Edgar Filing: ATLAS AIR WORLDWIDE HOLDINGS INC

Definitive Proxy Statement

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES

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LOGO

LETTER TO OUR SHAREHOLDERS FROM THE BOARD OF DIRECTORS

Dear Shareholders,

We are pleased to invite you to attend the Annual Meeting of Shareholders on Wednesday, May 24, 2017. Our meeting will be held at 10:00 a.m., local time, at our principal executive offices located at 2000 Westchester Avenue, Purchase, New York 10577.

As your Board, we welcome this opportunity to communicate with you. In stewarding your Company, we seek to achieve long-term, sustainable performance and create value through the right business strategies, prudent risk management, effective corporate governance practices and executive compensation programs, and well-functioning talent and succession planning. We would like to highlight a few areas of particular significance for the Board this past year:

2016: A Truly Historic and Transformative Year

2016 was a truly historic and transformative year for Atlas Air Worldwide.

In keeping with our commitment to drive value for our shareholders and our vision to be our customers’ most trusted partner, we capitalized on several strategic opportunities to further strengthen our position as the leader in international aviation outsourcing.

We also delivered strong share performance in 2016. Our shares rose more than 26%, reflecting our growth initiatives and our increasing alignment with the fast-growing express and e-commerce markets.

In April, we acquired Southern Air Holdings, Inc. (“Southern”) in a highly complementary transaction that expands our platform into 777 and 737 operations and provides our customers with access to a broader array of aircraft and operating services.

A month later, we reached agreement to provide air transport services for leading e-commerce retailer Amazon.com, Inc. (“Amazon”). In addition to leasing twenty 767-300 freighters to Amazon and operating them in support of package deliveries to its customers, our arrangements provide for future growth of the relationship as Amazon may increase its business with us.

Also in 2016, we completed an agreement to operate a 747-400 freighter for Nippon Cargo Airlines, with an opportunity for additional aircraft in the future. Similarly, we entered into an agreement in early 2017 to operate one of our 747-400 freighters for Asiana Cargo.

While expanding our customer base and presence in key markets, we continued to focus on strengthening relationships with our current valued customers.

For example, we entered a five-year agreement with FedEx Express to provide five 747-400 freighter aircraft for its peak flying seasons beginning in 2017. We have worked closely and successfully with FedEx for many years, but this agreement allows both companies to plan for the longer term.

2016 ended on a strong note, capped by a fourth quarter in which we delivered record revenue, a significant increase in reported earnings and record adjusted earnings while generating both sequential and year-over-year improvements in our block-hour volumes and margins.

Both operationally and financially, our full-year results were driven by the strength of our ACMI and Charter businesses, the annuity-like contribution of our Dry Leasing operations, ongoing efficiency and productivity initiatives, and a disciplined balance sheet focus.

On a reported basis, income from continuing operations, net of taxes, totaled $42.6 million, or $1.70 per diluted share. On an adjusted basis, income from continuing operations, net of taxes, totaled $114.3 million, or $4.50 per diluted share in 2016*. These results reflected better contributions and synergies from Southern than originally anticipated. Results also reflected the impact of startup expenses and initial warrants related to our new service for Amazon, which we expect to become accretive in 2017 and to be meaningfully accretive to our earnings and cash flows over time.

Shareholder Outreach and Responsiveness

In 2016, we continued to ramp up our shareholder engagement practices, including actively reaching out to holders representing over 75% of our outstanding shares to better understand their perspectives and consider ideas for further improvements to our corporate governance practices, executive compensation programs, business strategy and performance, capital allocation strategy and public disclosures. This specifically targeted engagement is done in parallel with our ongoing investor relations outreach.

At the Board level, we continue to take shareholder viewpoints under careful consideration when reviewing and refining our programs, communications, and disclosures.

As a result, our current corporate governance and executive compensation practices reflect an ongoing constructive dialogue with our shareholders as well as corporate governance best practices. A few recent examples of these practices at work include the proactive adoption of proxy access provisions to our by-laws, enhanced and expanded disclosure in our proxy statement, engagement of a new independent compensation consultant, changes to our named executive officers’ (“NEOs’”) performance compensation goal mix and goal levels under our Annual Incentive Plan, implementation of a majority voting requirement to elect Directors in uncontested elections, rotation of certain Board Committee Chairs and continued Board and Audit Committee and Compensation Committee refreshment.

Board Leadership and Governance Update

Over the past two years, we have continued our commitment to best-in-class corporate governance practices, with a particular focus on maintaining the right balance of skills, experience, and diversity on our Board. As a result of our regular evaluation of the composition of the Board and its Committee leadership, and given the increasing focus by investors on board composition and refreshment, we are pleased to report that we have added a new independent director, Charles F. Bolden, Jr., to our Board in 2017, following the election of two new Directors, Bobby J. Griffin and John K. Wulff, in 2016. These three individuals bring complementary perspectives and experiences that further align the Board’s skills and expertise with the Company’s long-term business strategy. In the last three years, we have also refreshed the independent Chairman of our Board and the Chairs of our Audit Committee and Compensation Committee. We anticipate refreshing our remaining Committee Chair (the Nominating and Governance Committee) at the organizational meeting of the Board immediately following the Annual Meeting. The Board monitors and stays abreast of evolving market best practices in corporate governance, and we engage with and respond to shareholders based on their feedback and shape our practices and policies to ensure that we maintain a strong and well-balanced corporate governance structure.

Continued Alignment of Strategy, Performance and Executive Compensation

Our strong 2016 financial and operating results are a reflection of our continued efforts to remain a leader in international aviation outsourcing. During 2016, key accomplishments included the immediately accretive acquisition of Southern, the agreement with Amazon to lease and operate 20 767-300 aircraft, expanded relationships with several existing customers, including DHL and FedEx, and the establishment of relationships

*	Adjusted Diluted EPS and adjusted income from continuing operations, net of taxes, are non-GAAP measures. A reconciliation to the most directly comparable GAAP measures is contained in Exhibit A attached hereto.

with new customers, including Nippon Cargo Airlines and Asiana Cargo. Our long-term strategy is to move more deeply into the fast-growing integrator-express and e-commerce markets. Driving our execution of this strategy are an experienced, dedicated team of employees focused on our customers’ expectations; a modern, superior fleet tailored to meet our customers’ unique needs; a broad array of value-added, global operating services; and a solid financial structure.

Our 2016 executive compensation programs were thoughtfully structured to align with and drive our operational performance and support the achievement of our financial targets. Shareholder feedback has been and will continue to be influential in shaping both our governance and executive compensation practices.

