|
(3)
|
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was
determined):
|
Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid
previously. Identify the previous filing by registration statement
number,
or the Form or Schedule and the date of its
filing.
|
[Missing
Graphic Reference]
|
|
1.
|
To
elect nine directors to serve until their successors are duly elected
and
qualified;
|
|
2.
|
To
ratify the appointment of Dixon Hughes PLLC as the independent registered
public accountants of the Company for the current fiscal year;
and
|
|
3.
|
To
transact such other business as may properly come before the meeting,
or
any adjournment or adjournments
thereof.
|
[Missing
Graphic Reference]
|
·
|
giving
a written notice of revocation to the Secretary of the
Company,
|
·
|
submitting
a proxy having a later date, or
|
·
|
appearing
at the meeting and requesting to vote in
person.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
|
|||||||||
Title
of
Class
|
Name
and Address of Beneficial Owner
|
Amount
of
Beneficial
Ownership
as
of June 1, 2007
|
Percent
Of
Class
|
||||||
Common
Stock, par value $.25 per share
|
Walter
Clark
|
142,422 | (1) | 5.8 | % |
(1)
|
Includes
76,500 shares controlled by Mr. Clark as one of the executors of
the
estate of David Clark.
|
Name
|
Fees
Earned or Paid in Cash
|
Total
|
||||||
Claude
S. Abernethy, Jr.
|
$ |
23,400
|
$ |
23,400
|
||||
Sam
Chesnutt
|
21,000
|
21,000
|
||||||
Allison
T.
Clark
|
15,000
|
15,000
|
||||||
George
C.
Prill
|
21,000
|
21,000
|
||||||
Dennis
A.
Wicker
|
14,500
|
14,500
|
||||||
J.
Bradley
Wilson
|
15,000
|
15,000
|
·
|
candidates
should possess broad training and experience at the policy−making level in
business, government, education, technology or
philanthropy;
|
·
|
candidates
should possess expertise that is useful to the Company and complementary
to the background and experience of other members of the Board of
Directors, so that an optimum balance in Board membership can be
achieved
and maintained;
|
·
|
candidates
should be of the highest integrity, possess strength of character
and the
mature judgment essential to effective
decision−making;
|
·
|
candidates
should be willing to devote the required amount of time to the work
of the
Board of Directors and one or more of its
committees;
|
·
|
candidates
should be willing to serve on the Board of Directors over a period
of
several years to allow for the development of sound knowledge of
the
Company and its principal operations;
and
|
·
|
candidates
should be without any significant conflict of interest or legal impediment
with regard to service on the Board of
Directors.
|
SECURITY
OWNERSHIP OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
|
|||||||||
Shares
and Percent of Common Stock Beneficially Owned as of June 1,
2007
|
|||||||||
Name
|
Position
with Company
|
No.
of Shares
|
Percent
|
||||||
Walter
Clark
|
Chairman
of the Board of Directors and Chief Executive Officer
|
142,422 | (1) | 5.8 | % | ||||
John
Parry
|
Vice
President-Finance, Chief Financial Officer, Secretary and
Treasurer
|
-
|
-
|
||||||
William
H.
Simpson
|
Executive
Vice President, Director
|
2,004
|
*
|
||||||
Claude
S. Abernethy, Jr.
|
Director
|
2,500 | (2) |
*
|
|||||
Sam
Chesnutt
|
Director
|
2,500 | (2) |
*
|
|||||
Allison
T.
Clark
|
Director
|
2,500 | (2) |
*
|
|||||
John
J.
Gioffre
|
Director
|
7,000
|
*
|
||||||
George
C.
Prill
|
Director
|
3,500 | (2) |
*
|
|||||
Dennis
A.
Wicker
|
Director
|
3,500 | (2) |
*
|
|||||
J.
