Exhibit 10.1

ATLAS AIR WORLDWIDE HOLDINGS, INC.

2017 LONG TERM CASH INCENTIVE PROGRAM

 

 

 

 

 

--------------------------------------------------------------------------------

 

ATLAS AIR WORLDWIDE HOLDINGS, INC.

2017 LONG TERM CASH INCENTIVE PROGRAM

Section 1.Purpose.

The purpose of the Program is to set forth certain terms and conditions
governing cash awards made under Atlas Air Worldwide Holdings, Inc.’s (“AAWW”)
2016 Incentive Plan (the “Plan”).  The Program shall be treated for all purposes
as a sub-plan or arrangement for the grant of Cash Awards under the Plan and
shall be subject to the Plan, which is incorporated herein by reference. Awards
under the Program are intended to qualify for the performance-based compensation
exception to the limitations on tax deductibility imposed by Section 162(m) of
the Code and, together with the applicable terms of the Plan and Program, shall
be construed accordingly.  The Program shall be effective as of January 1, 2017,
and shall be applicable for the 2017-2019 Performance Period.  Capitalized terms
not defined herein shall have the meanings given in the Plan.

Section 2.Definitions.

2.1.Award shall mean an opportunity to earn benefits under the Program.

2.2.Board shall mean the Board of Directors of AAWW.

2.3.Beneficiary shall mean a Participant’s beneficiary designated pursuant to
Section 8.

2.4.Code shall mean the Internal Revenue Code of 1986, as amended from time to
time.

2.5.Committee shall mean the Compensation Committee of the Board.

2.6.Company shall mean AAWW or its subsidiaries.

2.7.Eligible Participant shall mean any of the Chief Executive Officer,
President, Executive Vice Presidents, Senior Vice Presidents, Vice Presidents
and Staff Vice Presidents of the Company, and such other Company officers as may
from time to time be designated by the Committee.

2.8.Participant shall mean any Eligible Participant during such Eligible
Participant’s period of participation in the Program.

2.9.Performance Period shall mean January 1, 2017 through December 31, 2019.

2.10.Program shall mean this Atlas Air Worldwide Holdings, Inc. 2017 Long Term
Cash Incentive Program, as it may be amended from time to time.

1

--------------------------------------------------------------------------------

Section 3.Administration.

The Program shall be administered by the Committee in accordance with and
subject to the provisions of Section 3 of the Plan.

Section 4.Participation.

Each individual who is employed as an Eligible Participant on the first day of
the Performance Period shall participate in the Program.  An individual who
first becomes employed as an Eligible Participant on or prior to September 30,
2017 (March 31, 2017 in the case of an individual whose Award is intended to
qualify for the performance-based compensation exception to the limitations on
tax deductibility imposed by Section 162(m) of the Code), may participate in the
Program in the discretion of the Committee (or, in the case of officers below
the level of Senior Vice President, its delegate).  An individual employed by
the Company, including an Eligible Participant, may be awarded incentive
compensation outside the Program in lieu of or in addition to Awards, if any,
under the Program.

Section 5.Determination of Awards.

5.1.Target Bonus Award.  The target cash bonus payable under an Award for the
Performance Period will be the amount established by the Committee (or, in the
case of officers below the level of Senior Vice President, its delegate) for
each Participant classification (the “Target Bonus Amount”).

5.2.Performance Measures.  Payment of an Award is conditioned upon written
certification by the Committee of satisfaction of the achievement of certain
internal ROIC and EBITDA Growth levels as described below (the “Performance
Criteria”) during the period beginning January 1, 2017 and ending December 31,
2019.  The actual amount payable pursuant to an Award (the “Payable Amount”)
shall be determined in accordance with Annex A hereto (the “Performance Plan
Schedule”).  In no event shall the Payable Amount exceed, for any Participant,
the maximum amount specified in Section 4(c) of the Plan.

