,032 shares for each director (except 803 shares for Ms.
Wilderotter and 473 shares for Ms. Wolf) issuable under the Director Stock
Bonus Plan.
/3/Mr. Cline, Mr. Brazier and Mr. Donaway also serve as directors.
/4/Mr. Freudenberger retired from the Company in October 2000.
/5/Includes shares subject to options granted under the Company's stock option
plans as follows: Mr. Cline, 357,779; Mr. Brazier, 268,815; Mr. Donaway,
67,520; Mr. Freudenberger, 89,251; Mr. McCumber, 32,458 and Mr. Michael,
37,705.
/6/Includes 951,964 shares (inclusive of the shares mentioned in Notes 1, 2
and 5, above) subject to options or issuable under the Director Stock Bonus
Plan.
8
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning annual and long-term
compensation paid or accrued during calendar years 2000, 1999 and 1998 for
services in all capacities to the Company by the named executive officers:
Long-Term
Compensation
Awards:
Annual ------------
Compensation Securities
Name and Principal ------------------ Underlying All Other
Position Year Salary/1/ Bonus Options Compensation/2/
------------------ ---- --------- -------- ------------ ---------------
Robert S. Cline 2000 $650,000 $ -- 85,500 $13,999
Chairman, Chief Executive 1999 604,000 -- 84,000 18,867
Officer and Director 1998 590,346 531,311 150,000 20,931
Robert G. Brazier 2000 555,000 -- 59,500 10,094
Vice Chairman and Director 1999 519,500 -- 57,000 14,391
1998 510,462 401,988 92,000 17,800
Carl D. Donaway 2000 465,231 -- 43,000 12,057
President and Chief 1999 323,000 -- 24,000 13,733
Operating Officer 1998 319,039 189,030 40,000 17,366
and Director
Kent W. Freudenberger/3/ 2000 339,500 -- 27,500 9,647
Executive Vice President, 1999 323,000 -- 24,000 13,733
Marketing Division 1998 319,039 198,601 40,000 17,245
(Retired)
Kenneth J. McCumber/4/ 2000 214,596 91,182 8,950 7,571
Senior Vice President, 1999 181,750 96,430 6,000 11,129
Sales 1998 162,692 164,887 4,000 14,694
Lanny H. Michael/4/ 2000 221,696 28,067 9,300 7,664
Senior Vice President 1999 181,300 18,257 9,000 11,129
and Chief Financial 1998 179,181 105,985 5,800 14,992
Officer
- --------
/1/The named executive officers are paid their annual base salary on a
biweekly basis. Total salary paid in different calendar years may vary
depending on the number of pay periods that fall in each year. The specific
amounts shown here reflect that 1998 had one more pay period than 2000 and
1999.
/2/A portion of the amounts shown as All Other Compensation for 2000
represents contributions by the Company to the accounts of the named
executive officers under the Company's defined contribution plan, including
401(k) matching contributions ($ 385 for Mr. Brazier; $3,914 for Mr.
Michael and $3,955 for each of the other named executive officers). The
balance of the amounts shown in this column for 2000 represents premiums
paid on term life insurance for the named executive officers.
/3/Mr. Freudenberger retired from the Company in October 2000.
/4/Mr. McCumber and Mr. Michael were promoted in late 2000 to their executive
officer positions, but remained eligible under the Management Incentive
Compensation Plan (a non executive officer incentive plan) for 2000 based
on their previous positions with the Company. Bonuses were paid in 1999 and
2000 based on specific performance measured against individual objectives.
9
Option Grants in 2000
The following table shows information concerning stock options granted to
the named executive officers during calendar year 2000:
Individual Grants Potential Realizable
---------------------------------------------- Value at Assumed
Number Percent of Annual Rates of
of Total Stock Price
Securities Options Appreciation for
Underlying Granted to Exercise Option Term/2/
Options Employees in Price Expiration ---------------------
Name Granted/1/ Fiscal Year (per share) Date 5% 10%
- ---- ---------- ------------ ----------- ---------- ---------- ----------
Robert S. Cline 85,500 11.68% $18.94 2/01/10 $1,018,413 $2,580,859
Robert G. Brazier 59,500 8.13% $18.94 2/01/10 708,720 1,796,036
Carl D. Donaway 43,000 5.87% $18.94 2/01/10 512,184 1,297,976
Kent W. Freudenberger 27,500 3.76% $18.94 2/01/10 327,560 830,101
Lanny H. Michael 9,300 1.27% $18.94 2/01/10 110,775 280,725
Kenneth J. McCumber 8,950 1.22% $18.94 2/01/10 106,606 270,160
- --------
/1/Options for the named executive officers were granted on February 1, 2000.
Twenty-five percent of the options granted on February 1, 2000, will become
exercisable on February 1, 2001, February 1, 2002 , February 1, 2003 and
February 1, 2004, subject to certain contractual provisions that will apply
in the event of a change in control (see Employment Contracts). The
exercise price of all options was the fair market value of the Company's
Common Stock on the date of grant.