Bradley
Wilson
|
Director
|
2,500 | (2) |
*
|
|||||
All
directors, nominees and executive officers as a group (10
persons)
|
N/A
|
168,426 | (3) | 6.8 | % |
(1)
|
Includes
76,500 shares controlled by Mr. Clark as one of the executors of
the
estate of David Clark.
|
(2)
|
Includes
shares which the following non-employee directors have the right
to
acquire within sixty (60) days through the exercise of stock options
issued by the Company: Mr. Abernethy, 2,500 shares; Mr. Chesnutt,
2,500
shares; Mr. Allison Clark, 2,500 shares; Mr. Prill, 3,500 shares;
Mr.
Wicker, 3,500 shares; and Mr. Wilson, 2,500
shares.
|
·
|
base
salary,
|
·
|
annual
cash incentive plan,
|
·
|
periodic
option awards, and
|
·
|
retirement,
health and welfare and other
benefits.
|
·
|
individual
performance;
|
·
|
recommendations
of the Chief Executive Officer with respect to the base salaries
of other
executive officers;
|
·
|
the
duties and responsibilities of each executive officer
position;
|
·
|
their
current compensation level;
|
·
|
the
relationship of executive officer pay to the base salaries of senior
officers and other employees of the Company;
and
|
·
|
whether
the base salary levels are
competitive.
|
Name
and Principal Position
|
Year
|
Salary
($) (1)
|
Bonus
($) (2)
|
Option
Awards ($) (3)
|
Non-Equity
Incentive Plan Compensation ($) (4)
|
Change
in Pension Value and Nonqualified Deferred Compensation Earnings
($)(5)
|
All
Other Compensation ($)
|
Total
($)
|
Walter
Clark
|
2007
|
$206,000
|
$
-
|
$51,013
|
$ 88,399
|
$ -
|
$
25,490 (6)
|
$
370,902
|
President
and Chief Executive Officer
|
||||||||
John
J. Gioffre
(10)
|
2007
|
113,838
|
105,525
|
25,836
|
66,299
|
-
|
12,650
(7)
|
324,148
|
Former
Vice President- Finance and Chief Financial Officer (Former(Principal
Financial Officer)
|
||||||||
John
Parry
(11)
|
2007
|
52,985
|
-
|
10,321
|
33,150
|
-
|
19,888
(8)
|
116,344
|
Vice
President-Finance and Chief Financial Officer(Principal Financial
Officer)
|
||||||||
William
H.
Simpson
|
2007
|
206,000
|
-
|
30,608
|
88,399
|
(27,548)
|
18,594
(9)
|
316,053
|
Executive
Vice President
|
(1)
|
Includes
annual director fees in 2007 of $6,000 for each for Mr. Clark and
Mr.
Simpson and $7,500 for Mr. Gioffre.
|
(2)
|
Mr.
Gioffre’s bonus in 2007 includes $37,763 pursuant to his amended
employment agreement, subject to staying on with the Company past
his
intended retirement date. Also includes $67,762 paid to Mr.
Gioffre based upon verbal agreements, to stay additional periods
beyond
his intended retirement date.
|
(3)
|
The
estimated value of the stock options has been developed solely for
purposes of comparative disclosure in accordance with the rules and
regulations of the SEC and is consistent with the assumptions we
used for
Statement of Financial Accounting Standards 123(R) reporting during
fiscal 2007 and do not reflect risk of forfeiture or restrictions
on
transferability. The estimated value has been determined by application
of
the Black-Scholes option-pricing model, based upon the terms of the
option
grants and our stock price performance history as of the date of
the
grant. See Note 8 to the Consolidated Financial Statements in Item
8 for a
complete description of the option plan and the key assumptions used
to
determine estimated value of the stock
options.
|
(4)
|
Pursuant
to their employment agreements, Mr. Clark, Mr. Gioffre and Mr. Simpson
are
entitled to receive incentive compensation equal to two percent (2%)
of
the earnings before income taxes or extraordinary items reported
each year
by the Company in its Annual Report on Form 10-K. Mr. Parry is entitled
to
receive incentive compensation equal to one and one-half percent
(1.5%) of
the earnings before income taxes or extraordinary items. These
amounts are prorated for Messrs. Gioffre and Parry for partial years
of
employment in fiscal 2007.