Environmental, Social and Governance Issues

At AAWW, we are dedicated to serving our customers and the communities in which we operate. Fulfilling this commitment dictates that we build a vibrant, innovative organization that satisfies our customers’ needs and delivers value to our shareholders. Effectively addressing environmental, social and governance issues is a key part of building a premier organization. Doing so means maintaining sound business practices that (1) are designed to earn customer trust and support and maintain the highest level of legal and ethical conduct on the part of our employees, (2) are respectful to our employees and that reward them for their hard work, ingenuity and creativity, and (3) minimize the impact of our business on the environment and partner us with our customers and other stakeholders to ensure a clean, low-carbon future. Please see the section titled “Environmental, Social and Governance issues” for a discussion of the various ways in which we address these matters, which we view as an important part of our business.

Please feel free to share your thoughts or concerns with us. Communications may be addressed to the Board in care of the Office of the Secretary, Atlas Air Worldwide Holdings, Inc., 2000 Westchester Avenue, Purchase, NY 10577, or e-mailed to corporate.secretary@atlasair.com.

We value your input, your investment and your support.

Frederick McCorkle, Chairman

Robert F. Agnew

Timothy J. Bernlohr

Charles F. Bolden, Jr.

William J. Flynn

James S. Gilmore III

Bobby J. Griffin

Carol B. Hallett

Duncan J. McNabb

John K. Wulff

Notice of 2017

Annual Meeting of Shareholders

To be held on May 24, 2017

We will hold the 2017 Annual Meeting of Shareholders of Atlas Air Worldwide Holdings, Inc., a Delaware corporation, on Wednesday, May 24, 2017, at 10:00 a.m., local time, at our principal executive offices located at 2000 Westchester Avenue, Purchase, New York 10577, for the following purposes:

1.	To elect a Board of Directors to serve until the 2018 Annual Meeting of Shareholders or until their successors are elected and qualified;

2.	To ratify the selection of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the Company for the fiscal year ended December 31, 2017;

3.	To hold an advisory vote to approve the compensation of the Company’s NEOs;

4.	To hold an advisory vote regarding the frequency of the advisory shareholder vote to approve the compensation of the Company’s NEOs;

5.	To consider and vote on an amendment to our 2016 Incentive Plan to increase the number of shares that are available for issuance of awards under such plan; and

6.	To transact such other business, if any, as may properly come before the meeting and any adjournments thereof.

The foregoing matters are described in more detail in the Proxy Statement that is attached to this notice.

Only shareholders of record at the close of business on March 27, 2017, which date has been fixed as the record date for notice of the Annual Meeting of Shareholders, are entitled to receive this notice and to vote at the meeting and any adjournments thereof.

YOUR VOTE IS VERY IMPORTANT. WE HOPE YOU WILL ATTEND THIS ANNUAL MEETING OF SHAREHOLDERS IN PERSON. WHETHER OR NOT YOU ATTEND IN PERSON, PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD. RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE ANNUAL MEETING OF SHAREHOLDERS, YOU MAY VOTE IN PERSON EVEN IF YOU HAVE RETURNED A PROXY CARD. IF YOU HAVE RECEIVED MORE THAN ONE PROXY CARD, IT IS AN INDICATION THAT YOUR SHARES ARE REGISTERED IN MORE THAN ONE ACCOUNT. PLEASE COMPLETE, DATE, SIGN AND RETURN EACH PROXY CARD YOU RECEIVE.

By Order of the Board of Directors

LOGO

ADAM R. KOKAS

Executive Vice President, General Counsel,
Chief Human Resources Officer and Secretary

April 18, 2017

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE

ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 24, 2017

This Proxy Statement and the AAWW 2016 Annual Report are available for

downloading, viewing and printing at http://www.ezodproxy.com/atlasair/2017.


PROXY SUMMARY

PROXY SUMMARY

2016 Performance Highlights

Overview of Business

LOGO

We are a leading global provider of outsourced aircraft and aviation services. We operate the world’s largest fleet of 747 freighters and provide customers with a broad array of 747, 777, 767, 757 and 737 aircraft for domestic, regional and international cargo and passenger applications. Our fleet totaled 90 aircraft at year-end 2016, including the 23 we added pursuant to growth initiatives in 2016.

We provide unique value to our customers by giving them access to highly reliable new production freighters that deliver the lowest unit cost in the marketplace combined with outsourced aircraft operating services that we believe lead the industry in terms of quality and global scale. We operated 39,882 flights serving 425 destinations in 119 countries in 2016, reflecting our global scale and scope.

We service an expansive range of customers, including express delivery providers, e-commerce retailers, airlines, freight forwarders, the U.S. military, and charter brokers. We provide global services with operations in Africa, Asia, Australia, Europe, the Middle East, North America, and South America.

Our primary service offerings include the following:

•

ACMI (Aircraft, Crew, Maintenance, and Insurance): We provide outsourced cargo and passenger aircraft operating solutions, including the provision of an aircraft, crew, maintenance, and insurance. Customers assume fuel, demand, and yield (rate) risk and most other operational fees and costs.

•

CMI (Crew, Maintenance, and Insurance): Within ACMI, we also provide outsourced cargo and passenger aircraft operating solutions, including the provision of crew, line maintenance, and insurance, but not the aircraft. Customers assume fuel, demand and price risk, and are responsible for the providing the aircraft (which they may lease from us), heavy and non-heavy maintenance, and most other operational fees and costs.

•

Charter: We provide cargo and passenger aircraft charter services to customers including the U.S. Military Air Mobility Command (“AMC”), brokers, freight forwarders, direct shippers, airlines, sports teams and fans, and private charter customers. The customer pays a fixed charter fee that includes fuel, insurance, landing fees, navigation fees, and most other operational fees and costs.


		PROXY SUMMARY

•

Dry Leasing: We provide cargo and passenger aircraft and engine leasing solutions. The customer operates, and is responsible for insuring and maintaining, the flight equipment.

We currently operate our service offerings through the following reportable segments: ACMI, Charter, and Dry Leasing.


ACMI and CMI	Charter	Dry Leasing

~75% of Block Hours	~25% of Block Hours	Not Tied to Block Hours

Block Hours are the time intervals between when an aircraft departs the terminal until it arrives at the destination terminal and are the units by which we typically charge ACMI and Charter customers. In Dry Leasing, customers are typically charged a fixed monthly amount for the use of an aircraft or engine.

2016 Performance Highlights and Key Accomplishments

We delivered strong operating and share price performance in 2016. Our shares rose more than 26% in value, reflecting our growth initiatives and our increasing alignment with faster-growing integrator-express and e-commerce markets.

Strategic initiatives

•

In April, we acquired Southern in a highly complementary transaction that expands our platform into 777 and 737 operations and provides our customers with access to a broader array of aircraft and operating services.