/2/Based upon the $18.94 per share market price on the date of grant and
assumed appreciation over the term of the options at the annual rates of
stock appreciation shown. The named executive officers will realize no
value from these options if the stock price does not increase following
their grant.
Aggregate Option Exercises in 2000 and Year-End Option Values
The following table shows information concerning stock options exercised
during calendar year 2000 by the named executive officers and the value of
unexercised options at the end of that year:
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal Year- In-the-Money Options
Shares End at Fiscal Year-End
Acquired Value ------------------------- -------------------------
Name on Exercise Realized/1/ Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- ----------- ------------- ----------- -------------
Robert S. Cline 21,630 $247,393 315,524 223,500 $-- $--
Robert G. Brazier 28,640 313,961 258,100 148,250 -- --
Carl D. Donaway -- -- 46,770 81,000 -- --
Kent W. Freudenberger -- -- 72,376 65,500 -- --
Kenneth J. McCumber -- -- 32,940 15,450 -- --
Lanny H. Michael -- -- 31,680 18,950 -- --
/1/Represents the aggregate fair market value, on the respective dates of
exercise, of the shares of Common Stock received on exercise of options,
less the aggregate exercise price of the options.
- --------
10
Comparative Performance Graph
Set forth below is a graph comparing the cumulative total shareholder return
on the Company's Common Stock with the cumulative total return of the Standard
& Poor's Composite-500 Stock Index and the Standard & Poor's Transportation
Index for the five-year period ended December 31, 2000.
Comparison of Five-Year Cumulative Total Return/1/
Among Airborne, Inc. Common Stock,
the S&P Composite-500 Index, and the S&P Transportation Index
[PERFORMANCE GRAPH]
December 31 1995 1996 1997 1998 1999 2000
---------------------------------------------------------
Airborne, Inc. $100 $ 89 $237 $277 $170 $ 77
S&P Composite-500 Index $100 $123 $164 $211 $255 $232
S&P Transportation Index $100 $114 $148 $145 $131 $156
/1/The total return on the Company's Common Stock and each index
assumes the value of each investment was $100 on December 31, 1995
and that all dividends were reinvested.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
It is the responsibility of the Compensation Committee to set policies
governing compensation of the Company's executive officers and to make
recommendations to the Board as appropriate. These policies cover base
salaries, incentive compensation, stock options, and any other forms of
remuneration. In addition, the Committee evaluates performance of management,
considers management succession, and deals with other personnel matters
related to senior management.
11
The Company has designed pay programs for executive officers that provide a
strong link between the Company's performance and executive compensation. Each
component of executive pay is weighted and valued so that, in total, highly
talented executives can be attracted, retained and motivated to consistently
improve the performance of the Company.
Each year, the Committee reviews the total compensation of the Chief
Executive Officer and the other executive officers. The Committee also
monitors general compensation practices of all other officers of the Company
and its subsidiaries. To assist in these duties, the Committee periodically
retains the services of a compensation consulting firm to provide information
on the competitiveness of compensation paid to executive officers of the
Company compared to that of other companies of similar size and scope.
A consulting firm was retained to obtain such information in 2000. The firm
reviewed compensation paid by national transportation and general industry
companies. Annual revenues of the comparison companies were approximately $3.3
billion.
The Company compensates its executive officers through a combination of base
pay, annual awards and longer-term incentives. The Committee considers how the
mix of base salaries and annual awards compares to the median compensation
level of the comparison companies, but does not target such compensation at,
above, or below the median level. The Committee believes that total
compensation potentially available to Company executive officers is
competitive and provides the incentive necessary to motivate them to meet or
exceed goals set by the Board.
The compensation of the Chief Executive Officer and the other executive
officers was reviewed during 2000 based on their performance and
responsibilities and was adjusted as deemed appropriate by the Committee.
During 2000 the executive officers had the potential to receive annual
awards under the Company's executive incentive plans. In connection with these
plans, the Committee approved an annual operating plan at the beginning of
2000 that established targets for pre-tax net profits and revenue growth. In
addition certain executive officers were assigned individual objectives. The
Committee also retained discretion to grant bonuses outside these plans on an
individual basis.
Annual awards under the plans are calculated as a percentage of base salary.
The threshold for awards is attainment of 80% of the targets and the maximum
payout is available at 150% target attainment. However, regardless of revenue
growth and individual objectives, no awards are made unless the Company earns
at least 80% of the targeted level of pre-tax net profit. In 2000 the Company
did not achieve the threshold for pre-tax net profits. Accordingly, no awards
were paid under the executive incentive plans.
The Committee considers the desirability of granting longer-term incentive
awards to the Company's officers, including the executive officers, under the
Company's stock option program. In deciding the number of options to grant,
the Committee considers the anticipated value of the options, the number of
options outstanding or previously granted to the executives, and the aggregate
number of grants to all employees of the Company. In 2000, stock options were
granted to executive officers at an exercise price equal to the fair market
value of the Company's stock on the date of grant. The Committee believes that
these awards will have the desired effect of focusing the Company's senior
management on building consistent profitability and shareholder
12
value, since the awards directly ally the interests of management with an
increase in the market price of the Company's stock.
