Exhibit 10.17(a)
DELTA AIR LINES,
INC.
2009 LONG-TERM INCENTIVE
PROGRAM
1. Purpose.
The 2009 Long-Term Incentive Program
(the “ 2009 LTIP ”) is a long term incentive
program sponsored by Delta Air Lines, Inc. (“ Delta
” or the “ Company ”) that is intended to:
(a) closely link pay and performance by providing management
employees with a compensation opportunity based on Delta’s
achieving key business objectives; and (b) align the interests
of management employees with the Company’s other employees
and stakeholders.
The 2009 LTIP is being adopted under
the Delta Air Lines, Inc. 2007 Performance Compensation Plan
(“ 2007 Performance Plan ”). It is subject to
the terms of the 2007 Performance Plan and an individual’s
2009 LTIP Award Agreement (“ Award Agreement
”).
Capitalized terms that are used but
not defined in the 2009 LTIP shall have the meaning ascribed to
them in the 2007 Performance Plan. For purposes of the 2009 LTIP,
the definitions of “ Change in Control ,”
“ Good Reason ,” and “ Retirement
” as set forth in the 2007 Performance Plan are hereby
replaced or modified under Section 5 below, and shall apply as
set forth in Section 5 in lieu of the definitions of these
terms in the 2007 Performance Plan or as modified, as
applicable.
2. Individual Award
Agreements. Any person
offered an Award under the 2009 LTIP will be required to sign an
individual Award Agreement. Execution by such person of his or her
Award Agreement will be a prerequisite to the effectiveness of the
Award under the 2009 LTIP and to the person’s becoming a
Participant in the 2009 LTIP.
3. Awards.
(a) Restricted
Stock.
(i) Award Grant . A
Participant may receive Restricted Stock as specified in the
Participant’s Award Agreement (the “ Restricted
Stock ”).
(ii) Grant Date . The
Grant Date of the Restricted Stock will be determined by the
Committee and set forth in a Participant’s Award
Agreement.
(iii) Restrictions .
Until the restrictions imposed by this Section 3(a) (the
“ Restrictions ”) have lapsed pursuant to
Section 3(a)(iv), (v) or (vi) below, a Participant
will not be permitted to sell, exchange, assign, transfer, pledge
or otherwise dispose of the Restricted Stock and the Restricted
Stock will be subject to forfeiture as set forth below.
(iv) Lapse of
Restrictions—Continued Employment . Subject to the
terms of the 2007 Performance Plan and the 2009 LTIP, the
Restrictions shall lapse and be of no further force or effect with
respect to one-half of the Shares of Restricted Stock on
February 1, 2010 (“ First Installment Date
”) and the remaining one-half on February 1, 2011
(“ Second Installment Date ”).
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If this formula
results in any fractional Share allocation to any Installment Date,
the number of Shares with respect to which the Restrictions lapse
on the First Installment Date will be rounded up, and the number of
shares with respect to which the Restrictions lapse on the Second
Installment Date will be rounded down, to the nearest whole Share
so that only full Shares are covered by each Installment
Date.
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(v) Lapse of
Restrictions/Forfeiture upon Termination of Employment .
The Restricted Stock and the Restrictions set forth in this
Section 3(a) are subject to the following terms and
conditions:
(A) Without Cause or For Good
Reason. Upon a Participant’s Termination of Employment by
the Company without Cause or by the Participant for Good Reason
(including the Termination of Employment of the Participant if he
is employed by an Affiliate at the time the Company sells or
otherwise divests itself of such Affiliate), with respect to any
portion of the Restricted Stock subject to the Restrictions, the
Restrictions shall immediately lapse on the Pro Rata RS Portion as
of the date of such Termination of Employment. Upon a
Participant’s Termination of Employment by the Company
without Cause or by the Participant for Good Reason, any Restricted
Stock that remains subject to the Restrictions, other than the Pro
Rata RS Portion, shall be immediately forfeited.
