Document:

aaww-ex104_435.htm

Exhibit 10.4

EXECUTION DRAFT

ATLAS AIR WORLDWIDE HOLDINGS, INC.
BENEFITS PROGRAM FOR SENIOR EXECUTIVES

Amended and Restated as of July 1, 2019

 

 

 

 

 

 

This document describes the Atlas Air Worldwide Holdings, Inc. (“Holdings”) Benefits Program for Senior Executives (the “Benefits Program”), under which individuals employed and elected as Executive Vice Presidents (or more senior offices) of Holdings and certain of its operating subsidiaries, including Atlas Air, Inc. (“Atlas”), Polar Air Cargo Worldwide, Inc. (“Polar”) and Titan Aviation Leasing, Ltd. (“Titan”) (such individuals are hereinafter referred to as “Executives”) are eligible to participate.  This Benefits Program is effective as of July 1, 2019, and amends and restates the Atlas Air Worldwide Holdings, Inc. Benefits Program for Senior Executives dated January 1, 2015, as amended and restated as of January 1, 2018. For purposes of the Benefits Program, “Company” shall be defined as Holdings together with Atlas, and subject to confirmation of the Compensation Committee of the Board of Directors of Holdings, Polar, Titan, or any other operating subsidiary of Holdings. 

Individuals employed and elected as Executive Vice Presidents (or more senior offices) of Holdings or Atlas are eligible to participate in the Benefits Program. Individuals employed and elected as Executive Vice Presidents (or more senior offices) of Polar, Titan, or any other operating subsidiary of Holdings may participate in the Benefits Program only if expressly approved for such participation by the Compensation Committee of the Board of Directors of Holdings. 

All references in this document to the Compensation Committee or the Board of Directors refer to those bodies of Holdings. All references to the “Employer” are to the Company entity employing the Executive.

.I.   Annual Salary.

Each Executive will receive a base annual salary (“Base Annual Salary”) reviewed at least every other year for possible increases by the Compensation Committee. Included among other considerations in the annual review will be the Executive’s individual job performance. Increases, if any, shall be at the discretion of the Compensation Committee.

II.   Annual Bonus Plan.

Each Executive shall be eligible to participate in Holdings’ Annual Incentive Plan for Senior Executives or successor plan (the “Annual Incentive Plan”) at the Executive Vice President or higher level, as applicable. The Executive’s applicable annual bonus participation level will be set forth in the Annual Incentive Plan and will be awarded in consideration of individual and company performance based on performance goals and objectives determined by the Compensation Committee. A complete description of the effect of company and individual performance attainment on bonuses payable is described in the Annual Incentive Plan and any exhibits incorporated thereto (the “AIP Plan Document”). The AIP Plan Document is developed by the Compensation Committee and is subject to amendment from time to time with changes as adopted by the Compensation Committee or Board of Directors of Holdings, as applicable. Subject to the full language of the AIP Plan Document, attainment of company and individual performance in combination generally permits the Executive to earn a target bonus equal to at least 85% of Base Annual Salary for Executive Vice Presidents, 90% for Executive Vice Presidents of Holdings who also hold the title of President of Atlas or Chief Executive Officer of Titan and 100% for the 

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Chief Executive Officer of Holdings and Atlas as may be adjusted upward by the Compensation Committee. Company or individual performance attainment at levels below the applicable goals set forth in the AIP Plan Document may cause bonus payments to be in lesser percentage amounts, as applicable, of Base Annual Salary or result in no bonus being payable. Company and individual performance attainment at levels above the applicable goals may result in the bonus being greater percentage amounts as applicable, of Base Annual Salary. When the bonus payment reaches more than 85%, 90%, or 100%, as applicable, of Base Annual Salary, the Employer reserves the right to pay some or all of the portion of the bonus that is above 50% of Base Annual Salary in Holdings unrestricted common stock payable under the Atlas Air Worldwide Holdings, Inc. 2018 Incentive Plan, as may be amended or superseded, or any successor plan, subject to the terms and conditions of such plan and any applicable award agreement issued in connection with such award of unrestricted Holdings stock. Any bonus paid to Executive under the Annual Incentive Plan will be paid no later than two weeks following the completion of the year-end audit for the applicable performance year, but in no event later than March 15 of the year following the applicable performance year unless otherwise provided in the Annual Incentive Plan.

III.Health Benefits.

Each Executive and each such Executive’s eligible dependents shall be entitled to participate in the medical, dental and vision care plans (the “Health Insurance Plans”) offered by the Employer, provided that the Executive and the Employer will each contribute to the Executive’s monthly premium as provided by such Health Insurance Plan, except following an Executive’s termination such Executive’s monthly premium charged under such plan shall be paid in the manner described in Section IV or Section V below, as applicable, subject to the terms and conditions of the applicable Health Insurance Plan. The Employer reserves the right to modify or discontinue any Health Insurance Plan at any time with the understanding that the Employer will comply in full measure with all applicable state and federal laws relating to employer-provided health care coverage, including without limitation the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) and the Patient Protection and Affordable Care Act of 2010, each as may be amended or superseded.

