Item 5.02 Departure of Directors or Certain
Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On July 2, 2019, Atlas Air Worldwide Holdings, Inc.
(the “Company”) announced that William J. Flynn, age 65, will transition from his role as the Company’s
President and Chief Executive Officer. Pursuant to notice delivered on June 28, 2019, effective as of July 1, 2019, Mr. Flynn
will step down as President of the Company and, effective as of January 1, 2020 (the “Transition Date”), he will
retire from his position as Chief Executive Officer of the Company. At that time, Mr. Flynn will also cease to serve as
an executive, officer or employee of any subsidiary or affiliate of the Company. In connection with Mr.
Flynn’s transition, the Company has appointed John W. Dietrich, the Company’s current Executive Vice President
and Chief Operating Officer, to serve as its President and Chief Operating Officer, effective as of July 1, 2019, and as its
President and Chief Executive Officer, effective as of the Transition Date.
Following his retirement as President of the Company, Mr. Flynn
will continue to serve as a director on the Board of Directors of the Company (the “Board”). As of the Transition Date,
Mr. Flynn will assume the role of Chairman of the Board, and Robert F. Agnew, the current Chairman of the Board, will serve as
the Lead Independent Director of the Board. Also as of the Transition Date, Mr. Dietrich will be appointed as a director of the
Company and the Board will be increased to a total of 11 members.
Mr. Dietrich, age 54, has been Executive Vice President and
Chief Operating Officer of the Company since September 2006. In addition, he was named President and Chief Operating Officer of
Atlas Air, Inc. (“Atlas Air”) effective October 2014. Mr. Dietrich was Senior Vice President, General Counsel and Chief
Human Resources Officer of the Company from February 2004 to September 2006. He was named Vice President and General Counsel of
the Company in March 2003, where he was also responsible for the Company’s Human Resources and Corporate Communications functions.
Mr. Dietrich joined the Company in 1999 as Associate General Counsel. Prior to joining the Company, he was an attorney at United
Airlines from 1992 to 1999, where he provided legal counsel to all levels of management. He also serves as Chairman of the National
Defense Transportation Association and on the Board of the National Air Courier Association. Mr. Dietrich earned a Bachelors of
Science degree from Southern Illinois University and received his Juris Doctorate,
, from John Marshall Law School.
He is a member of the New York, Illinois and Colorado Bars.
There are no arrangements or understandings between Mr.
Dietrich and any other person pursuant to which Mr. Dietrich was appointed as President and Chief Executive Officer or as a
director, and Mr. Dietrich is not currently expected to serve on any of the standing committees of the Board. Mr. Dietrich
does not have any family relationships with any of the Company’s directors or other executive officers and is not party
to any transactions listed in Item 404(a) of Regulation S-K.
Employment Agreement with Mr. Dietrich
In connection with his promotion, Mr. Dietrich entered into
a new employment agreement with Atlas Air (the “Employment Agreement”), effective as of July 1, 2019. Pursuant to the
Employment Agreement, Mr. Dietrich will receive an annual base salary of $775,000 through the end of 2019 and, effective as of
the Transition Date, an annual base salary of $850,000. In addition, as of July 1, 2019, Mr. Dietrich’s target bonus opportunity
will be 100% of his annual base salary, with his annual bonus for 2019 calculated based on his previous salary and target bonus
percentage for the first half of the year and his new annual base salary and target bonus opportunity from July 1, 2019 through
the end of the year. In calendar year 2020, Mr. Dietrich will be eligible for a long-term incentive award with a target value equal
to 375% of base salary.
Pursuant to the Employment Agreement, Mr. Dietrich will be entitled
to severance benefits in connection with certain terminations of employment that are generally consistent with his current entitlements.
In the event Mr. Dietrich’s employment is terminated by the Company without “cause,” by Mr. Dietrich for “good
reason,” or due to death or “disability” (each as defined in the Employment Agreement), subject to him executing
a general release of claims, Mr. Dietrich will be entitled to a lump sum payment equal to 24 months of his then current base salary.
Due to his tenure with the Company, Mr. Dietrich will also be eligible to participate in the Company’s health plans until
he becomes eligible for Medicare or is eligible to be covered by the health plan of a subsequent employer.
the event Mr. Dietrich’s employment is terminated by the Company without “cause” or by Mr. Dietrich for “good
reason” within 12 months following a “change in control” of the Company (as defined in the Employment Agreement),
Mr. Dietrich will be entitled to receive a lump sum payment equal to 36 months of his then current base salary.
the 6-month period immediately following a termination by the Company without “cause” or by Mr. Dietrich for “good
reason,” a “change in control” of the Company occurs, then, in addition to the severance equal to 24 months of
base salary described above, Mr. Dietrich will receive an additional lump sum payment equal to 12 months of his base salary.
The Employment Agreement additionally provides that Mr. Dietrich
will be subject to perpetual confidentiality provisions, as well as two-year post-termination non-solicitation and one-year post-termination
Transition Agreement with Mr. Flynn
In connection with his retirement, Mr. Flynn entered into a
transition agreement with the Company (the “Transition Agreement”), effective as of July 1, 2019, which restates Mr.
Flynn’s current entitlements upon his retirement under the Company benefit plans and programs in which he participates. Pursuant
to these benefit plans and programs, Mr. Flynn’s outstanding time-based restricted stock units will vest upon his retirement
and be settled shortly thereafter and his outstanding performance-based restricted stock units and long-term cash incentive awards
will remain outstanding and will vest based upon actual performance upon completion of the relevant performance cycles. Mr. Flynn
will also be entitled to payment of a non-prorated annual bonus for 2019 based upon actual Company and individual performance,
his full account balance under the Company’s 401(k) Restoration and Voluntary Deferral Plan, and a payment in respect of
accrued but unused vacation.
In the Transition Agreement, Mr. Flynn reaffirms the two-year
post-termination non-solicitation and one-year post-termination non-competition provisions in his employment agreement. The Transition
Agreement also contains customary restrictive covenants related to trade secrets, confidential information, company property, and
non-disparagement, and provides for Mr. Flynn to execute a general release of claims on his last day of employment.
In order to facilitate an effective leadership transition and
to promote business continuity, each of the Company’s other named executive officers, Adam R. Kokas, Executive Vice President,
General Counsel and Secretary, Spencer Schwartz, Executive Vice President and Chief Financial Officer, and Michael T. Steen, Executive
Vice President and Chief Commercial Officer, was granted a retention bonus opportunity as follows: subject to continued employment,
each recipient would become entitled to receive $500,000 as of December 31, 2020 and $1,000,000 as of December 31, 2021. Each executive
would also be eligible to receive any unpaid portion of the retention bonus upon a termination by the Company without “cause,”
by the executive for “good reason,” or upon the executive’s death or “disability” (in each case as
such term is defined in the applicable award agreement).
A copy of the Company’s related press release is attached
hereto as Exhibit 99.1 and is incorporated herein by reference.