“ Pro Rata RS Portion
” means, with respect to any portion of Restricted Stock that
is subject to the Restrictions at the time of a Participant’s
Termination of Employment, the number of Shares with respect to
which the Restrictions would have lapsed on each future Installment
Date multiplied by a fraction (i) the numerator of which is
the number of calendar months 2 from the Grant Date to the date of such
Termination of Employment, rounded up for any partial month and
(ii) the denominator of which is twelve (12) for the
First Installment Date and twenty-four (24) for the Second
Installment Date. 3
(B) Voluntary Resignation.
Upon a Participant’s Termination of Employment by reason of a
voluntary resignation (other than for Good Reason or Retirement),
any portion of the Restricted Stock subject to the Restrictions
shall be immediately forfeited.
(C) Retirement. Subject to
Section 3(a)(v)(F) below, upon a Participant’s
Termination of Employment by reason of Retirement, with respect to
any portion of the Restricted Stock subject to the Restrictions,
the Restrictions shall immediately lapse on the Pro Rata RS Portion
as of the date of such Termination of Employment. Pro Rata RS
Portion has the meaning set forth in Section 3(a)(v)(A) above.
Upon a Participant’s Termination of Employment by reason of
Retirement, any Restricted Stock that remains subject to the
Restrictions, other than the Pro Rata RS Portion, shall be
immediately forfeited.
(D) Death or Disability. Upon
a Participant’s Termination of Employment due to death or
Disability, the Restrictions shall immediately lapse and be of no
further force or effect as of the date of such Termination of
Employment.
(E) For Cause. Upon a
Participant’s Termination of Employment by the Company for
Cause, any portion of the Restricted Stock subject to the
Restrictions shall be immediately forfeited.
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For purposes of
the 2009 LTIP, one calendar month is calculated from the date of
measurement to the same or closest numerical date occurring during
the following month. For example, one calendar month from
January 31, 2009 will elapse as of February 28, 2009, two
months will elapse on March 31, 2009, and so on.
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If this formula
results in any fractional Share, the Pro Rata RS Portion will be
rounded up to the nearest whole Share.
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(F) Retirement-Eligible
Participants Who Incur a Termination of Employment for Other
Reasons. If a Participant who is eligible for Retirement is, or
would be, terminated by the Company without Cause, such Participant
shall be considered to have been terminated by the Company without
Cause for purposes of the 2009 LTIP rather than having retired, but
only if the Participant acknowledges that, absent Retirement, the
Participant would have been terminated by the Company without
Cause. If, however, the employment of a Participant who is eligible
for Retirement is terminated by the Company for Cause, then
regardless of whether the Participant is considered as a retiree
for purposes of any other program, plan or policy of the Company,
for purposes of the 2009 LTIP, the Participant’s employment
shall be considered to have been terminated by the Company for
Cause.
(vi) Change in Control
. Notwithstanding the forgoing and subject to Section 4
below, upon a Participant’s Termination of Employment by the
Company without Cause or by the Participant for Good Reason
(including the Termination of Employment of the Participant if he
is employed by an Affiliate at the time the Company sells or
otherwise divests itself of such Affiliate) on or after a Change in
Control but prior to the second anniversary of such Change in
Control, any Restrictions in effect shall immediately lapse on the
date of such Termination of Employment and be of no further force
or effect as of such date.
(vii) Dividends . In
the event a cash dividend shall be paid with respect to Shares at a
time the Restrictions on the Restricted Stock have not lapsed, the
Participant shall be eligible to receive the dividend upon the
lapse of the Restrictions. The Restrictions shall apply to any such
dividend.
(b) Performance
Awards.
(i) Award Grant
. A Participant may receive a Performance Award for a
specified target cash amount as set forth in the
Participant’s Award Agreement (a “ Performance
Award ”).
(ii) Grant Date . The
Grant Date of the Performance Award will be determined by the
Committee and set forth in the Participant’s Award
Agreement.
(iii) Payout Criteria and Form
of Payment . Except as otherwise expressly set forth in
this Section 3(b), payment, if any, of a Performance Award
will be based on the following factors as described and defined
below: (A) the Cumulative Revenue Growth during the
Performance Period of the Company relative to the members of the
Airline Peer Group; and (B) the Average Annual Pre-Tax Income
Margin during the Performance Period of the Company relative to the
members of the Airline Peer Group.