If an Executive enrolls in Medicare while actively employed and covered by the Health Insurance Plans, then the Health Insurance Plans will be primary and Medicare will be considered the secondary payer.

IV.Severance.

A. If an Executive’s employment is terminated (i) by the Employer for reasons other than Cause (as defined below), (ii) due to Executive’s Permanent Disability (as defined below), or (iii) by the Executive for Good Reason (as defined below), and subject, in each case, to the Executive’s execution of a release upon terms and conditions reasonably acceptable to the Employer and Executive (such acceptance not to be unreasonably withheld), which release must be presented to Executive, executed, no longer be subject to revocation, and become effective no later than the sixtieth (60th) day following the date of termination, then the Executive shall be entitled to: 

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(i) receive a severance payment equal to twenty-four (24) months of the Executive’s monthly Base Annual Salary, at the rate in effect on the date of termination, and except as otherwise required by Section XII below, all severance pay to which the Executive is entitled shall be in the form of salary continuation, payable in accordance with the normal payroll practices of the Employer for its executives (each such payment to be treated as a separate payment under Section 409A of the Internal Revenue Code), with the first payment, which shall be retroactive to the day immediately following the date the Executive’s employment terminated, being due and payable on the later of the sixty-first (61st) day following the date of termination or the date specified in Section XII below (if applicable) (the “Lump-Sum Payment Date”);

(ii)provided Executive timely elects COBRA coverage for himself or herself and any eligible dependents and submits the applicable COBRA premium payments on a timely basis, reimbursement on an after-tax basis of the employer portion of COBRA premiums for a period of twelve (12) months from the date of termination; provided, however, that any such reimbursement shall cease in the event the Executive obtains comparable coverage in connection with subsequent employment or otherwise or becomes eligible for Medicare coverage; and

(iii) receive a payment with respect to an annual bonus award under the Annual Incentive Plan for the year in which such termination occurred, as may be provided under the AIP Plan Document and such payment shall be subject to all other terms and conditions of the AIP Plan Document under which the award was granted, including without limitation any provisions related to whether all required performance measures for the payment of an award have been satisfied and the provisions of the Annual Incentive Plan regarding the timing of payment of such award. 

The above benefits are in addition to an Executive’s right to receive accrued but unused vacation pay through the date the employment period terminates, and all other benefits in which the Executive is vested pursuant to other plans and programs of the Company at the time of the Executive’s date of termination.

Upon the death of an Executive while severance payments are due to the Executive, the Executive’s personal representative shall be entitled to the unpaid severance payments described in this Section IV.A and the Executive’s spouse and eligible dependents, if any, shall be entitled to the health coverage described under this Section IV.A, except that the remaining severance payments under this Section IV.A shall be made in a lump sum within (10) days immediately following the Company’s receipt of notice of Executive’s death.  

In the event that any of the above benefits as described could reasonably result in adverse tax or legal consequences to the Company, the Company will provide in good faith a reasonable equivalent to the affected benefit(s).

B.If an Executive’s employment is terminated by the Employer for Cause or if the Executive resigns for other than Good Reason, the Executive shall be entitled to receive only the Executive’s accrued but unpaid Base Annual Salary and accrued but unused vacation as of the date of termination.

C.“Good Reason” as used herein shall mean (i) a material reduction in the 

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Executive’s Base Annual Salary, percentage target bonus opportunity under the Annual Incentive Plan, or target long-term incentive award opportunity, in each case as then in effect, or other material benefits provided to officers of the Company, except where such reduction is part of a general reduction in salary or benefits by the Company, (ii) a material reduction in the Executive’s title or job responsibilities, or (iii) following a Change in Control of Holdings, an attempted relocation of the Executive to a position that is located greater than forty (40) miles from the location of such Executive’s most recent principal location of employment with the Company; provided, however, that the Executive will be treated as having resigned due to Good Reason only if he or she provides the Company with a notice of termination within ninety (90) days of the initial existence of one of the conditions described above, following which the Company shall have thirty (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 Executive must terminate his or her employment not later than thirty (30) days following the end of such cure period.

D.“Cause” as used herein shall mean (i) the Executive’s refusal or failure (other than during periods of illness or disability) to perform the Executive’s material duties and responsibilities to the Employer or Company, as applicable, (ii) the conviction or plea of guilty or nolo contendere of the Executive 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 or any of its subsidiaries 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 or any of its subsidiaries, including, without limitation, a violation of the laws against workplace discrimination.

E.“Permanent Disability” as used herein shall mean, in the Company’s sole determination, an Executive having been continuously disabled from performing the duties assigned to the Executive for a period of six (6) consecutive calendar months. Notwithstanding the foregoing, in the event that, as a result of an absence because of a medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six (6) months, the Executive incurs an earlier “separation from service” within the meaning of Section 409A of the Internal Revenue Code, as may be amended (“Section 409A”), the Executive shall on such date automatically be terminated from employment as a result of Permanent Disability. 

 

V.Continued Health Coverage. 