Under Federal income tax rules, the deduction for certain types of
compensation paid to the Chief Executive Officer and four other most highly
compensated officers of publicly held companies is limited to $1 million per
employee. In certain circumstances, performance based compensation is exempt
from the $1 million limit. The Committee believes all compensation earned by
the Company's executive officers in 2001 will be deductible.
Richard M. Rosenberg, Chairman
James H. Carey
Harold M. Messmer, Jr.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is currently composed of Mr. Rosenberg, Chairman,
Mr. Carey and Mr. Messmer. Mr. Rosenberg was a director of BankAmerica
Corporation, the parent of Bank of America. The Company has various demand
deposit accounts, and participates in a credit agreement with Bank of America.
Audit Committee Report
The Audit Committee of the Board of Directors has furnished the following
report:
The Audit Committee of the Board of Directors consists entirely of non-
employee directors who are independent, as that term is defined in the New
York Stock Exchange's Listing Standards. The Board adopted a written charter
for the Committee during 2000, a copy of which is attached to this proxy
statement as Annex A.
Management of the Company has the responsibility for the financial
statements and for their integrity and objectivity. To help fulfill this
responsibility, management maintains a system of internal controls designed to
provide reasonable assurance that assets are safeguarded against loss or
unauthorized use and that transactions are executed in accordance with
management's authorizations and are reflected accurately in the Company's
records. The Committee oversees the fulfillment by management of its
responsibilities over financial controls and the preparation of the financial
statements. The Committee has reviewed the Company's audited financial
statements for the fiscal year ended December 31, 2000 and discussed such
statements with management, including discussions concerning the quality of
accounting principles, reasonableness of significant judgments and disclosures
in the financial statements.
The Committee has discussed with the Company's independent auditors,
Deloitte & Touche LLP, such matters relating to the performance of the audit
as are required to be discussed by Statements of Auditing Standards No. 61
(Communications with Audit and Finance Committees, as amended). Additionally,
the Committee has discussed with the independent auditors their independence
from management and whether their provision of non-audit services is
compatible with maintaining that independence. The Company has received the
written disclosures from the independent auditors required by the Independence
Standards Board Standard No. 1.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors that the audited financial statements be
included in the Annual Report
13
on Form 10-K for the year ended December 31, 2000 for filing with the
Securities and Exchange Commission.
Andrew B. Kim, Chairman
William Swindells
Rosalie J. Wolf
Retirement Plans
The Company maintains two qualified retirement plans that cover the named
executive officers (and all other employees other than certain union
employees) and a non-qualified Supplemental Executive Retirement Plan ("SERP")
that provides for benefits in excess of statutory limits. Officers accrue
benefits under the SERP based on an age and service formula that accumulates a
point value used to determine a benefit level at a particular retirement age.
Normal retirement age is 62. Points are credited for each year of service and
year of age up to a maximum point total of 80. Assuming the attainment of the
maximum point total, the plans, in conjunction with Social Security, are
designed to provide a retirement benefit equal to approximately 65% of an
officer's final average earnings at a normal retirement date of age 62. Final
average earnings is the average of the highest five consecutive calendar years
of compensation during an officer's last ten years of employment. Compensation
considered in the formula includes salary and bonus paid in a calendar year
without regard to IRS limitations.
Benefits under the SERP determined through the above formula are offset by
Social Security and the gross benefit amounts calculated under the Company's
two qualified retirement plans. The qualified plans, a defined contribution
profit sharing plan and a defined benefit plan, are used in connection with
the SERP and Social Security to fund retirement benefits. The SERP is
unfunded, although the Company maintains commingled investment fund assets
that could be used to fund eventual benefit payments. The Company also has a
voluntary 401(k) salary deferral plan.
The following table sets forth the targeted annual pension benefits
(calculated on the basis of a straight life annuity) payable upon normal
retirement at age 62 to the Company's officers (including the named executive
officers) based on specified years of service and levels of final average
earnings. The amounts shown take into account Social Security offsets based on
the career average Social Security wage base in effect in 2000.
Pension Plan Table
Years of Service
--------------------------------------------------------------
Remuneration 5 10 15 20 25 30 35
- ------------ - -- -- -- -- -- --
$ 200,000 $ 82,443 $ 95,443 $108,443 $116,243 $116,243 $116,243 $116,243
300,000 130,543 150,043 169,543 181,243 181,243 181,243 181,243
400,000 178,643 204,643 230,643 246,243 246,243 246,243 246,243
500,000 226,743 259,243 291,743 311,243 311,243 311,243 311,243
600,000 274,843 313,843 352,843 376,243 376,243 376,243 376,243
700,000 322,943 368,443 413,943 411,243 441,243 441,243 441,243
800,000 371,043 423,043 475,043 506,243 506,243 506,243 506,243
900,000 419,143 477,643 536,143 571,243 571,243 571,243 571,243
1,000,000 467,243 532,243 597,243 636,243 636,243 636,243 636,243
1,100,000 515,343 586,843 658,343 701,243 701,243 701,243 701,243
14
Based on compensation through December 31, 2000, the final average earnings
of the named executive officers were as follows: Mr. Cline, $859,501; Mr.