•

A month later, in May, we reached an agreement to provide air transport services for leading e-commerce retailer Amazon. In addition to leasing twenty 767-300 freighters to Amazon and operating them in support of package deliveries to its customers, our arrangements provide for future growth of the relationship as Amazon may increase its business with us.

Growth/Results

Our results in 2016 were driven by the strength of our ACMI and Charter businesses, the annuity-like contribution of our Dry Leasing operations, ongoing efficiency and productivity initiatives, and a disciplined balance sheet focus.

Our results in 2016 included immediate accretion from Southern, with better contributions and synergies than originally anticipated. They also reflected the impact of startup expenses and initial warrants related to our new service for Amazon, which we expect to become accretive in 2017 and to be meaningfully accretive to our earnings and cash flows over time.

In addition to expanding our operating platforms and our fleet from 67 to 90 aircraft during 2016, we continue to deliver against aggressive, objective, on-time customer service quality goals and to maintain a safe, compliant operation while maintaining the same lean management structure.

We continue to execute on strategic initiatives to strengthen and diversify our business mix, expand our customer base, generate cost savings through operating efficiencies, and enhance our portfolio of assets and services. Our actions have positioned us to capitalize on market opportunities.


PROXY SUMMARY

Strong Performance in 2016

Acquired

Southern

(Five 777 and Five 737 Freighters)

Entered into

Amazon Agreements

(20 767-300Fs)

Reported/Adjusted EPS

$1.70/$4.50*

TSR

> 26%

New Operating Platforms

Future Growth Opportunity

Southern Accretion, Amazon Startup Expenses

Growth Initiatives, Express/E-commerce

Alignment

Disciplined and Balanced Capital Allocation Strategy

We are committed to creating, enhancing and delivering value to our shareholders.

Our commitment reflects a disciplined and balanced capital allocation strategy that has focused on maintaining a strong balance sheet, investing in modern, efficient assets, and returning capital to shareholders.

2016 Capital Allocation Actions:

•

Acquired Southern, expanding into 777 and 737 CMI freighter platforms

•

Secured twenty 767-300 aircraft for Amazon dry lease and CMI agreements

•

Entered into $150 million secured revolving credit facility

•

Paid $179 million of debt principal

•

Focused on maintaining a healthy cash position

•

Maintained authority to repurchase shares up to $25 million

In April 2016, we acquired Southern, a premier provider of intercontinental and domestic CMI services.

The acquisition of Southern, which was immediately accretive, provided us immediate entry into 777 and 737 aircraft operating platforms, with potential for developing additional business with existing and new customers. The acquisition has resulted in a more diversified and profitable company offering access to the widest range of modern, efficient aircraft.

In May 2016, we reached agreement to provide air transport services for leading e-commerce retailer Amazon. In addition to leasing twenty 767-300 freighters to Amazon and operating them in support of package deliveries to its customers, our arrangements provide for future growth of the relationship as Amazon may increase its business with us.

We have secured all 20 of the aircraft required for Amazon, as well as a spare and expect to ramp up to full service through 2018.

In December 2016, we entered into a three-year, $150 million secured revolving credit facility for general corporate purposes, including financing the acquisition and conversion of 767 aircraft prior to obtaining permanent financing for the converted aircraft.

^*	Adjusted Diluted EPS from continuing operations, net of taxes is a non-GAAP measure. A reconciliation to the most directly comparable GAAP measure is contained in Exhibit A attached hereto.

iii


		PROXY SUMMARY

LOGO

With the Southern and Amazon initiatives, we are moving more deeply into the fast-growing express and e-commerce markets during what is an era of new business growth and development for the Company.

Shareholder Outreach and Engagement

We have engaged in extensive ongoing shareholder outreach over the past five years to better understand shareholder perspectives and consider ideas for improvements to, among other things, our corporate governance and executive compensation practices, as well as our business strategy and performance, capital allocation strategy and public disclosures. This year, we again engaged in a particularly robust shareholder outreach program, reaching out to shareholders representing approximately 75% of our outstanding shares and engaging in discussions with those representing about one-half of our outstanding shares. We have made significant recent changes to our governance and executive compensation practices in response to insight gained during these discussions (as well as recommendations from our various advisors).

Below is a summary of key changes we implemented to our compensation and governance practices in response to shareholder feedback.

Recent and near-future shareholder - driven changes

•

Anticipate rotation of the Nominating and Governance Committee Chair at the organizational meeting of the Board immediately following the Annual Meeting

•

Changes since our last annual shareholder meeting:

•

Added proxy access provisions to our by-laws (p. 17)

•

Increased the weight of corporate performance goals from 50% to 60% in determining compensation of our NEOs under the 2017 Annual Incentive Program (p. 34)

•

Strengthened disclosure to reflect that we once again set target goal for company performance (net income) under the 2017 Annual Incentive Plan at a higher level than actual company performance of net income in 2016 (p. 36)

•

Memorialized our general practice of granting equity awards subject to vesting periods greater than one year by adding minimum vesting language to our 2016 Plan (p. 62)

•

Engaged a new independent compensation consultant, Pay Governance (p. 22)

•

Added enhanced disclosure regarding our environmental, social and governance policies (p. 20)

•

Adopted limits on Director service on other boards in keeping with market best practices and investor input regarding a board’s time commitment.

•

Other recent changes/decisions:

•

Refreshed our board membership (one new 2017 director, two new directors elected in 2016), with a view towards increasing diversity (p. vi)

•

Required majority voting over the last two years to elect Directors in uncontested elections

•

Rotated our Compensation and Audit Committee Chairs

We regularly conduct ongoing reviews of both our governance and executive compensation practices to ensure that we maintain best practices and enhanced disclosure in our proxy statement and other SEC filings. We have also worked to expand and enhance our public disclosure around the topics that were of interest to our shareholders during these discussions.


PROXY SUMMARY

In general, our outreach program over the past two years has targeted shareholders representing approximately 75% of our outstanding shares, with investor discussions occurring throughout the year on topics relevant to our Company and on the evolving governance landscape in the off-season, as well as our annual meeting ballot items.

•

In-Season Engagement. In 2016, prior to our annual meeting, we reached out to shareholders representing approximately 70% of our outstanding shares (including each of our 20 largest holders) and held discussions with all available shareholders.

•

Off-Season Engagement. After our 2016 annual meeting, we reached out to shareholders representing approximately 75% of our outstanding shares and held discussions with all interested holders, representing approximately one-half of our outstanding shares, to obtain additional feedback on our corporate governance and executive compensation practices. Although shareholders with whom we held discussions did not identify specific executive compensation practices requiring changes, shareholders reacted favorably to our previous compensation and governance changes and to our strong common stock performance in 2016. We gathered meaningful topical feedback from our shareholder engagement program (e.g., in-house metrics used by shareholders to assess pay for performance) that the Board considered and incorporated into its discussions, including in setting and structuring 2017 compensation.