 

A.Notwithstanding Section IV.A(ii) above, if an Executive has attained age fifty-five (55) and completed ten (10) years of service with an Employer and such Executive’s employment is terminated (i) by the Employer for reasons other than Cause, (ii) due to Executive’s Permanent Disability, (iii) by the Executive for Good Reason, or (iv) by reason of Executive’s Retirement (as defined below), the Executive and his or her eligible dependents, if any, will continue to be eligible to participate in the Health Insurance Plans until such Executive is Medicare eligible, subject to the terms and conditions of such Health Insurance Plans and this Section V (the “Continued Health Insurance Coverage”).

 

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B.The Continued Health Insurance Coverage is available to the Executive so long as health coverage is not otherwise available to the Executive through another future employer or other company receiving services from the Executive.

 

C.The Continued Health Insurance Coverage will be available to the Executive’s dependents if, and only if, they meet the definition of an “eligible dependent” as that term, or other similar term, is defined under the applicable Health Insurance Plans.

 

D.The Executive (and his or her eligible dependents, if any) will be eligible to participate in the Health Insurance Plans on an after-tax “COBRA” basis, until the Executive becomes eligible for Medicare.

 

E.Except as otherwise provided in Section IV.A(ii) above or in an Executive’s individual employment agreement, the Company reserves the right to amend or terminate the Health Insurance Plans or the Continued Health Insurance Coverage described in this Section V, in any way and at any time, to the maximum extent permitted by law. No Executive or retiree (or any of his or her dependents) will have any vested rights to medical, dental, or vision coverage or benefits, except as may be required under applicable laws.

 

F.For purposes of this Benefits Program, “Retirement” shall mean a termination of an Executive’s employment by the Executive on or after such Executive (i) attains age fifty-five (55) and has completed ten (10) years of service with an Employer, and (ii) has given not less than three (3) months’ advanced written notice of such proposed Retirement to the then current Chief Executive Officer of Holdings or, in the event of a proposed Retirement of the then current Chief Executive Officer of Holdings such notice must be given to the Chairman of the Board of Directors of Holdings; provided, however, that if such Executive is terminated by his or her Employer for Cause after providing such advanced written notice, such termination shall not be considered a Retirement, as defined herein. 

 

VI.Change in Control.

 

A.If, within the twelve-month period immediately following a Change in Control of Holdings (defined below), the Executive’s employment is terminated by the Employer for reasons other than Cause or if the Executive resigns for Good Reason, and subject to the Executive’s execution of a general release upon terms and conditions consistent with this Benefits Program and acceptable to the Employer and the Executive (such acceptance not to be unreasonably withheld), which release must be presented to Executive upon or promptly after termination of the Executive’s employment, fully executed, no longer subject to revocation, and become effective no later than the sixtieth (60th) day following the date on which the Executive’s employment terminates, then the Executive shall be entitled to the compensation and benefit coverage set forth in Section IV.A above, except that the severance payments in Section IV.A shall be in the form of a single lump-sum payment payable on the Lump-Sum Payment Date in an amount equal to thirty six (36) months of the Executive Vice President’s Base Annual Salary, as applicable.

B.If, within the six-month period immediately following a termination of the Executive’s employment by the Employer for reasons other than Cause or by the Executive for 

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Good Reason, a Change in Control of Holdings occurs, then, in addition to the payment set forth in Section IV.A above (which shall be paid in the manner specified in Section IV.A above), and subject to satisfaction by the Executive of the release requirements of Section IV.A above,  the Executive shall receive a lump-sum payment on the Lump-Sum Payment Date equal to twelve (12) months (in the case of an Executive Vice President) of the Executive’s Base Annual Salary, as applicable.

C.For purposes of this Benefits Program, “Change in Control of Holdings” shall mean the occurrence of any of the following:

(i)any “person” (as used herein, as defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the “Exchange Act”) and as used in Sections 13(d) and 14(d) thereof) or “group” (as used herein, as defined in Section 13(d) of the Exchange Act), acquires ownership or beneficial ownership of Holdings securities that, together with securities held by such person or group, constitutes more than 50% of the total fair market value of the issued and outstanding shares or the total voting power of Holdings; 

(ii)any “person” or “group,” during the 12-month period ending on the date of the most recent acquisition by such “person” or “group” acquires ownership of Holdings securities that constitute 30% or more of the total fair market value of the issued and outstanding shares or the total voting power of Holdings;

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

(iv)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 Holdings 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 Holdings; or

(v)the consummation of a complete liquidation or dissolution of Holdings.

 

For purposes of determining whether a Change in Control of Holdings has occurred (i) shares of Holdings received upon conversion of an option or warrant is considered to be an acquisition of shares of Holdings and (ii) in the event the persons who were beneficial owners of Holdings shares immediately prior to the consummation of a merger, share exchange, business combination or other similar corporate transaction continue to beneficially own, directly or indirectly, more than 50% of total fair market value of the issued and outstanding shares or the total voting power of Holdings (including a corporation or entity that, as a result of such transaction, owns Holdings or all or substantially all of Holdings’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such consummation of such transaction, such transaction shall not constitute a Change in Control of Holdings.  