Brazier, $709,961; Mr. Donaway, $439,663; Mr. Freudenberger, $415,247; Mr.
McCumber, $268,872 and Mr. Michael, $246,405. All of the named executive
officers have accrued at least 20 years of service, except for Mr. Michael,
who has 19 years of service.
Employment Contracts
Each of the named executive officers is elected annually and serves at the
pleasure of the Board, subject, however, to agreements with the Company that
generally assure that, in the event of a change in control of the Company, all
of the officers will have the right to remain employed, at not less than the
respective rates of compensation in effect as of the date of the change in
control, for at least three years thereafter.
The agreements with the named executive officers generally provide that, if
an officer is terminated without "cause" (defined as willful and continued
failure to perform duties after demand from the Board, or willful and gross
misconduct) within three years after a change in control, the Company must pay
the officer, in addition to all accrued compensation, the equivalent of three-
years' salary, bonus and other benefits. Also under the agreements, an officer
terminated after a change in control may elect to receive cash equal to the
difference between the exercise price of all stock options held by the officer
(whether or not then exercisable) and the market value of the stock on the
date of termination, or the highest price per share actually paid in
connection with any change in control of the Company, whichever is higher. In
the absence of this provision, under the Company's stock option plans, an
employee terminated other than for cause has three months to exercise any
options exercisable on the date of termination but any options not then
exercisable are canceled. The Company's stock option plans provide that all
outstanding options become exercisable upon retirement and expire between 18
months and three years after the date of retirement unless their terms expire
sooner. The Company is required to provide the same additional compensation
and benefits described above in the event a named executive officer resigns
due to failure of the Company, after a change in control, to provide the
salary, other specific benefits and terms of employment required by the
agreement.
In return for the benefits under the agreements described above, each of the
named executive officers has agreed, among other things, not to serve as an
executive officer, director or consultant to any competitor of the Company for
at least one year after termination of employment with the Company. While
these contracts were designed to encourage these officers to stay with the
Company, and not to deter changes in control, it is possible that a party
wishing to obtain control of the Company with the intention of replacing
incumbent management could be influenced by the additional cost that the
Company would incur under these contracts.
15
PROPOSAL 2
SELECTION OF AUDITORS
The firm of Deloitte & Touche LLP, independent auditors, has examined the
financial statements of the Company for the three years ended December 31,
2000, and has been recommended by the Audit Committee of the Board and by the
full Board for reappointment. Deloitte & Touche LLP has no financial interest
in the Company, nor does it have any connection with the Company in the
capacity of promoter, underwriter, voting trustee, director, officer or
employee. Representatives of Deloitte & Touche LLP are expected to 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
from shareholders. Unless a contrary vote is indicated thereon, the proxy
solicited hereby will be voted for the selection of Deloitte & Touche LLP as
such auditors for the ensuing year.
Auditor's Fees
Audit Fees
The aggregate fees billed by Deloitte & Touche LLP for professional services
rendered for the audit of the Company's annual financial statements for the
fiscal year ended December 31, 2000 and for the reviews of the financial
statements included in the Company's Quarterly Reports on Form 10-Q for that
fiscal year were $238,700.
Financial Information Systems Design and Implementation Fees
Deloitte & Touche LLP did not render professional services for information
technology services relating to financial information systems design and
implementation for the fiscal year ended December 31, 2000.
All Other Fees
The aggregate fees billed by Deloitte & Touche LLP for services rendered to
the Company, other than the services described above under "Audit Fees" for
the fiscal year ended December 31, 2000 were $49,522.
SHAREHOLDER PROPOSALS
The Company has been advised that several shareholders intend to present
proposals at the annual meeting. The Company will furnish promptly the names,
addresses, and number of shares held by the proponents of the following
shareholder proposals upon receipt of written or oral request for such
information to the Secretary.
16
PROPOSAL 3
SHAREHOLDER PROPOSAL
TO DECLASSIFY THE BOARD OF DIRECTORS
Shareholder Resolution
RESOLVED: That Airborne stockholders urge the Board of Directors take the
necessary steps, in compliance with state law, to declassify the Board for the
purpose of director elections. The Board's declassification shall be completed
in a manner that does not affect the unexpired terms of directors previously
elected.
Proponent's Supporting Statement
Airborne's Board is divided into three classes of directors serving
staggered three-year terms. This means an individual director faces election
only once every three years, and shareholders only vote on roughly a third of
the Board each year.
Companies often defend classified boards by suggesting that they preserve
continuity. We think continuity is insured through director re-elections. When
directors are performing well they routinely are re-elected with majorities
over 95%.
We believe that annual elections can pave the way for improved board
sensitivity to important shareholder issues. In particular, it can help speed
the diversification of Airborne's Board and introduce new perspectives.
In addition, a declassified board allows the company to respond quickly to
changes by giving the board the ability to appoint more qualified candidates
each year. A declassified board can help give Airborne the flexibility it
needs as it moves into the next century.
For the past two years, the proposal to declassify Board of Director
elections has received majority votes. In 2000, the proposal received 73% of
the shareholder vote.