The payout, if any, of a Performance
Award will be made (A) in Shares, calculated based on the
Conversion Formula (as defined below), to each Participant who is
employed by the Company as an executive vice president or more
senior officer or holds the position of general counsel or chief
financial officer of the Company (“ Executive Officer
Participant ”) at the time of such payout; and
(B) in cash in all other circumstances.
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(iv) Definitions
.
(A) “ Airline Peer
Group ” means AMR Corporation, Continental Airlines,
Inc., Southwest Airlines Co., UAL Corporation and US Airways Group,
Inc.
(B) The “ Average Annual
Pre-Tax Income Margin ” for Delta and each member of the
Airline Peer Group shall be calculated by using the subject
company’s Pre-Tax Income and Total Operating Revenue for the
applicable periods and the following formula: (A ÷ B ),
where:
A = Pre-Tax Income for 2009 and
2010; and
B = Total Operating Revenue for 2009
and 2010.
(C) The “ Conversion
Formula ” will apply to convert from cash to Shares the
payout, if any, of a Performance Award to a person who is an
Executive Officer Participant at the time of such payout. First,
the cash amount of the payout is calculated in the same manner as
if the payout is being made in cash. Next, the cash amount is
converted into a number of Shares based on the following formula: A
÷ B, where:
A = the amount of the payout for the
Performance Award if it is paid in cash; and
B = the closing price of a Share on
the New York Stock Exchange on the date that the Committee approves
the payouts, if any, of the Performance Awards to the Executive
Officer Participants following the Committee’s determination
of the achievement of the payout criteria described in
Section 3(b)(iii).
(D) The “ Cumulative
Revenue Growth ” for Delta and each member of the Airline
Peer Group shall be calculated by using the subject company’s
Total Operating Revenue for the applicable periods and the
following formula: (A + B ) ÷ C, where:
A = Total Operating Revenue for 2009
minus Total Operating Revenue for 2008;
B = Total Operating Revenue for 2010
minus Total Operating Revenue for 2009; and
C = Total Operating Revenue for
2008.
As a result of the merger (the
“ Merger ”) of a subsidiary of Delta with and
into Northwest Airlines Corporation (“ Northwest
”) on October 29, 2008, the Total Operating Revenue for
Delta for 2008 will be the sum of the Total Operating Revenue for
Delta and Northwest for that year, as adjusted to eliminate
intercompany transactions, classification differences and such
other matters as the Committee deems in its discretion to be
necessary or advisable to prevent the enlargement or dilution of
the benefits or potential benefits to be made available under
Section 3(b).
(E) “ GAAP ”
means accounting principles generally accepted in the United States
of America.
(F) “ Performance
Period ” means the period beginning on January 1,
2009 and ending on and including December 31, 2010.
(G) “ Pre-Tax Income
” means, subject to Section 3(c)(v)(B) below, the
subject company’s consolidated pre-tax income for the
applicable periods based on its regularly prepared and publicly
available statements of operations prepared in accordance with
GAAP, but excluding: (i) any material asset write downs;
(ii) expenses associated
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with employee equity securities;
(iii) gains or losses with respect to unusual or non-recurring
events, including, without limitation, changes in accounting
principles, bankruptcy-related reorganization items and other out
of period adjustments; and (iv) expenses accrued with respect
to any annual profit sharing plan, program or
arrangement.
(H) “ Total Operating
Revenue ” means, subject to Section 3(c)(v)(B)
below, the subject company’s total operating revenue for the
applicable periods based on its regularly prepared and publicly
available statements of operations prepared in accordance with
GAAP.
(v) Vesting
.
(A) General. Subject to the
terms of the 2007 Performance Plan and all other conditions
included in any applicable Award Agreement, the Performance Award
shall vest, as described in this Section 3(b)(v), as of the
end of the Performance Period to the extent that the Company ranks
number five (5)