The diagram below represents our ongoing shareholder outreach process.

LOGO

Compensation Program that Aligns Pay and Performance

Our compensation programs are designed to drive achievement of our business strategies and provide competitive opportunities. Accordingly, achievement of most of those opportunities depends on the attainment of certain performance goals tied to Company performance. Atlas’ compensation programs are designed to provide compensation that:

1.	Attracts, motivates and retains high-performing executives

2.	Provides performance-based incentives to reward achievement of short- and long-term business goals and strategic objectives which align with our operating plan, while recognizing individual contributions

3.	Aligns the interests of our executives with those of our shareholders

…and taken into consideration as the Board contemplates

any changes to our corporate governance and compensation programs, communications and disclosures

Twice a year, outreach to holders of ~75% of outstanding shares

AAWW’s Shareholder Outreach and Engagement Process

…with shareholder input reported back to the relevant committees and full Board

…to communicate on key topics including:

Business Strategy and Performance

Corporate Governance

Executive Compensation

Public disclosures


		PROXY SUMMARY

In making compensation decisions for 2016, the Compensation Committee considered our operating strategy and goals, as well as comments received through our shareholder outreach program. While the Committee did not make any fundamental adjustments to the compensation opportunities of the NEOs or the overall design of our incentive arrangements, the immediately accretive Southern transaction, and transformative Amazon transaction, which obtained over 99% shareholder approval, triggered the change of control provisions existing in certain of our compensation plans and programs, which resulted in certain one-time payments and benefits being accelerated into 2016. See pages 31 and 42 in the Compensation Discussion and Analysis for additional detail concerning these matters.

The Company performance metrics we believe are important to our shareholders are the same metrics as we use in our incentive plans in 2016:

Annual Incentives


Company Performance Metric				NEO Performance Metric
Adjusted Earnings Per Share				Adjusted Earnings Per Share
Customer Service On-Time Reliability				Customer Service On-Time Reliability
Strategic Initiatives				Individual Performance Objectives
Long-Term Incentives – PSUs and Performance Cash
Adjusted EBITDA Growth				Adjusted EBITDA Growth
Return on Invested Capital				Return on Invested Capital

The Compensation Committee has designed and administered compensation programs aligned with this philosophy and is committed to continued outreach to shareholders to understand and address comments on our compensation programs.

Strong, Well-Balanced Corporate Governance Practices

✓

Highly Qualified Board. Our Directors bring deep industry experience to provide effective oversight in the boardroom.

✓

Independent Board Leadership. We have had separate Chairman of the Board and CEO roles for more than 12 years, with an independent Chairman, elected annually by our Board. In the last three years, we have refreshed the independent Chairman (May 2014) and the Chairs of our Audit Committee (May 2016) and Compensation Committee (September 2014), providing strong, independent Board and Committee leadership. We anticipate refreshing our remaining Committee Chair (Nominating and Governance Committee) at the organizational meeting of the Board immediately following the Annual Meeting.

✓

Focus on Board Composition, Refreshment and Rotation. We regularly evaluate the composition of our Board and our Committee leadership to ensure that we have the right balance of experience and perspective, and a mix of skills, backgrounds, and diversity to effectively facilitate oversight of management and strategy. To that end, we have welcomed three new directors, Bobby J. Griffin, John K. Wulff and Charles F. Bolden, Jr., to our Board in 2016 and 2017. We also recently rotated the Chairs of our Audit Committee and Compensation Committee, following the rotation of the Chair of the Board in mid-2014.



Bobby J. Griffin	John K. Wulff	Charles F. Bolden, Jr.


PROXY SUMMARY

To best serve shareholders, our director nominees bring an appropriate balance of fresh perspective and experience to effectively oversee strategy and management.

Upon election by our shareholders at the 2017 Annual Meeting, the average tenure of our Directors and the composition of our Board would be as follows:

✓

Best Practices. We maintain corporate governance best practices that promote accountability and protect shareholder rights, including the adoption of proxy access provisions in our by-laws and the implementation of majority voting in uncontested elections.

In addition, we have annually elected Directors, 100% Board independence (except our CEO), separate CEO and Chairman positions, no poison pill in place, 100% independent Board committees, and ongoing dialogue with shareholders, including on governance, executive compensation, and investor relations matters.

Please see pages 12-21 for further discussion of our governance practices.

vii


TABLE OF CONTENTS

TABLE OF CONTENTS


	Page
General Information		1

About the Annual Meeting		2
Record Date and Voting Securities		3
Quorum, Vote Required		3

Proposal No. 1 – Election of Directors		4
Director Core Competencies		4
Nominees for Director		6

Corporate Governance, Board and Committee Matters		12
Executive Sessions		12
Board Leadership Structure		12
Board Oversight of Risk Management Process		13
Compensation of Outside Directors		13
Communications with the Board		15
Board Effectiveness and Annual Assessment		15
Director Independence		15
Board Committees		16
Nominating and Governance Committee		16
Audit Committee		18
Code of Ethics and Employee Handbook		19
Environmental, Social and Governance Issues		20
Compensation Committee		21

Compensation Discussion and Analysis		24
Overview		25
Discussion of Our Compensation Program		31
Compensation Committee Report		45
Compensation Tables and Explanatory Notes		46

Proposal No. 2 – Ratification of Pricewaterhousecoopers LLP as the Company’s Independent Registered Public Accounting Firm for 2017		59

Proposal No. 3 – Advisory Vote to Approve the Compensation of Our Named Executive Officers		60

Proposal No. 4 – Advisory Vote Regarding the Frequency of the Advisory Shareholder Vote to Approve the Compensation of Our Named Executive Officers		61

viii | Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement


		TABLE OF CONTENTS


	Page

Proposal No. 5 – Approval of an Amendment to our 2016 Incentive Plan		62

Stock Ownership		71
Beneficial Ownership Table		71
Section 16(a) Beneficial Ownership Reporting Compliance		73
Certain Relationships and Related Person Transactions		73

Deadline for Receipt of Shareholder Proposals to be Presented at the 2018 Annual Meeting		74
Shareholder Proposals to Be Included in Our 2018 Proxy Statement		74
Proxy Access Notice Procedures		74
Advance Notice Procedures		74

Additional Information		74
Shares Registered in the Name of a Bank, Broker or Nominee		74
Broker Non-Votes		75
Revocability of Proxies		75
Proxy Solicitation		75
Proxy Tabulation		75
Separate Voting Materials		75
List of Shareholders		76
Additional Copies of Annual Report		76
Limited Voting by Foreign Owners		76
Extent of Incorporation by Reference of Certain Materials		77

Other Matters		78

Exhibits

Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement | ix


		GENERAL INFORMATION

ATLAS AIR WORLDWIDE HOLDINGS, INC.