The evidence shows that shareholders are fed up with classified boards. This
is especially true for employee shareholders. This past year, majorities of
shareholders voted to declassify boards at many companies, including: Baxter
International (60.4%), Eastman Chemical (70%), Eastman Kodak (60.7%), Lonestar
Steakhouse & Saloon, Inc. (79%), Silicon Graphics (81.1%), United Health Group
(75.7%), Weyerhaeuser (58%) and Kmart/1/ (68.5%). In 1999, shareholders voted
to declassify boards with a majority at Cendant, Cooper Tire & Rubber, Kaufman
& Broad Home, Oregon Steel and Tenneco. In 1998, Walt Disney Company agreed to
change the by-laws after the resolution passed with 65% of the vote. More than
70% of shareholders demanded that same at Fleming and Eastman Kodak.
By adopting annual elections, Airborne can demonstrate its commitment to
fuller accountability to shareholders, accountability that honors shareholder
prerogatives.
We urge you to vote YES for this proposal.
- --------
1. At Kmart, the proposal was binding and received 68.5% of ballots cast,
45.78% of shares outstanding. Kmart's by-laws require support of 58% of
shares outstanding.
17
BOARD OF DIRECTORS RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
AGAINST PROPOSAL 3
The Company's Board of Directors is divided into three classes with
directors elected to staggered three-year terms. The Company adopted its
classified board as a result of a majority vote of all outstanding shares at
its 1982 annual meeting. The Board believes board classification continues to
serve the best interests of the Company's shareholders.
The Board believes classification provides stability in its composition and
long-range planning. A classified board ensures that a majority of the Board
will have prior experience as directors of the Company. A Board with a
historical perspective of the Company is better positioned to make the
fundamental decisions that are best for the Company and its shareholders. This
enables the directors to build on past experience and plan for a reasonable
period in the future. The annual election of one-third of the Board also helps
to prevent abrupt changes in corporate policies that might result if the
entire Board were elected each year.
The Board also believes that a classified board reduces the ability of a
third party to effect a sudden, unsolicited change in the Company's direction.
It allows the Board to fulfill its duties to the shareholders by providing an
opportunity to negotiate with the proponent of change, consider alternatives
and seek the best results for all shareholders.
The Board continues to believe that directors who are elected to three-year
terms are just as accountable to shareholders as directors who are elected
annually.
Directors have fiduciary duties that do not depend on how often they are
elected. The Board has policies that further the accountability of the Board
to the shareholders. A portion of each director's compensation is paid in
Airborne stock and options to purchase Airborne stock.
Shareholders have the opportunity annually to vote against one-third of the
directors as a way of expressing any dissatisfaction with the Board or
management. A majority of the Board can be replaced in the course of two
annual meetings, all held within approximately one year.
The Board recognizes that some shareholders oppose board classification.
Nevertheless, classified boards reportedly remain a feature of corporate
governance at a majority of S&P 500 companies. The shareholder proposals for
board declassification at the Company's 1999 and 2000 annual meetings received
support from less than half of the outstanding shares.
Approval of this proposal would require the affirmative vote of a majority
of the shares represented in person or by proxy at the meeting and entitled to
vote. However, approval of the proposal would not automatically eliminate the
classified board, as this proposal is only a recommendation. Eliminating the
classified board would require action by the Board to amend the Company's
Certificate of Incorporation and Bylaws, which provide for a classified board.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE AGAINST PROPOSAL 3.
18
PROPOSAL 4
SHAREHOLDER PROPOSAL
FOR CONFIDENTIAL SHAREHOLDER VOTING
Shareholder Resolution
RESOLVED: To increase shareholder value Airborne shareholders recommend that
the board of directors adopt a bylaw or policy requiring confidentiality for
all proxies, ballots and voting tabulations that identify how shareholders
vote. Also the inspectors of election are to be independent and not employees
of the company.
The Investor Responsibility Research Center (IRRC) reported that
confidential voting proposals won 52% shareholder approval at major companies
in 2000. This proposal is to apply to each election in which a change in
control is not an issue.
Proponent's Supporting Statement
The confidential ballot is fundamental to the American system. This
protection ensures that voters are not subject to:
. Actual
. Perceived or
. Potential coercive pressure.
IRRC surveyed 56 institutional investors and found that 75% said they
consistently support confidential voting proposals. Airborne is 67% owned by
institutional shareholders.
Confidential voting enhances shareholder rights. By protecting the
confidentiality of the ballot, shareholders are free to oppose management
nominees and express positions without fear of retribution:
This is especially important for professional money managers whose business
relationships can be jeopardized by their voting positions.
Management's proxy solicitors have elaborate databases that can match street
name account numbers with the identity of shareholders.
Prevent Management Control of the Shareholder Ballot.
This proposal will prevent management from identifying shareholders and
personally lobbying those shareholders who are not voting according to
management's instructions.
What incentive is there for improved corporate governance--highlighted by
confidential voting?
A recent survey by McKinsey & Co., international management consultant shows
that institutional investors are prepared to pay an 18% premium for good
corporate governance.