(1)“ROIC” for the Company shall be an average of the Company’s actual ROIC for
2017, 2018 and 2019 and shall mean a fraction where the numerator is NOPAT and
the denominator is Average Invested Capital, as determined by the
Committee.  “NOPAT” is defined as adjusted operating income, as included in the
Company’s press release, minus Cash Tax Paid.  “Cash Tax Paid” is defined as
income taxes as reflected on the income statement minus deferred taxes as
reflected on the cash flow statement.  “Average Invested Capital” is defined as
the average of the beginning and ending Invested Capital during the
year.  “Invested Capital” is defined as capital lease obligations, plus
short-and long-term debt, plus total stockholders equity, minus an amount equal
to cash, cash equivalents, restricted cash, and short-term
investments.  Invested Capital shall exclude investment amounts associated with
aircraft acquisition until the first time that such aircraft is flown under a
customer contract, at which time all amounts accrued with respect to such
aircraft shall be considered in the Average Invested Capital calculation from
such date.  Invested Capital shall be reduced by the amount of any investments
held in the Company’s direct or indirect debt securities that remain outstanding
and that have not otherwise been defeased.

2

--------------------------------------------------------------------------------

(2)“EBITDA” for the Company shall mean adjusted income from continuing
operations, before interest, income taxes, depreciation expense and amortization
expense as included in the Company’s press release.  “EBITDA Growth” shall be
calculated by averaging the percentage increase or decrease in EBITDA for each
of the three years ended December 31 in the Performance Period.  EBITDA increase
or decrease for each twelve month period shall be calculated by subtracting
EBITDA for the twelve months ended December 31 for the prior year from EBITDA
for the twelve months ended December 31 for the current year and dividing the
resulting difference in EBITDA by the EBITDA for the twelve months ended
December 31 for the prior year.

(3)In the calculation of EBITDA Growth and ROIC, amounts objectively
demonstrated to be attributable to the following items will not be taken into
account: (i) any benefit or detriment resulting from changes in the Company’s
financial reporting (including but not limited to changes in accounting
principles) or from statutory changes in federal, state or foreign income tax
rates; (ii) any aggregate costs in excess of $500,000 for business initiatives
not specified in the Company’s operating plans; (iii) any costs related to
retention, recruitment, or termination of executive officers; (iv) any costs
related to collective bargaining, other labor negotiations, grievances or other
disputes including labor unions in excess of the Company’s operating plans; and
(v) any costs or the payment of any fines, penalties, deposits or settlement
amounts in connection with (A) foreign or domestic antitrust investigations and
related lawsuits, (B) Brazilian customs or labor claims or investigations, or
(C) environmental, regulatory or compliance matters (including any related
compliance or other costs or actions) resulting from changes in applicable law
or otherwise.  The ROIC ratio will exclude the unconsolidated results of Polar
Air Cargo Worldwide, Inc.

Section 6.Payment of Awards under this Program.

6.1.General.  A Participant will be entitled to receive payment, if any, under
an Award if the Participant’s Employment continues through December 31, 2019,
subject to this Section 6 and Section 7.  A Participant will receive an Award in
the manner and at the times set forth in Sections 6.2, 6.3, 6.4 and Section 7.

6.2.Time of Payment.  In connection with the completion of performance, the
Committee shall certify, in accordance with Section 162(m) of the Code, whether
and at what level the Performance Criteria have been achieved.  For the purposes
of this Program, the term “Determination Date” means the date in 2020 on which
the Committee makes such certification. Any Payable Amount for an Award for the
Performance Period shall be paid by the Company within two weeks following the
Determination Date, but in no event later than March 15, 2020.

6.3.Form of Payment.  All Payable Amounts for an Award shall be paid in cash.

6.4.Termination of Employment.

(a)General.  Except as provided otherwise in this Section 6.4 or Section 7, a
Participant whose Employment terminates for any reason prior to the last day of
the Performance Period shall forfeit such Award.

3

--------------------------------------------------------------------------------

(b)Termination by Reason of Death or Disability; Termination by the Company Not
For Cause.  In the event of the termination of the Participant’s Employment (i)
due to death, (ii) by the Company by reason of the Participant’s Disability, or
(iii) by reason of an involuntary termination by the Company not for Cause, in
each case occurring after January 1, 2017, but before the end of the Performance
Period and before the occurrence of a Change in Control of the Company, the
portion of the Award that will be payable is calculated by dividing the number
of days from January 1, 2017 until the date of such termination of Employment,
by the total number of days in the Performance Period, and multiplying that
fraction by the Payable Amount.  Subject to Section 7, the reduced (prorated)
Payable Amount, if any (calculated as provided in Section 5.2) shall not be
payable until after the Determination Date in accordance with Section 6.2 above.