|
(5)
|
Represents
the aggregate change in the actuarial present value of Mr. Simpson’s
accumulated benefit under the retirement provisions of his employment
agreement.
|
(6)
|
Includes
$3,506 for Company matching contributions under the Air T, Inc. 401(k)
Retirement Plan, $15,802 for personal use of corporate airplane,
$4,800
for auto allowance and $1,382 for personal auto
expenses.
|
(7)
|
Includes
$4,384 for Company matching contributions under the Air T, Inc. 401(k)
Retirement Plan, $3,600 for auto allowance and $4,666 for personal
auto
expenses.
|
(8)
|
Includes
$2,000 for auto allowance, $2,690 for personal auto expenses, $5,500
temporary housing allowance, $2,750 for supplemental pay in lieu
of
directors’ fees and $6,948 for relocation
expenses.
|
(9)
|
Includes
$6,000 for Company matching contributions under the Air T, Inc. 401(k)
Retirement Plan, $4,800 for auto allowance, $4,794 for personal auto
expenses and $3,000 for country club
dues.
|
(10)
|
Mr.
Gioffre stepped down from the position of Chief Financial Officer
on
November 14, 2006 and retired from the Company on December 31,
2006. Mr. Gioffre remains a Director of the Company as of March
31, 2007.
|
(11)
|
Mr.
Parry was hired by Company effective October 15, 2006 and was appointed
Chief Financial Officer on November 14,
2006.
|
Name
|
Grant
Date (1)
|
All
Other Option Awards: Number of Securities Underlying Options
(#)
|
Exercise
or Base Price of Option Awards ($/Sh) (2)
|
Grant
Date Fair Value of Option Awards
|
Closing
Market Price on Date of Grant (3)
|
||||||||||||
Walter
Clark
|
8/15/06
|
50,000
|
$ |
8.29
|
$ |
245,000
|
$ |
8.29
|
|||||||||
John
J.
Gioffre
|
8/17/06
|
6,000
|
8.52
|
25,860
|
8.66
|
||||||||||||
John
Parry
|
12/06/06
|
15,000
|
9.30
|
82,500
|
9.30
|
||||||||||||
WilliamH.Simpson
|
8/15/06
|
30,000
|
8.29
|
147,000
|
8.29
|
(2)
|
With
the exception of the options granted to Mr. Gioffre, the options
become
vested and exercisable in three equal annual installments beginning
with
the date of grant, or if earlier, upon a change of control of the
Company
or the date the employee terminates employment due to death, disability
or
retirement, the options expire ten years following the date of grant
or,
if earlier, one year from the date the executive officer terminates
employment due to death, disability or retirement. The options
granted to Mr. Gioffre become vested and exercisable one year from
date of
grant and expire five years from date of
retirement.
|
(3)
|
The
2005 Equity Incentive Plan provides that the exercise price of all
options
awarded under the plan may be no less than the fair market value
of the
Company’s common stock on the date of grant, which is defined in the plan
to mean the closing bid price per share of the Company’s common stock on
the Nasdaq Capital Market on that date. The options awarded on
August 15, 2006 and December 6, 2006 had an exercise price per share
equal
to the per share closing market price of the Company’s common stock on the
Nasdaq Capital Market on the date of the award, which closing market
price
was slightly higher than the closing bid price on that
date. Options awarded on August 17 2006 had an exercise price
per share equal to the closing bid price on the respective date those
options were granted.
|
|
__________________
|
Option
Awards (1)
|
|||||||||||||
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
|||||||||
Walter
Clark
|
-
|
50,000 | (2) | $ |
8.29
|
08/15/16
|
|||||||
John
J.