2000 Westchester Avenue

Purchase, New York 10577

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

May 24, 2017

GENERAL INFORMATION

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board of Directors” or “Board”) of Atlas Air Worldwide Holdings, Inc., a Delaware corporation (“AAWW” or the “Company”), for use at the Annual Meeting of Shareholders (the “Annual Meeting”) to be held on Wednesday, May 24, 2017, at our principal executive offices located at 2000 Westchester Avenue, Purchase, New York 10577 at 10:00 a.m., local time, and at any adjournments or postponements of the Annual Meeting. It is expected that this Proxy Statement and the accompanying proxy will first be mailed or delivered to shareholders beginning on or about April 20, 2017. Proxies may be solicited in person, by telephone or by mail, and the costs of such solicitation will be borne by AAWW.

THE COMPANY

AAWW is a leading global provider of outsourced aircraft and aviation operating services. We operate the world’s largest fleet of 747 freighters and provide customers with a broad array of 747, 777, 767, 757 and 737 aircraft for domestic, regional and international cargo and passenger applications.

AAWW is a holding company with two wholly owned operating subsidiaries, Atlas Air, Inc. (“Atlas”) and, as of April 7, 2016, Southern Air, Inc. (a subsidiary of Southern). We also have a 51% economic interest and a 75% voting interest in Polar Air Cargo Worldwide, Inc. (“Polar”). In addition, we are the parent company of several wholly owned subsidiaries related to our dry leasing services (collectively referred to as “Titan”). Except as otherwise noted, AAWW, Atlas, Southern and Titan (along with all other entities included in AAWW’s consolidated financial statements) are collectively referred to herein as the “Company,” “AAWW,” “we,” “us,” or “our.”

Combined with Polar, AAWW provides ACMI, CMI, Charter and Dry Leasing services to DHL Express (“DHL”) in support of DHL’s transpacific express, North American and intra-Asian networks. Additionally, we fly between the Asia Pacific region, the Middle East and Europe on behalf of DHL and other customers. Atlas also provides incremental charter capacity to Polar and DHL Express on an ad hoc basis.

2016 STRATEGIC ACTIONS

Building on our previous successes and our commitment to pursue strategic growth, we made several decisions in 2016 that are among the most important in the history of AAWW and in line with a long-term strategic plan approved by our Board of Directors. These transformational initiatives include our immediately accretive acquisition of Southern in April 2016 and long-term commercial agreements with Amazon in May 2016, which continue to increase our presence in the fast-growing integrator-express and e-commerce markets.

Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement | 1


2016 STRATEGIC ACTIONS

Our acquisition of Southern is a highly complementary transaction that expands our operating platform and provides our customers with access to a broader array of aircraft and operating services. Southern’s 10-aircraft, 777 and 737 CMI operations generated immediate earnings accretion in 2016 and further developed our business base in the dynamic express and e-commerce sectors, both of which rely on airfreight and dedicated freighter services.

Our new relationship with Amazon supports the ongoing expansion of its e-commerce business and its customer delivery capabilities. In addition to leasing twenty 767-300 converted freighters to Amazon and operating them in support of package deliveries to its customers, our arrangements provide for future growth of the relationship as Amazon may increase its business with us. We expect these agreements to be meaningfully accretive to our earnings and cash flows over time.

“Amazon One,” our first aircraft for Amazon and the first in its new “Prime Air” livery, began operations in August 2016, followed by a second aircraft in early 2017. We have secured all 20 of the aircraft required for Amazon, as well as a spare, and expect to ramp up to full service through 2018.

As part of the inherent value creation and to align interests and strengthen the long-term relationship between the companies, we granted Amazon warrants to acquire up to 20% of AAWW’s common shares through May 2021 at a price of $37.50 per share. A portion of the warrant, representing the right to purchase 3.75 million shares, vested immediately upon issuance of the warrant and the remainder of the warrant, representing the right to purchase 3.75 million shares, will vest in increments of 375,000 shares as the lease and operation of each of the 11th through 20th aircraft commences. The agreements also provide incentives for future growth of the relationship. In that regard, we granted Amazon warrants to acquire up to an additional 10% of our outstanding common shares through May 2023 at the same exercise price, with vesting tied to payments made by Amazon for additional business with us.

ABOUT THE ANNUAL MEETING

At our Annual Meeting, the holders of shares of our Common Stock, par value $0.01 per share (the “Common Stock”), will act upon the matters outlined in the notice of meeting at the beginning of this Proxy Statement, in addition to transacting such other business, if any, as may properly come before the meeting or any adjournments thereof. The shares represented by your proxy will be voted as indicated on your proxy, if properly executed. If your proxy is properly signed and returned, but no directions are given on the proxy, the shares represented by your proxy will be voted:

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FOR the election of the Director Nominees named herein, to serve until the 2018 Annual Meeting or until their successors are elected and qualified (Proposal No. 1);

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FOR ratifying the selection of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the Company for the year ending December 31, 2017 (Proposal No. 2);

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FOR the adoption of an advisory vote approving the compensation of our NEOs (the “Say-on-Pay” vote) (Proposal No. 3);

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FOR an advisory vote to hold annually an advisory shareholder vote to approve the compensation of our NEOs (the “Say on Frequency” vote) (Proposal No. 4);

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FOR the approval of an amendment to our 2016 Incentive Plan to increase the number of shares that are available for issuance of awards under such plan (Proposal No. 5).

In addition, if any other matters are properly submitted to a vote of shareholders at the Annual Meeting, the accompanying form of proxy gives the proxy holders the discretionary authority to vote your shares in accordance with their best judgment on that matter. Unless you specify otherwise, it is expected that your shares will be voted on those matters as recommended by our Board of Directors, or if no recommendation is given, in the proxy holders’ discretion.

For additional information regarding our Annual Meeting, see “Additional Information” at the end of this Proxy Statement.

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		ABOUT THE ANNUAL MEETING

Record Date and Voting Securities

All of our shareholders of record at the close of business on March 27, 2017 (the “Record Date”) are entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements thereof. As of the Record Date, there were 25,255,177 shares of Common Stock issued and outstanding. Each outstanding share of Common Stock will be entitled to one vote on each matter considered at the Annual Meeting. A description of certain restrictions on voting by shareholders who are not “U.S. citizens,” as defined by applicable laws and regulations, can be found in “Additional Information — Limited Voting by Foreign Owners” at the end of this Proxy Statement.

Quorum, Vote Required

A majority of the outstanding shares of Common Stock as of the Record Date must be present, in person or by proxy, at the Annual Meeting to have the required quorum for the transaction of business. If the number of shares of Common Stock present in person and by proxy at the Annual Meeting does not constitute the required quorum, the Annual Meeting may be adjourned to a subsequent date for the purpose of obtaining a quorum.