(c)Definitions.  For purposes of this Program:

(1) A termination of Employment shall be deemed to be by reason of “Disability”
if immediately prior to such termination of Employment, the Participant shall
have been continuously disabled from performing the duties assigned to the
Participant for a period of not less than six consecutive calendar months, in
which case such Disability shall be deemed to have commenced on the date
following the end of such six consecutive calendar month period; and

(2) “Cause” shall mean (i) the Participant’s refusal or failure (other than
during periods of illness or disability) to perform the Participant’s material
duties and responsibilities to the Company, (ii) the conviction or plea of
guilty or nolo contendere of the Participant in respect of any felony, other
than a motor vehicle offense, (iii) the commission of any act which causes
material injury to the reputation, business or business relationships of the
Company including, without limitation, any breach of written policies of the
Company with respect to trading in securities, (iv) any other act of fraud,
including, without limitation, misappropriation, theft or embezzlement, or (v) a
violation of any applicable material policy of the Company, including, without
limitation, a violation of the laws against workplace discrimination.

(d)Retirement of the Chief Executive Officer.  In the event of a termination of
Employment of the Chief Executive Officer of the Company (the “Chief Executive
Officer”) by reason of the Chief Executive Officer’s Retirement before the end
of the Performance Period and before the occurrence of a Change in Control of
the Company, the Payable Amount shall be payable as if the Chief Executive
Officer’s Employment had continued during the entire Performance
Period.  Subject to Section 7, the Payable Amount, if any (calculated as
provided in Section 5.2) shall not be delivered until after the Determination
Date.  For purposes of this Program, “Retirement” shall mean a termination of
the Chief Executive Officer’s Employment with the Company for any reason other
than Cause on or after the Chief Executive Officer’s attainment of age sixty
(60) and ten (10) years of service with the Company; provided, however, that a
voluntary

4

--------------------------------------------------------------------------------

resignation from Employment shall not be considered Retirement for purposes of
the Program unless the Chief Executive Officer shall have given not less than
six (6) months’ advance written notice of such resignation to the Chair of the
Board (or such lesser period of notice as may be determined by the Board).

(e)Other Terminations of Employment.  Except as provided in this Section 6.4 or
in Section 7, any termination of Employment of the Participant occurring prior
to the end of the Performance Period (including a termination of Employment
initiated by the Participant) shall result in the immediate and automatic
termination and forfeiture of the Award.

Section 7.Change in Control.

7.1.Vesting; Determination of Payable Amount.  Immediately prior to a Change in
Control of the Company (as defined below) unless in connection therewith an
Award is assumed (or a substitute award granted) pursuant to Section 7(a)(1) of
the Plan, the Performance Criteria in the Performance Plan Schedule applicable
to an Award, if an Award is then outstanding, shall be deemed to have been
satisfied based on assumed achievement at the 200% achievement level (“Deemed
CIC Achievement”) and the Company shall pay to the Participant in full
satisfaction of its obligations with respect thereto cash in an amount equal to
the Payable Amount on the basis of such Deemed CIC Achievement within ten (10)
days following the Change in Control of the Company.  Notwithstanding the
immediately preceding sentence but, solely in the case of the Chief Executive
Officer, subject to the fourth sentence of this Section 7.1, if in connection
with the Change in Control of the Company, an Award is assumed (or a substitute
award granted) pursuant to Section 7(a)(1) of the Plan, then such Award shall
become payable only if (A) the Participant’s Employment continues until the end
of the Performance Period, in which case this Award will become fully payable at
the end of the Performance Period, or (B) there is a Change in Control
Termination before the end of the Performance Period, in which case this Award
will become fully payable in connection with the Change in Control
Termination.  In the case of either (A) or (B), the Company shall pay to the
Participant, within ten (10) days following the period specified in (A) or the
time specified in (B), as applicable, the Payable Amount on the basis of the
Deemed CIC Achievement.  Solely in the case of the Chief Executive Officer, in
the event of a Change in Control of the Company, notwithstanding anything in
this Section 7.1 to the contrary, his Award shall become fully payable on, and
the Company shall pay the Payable Amount, on the basis of the Deemed CIC
Achievement, to the Chief Executive Officer within ten (10) days following, the
later of the date on which the Chief Executive Officer becomes eligible for
Retirement and a Change in Control of the Company.  The foregoing is intended to
qualify such payment as a “short-term deferral” within the meaning of Section
1.409A-1(b)(4) of the Treasury regulations.  For the avoidance of doubt, if
there is a Change in Control Termination before the end of the Performance
Period and before the date on which the Chief Executive Officer becomes eligible
for Retirement, then his Award will become fully payable in connection with the
Change in Control Termination and the Company shall pay the Payable Amount, on
the basis of the Deemed CIC Achievement, to the Chief Executive Officer within
ten (10) days following such Change in Control Termination.