 

Notwithstanding anything to the contrary herein, with respect to any amounts payable hereunder that constitute deferred compensation for purposes of Section 409A, such payment or settlement may accelerate upon a Change in Control of Holdings for purposes 

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of this Benefits Program only if such Change in Control of Holdings also constitutes a “change in control event” (as that term is defined at Section 1.409A-3(i)(5) of the Treasury Regulations)  (it being understood that vesting of amounts payable hereunder may accelerate upon a Change in Control of Holdings, even if payment of such amounts may not accelerate pursuant to this sentence).

 

D.To the extent that any capitalized term defined in this Section VI conflicts or is otherwise inconsistent with any defined term set forth in any employment agreement, incentive program or other compensation or incentive arrangement which an Executive may be a party to with Holdings, Atlas, Polar or Titan, the meaning of the capitalized term as defined in this Section VI will govern.

 

VII.   Vacation.

 

Each Executive shall be entitled to at least four weeks of paid vacation per year, prorated for partial years of employment.

 

VIII.401(k) Plan, Annual Executive Physical and Other Benefits.

 

Each Executive shall be eligible to participate in the Employer’s 401(k) plan and any other pension or welfare plan generally available from time to time to Executives or other employees of the Employer, the latter as determined by the Compensation Committee, as well as an annual executive physical as administered by the Benefits Department.

	
 
	
IX.
	
   Non-Competition

 

As a condition of employment and participation in this Benefits Program, each Executive shall execute a Non-Competition Agreement in a form approved by Holdings. The release referred to in Sections IV and V as a condition to the payments and benefits set forth respectively therein also shall contain non-competition and other Company deemed appropriate restrictive covenants.

 

X.Principal Residence

 

Each Executive shall be required to maintain his or her principal residence within reasonable commutable distance to the Purchase, New York area, except as may be otherwise expressly agreed in Section XI, below, based upon Employer’s specific business need.

 

XI. Variations from Benefits Program

 

Any variation from the provisions of this Benefits Program (whether by separate employment agreement otherwise) shall be effective only if such variation is contained in a writing provided to the affected Executive and signed by the Chief Executive Officer, President, General Counsel or Chief Human Resources Officer of Holdings; any variation in writing so signed shall be binding on the affected Executive, provided, however, that no such modification or amendment after the date on which the Executive’s employment has been terminated for reasons other than Cause, due to Permanent Disability, death or for Good Reason, after the occurrence of a Change in Control of Holdings or by reason of Retirement 

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shall adversely affect an Executive’s entitlement to severance benefits under Sections IV, V or VI above.  Amendments to or restatements of this Benefits Program shall apply prospectively from the date of effectiveness; such amendments or restatements shall be binding on each Executive, provided, however, that no such modification or amendment after the date on which the Executive’s employment has been terminated for reasons other than Cause, due to Permanent Disability, death or for Good Reason, after the occurrence of a Change in Control of Holdings or by reason of Retirement shall adversely affect an Executive’s entitlement to severance benefits under Sections IV, V or VI above.  Notwithstanding the foregoing, any amendments, restatements, or variations to this Benefits Program must be approved by the Compensation Committee.

 

 

XII.   Section 409A

 

It is intended that the provisions of this Benefits Program comply with or are exempt from Section 409A (“Section 409A”) of the Internal Revenue Code of 1986, as amended (the “Code”), and all provisions of this Benefit Program shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A.

 

Notwithstanding anything to the contrary in this Benefits Program, if at the time of an Executive’s termination of employment, the Executive is a “specified employee,” as defined below, any and all amounts payable under this Benefits 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 Executive’s death; except (A) to the extent of amounts that do not constitute a deferral of compensation within the meaning of Treasury regulation Section 1.409A-1(b) (including without limitation by reason of the safe harbor set forth in Section 1.409A-1(b)(9)(iii), as determined by Holdings in its reasonable good faith discretion); (B) benefits that qualify as excepted welfare benefits pursuant to Treasury regulation Section 1.409A-1(a)(5); or (C) other amounts or benefits that are not subject to the requirements of Section 409A.

 

For purposes of this Benefits 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 Holdings to be a specified employee under Treasury regulation Section 1.409A-1(i).

 

Except as permitted under Section 409A, any deferred compensation (within the meaning of Section 409A) payable to or for the Executive’s benefit under this Benefits Program may not be reduced by, or offset against, any amount owing by the Executive to the Company. Except as specifically permitted by Section 409A, the benefits and reimbursements provided to the Executive under this Benefits Program during any calendar year shall not affect the benefits and reimbursements to be provided to the Executive under the relevant section of this Benefits Program in any other calendar year, and the right to such benefits and reimbursements cannot be liquidated or exchanged for any other benefit and 

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shall be provided in accordance with Treasury regulation Section 1.409A-3(i)(1)(iv) or any successor thereto.  Further, in the case of reimbursement payments, such payments shall be made to the Executive on or before the last day of the calendar year following the calendar year in which the underlying fee, cost or expense is incurred.

 

Each payment made under this Benefits Program shall be treated as a separate payment and the right to a series of installment payments under this Benefits Program is to be treated as a right to a series of separate payments.