Wall Street Journal June 19, 2000
19
The adoption of this one proposal to improve a significant management rule
deserves particular attention because the Company has other important rules
and practices that are not competitive--according to many institutional
investors:
. The board refused to act on the 70% vote of shareholders for Annual
Election of each Director at the 1999 shareholder meeting. Shareholders
responded by voting a greater 74% approval at the 2000 shareholder
meeting.
. Rich stock options: Management recommended shareholders adopt a
lucrative stock option plan at the 2000 annual meeting that would raise
all company stock option plans to a cost of nearly 11%. A respected
institutional shareholder advisory firm calculated that this cost was
16% higher than the Airborne cap should be.
. No shareholder vote to ratify outside auditors.
. Directors are not required to own any stock.
Airborne needs to be more competitive at the highest level of the company--
where it will have the greatest impact to return the stock to the $43 price of
1999.
To improve corporate governance and company performance vote yes:
CONFIDENTIAL SHAREHOLDER VOTING
YES ON 4
BOARD OF DIRECTORS RECOMMENDATION
THE BOARD OF DIRECTORS
RECOMMENDS THAT THE SHAREHOLDERS VOTE AGAINST PROPOSAL 4
The Company has independent inspectors of election and has no plans to
change this practice.
Shareholders already have the freedom to choose whether or not they want
their vote to be confidential by the way they structure their ownership of the
Company's stock. A shareholder choosing anonymity may hold shares in street
name through a bank, broker or other nominee who cannot disclose the
shareholder's name without consent. As of the record date for the 2001 annual
meeting, more than 95% of the Company's shares were held in nominee name.
Shareholders may choose to hold their shares of record in order to communicate
their views to management.
The Board believes the Company needs the ability to contact shareholders on
issues that are important to the Company's success. This proposal limits that
ability. The proposal also fails to include exceptions to confidentiality when
disclosure is requested by a shareholder or required by law.
The Board believes it is structured appropriately to protect shareholder
interests. The Board has adopted policies concerning director ownership of
Company stock. Information on director stock ownership is set forth on page 8
of this Proxy Statement. Proposal 2 asks the shareholders to approve the
selection of the Company's independent auditors. At the 2000 annual meeting,
the Board asked for and obtained shareholder approval of the 2000 Director
Stock Option Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
AGAINST PROPOSAL 4
20
PROPOSAL 5
SHAREHOLDER PROPOSAL
FOR SHAREHOLDER VOTE ON POISON PILLS
Shareholder Resolution
RESOLVED: Adopt proposal that won greater than 55% shareholder approval at
24 major companies in 2000. To increase shareholder value Airborne
shareholders recommend that a shareholder vote be required to maintain
Airborne's poison pill or adopt a new poison pill. The company is to redeem or
terminate any such plan or agreement.
Also, require that any future action on this topic be put to shareholder
vote--as a separate proposal.
Proponent's Supporting Statement
Why submit the Airborne poison pill to a shareholder vote?
. The poison pill injures shareholders by reducing management
accountability and adversely affects shareholder value.
Nell Minow and Robert Monks in their book, Power and Accountability
. "Shareholder approval of all poison pills" is recommended by the Council
of Institutional Investors (www.cii.org) in its Shareholder Bill of
Rights.
. Airborne is 67%-owned by institutional investors.
The combination of director's staggered 3-year terms and poison pill is a
formidable defense against hostile take-over overtures. In order to repeal the
Airborne poison pill and push through a take-over, a group must win virtually
all board seats up for election at 2 consecutive annual meetings. Few groups
are willing to undertake this process due to the time and expense required.
This reform is necessary to improve the stock price that plummeted 62% in
the first 3 quarters of 2000. By requiring a shareholder vote on poison pills,
the directors will be less entrenched and more responsive to turn around
recent reversals. Otherwise they risk being replaced by better management.
Airborne's stock plummeted from $43 in 1999.
Airborne loss warning stuns analysts.
Analysts expected the Company to earn 29 cents a share.
The company warned it would lose 5 to 10 cents a share in the third
quarter--the first quarterly loss in 8 years.
"I didn't expect it to be this bad," said Ed Wolfe, Bear Stearns analyst.
Wolfe said he expected the Company to earn at least 10 cents a share even
in his worst-case scenario.
21
The company continues to lose ground against UPS, Fed-Ex and technology.
Airborne's sales had minuscule growth--less than 1% last quarter.
Airborne stock dropped 62% since January.
Seattle Times September 29, 2000
The Seattle Times reported that the proponent of this proposal, John
Chevedden, Redondo Beach, California, won a 2 to 1 vote for his annual
election of each director proposal at the 1999 Airborne annual meeting.
In its response to the proposal, Airborne was asked to name the steps it has
taken in the last year to improve corporate practices at the highest level of
the company.
To restore shareholder value vote yes.
ADOPT PROPOSAL THAT WON GREATER THAN 55% SHAREHOLDER
APPROVAL at 24 MAJOR COMPANIES in 2000:
SHAREHOLDER VOTE ON POISON PILLS
YES ON 5
BOARD OF DIRECTORS RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE AGAINST PROPOSAL 5
The Board of Directors maintains a shareholder rights plan ("Rights Plan")
to maximize shareholder value in the event of a change in control or takeover.