Gioffre
|
-
|
6,000 | (3) |
8.52
|
08/17/11
|
||||||||
John
Parry
|
-
|
15,000 | (4) |
9.30
|
12/06/16
|
||||||||
William
H. Simpson
|
-
|
30,000 | (2) |
8.29
|
08/15/16
|
|
(1)
|
All
option awards were made under the Company’s 2005 Equity Incentive
Plan. Under the terms of the plan, option awards were made
without any corresponding transfer of consideration from the
recipients.
|
|
(2)
|
Stock
options vest at the rate of 33-1/3% per year with vesting dates of
08/15/07, 08/15/08 and 08/15/09.
|
|
(3)
|
Stock
options vest on 8/17/07.
|
|
(4)
|
Stock
options vest at the rate of 33-1/3% per year with vesting dates of
12/06/07, 12/06/08 and 12/06/09.
|
Name
|
Plan
Name
|
Number
of Years Credited Service
(#)
|
Present
Value of Accumulated Benefit
($)
|
Payments
during Last fiscal Year
($)
|
|||||||||
William
H. Simpson
|
Employment
agreement
|
11.25
|
$ |
633,693
|
-
|
Gross
Severance Benefit Payable under the Employment
Agreement
|
Estimated
value of Continued Participation in Health Insurance
|
Stock
Options (1)
|
Total
(2)
|
|||||||||||||
Walter
Clark
|
$ |
500,000
|
$ |
42,000
|
$ |
-
|
$ |
542,000
|
||||||||
John
J. Gioffre (3)
|
|
N/A
|
N/A
|
N/A
|
N/A
|
|||||||||||
John Parry | $ | 125,000 | $ | - | $ | - | $ | 125,000 | ||||||||
William
H. Simpson
|
$ |
200,000
|
-
|
-
|
$ |
200,000
|
(1)
|
Value
of unvested stock options that would become vested upon a change
of
control of the Company, based on the closing market price of the
Company’s
common stock on March 31, 2007. Options are given no value at
that date based upon the exercise price in excess of the closing
market
price.
|
(2)
|
Amounts
set forth in this table would be the same if termination of employment
without cause occurred in the absence of a change in
control.
|
(3)
|
Mr.
Gioffre retired on December 31,
2006.
|
2007
|
2006
|
|||||||
Audit
Fees
(1)
|
$ |
181,150
|
$ |
171,700
|
||||
AuditRelatedFees (2)
|
8,000
|
4,000
|
||||||
Tax
Fees
(3)
|
63,520
|
50,190
|
||||||
All
Other
Fees
|
-
|
-
|
(1)
|
Fees
for audit service totaled $181,150 in fiscal 2007 for Dixon Hughes
PLLC
and $171,700 in fiscal 2006 ($154,700 for Dixon Hughes PLLC and $17,000
for Deloitte & Touche LLP). Audit fees for 2007 and 2006
included fees associated with annual year-end audit and reviews of
the
Company’s quarterly reports on Form
10-Q.
|
(2)
|
Fees
for audit-related services totaled $8,000 in 2007 (for Dixon Hughes
PLLC)
and $4,000 in 2006 (for Dixon Hughes PLLC). Audit-related fees
in 2007 and 2006 included fees associated with the audit of the Company’s
employee benefit plan.
|
(3)
|
Tax
related fees totaled $63,520 in 2007 (for Dixon Hughes PLLC) and
$50,190
in 2006 (for Dixon Hughes PLLC), and were primarily related to preparation
of year-end tax returns and consulting and advisory
matters. This amount included fees for tax consulting and
advisory services totaled $34,320 in 2007 and $4,345 in 2006, and
were
related to tax consultation services associated with various state
and
international tax matters.
|
(1)
|
the
quality and integrity of the accounting, auditing and reporting practices
of the corporation;
|
(2)
|
the
audits of the corporation’s financial statements and the independent
auditor’s qualifications, independence and
performance;
|
(3)
|
the
corporation’s systems of internal control over financial
reporting;
|
(4)
|
the
corporation’s compliance with legal and regulatory
requirements;
|
(5)
|
the
performance of the corporation’s internal audit
function;
|
·
|
Selecting
and retaining the independent accounting firm that audits the financial
statements of the corporation and approving the scope of the proposed
audit for each fiscal year and the fees and other compensation to
be paid
therefor. In so doing, the committee will discuss and consider
the auditor’s written affirmation that the auditor is in fact independent
and the nature and rigor of the audit process and receive and review
all
reports from management and the current auditor relevant to these
determinations.