Proposal No. 1: Election of Directors. In an uncontested election, a Director is elected by a majority of the votes cast (the number of shares voted “For” a Director-Nominee must exceed the number of votes cast “Against” that Director-Nominee). Shares voting “Abstain” or broker non-votes will have no effect on the election of Directors. Brokers, banks, and other nominees have no discretionary voting power in respect of this item.

Proposal No. 2: Ratification of the selection of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the Company for the fiscal year ending December 31, 2017. The affirmative vote of a majority of the shares represented at the Annual Meeting, either in person or by proxy and entitled to vote on this proposal, is required to ratify the selection of PricewaterhouseCoopers LLP. Shares voting “Abstain” will have the same effect as a vote “Against” this Proposal 2. Brokers, banks, and other nominees have discretionary voting power in respect of this item.

Proposal No. 3: Advisory Vote to Approve the Compensation of the Company’s NEOs. Because Proposal 3 asks for a non-binding, advisory vote, there is no “required vote” that would constitute approval. We value highly the opinions expressed by our shareholders in this advisory vote, and our Compensation Committee, which is responsible for overseeing and administering our executive compensation programs, will consider the outcome of the vote when designing our compensation programs and making future compensation decisions for our NEOs. Shares voting “Abstain” will have the same effect as a vote “Against” this Proposal 3. Broker non-votes will have no effect on this non-binding advisory vote. Brokers, banks, and other nominees have no discretionary voting power in respect of this item.

Proposal No. 4: Advisory Vote Regarding the Frequency of the Advisory Shareholder Vote to Approve the Compensation of the Company’s NEOs. Because Proposal 4 also asks for a non-binding, advisory vote, there is no “required vote” that would constitute approval. We value highly the opinions expressed by our shareholders in this advisory vote. Our Board has recommended an annual vote with respect to this item. However, if another frequency receives more votes, our Board will take that fact into account when making its decision on how often to hold executive compensation advisory votes. Shares voting “Abstain” or broker no-votes will have no effect on this non-binding advisory vote. Brokers, banks, and other nominees have no discretionary voting power in respect of this item.

Proposal No. 5: Approval of an Amendment to our 2016 Incentive Plan. The affirmative vote of a majority of the shares represented at the Annual Meeting, either in person or by proxy and entitled to vote on this proposal, is required to approve an amendment to our 2016 Incentive Plan to increase the number of shares that are available for issuance of awards under such plan. Shares voting “Abstain” or broker no-votes will have no effect on approval of an amendment to our 2016 Incentive Plan. Brokers, banks, and other nominees have no discretionary voting power in respect of this item.

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PROPOSAL NO. 1 – ELECTION OF DIRECTORS

PROPOSAL NO. 1 – ELECTION OF DIRECTORS

Our Board has nominated ten persons to stand for election at the 2017 Annual Meeting and to hold office until the next Annual Meeting. All Nominees are currently Directors elected at the 2016 Annual Meeting, except for Mr. Bolden, who was elected a Director by the Board in February 2017. The Nominating and Governance Committee has recommended the ten Nominees for nomination by the Board after an evaluation of the size and composition of the Board and a review of each member’s skills, characteristics, and independence. The Board believes that each of the Nominees brings strong skills, background, experience and industry expertise to the Board, giving the Board as a group the appropriate balance of skills needed to exercise its oversight responsibilities. Mr. Bolden was identified by two of our independent Directors as part of the Nominating and Governance Committee’s comprehensive candidate selection process for identifying potential Directors with a view to refreshing the Board and enhancing its skills, characteristics and diversity.

Each Nominee has consented to be named as a Nominee for election as a Director and has agreed to serve if elected. Except as otherwise described below, if any of the Nominees is not available for election at the time of the Annual Meeting, discretionary authority will be exercised to vote for substitutes designated by our Board of Directors, unless the Board chooses to reduce the number of Directors. Management is not aware of any circumstances that would render any Nominee unavailable. At the Annual Meeting, Directors are expected to be elected to hold office until the 2018 Annual Meeting or until their successors are elected and qualified, as provided in our By-Laws.

Because this election is not a contested election, each Director will be elected by the vote of the majority of the votes cast when a quorum is present. A “majority of the votes cast” means that the number of votes cast “for” a Director exceeds the number of votes cast “against” that Director. “Votes cast” excludes abstentions and any votes withheld by brokers in the absence of instructions from street name holders (“broker non-votes”).

It is the policy of the Board that, as a condition of nomination, each incumbent Director nominated has submitted to the Secretary of the Company an irrevocable contingent resignation. This resignation will be effective only if (i) the Nominee fails to receive a majority of the votes cast in an uncontested election and (ii) the Board accepts such resignation within 60 days following the certification of the election results.

Director Core Competencies

Our Board strives to maintain an appropriate balance of experience, tenure, diversity, leadership, skills and qualifications that are of importance to our Company and the execution of our strategy. Given the diversity of our operations, it is important to bring together Directors with differing experiences, perspectives and backgrounds to ensure proper oversight of the interests of our Company and our shareholders.

The Nominating and Governance Committee works with the full Board to determine the qualifications and experiences it believes are most relevant and responsive to the needs of our business. In doing so, the Nominating and Governance Committee takes into account a number of factors, including the Company’s:

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Evolving strategic priorities;

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Existing characteristics of our Board, including tenure and diversity; and

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Results of our annual Board and Committee self-evaluations.

In 2016, the Board of Directors and the Nominating and Governance Committee continued a process developed in 2015 for seeking out, evaluating and recommending potential candidates for election to the Board. During 2016, the full Board, under the guidance of the Nominating and Governance Committee, undertook a thorough review of the skills, qualifications and tenure of our incumbent Directors, as well as the size of the Board, in the context of our long-range strategic plan, consistent with our governance principles, and taking into account feedback from shareholder outreach. The Board reviewed in detail the experience, skills, and qualifications of our incumbent Directors and identified areas that would enhance the overall strength of our current Board and the ability of the

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		PROPOSAL NO. 1 – ELECTION OF DIRECTORS

AAWW’s Board of Directors’ Skills and Qualifications

Civil and Governmental Aviation

Corporate Governance

Finance, Accounting and Risk Management

International and National Trade

Global Operations

Strategic Planning

Mergers and Acquisitions

Capital Structure

Transportation and Security

Legal, Regulatory and Government Affairs

Procurement and Distribution

Military Affairs Sales and Marketing Previous Public Company CEO/CFO/Executive Experience

Company to execute on its long-range strategic plan. Key qualifications that the Board and Committee identified included civil and governmental aviation, transportation and security, global operations, strategic planning, corporate governance and military affairs.