Rights plans have been adopted by a majority of S&P 500 corporations.
The purpose of the Rights Plan is to help the Board maximize shareholder
value in the event of a takeover attempt by encouraging negotiations with the
Board and by giving the Board the opportunity to explore other alternatives.
The Rights Plan is not intended to and will not prevent a takeover on terms
determined by the Board to be fair, adequate and in the best interests of all
shareholders. If the Board determines that an offer adequately reflects the
value of the Company and is in the best interests of all shareholders, the
Rights Plan provides that the Board may redeem the rights.
The Rights Plan is designed to protect shareholders against potential abuses
during the takeover process, such as "creeping" acquisitions of the Company's
stock in the open market, hostile tender offers made at less than a full and
fair price, partial and two-tiered tender offers that discriminate among
shareholders, and other abusive tactics that can be used to deprive
shareholders of the ability to get a full and fair price for all of their
shares.
Delaware law imposes a fiduciary duty on the Board to act in the best
interests of the Company's shareholders and to oppose unfair takeover offers.
Courts have recognized that rights plans are a useful and legitimate tool
available to directors in fulfilling their fiduciary responsibilities to
shareholders. The Company's directors are well aware of their fiduciary duties
and responsibilities to the Company's shareholders when evaluating the merits
of any acquisition proposal.
22
A 1997 study by Georgeson Shareholder Communications, Inc., a major proxy
solicitation firm, concluded that rights plans did not reduce the likelihood
of takeovers and that companies with rights plans received higher premiums
than those without rights plans.
The adoption of a shareholder rights plan does not require shareholder
approval. The Board believes that the adoption of a rights plan is
appropriately within the scope of responsibilities of the Board, acting on
behalf of the shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
AGAINST PROPOSAL 5
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that certain of the Company's officers and directors, and persons who own more
than ten percent of a registered class of the Company's equity securities,
file reports of ownership and changes of ownership with the Securities and
Exchange Commission and the New York Stock Exchange. Officers, directors and
greater than ten percent shareholders are required by SEC regulation to
furnish the Company with copies of all such forms they file.
Based solely on its review of the copies of such forms received by the
Company, and on written representations by the Company's officers and
directors regarding their compliance with the filing requirements, the Company
believes that, in 2000, all filing requirements applicable to its officers,
directors and greater than ten percent beneficial owners were complied with.
SHAREHOLDER PROPOSALS
The Company's 2002 Annual Meeting of Shareholders is scheduled to be held on
April 23, 2002. Proposals of shareholders intended to be presented at the 2002
Annual Meeting must be received by the Company on or prior to November 13,
2001, to be eligible for inclusion in the Company's Proxy Statement and form
of proxy to be used in connection with the 2002 Annual Meeting.
A shareholder of record who intends to submit a proposal at the 2002 Annual
Meeting that is not eligible for inclusion in the Proxy Statement, or who
intends to submit one or more nominations for directors at the meeting, must
provide prior written notice to the Company. The notice should be addressed to
the Secretary and received at the Company's principal executive offices not
later than January 23, 2002 for proposals and not later than February 12, 2002
for director nominations. The written notice must satisfy certain requirements
specified in the Company's Bylaws. A copy of the Bylaws will be sent to any
shareholder upon written request to the Company's Secretary.
23
OTHER MATTERS
Management is not aware at this time that any other matters are to be
presented for action at this meeting. If other matters come before the
meeting, the persons named in the enclosed proxy form will vote all proxies in
accordance with their best judgment unless the shareholder has indicated on
the proxy card that the shares represented thereby are not to be voted on such
other matters. No action will be required of shareholders regarding reports of
officers.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY AND THAT YOUR SHARES BE
REPRESENTED. SHAREHOLDERS ARE URGED TO FILL IN, SIGN AND PROMPTLY RETURN THE
ACCOMPANYING FORM OF PROXY IN THE ENCLOSED ENVELOPE.
March 13, 2001
Seattle, Washington
24
Annex A
Airborne, Inc.
Audit Committee Charter
I. Purpose
The Audit Committee (or "Committee") is appointed by the Board of Directors
to assist the Board in fulfilling its oversight responsibilities. The
Committee's primary duties and responsibilities are to monitor (1) the
integrity of the Company's financial reporting process and systems of internal
controls and (2) the independence and performance of the Company's independent
auditors.
The Committee has the authority to retain special legal, accounting, or
other consultants or experts it deems necessary in fulfilling the performance
of its responsibilities.
II. Composition and Meetings
The Audit Committee shall be comprised of at least three directors who meet
the independence and experience requirements of the New York Stock Exchange.
Each Audit Committee member shall be an independent nonexecutive director,
free from any relationship that would interfere with the exercise of his or
her independent judgment. All members of the Committee shall have a basic
understanding of finance and accounting and be able to read and understand
fundamental financial statements, and at least one member of the Committee
shall have accounting or related financial management expertise.