5

--------------------------------------------------------------------------------

7.2.Definitions.  For purposes of this Program, the following definitions shall
apply:

(a)“Change in Control Termination” means the termination of a Participant’s
Employment following a Change in Control of the Company (i) by the Company and
its subsidiaries not for Cause, (ii) by the Participant for Good Reason, or
(iii) by reason of the Participant’s death or Disability.

(b)“Change in Control of the Company” means a “change in control event” (as that
term is defined at Section 1.409A-3(i)(5) of the Treasury Regulations) with
respect to the Company, which generally will include the following events,
subject to such additional rules and requirements as may be set forth in the
Treasury Regulations and related guidance:

(1) a transfer or issuance of stock of the Company, where stock in the Company
remains outstanding after the transaction, and one person, or more than one
person acting as a group (as determined under the Treasury Regulations),
acquires ownership of stock in the Company that, together with stock held by
such person or group, constitutes more than 50% of the total fair market value
or total voting power of the stock of the Company (however, if a person or group
is considered to own more than 50% of the total fair market value or 30% of the
total voting power of the stock of the Company, the acquisition of additional
stock by the same person or group will not be considered a change in control for
purposes of this Section 7);

(2) the acquisition by a person or group, during the 12-month period ending on
the date of the most recent acquisition by such person or group, of ownership of
stock possessing 30% or more of the total voting power of the Company (however,
if a person or group is considered to control the Company within the meaning of
this sentence (i.e., owns stock of the Company possessing 30% or more of the
total voting power of the Company), then the acquisition of additional control
will not be considered a change in control for purposes of this Section 7);

(3) the replacement of a majority of members of the Company’s Board of Directors
during any 12-month period by directors whose appointment or election is not
endorsed by a majority of the members of the Company’s Board of Directors before
the appointment or election; or

(4) the acquisition by a person or group, during the 12-month period ending on
the date of the most recent acquisition by such person or group, of assets from
the Company that have a total gross fair market value equal to or more than 40%
of the total gross fair market value of all the assets of the Company, as
determined under the Treasury Regulations (however, a transfer of assets to
certain related persons, as provided under the Treasury Regulations, or to an
entity that is controlled by the shareholders of the Company immediately after
the transfer, will not be considered a change in control for purposes of this
Section 7).

6

--------------------------------------------------------------------------------

(c)“Good Reason” means (i) a material reduction in a Participant’s duties and
responsibilities from those of the Participant’s most recent position with the
Company, (ii) a reduction of a Participant’s aggregate salary, benefits and
other compensation (including incentive opportunity) from that which the
Participant was most recently entitled during Employment with the Company other
than in connection with a reduction as part of a general reduction applicable to
all similarly-situated Participants of the Company, or (iii) a relocation of a
Participant to a position that is located greater than 40 miles from the
location of such Participant’s most recent principal location of Employment;
provided, however, that a Participant will be treated as having resigned for
Good Reason only if he or she provides the Company with a notice of termination
within 90 days of the initial existence of one of the conditions described
above, following which the Company shall have 30 days from the receipt of the
notice of termination to cure the event specified in the notice of termination
and, if the Company fails to so cure the event, the Participant must terminate
his or her Employment not later than 30 days following the end of such cure
period.

Section 8.Beneficiary Designation.