 

In no event shall the Company have any liability relating to the failure or alleged failure of any payment or benefit under this Benefits Program to comply with, or be exempt from, the requirements of Section 409A.

 

XIII.Section 280G of the Code.  

 

Notwithstanding any other provision in this Benefit Program or any other agreement, contract, or understanding entered into by the Executive with Holdings, the Company, the Employer or any of their subsidiaries, in the event that it is determined by the reasonable computation by a nationally recognized certified public accounting firm that shall be selected by Holdings (the “Accountant”) that the aggregate amount of the payments, distributions, benefits and entitlements of any type payable by Holdings, the Company, the Employer or any of their subsidiaries to or for the Executive’s benefit under this Benefits Program or any other formal or informal plan or other arrangement, contract or understanding (including any payment, distribution, benefit or entitlement made by any person or entity effecting a change of control), in each case, that could be considered “parachute payments” within the meaning of Section 280G of the Code (such payments, the “Parachute Payments”) that, but for this Section XIII would be payable to the Executive, exceeds the greatest amount of Parachute Payments that could be paid to the Executive without giving rise to any liability for any excise tax imposed by Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law, or any interest or penalties with respect to such tax (such tax or taxes, together with any such interest or penalties, being hereafter collectively referred to as the “Excise Tax”), then the aggregate amount of Parachute Payments payable to the Executive shall not exceed the amount which produces the greatest after-tax benefit to the Executive after taking into account any Excise Tax to be payable by the Executive.  For the avoidance of doubt, this provision will reduce the amount of Parachute Payments otherwise payable to the Executive, if doing so would place the Executive in a better net after-tax economic position as compared with not doing so (taking into account the Excise Tax payable in respect of such Parachute Payments). The Company shall reduce or eliminate the Parachute Payments by first reducing or eliminating the portion of the Parachute Payments that are payable in cash and then by reducing or eliminating the non-cash portion of the Parachute Payments, in each case in reverse order beginning with payments or benefits which are to be paid the furthest in time from the date of the Accountant’s determination.

 

XIV.Conflict with Benefits Program

 

In the event there is any conflict or inconsistency between the terms and conditions of this Benefits Program and those set forth in any employment agreement, incentive program or other arrangement which an Executive may be a party to with Holdings, Atlas, 

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Polar or Titan, the terms and conditions of such other employment agreement, incentive program or other arrangement shall govern and control.

 

XV.Administration

 

This Benefits Program may be amended, suspended or terminated by the Compensation Committee of the Board of Directors of Holdings at any time or from time to time; provided, however, that no such amendment, suspension or termination of this Benefits Program shall affect the terms and conditions of the Annual Incentive Plan, as may be amended, the Holdings 2018 Incentive Plan, as may be amended, any employment agreement, or any incentive program, each of which shall be governed by its terms and conditions. 

10aaww-ex105_437.htm

Exhibit 10.5

EXECUTION VERSION

ATLAS AIR WORLDWIDE HOLDINGS, INC.

ANNUAL INCENTIVE PROGRAM

FOR SENIOR EXECUTIVES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adopted by Compensation Committee:  As of July 1, 2019

 

 

 

ATLAS AIR WORLDWIDE HOLDINGS, INC.

ANNUAL INCENTIVE PROGRAM

FOR SENIOR EXECUTIVES

 

Section 1.  Purpose.

The purpose of the Program is to set forth certain terms and conditions governing cash awards made under the Atlas Air Worldwide Holdings, Inc. (“AAWW”) 2018 Incentive Plan, as may be amended from time to time (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. The Program shall be effective as of January 1, 2019, and shall be applicable for the 2019 Program Year and subsequent Program Years during the continuance of the Plan unless amended or terminated by the Committee pursuant to Section 10. Capitalized terms not defined herein shall have the meanings given in the Plan.  

Section 2.  Definitions.

Award 

shall mean an opportunity to earn benefits under the Program.

Atlas 

shall mean AAWW or its subsidiaries, as applicable.

Base Salary 

shall mean an Eligible Employee’s actual base salary for the applicable period.

Board 

shall mean the Board of Directors of AAWW.

Beneficiary 

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

2.6.Cause shall mean (i) the Participant’s refusal or failure (other than during periods of illness or Disability (as defined in the Plan)) to perform his or her material duties and responsibilities to Atlas, (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 Atlas including, without limitation, any material breach of written policies of Atlas with respect to trading in securities, (iv) other acts of fraud in connection with the Participant’s duties and responsibilities to Atlas, including, without limitation, misappropriation, theft or embezzlement in the performance of the Participant’s duties and responsibilities as an employee of Atlas, or (v) a violation of any material Atlas policy, including, without limitation, a violation of the laws against workplace discrimination.