Members of the Audit Committee shall be appointed by the Board. The Audit
Committee shall meet at least two times annually, or more frequently as
circumstances dictate.
III. Responsibilities and Duties
Review Procedures
1. Review and reassess the adequacy of this Charter at least annually and
recommend any proposed changes to the Board for approval.
2. Review the Company's annual audited financial statements prior to
filing or distribution. Review should include discussion with
management and independent auditors of significant issues regarding
accounting principles, practices and judgments.
3. In consultation with management and the independent auditors, consider
the integrity of the Company's financial reporting processes and
controls. Discuss significant financial risk exposures and the steps
management has taken to monitor, control, and report such exposures.
Review significant findings prepared by the independent auditors
together with management's responses.
4. Review with financial management and the independent auditors the
Company's quarterly financial results prior to the filing of the
Quarterly Report on Form 10-Q. The Chair of the Committee may represent
the entire Audit Committee for purposes of this review.
25
Independent Auditors
5. The independent auditors are ultimately accountable to the Audit
Committee of the Board of Directors. The Committee shall review the
independence and performance of the independent auditors and annually
recommend to the Board of Directors the appointment of the independent
auditors or approve any discharge of the auditors when the
circumstances warrant.
6. Approve the fees paid to the independent auditors.
7. On an annual basis, receive and review with the independent auditors a
written statement describing all significant relationships they have
with the Company that could impair the auditors' independence.
8. Discuss with the independent auditors the matters required to be
discussed by AICPA Statement on Auditing Standards No. 61 relating to
the conduct of the annual audit. Matters include discussion of
significant accounting policies, management judgments and accounting
estimates, significant audit adjustments, disagreements with
management and difficulties encountered in performing the audit.
Other Audit Committee Duties
9. Annually prepare a report to shareholders as required by the
Securities and Exchange Commission. This report should be included in
the Company's annual proxy statement.
10. Perform any other activities consistent with this Charter, the
Company's bylaws and governing law, as the Committee or the Board
deems necessary.
26
AIRBORNE, INC.
3101 Western Avenue, P.O. Box 662, Seattle, WA 98111
P R O X Y
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints James H. Carey, Andrew B. Kim and Robert
S. Cline as Proxies, each with the power to appoint a substitute, and hereby
authorizes them to represent and to vote, in such manner as in their discretion
shall be deemed appropriate to carry out the authority as designated below, all
the shares of Common Stock of Airborne, Inc. (the "Company") held of record by
the undersigned on February 20, 2001, at the annual meeting of shareholders to
be held April 24, 2001, or any adjournments thereof.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. Except as otherwise directed, this proxy
will be voted FOR the election of the nominees named on the reverse side; FOR
approval of Deloitte & Touche LLP as independent auditors; AGAINST the
shareholder proposal to declassify the Board for the purpose of director
elections; AGAINST the shareholder proposal for confidential shareholder voting;
and AGAINST the shareholder proposal for a shareholder vote on poison pills.
Continued, and to be signed and dated on reverse side.
AIRBORNE, INC.
P.O. BOX 11249
NEW YORK, N.Y. 10203-0249
Please Detach Proxy Card Here
1. ELECTION OF DIRECTORS - FOR all nominees [_]
Class A (Term to expire 2004) listed below.
WITHHOLD AUTHORITY to vote [_] EXCEPTIONS [_]
for all nominees listed below.
Nominees: Carl D. Donaway, Harold M. Messmer, Jr., Mary Agnes Wilderotter,
Rosalie J. Wolf
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and strike out the nominee's name above. If you desire to
cumulate your votes for any individual nominee(s), write your instruction, as to
number of votes cast for each, on the space provided below. The total must not
exceed four times the number of shares you hold).
- --------------------------------------------------------------------------------
2. To approve the selection of Deloitte & Touche LLP as independent auditors.
FOR [_] AGAINST [_] ABSTAIN [_]
3. To approve the shareholder proposal to declassify the Board of Directors for
the purpose of director elections. Director recommendation: AGAINST
FOR [_] AGAINST [_] ABSTAIN [_]
4. To approve the shareholder proposal for confidential shareholder voting.
Director recommendation: Against
FOR [_] AGAINST [_] ABSTAIN [_]
5. To approve the shareholder proposal for a shareholder vote on poison pills.
Director recommendation: Against
FOR [_] AGAINST [_] ABSTAIN [_]
6. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting, or any adjournments
thereof.
Change of Address and/
or Comments Mark Here [_]
Please sign as the name appears hereon. When shares are held by joint tenants,
both should sign. When signing as an attorney, executor, administrator, trustee,
or guardian, please give full title as such. If a corporation, please sign in
full corporate name by president or other authorized officer. If partnership,
please sign in partnership name by authorized person.
Dated: ________________________, 2001
_____________________________________
Signature
_____________________________________
Signature if held jointly
Votes must be indicated
(x) in Black or Blue ink. [X]
Please Mark, Sign, Date and Return the Proxy Card Promptly Using the Enclosed
Envelope.
Please Detach Here
You Must Detach This Portion of the Proxy Card
Before Returning it in the Enclosed Envelope