8.1.Designation and Change of Designation.  Each Participant shall file with the
Company a written designation of one or more persons as the Beneficiary who
shall be entitled to receive the Award, if any, payable under the Program upon
the Participant’s death.  A Participant may, from time to time, revoke or change
his Beneficiary designation without the consent of any prior Beneficiary by
filing a new designation with the Company.  The last such designation received
by the Company shall be controlling; provided, however, that no designation, or
change or revocation thereof, shall be effective unless received by the Company
prior to the Participant’s death, and in no event shall it be effective as of
any date prior to such receipt.

8.2.Absence of Valid Designation.  If no such Beneficiary designation is in
effect at the time of a Participant’s death, or if no designated Beneficiary
survives the Participant, or if such designation conflicts with law, the
Participant’s estate shall be deemed to have been designated as the
Participant’s Beneficiary and shall receive the payment of the amount, if any,
payable under the Program upon the Participant’s death.  If the Company is in
doubt as to the right of any person to receive such amount, the Company may
retain such amount, without liability for any interest thereon, until the rights
thereto are determined, or the Company may pay such amount into any court of
appropriate jurisdiction and such payment shall be a complete discharge of the
liability of the Program and the Company therefor.

Section 9.General Provisions.

9.1.Program to be Unfunded.  The Program is intended to constitute an unfunded
incentive compensation arrangement.  Nothing contained in the Program, and no
action taken pursuant to the Program, shall create or be construed to create a
trust of any kind.  A Participant’s right to receive an Award shall be no
greater than the right of an unsecured general creditor of the Company.  All
Awards shall be paid from the general funds of the Company, and no special or
separate fund shall be established and no segregation of assets shall be made to
assure payment of such Awards.  There shall not vest in any Participant or
Beneficiary any right, title, or interest in and to any specific assets of the
Company.

7

--------------------------------------------------------------------------------

9.2.Section 409A of the Code.  Awards under the Program are intended to be
exempt from, or comply with, the requirements of Section 409A of the Code and
shall be construed and administered accordingly.  Notwithstanding anything to
the contrary in this Program, if at the time of the Participant’s termination of
employment, the Participant is a “specified employee,” as defined below, any and
all amounts payable under this Program on account of such separation from
service that constitute deferred compensation and would (but for this provision)
be payable within six (6) months following the date of termination, shall
instead be paid on the next business day following the expiration of such six
(6) month period or, if earlier, upon the Participant’s death; except (A) to the
extent of amounts that do not constitute a deferral of compensation within the
meaning of Section 1.409A-1(b) of the Treasury Regulations, as determined by the
Company in its reasonable good faith discretion or (B) other amounts or benefits
that are not subject to the requirements of Section 409A.  For purposes of this
Program, all references to “termination of employment” and correlative phrases
shall be construed to require a “separation from service” (as defined in Section
1.409A-1(h) of the Treasury Regulations after giving effect to the presumptions
contained therein), and the term “specified employee” means an individual
determined by the Company to be a specified employee under Section 1.409A-1(i)
of the Treasury Regulations.  Notwithstanding anything to the contrary in the
Program, neither the Company, nor any affiliate, nor the Committee, nor any
person acting on behalf of the Company, any affiliate, or the Committee, shall
be liable to any Participant or to the estate or beneficiary of any Participant
or to any other holder of an Award by reason of any acceleration of income, or
any additional tax, asserted by reason of the failure of an Award to be exempt
from the requirements of Section 409A or by reason of Section 4999 of the Code;
provided, that nothing in this Section 9.2 shall limit the ability of the
Committee or the Company to provide by separate express written agreement with a
Participant for a gross-up payment or other payment in connection with any such
tax or additional tax.

9.3.Rights Limited.  Nothing contained in the Program shall give any Eligible
Participant the right to continue in the employment of the Company, or limit the
right of the Company to discharge an Eligible Participant.

9.4.Governing Law.  The Program shall be construed and governed in accordance
with the laws of the State of New York.

9.5.Taxes.  There shall be deducted from all amounts paid under the Program all
federal, state, local and other taxes required by law to be withheld with
respect to such payments.

Section 10.Amendment, Suspension, or Termination.

The Committee reserves the right to amend, suspend, or terminate the Program at
any time.

8