2.7.Change in Control Good Reason shall mean (i) a material reduction in the Participant’s duties and responsibilities from those of the Participant’s most recent position with Atlas, (ii) a reduction of the Participant’s aggregate salary, benefits and other compensation (including any incentive opportunity) from that which the Participant was most recently entitled during Employment other than in connection with a reduction as part of a general reduction applicable to all similarly-situated employees of Atlas, or (iii) a relocation of the Participant to a 

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position that is located greater than 40 miles from the location of such Participant’s most recent principal location of Employment with Atlas; provided, however, that the Employee will be treated as having resigned for Change in Control Good Reason only if he or she provides Atlas with a notice of termination within 90 days of the initial existence of one of the conditions described above, following which Atlas shall have 30 days from the receipt of the notice of termination to cure the event specified in the notice of termination and, if Atlas 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.

Code 

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

Committee 

shall mean the Compensation Committee of the Board.

Eligible Employee 

shall mean any of the Chief Executive Officer, President and Executive Vice Presidents of AAWW and such other Atlas senior executive officers as shall be designated by the Committee.

2.11.Good Reason shall mean (i) a material reduction in the Participant’s annual base salary, Target Bonus Percentage, or target long-term incentive award opportunity, in each case as then in effect, or other material benefits provided to officers of Atlas, except where such reduction is part of a general reduction in salary or benefits by Atlas or (ii) a material reduction in the Participant’s title or job responsibilities; provided, however, that a Participant shall be treated as having resigned due to Good Reason only if he or she provides Atlas with a notice of termination within 90 days of the initial existence of one of the conditions described above, following which Atlas shall have 30 days from the receipt of the notice of termination to cure the event specified in the notice of termination and, if Atlas 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.

Participant 

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

Program 

shall mean this Atlas Air Worldwide Holdings, Inc. Annual Incentive Program for Senior Executives, as it may be amended from time to time.

Program Year 

shall mean the calendar year.

2.15.Retirement shall mean a termination of a Participant’s Employment with Atlas by the Participant on or after the Participant (i) attains age fifty-five (55) and has completed ten (10) years of service with Atlas, and (ii) has given not less than three (3) months’ advanced written notice of such proposed Retirement to the then current Chief Executive Officer of AAWW; provided, however, that if such Participant is terminated by Atlas for Cause after providing such advanced written notice, such termination shall not be considered a Retirement, as defined herein.  Notwithstanding clause (ii) above, in the event of a proposed Retirement of the then current Chief Executive Officer of AAWW, he or she must give not less than six (6) months’ advance written notice to the Board and a majority of the members of the Board (disregarding the Board membership of the Chief Executive Officer of AAWW for these purposes) must approve such retirement.

2.16.Termination of Service shall mean the date a Participant’s Employment terminates. 

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Section 3.  Administration.

The Program shall be administered by the Committee. The Committee shall have full power and authority in its sole discretion to construe and interpret the Program, establish and amend administrative regulations to further the purpose of the Program, determine the extent to which Award payments have been earned by virtue of satisfying the Financial Goal described in Section 5.3, determine whether to reduce under Sections 5.3(b) through 5.3(e), to the extent that cost control, the Service Reliability Goal (described in Section 5.3), Management Business Objectives (“MBOs”) and any other Performance Criteria have not been satisfied, the amount otherwise payable under Section 5.3, determine whether to settle a portion of the Award in AAWW stock, and take any other action necessary to administer the Program.  All decisions, actions, or interpretations of the Committee shall be final, conclusive, and binding upon all Participants.  

Section 4.  Participation.

	
4.1
	
General. Each Eligible Employee shall participate in the Program if he or she is employed as an Eligible Employee on the first day of the Program Year. An individual who becomes an Eligible Employee during a Program Year but prior to September 30 of the applicable year will participate only with respect to Base Salary earned on and after the date he or she first becomes an Eligible Employee.  

	
4.2
	
Change of Title/Position. If an Eligible Employee is promoted during a Program Year such that his or her Base Salary, Target Bonus Percentage (as defined below) and/or Maximum Bonus Percentage (as defined below) increases, (i) for the portion of the Program Year prior to such promotion, the Award will be calculated as set forth herein using (A) the Base Salary earned prior to the effective date of such promotion, and (B) the Target Bonus Percentage and Maximum Bonus Percentage applicable to the Eligible Employee’s title/position prior to the effective date of such promotion, and (ii) for the portion of the Program Year following such promotion, the Award will be calculated as set forth herein using (A) the Base Salary earned on and after the effective date of such promotion, and (B) the Target Bonus Percentage and Maximum Bonus Percentage applicable to the Eligible Employee’s new title/position on and after the effective date of such promotion.   

	
4.3
	
Other Compensation. Any determination by the Committee to provide incentive compensation to an Eligible Employee other than as described in this Section 4 shall be treated as a separate award made outside the Program.

Section 5.  Determination of Awards.

5.1.Target Bonus Percentage. The “Target Bonus Percentage” shall mean the following percentage of Base Salary for each Participant, as such percentages may be increased by the Committee from time to time: (i) one hundred percent (100%) of Base Salary for the Chief Executive Officer of AAWW, (ii) ninety percent (90%) of Base Salary for Executive Vice Presidents who also hold the title of President of Atlas Air, Inc. or Chief Executive Officer of Titan Aviation Holdings, Inc., and (iii) eighty-five percent (85%) of Base Salary for other Executive Vice Presidents.