The Board and the Nominating and Governance Committee asked all of the Directors to consider the skills and qualifications identified and recommend potential candidates to be considered, and established a committee consisting of the Chair of the Nominating and Governance Committee, the Chairman of the Board, the Chief Executive Officer and one of the independent Directors to interview and evaluate the identified candidates and make recommendations to the Nominating and Governance Committee. Over several months, this special committee interviewed all candidates recommended by the members of the Nominating and Governance Committee, as well as members of the Board. While all of the candidates interviewed demonstrated an extraordinary and diverse background and scope of experience, the Nominating and Governance Committee determined to recommend, and with approval by the Board to nominate, Mr. Bolden for election as a Director of the Company.

In consideration of the factors noted above, the Board actively seeks new Directors who possess the skills and qualifications that would enhance Board effectiveness. The chart below depicts the current skills, qualifications, and expertise represented on our Board.

LOGO

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES NAMED BELOW.

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PROPOSAL NO. 1 – ELECTION OF DIRECTORS

Nominees for Director


Frederick McCorkle Independent Chairman Age: 72 Director since: 2004 Committees: Compensation Nominating and Governance				Background: Lieutenant General Frederick McCorkle, Retired served in the U.S. Marine Corps from 1967 to October 2001. He last served as Deputy Commandant for Aviation, Headquarters, Marine Corps, Washington, D.C. In this position, he was responsible for all of Marine Aviation procurement, material and parts support, including maintenance of Marine Corps aircraft, with a budget in excess of $8 billion. General McCorkle began his career as a naval aviator in 1969 and accumulated over 6,500 flight hours in more than 65 different series of aircraft over the course of his career. His assignments, accomplishments, and decorations are numerous and include the Distinguished Flying Cross, the Purple Heart, the Air Medal, the Navy Commendation Medal, and the Navy Achievement Medal. General McCorkle is currently a member of the board of directors of Lord Corporation and Jura Corporation (both privately held businesses) and of Rolls-Royce North America (a unit of Rolls Royce Group plc).

				Board Skills and Qualifications: Civil and Governmental Aviation; Corporate Governance; Global Operations; Legal Regulatory and Government Affairs; Military Affairs; Procurement and Distribution; Strategic Planning; Transportation and Security

Robert F. Agnew Independent Director Age: 66 Director since: 2004 Committees: Audit Nominating and Governance				Background: Mr. Agnew is President and Chief Executive Officer of Morten Beyer & Agnew, an international aviation consulting firm experienced in the financial modeling and technical due diligence of airlines and aircraft funding (Morten Beyer & Agnew is a privately held business). Mr. Agnew has over 30 years of experience in aviation and marketing consulting and has been a leading provider of aircraft valuations to banks, airlines, and financial institutions worldwide. Previously, he served as Senior Vice President of Marketing and Sales at World Airways. Mr. Agnew began his commercial aviation career at Northwest Airlines, where he concentrated on government and contract sales, schedule planning, and corporate operations research. Earlier, he served in the U.S. Air Force as an officer and instructor navigator with the Strategic Air Command. Mr. Agnew is also a member of the Board of directors of TechPubs LLC (a privately held business) and, within the last five years, served as director of Stanley Martin Communities, LLC (also a privately held business). In addition, he is a member of the Board of Trustees of the International Society of Transport Aircraft Trading Foundation and formerly chaired the Military Airlift Committee of The National Defense Transportation Association.

				Board Skills and Qualifications: Civil and Governmental Aviation; Finance, Accounting and Risk Management; Global Operations; Mergers and Acquisitions; Military Affairs; Previous Public Company CEO/CFO/Executive Experience; Procurement and Distribution; Sales and Marketing; Strategic Planning; Transportation and Security

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		PROPOSAL NO. 1 – ELECTION OF DIRECTORS


Timothy J. Bernlohr Independent Director Age: 58 Director since: 2006 Committees: Audit (Chair) Nominating and Governance				Background: Mr. Bernlohr is the founder and managing member of TJB Management Consulting, LLC, which specializes in providing project-specific consulting services to businesses in transformation, including restructurings, interim executive management and strategic planning services (TJB Management Consulting is a privately held business). Mr. Bernlohr founded the consultancy in 2005. Mr. Bernlohr was President and Chief Executive Officer of RBX Industries, Inc., which was a nationally recognized leader in the design, manufacture, and marketing of rubber and plastic materials to the automotive, construction, and industrial markets, until it was sold in 2005. Prior to joining RBX in 1997, Mr. Bernlohr spent 16 years in the International and Industry Products divisions of Armstrong World Industries, where he served in a variety of management positions. Mr. Bernlohr also serves as a director of WestRock Company (Chairman, Compensation Committee), Overseas Ship Holding Group (Chairman, Compensation Committee) and International Seaways, Inc. (Chairman, Compensation Committee) Within the last five years, he was a director of Chemtura Corporation, Rock-Tenn Company, Smurfit Stone Container Corporation, The Cash Store Financial Services Inc., Ambassadors International, Inc., Aventine Renewable Resources, and WCI Steel, Inc.

				Board Skills and Qualifications: Capital Structure; Corporate Governance; Finance, Accounting and Risk Management; Legal, Regulatory and Government Affairs; Mergers and Acquisitions; Previous Public Company CEO/CFO/Executive Experience; Procurement and Distribution; Sales and Marketing Strategic Planning; Transportation and Security

Charles F. Bolden, Jr. Independent Director Age: 70 Director since: February 2017				Major General Charles F. Bolden, Jr., Retired U.S. Marine Corps served as the 12^th Administrator of the National Aeronautics and Space Administration (NASA) from July 2009 to January 2017. As Administrator, he led a nationwide NASA team to advance the missions and goals of the U.S. space program. General Bolden’s 34-year career with the U.S. Marine Corps also included 14 years as a member of NASA’s Astronaut Office. After joining the Office in 1980, General Bolden traveled to orbit four times aboard the space shuttle between 1986 and 1994, commanding two of the missions and piloting two others. His flights included deployment of the Hubble Space Telescope and the first joint U.S.-Russian shuttle mission, which featured a cosmonaut as a member of his crew. General Bolden left NASA in 1994 and returned to the operating forces of the Marine Corps. His final duty was as Commanding General of the 3rd Marine Aircraft Wing, Miramar, CA. General Bolden currently serves as Director of Lord Corporation (a privately held business).