|
·
|
Reviewing
and periodically discussing with the independent auditor all significant
relationships the firm and members of the engagement team have with
the
corporation and others that may affect the auditor’s
independence.
|
·
|
Preapproving
all auditing services and permitted non-audit services (including
the fees
and terms thereof) to be performed for the corporation by its independent
auditor, subject to such exceptions for non-audit services as permitted
by
applicable laws and regulations. The committee may form and
delegate authority to subcommittees consisting of one or more members
when
appropriate, including the authority to grant preapprovals of audit
and
permitted non-audit services, provided that decisions of such subcommittee
to grant preapprovals shall be presented to the full committee at
its next
scheduled meeting.
|
·
|
Providing
guidance and oversight to the internal audit function of the corporation,
including review of the organization, budget, staffing, plans and
results
of such activity.
|
·
|
Reviewing
financial statements (including quarterly reports) with management
and the
independent auditor. It is anticipated that these discussions
will include quality of earnings, review of reserves and accruals,
consideration of the suitability of accounting principles, review
of
highly judgmental areas, audit adjustments (whether or not recorded)
and
such other inquiries as may be appropriate. Annually, after
satisfactory review by the committee, the company’s audited financial
statements will be approved by the board of directors for inclusion
in the
annual report of Form 10-K to be filed with the Securities and Exchange
Commission.
|
·
|
Reviewing
with management Management’s Discussion and Analysis of Financial
Condition and Results of Operations to be included in the corporation’s
annual report on Form 10-K or quarterly report on Form 10-Q, as
applicable.
|
·
|
Discussing
with management and the auditors the quality and adequacy of the
company’s
internal controls over financial reporting and reporting
processes.
|
·
|
Discussing
with the independent auditor its judgments about the quality and
appropriateness of the Corporation’s accounting principles as applied in
its financial reporting.
|
·
|
Reviewing
and discussing with management and the independent auditor, as
appropriate, earnings press releases, and financial information and
earnings guidance provided by the Corporation to analysts and rating
agencies.
|
·
|
Discussing
with management, the internal auditors and the independent auditor
policies with respect to risk assessment and risk management, significant
risks or exposures of the corporation and the steps that have been
taken
to minimize such risks. It is anticipated that such discussions
will include the status of pending litigation, taxation matters and
other
areas of oversight of the legal and compliance area as may be
appropriate.
|
·
|
Establishing
procedures for the receipt, retention and treatment of complaints
received
by the corporation regarding accounting, internal control over financial
reporting or auditing matters, and the confidential, anonymous submission
by employees of concerns regarding questionable accounting or auditing
matters.
|
·
|
Approving
any letter to be included in the Corporation’s annual report or proxy
statement that describes the Committee’s composition and responsibilities
and how they were discharged.
|
·
|
Reporting
on audit committee activities to the full board and issuance annually
of a
summary report (including appropriate oversight conclusion) suitable
for
submission to the shareholders.
|
·
|
Reviewing
any “related party transactions,” as defined by applicable NASDAQ rules,
and determining whether to ratify or approve such
transactions.
|
·
|
Performing
any other activities consistent with this charter, the corporation’s
bylaws and governing law that the committee or the board may deem
necessary or appropriate.
|
·
|
Conducting
an annual review of this charter and updating it as
appropriate.
|
I.
|
PURPOSE
|
II.
|
COMPOSITION
|
III.
|
MEETINGS
|
IV.
|
ACTIVITIES
|
[Missing
Graphic Reference]
|
Sam
Chesnutt
|
Allison
T. Clark
|
George
C. Prill
|
Dennis
A. Wicker
|
J.
Bradley Wilson
|
2.
|
PROPOSAL
TO RATIFY THE SELECTION OF DIXON HUGHES PLLC as the Company’s independent
registered public accountants
|
|
PLEASE
MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
POSTAGE-PREPAID ENVELOPE
|