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5.2.Maximum Bonus Award. The maximum bonus payable under an Award for each Program Year will be the lesser of (i) the dollar limit set forth in Section 4(c) of the Plan, and (ii) the following percentage of Base Salary for each Participant, as such percentages may be increased by the Committee from time to time: (A) two-hundred percent (200%) of Base Salary for the Chief Executive Officer of AAWW, (B) one-hundred eighty percent (180%) of Base Salary for Executive Vice Presidents who also hold the title of President of Atlas Air, Inc. or Chief Executive Officer of Titan Aviation Holdings, Inc., and (C) one-hundred and seventy percent (170%) of Base Salary for other Executive Vice Presidents (each, a “Maximum Bonus Percentage”).  

5.3.Performance Measures. Payment under an Award is conditioned upon achievement of the threshold Financial Goal (as defined below), as described below. If the threshold Financial Goal is achieved, the Award payment will be the Maximum Bonus Percentage minus such adjustments, if any, as the Committee determines to be appropriate to reflect levels of achievement with respect to the Financial Goal (if such Financial Goal is achieved at a level below the maximum level) and/or one or more of the other factors described below and/or such other factors as shall be designated by the Committee.  

(a)Financial Goal. The financial goal is based on Atlas’s adjusted income from continuing operations, net of taxes (“Adjusted Income”) as reported in Atlas’s press release, as may be further provided in any exhibit to the Program (the “Financial Goal”). For each Program Year, the threshold Adjusted Income level (which must be met before any amounts will be payable under Awards), the maximum Adjusted Income level, intermediate Adjusted Income levels, and the percentage of each Participant’s target bonus award that will be deemed achieved at each such profit level, will be determined by the Committee.

(b)Service Reliability Goal. The Committee may also reduce maximum Award payments, if any, to reflect the level of achievement of such service reliability goals as the Committee may determine for the Program Year (the “Service Reliability Goal”).

(c)Management Business Objectives Adjustment. The Committee may also reduce maximum Award payments, if any, to reflect the level of achievement of such individual MBOs as the Committee may determine in the case of any Participant for the Program Year.

(d)Effect of Corporate Transactions and other Exigencies. Without limiting the generality of the foregoing, the Committee shall have the authority to identify objectively determinable events (for example, but without limitation, acquisitions or dispositions) which, if they occur, would have a material effect on objective Performance Criteria applicable to Awards under the Program, and to adjust such Performance Criteria in an objectively determinable manner to reflect such events.  

Section 6.  Payment of Awards under this Program.

6.1.General. Subject to Section 6.4 and Section 7, a Participant will be entitled to receive payment, if any, under an Award if the Participant is still employed by Atlas on the last day of the Program Year for which the Award is paid, unless in the period between the last day of 

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the Program Year and any payout under the Program the Participant is terminated by Atlas for Cause or the Participant terminates his or her Employment with Atlas for any reason other than for Good Reason or by reason of a Retirement. A Participant will receive an Award in the manner and at the times set forth in this Sections 6.

6.2.Time of Payment. Any amount payable for an Award for a Program Year shall be paid by Atlas within two weeks following certification by the Committee as to achievement of the performance goals following the completion of the year-end audit for the applicable Program Year, but in no event later than March 15 of the year following the applicable Program Year.  

6.3.Form of Payment. All amounts payable for an Award shall be paid in cash or AAWW stock, but AAWW stock may be used, if at all, only for the portion of the Award that exceeds fifty percent (50%) of Base Salary.  

6.4.Termination of Employment.  

(a)In 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 Program Year for which an Award is payable shall forfeit such Award.

(b)Termination Bonus Amount. For purposes of this Section 6.4, “Termination Bonus Amount” shall mean a payment with respect to an Award for the Program Year in an amount equal to, (A) in the event the Termination of Service occurs after June 30 of the Program Year, the lesser of (1) the amount he or she would have received if he or she was employed by Atlas on the last day of the Program Year based upon actual company performance measured pursuant to the Plan (and assuming for such purpose that his or her MBOs have been achieved at target), or (2) his or her Target Bonus Percentage (such lesser amount, the “Full Termination Bonus Amount”) or (B) in the event the Termination of Service occurs prior to July 1 of the Program Year, the Full Termination Bonus Amount multiplied by a fraction, the numerator of which is the number of days from the commencement of the Program Year until such Termination of Service and the denominator of which is 365.

(c)Death or Disability. In the event of a Participant’s Termination of Service during a Program Year due to his or her death or Disability, the Participant shall be entitled to receive the Termination Bonus Amount.  

(d)Involuntary Termination; Good Reason; Retirement. If a Participant’s Employment terminates during a Program Year by reason of (i) an involuntary termination by Atlas not for Cause, (ii) termination by the Participant for Good Reason, or (iii) Retirement, the Participant shall be entitled to receive the Termination Bonus Amount. Such payment shall be subject to all terms and conditions of the Program, including without limitation the provisions of Section 5 (relating to determination of the Award) and Section 6.2 (relating to the time of payment of the Award). 

(e)Relationship with Other Agreements. This Section 6.4 shall not apply to the extent the rights of a Participant in such circumstances are governed by another 

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agreement.    

Section 7.  Change in Control.

In the event of a Change in Control, payment with respect to an Award for the Program Year in which such Change in Control occurred shall be an amount equal to the greater of (a) the applicable Target Bonus Percentage and (b) actual company performance measured pursuant to the Plan (such greater amount, the “CIC Bonus Amount”). In the event a Participant’s Employment is terminated during a Program Year in which a Change in Control occurs (i) following such Change in Control by reason of (A) an involuntary termination by Atlas not for Cause, (B) termination by the Participant for Change in Control Good Reason, (C) Retirement, (D) death, or Disability; or, (ii) within six months prior to such Change in Control, by Atlas not for Cause or by the Participant for Change in Control Good Reason, in each case, instead of the treatment described in Section 6.4, such Participant shall be entitled to the CIC Bonus Amount (for the avoidance of doubt, without proration). Such payment shall be subject to all terms and conditions of the Program, including without limitation the provisions of Section 5 (relating to determination of the Award) and Section 6.2 (relating to the time of payment of the Award).

For purposes of this Program, “Change in Control” shall mean the occurrence of any of the following:

	
 
	
(1)
	
any “person” (as used herein, as defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the “Exchange Act”) and as used in Sections 13(d) and 14(d) thereof) or “group” (as used herein, as defined in Section 13(d) of the Exchange Act), acquires ownership or beneficial ownership of AAWW securities that, together with securities held by such person or group, constitutes more than 50% of the total fair market value of the issued and outstanding shares or the total voting power of AAWW;

	
 
	
(2)
	
any “person” or “group,” during the 12-month period ending on the date of the most recent acquisition by such “person” or “group” acquires ownership of AAWW securities that constitute 30% or more of the total fair market value of the issued and outstanding shares or the total voting power of AAWW;

	
 
	
(3)
	
the replacement of a majority of members of AAWW’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 AAWW’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 AAWW 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 AAWW; or

	
 
	
(5)
	
the consummation of a complete liquidation or dissolution of AAWW.

For purposes of determining whether a Change in Control has occurred (i) shares of AAWW received upon conversion of an option or warrant is considered to be an acquisition of shares of AAWW and (ii) in the event the persons who were beneficial owners of AAWW shares immediately prior to the consummation of a merger, share exchange, business combination or other similar corporate transaction continue to beneficially own, directly or indirectly, more than 

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50% of total fair market value of the issued and outstanding shares or the total voting power of AAWW (including a corporation or entity that, as a result of such transaction, owns AAWW or all or substantially all of AAWW’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such consummation of such transaction, such transaction shall not constitute a Change in Control.  

 

Notwithstanding anything to the contrary herein, with respect to any amounts payable hereunder that constitute deferred compensation for purposes of Section 409A, such payment or settlement may accelerate upon a Change in Control for purposes of this Program only if such Change in Control also constitutes a “change in control event” (as that term is defined at Section 1.409A-3(i)(5) of the Treasury Regulations) (it being understood that vesting of amounts payable hereunder may accelerate upon a Change in Control, even if payment of such amounts may not accelerate pursuant to this sentence).

Section 8.  Beneficiary Designation.

8.1.Designation and Change of Designation. Each Participant shall file with Atlas 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 or her Beneficiary designation without the consent of any prior Beneficiary by filing a new designation with Atlas. The last such designation received by Atlas shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by Atlas 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 his death. If Atlas is in doubt as to the right of any person to receive such amount, Atlas may retain such amount, without liability for any interest thereon, until the rights thereto are determined, or Atlas 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 Atlas therefor.

Section 9.  General Provisions.

9.1.Plan 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 Atlas. All Awards shall be paid from the general funds of Atlas, 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 Atlas.

9.2.Section 409A of the Code. Awards under the Program are intended to be exempt from the requirements of Section 409A of the Code and shall be construed and administered accordingly. Notwithstanding anything to the contrary in the Program, neither Atlas, nor any 

7

 

 

 

affiliate, nor the Committee, nor any person acting on behalf of Atlas, 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 satisfy 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 Atlas 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; Conflicts. Nothing contained in the Program shall give any Eligible Employee the right to continue in the Employment of Atlas, or limit the right of Atlas to discharge an Eligible Employee. If there is a conflict between this Program and another senior executive employment program or arrangement, such other program or arrangement shall control. 

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.

Except with respect to 6.4(d) for any Program Year in effect, the Committee reserves the right to amend, suspend, or terminate the Program at any time. 

 

Section 11.   Awards Subject to Clawback

Pursuant to AAWW’s Executive Compensation Clawback Policy, as the same is in effect following its adoption by the Board and as may be subsequently amended from time to time (the “Clawback Policy”), by his or her acceptance of an Award under the Program, the Participant agrees that the Committee may withhold, and participant will forfeit, compensation otherwise payable under an Award or seek recovery from, and the participant agrees to repay, compensation previously paid under an Award, as the case may be, as provided by the Clawback Policy, or to the extent required to comply with applicable law. 

 

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