				Board Skills and Qualifications: Civil and Governmental Aviation; Corporate Governance; Global Operations; Military Affairs; Strategic Planning; Transportation and Security

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PROPOSAL NO. 1 – ELECTION OF DIRECTORS


William J. Flynn President and CEO Age: 63 Director since: 2006				Background: Mr. Flynn has been our President and Chief Executive Officer since June 2006. Mr. Flynn has a 40-year career in international supply chain management and freight transportation. Prior to joining us, Mr. Flynn served as President and Chief Executive Officer of GeoLogistics Corporation since 2002 where he led a successful turnaround of the company’s profitability and the sale of the company in September 2005. Prior to his tenure at GeoLogistics, Mr. Flynn served as Senior Vice President at CSX Transportation from 2000 to 2002. Mr. Flynn spent over 20 years with Sea-Land Service, Inc., a global provider of container shipping services, serving in roles of increasing responsibility in the U.S., Latin America, and Asia. He ultimately served as head of the company’s operations in Asia. Mr. Flynn is also a director of Republic Services, Inc. He is Chairman of the National Defense Transportation Association and a Director of Airlines for America.

				Board Skills and Qualifications: Capital Structure; Civil and Governmental Aviation; Corporate Governance; Finance and Risk Management; Global Operations; International and National Trade; Legal, Regulatory and Government Affairs; Mergers and Acquisitions; Military Affairs; Previous Public Company CEO/CFO/Executive Experience; Procurement and Distribution; Sales and Marketing; Strategic Planning; Transportation and Security


James S. Gilmore III Independent Director Age: 67 Director since: 2004 Committees: Nominating and Governance (Chair through May 24, 2017) Compensation				Background: Mr. Gilmore, an attorney and business consultant with Gilmore Global Group, L.L.C., served as the 68th Governor of the Commonwealth of Virginia from 1998 to 2002. Mr. Gilmore was a partner in the law firm of Kelley Drye & Warren LLP from 2002 to 2008, where he served as the Chair of the firm’s Homeland Security Practice Group focusing on corporate, technology, information technology, and international matters. He is President and Chief Executive Officer of the American Opportunity Foundation, formerly the Free Congress Foundation, which offers bipartisan solutions to domestic fiscal and foreign policy challenges. In 2003, President George W. Bush appointed Mr. Gilmore to the Air Force Academy Board of Visitors, and he was elected Chairman in the fall of 2003. Mr. Gilmore served as the Chairman of the Republican National Committee from 2001 to 2002. He also served as Chairman of the Congressional Advisory Panel to Assess Domestic Response Capabilities for Terrorism involving Weapons of Mass Destruction, a national panel established by Congress to assess federal, state, and local government capabilities to respond to the consequences of a terrorist attack. Also known as the “Gilmore Commission,” this panel was influential in developing the Office of Homeland Security. He is also a director of CACI International Inc. Within the last five years, Mr. Gilmore served as a Director of Barr Laboratories, Inc., IDT Corporation, and Everquest Financial Ltd. (a privately held business). He was also a member of the advisory board of Unisys Corporation and the federal advisory board of Hewlett-Packard Company. Mr. Gilmore was a candidate for the Republican nomination for President of the United States in 2016. He has traveled extensively as Governor of Virginia and for private business.

				Board Skills and Qualifications: Corporate Governance; Global Operations; International and National Trade; Legal, Regulatory and Government Affairs; Procurement and Distribution; Strategic Planning

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		PROPOSAL NO. 1 – ELECTION OF DIRECTORS


Bobby J. Griffin Independent Director Age: 68 Director since: 2016 Committees: Compensation				Background and Experience: Mr. Griffin served as President – International Operations for Ryder System, Inc., a global provider of transportation, logistics and supply chain management solutions from 2005 to 2007. Beginning in 1986, Mr. Griffin served in various other management positions with Ryder, including as Executive Vice President – International Operations from 2003 to 2005 and Executive Vice President – Global Supply Chain Operations from 2001 to 2003. Prior to Ryder, Mr. Griffin was an executive at ATE Management and Service Company, Inc., which was acquired by Ryder in 1986. He currently serves as director of Hanesbrands Inc., United Rentals, Inc. and WESCO International, Inc.

				Board Skills and Qualifications: Corporate Governance; Executive Experience; Global Operations, Transportation and Supply Chain Logistics; Previous Public Company CEO/CFO/Executive Experience; Procurement and Distribution; Strategic Planning; Transportation and Security


Carol B. Hallett Independent Director Age: 79 Director since: 2006 Committees: Compensation (Chair)				Background: Ms. Hallett has been of counsel at the U.S. Chamber of Commerce since 2003 and served as a member of the U.S. Chamber Foundation Board of Directors from 2003 to 2015. From 1995 to 2003, Ms. Hallett was President and Chief Executive Officer of the Air Transport Association of America (ATA), the nation’s oldest and largest airline trade association, now known as the Airlines for America (A4A). Prior to joining the ATA, Ms. Hallett served as senior government relations advisor with Collier, Shannon, Rill & Scott from 1993 to 1995. From 2003 to 2004, she was chair of Homeland Security at Carmen Group, Inc., where she helped develop the homeland security practice for the firm. From 1986 through 1989, Ms. Hallett served as United States Ambassador to the Commonwealth of the Bahamas. From 1989 to 1993, she was Commissioner of the United States Customs Service. Ms. Hallett has also been a director of Rolls Royce-North America (a unit of Rolls Royce Group plc) since 2003. In addition, she was appointed by the Secretaries of Treasury and Homeland Security and served on the Customs Oversight Advisory Committee (COAC) from 2011 to 2015. Ms. Hallett has served on the Transnational Threat Committee at the Center for Strategic and International Studies since 2003. Within the last five years, she was a director of G4S Government Solutions Inc. (a privately held business), Horizon Lines, Inc., and Mutual of Omaha Insurance Company.

				Board Skills and Qualifications: Civil and Governmental Aviation; Corporate Governance; Global Operations; International and National Trade; Legal, Regulatory and Government Affairs; Procurement and Distribution; Strategic Planning; Transportation and Security

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PROPOSAL NO. 1 – ELECTION OF DIRECTORS


Duncan J. McNabb Independent Director Age: 64 Director since: 2012 Committees: Audit Nominating and Governance (Chair, effective May 24, 2017)				Background: General Duncan J. McNabb, Retired U.S. Air Force served as Commander of the United States Air Mobility Command from 2005 to 2007 and Commander of the United States Transportation Command (USTRANSCOM) from 2008 until his retirement from the Air Force in December 2011. USTRANSCOM is the single manager for air, land, and sea transportation for the Department of Defense (DOD). He also served as DOD’s Distribution Process Owner, overseeing DOD’s end-to-end supply chain, transportation, and distribution to our armed forces worldwide. General McNabb commanded more than $56 billion in strategic transportation assets, over 150,000 service personnel and a worldwide command-and-control network. A graduate of the United States Air Force Academy and Air Force pilot, he flew more than 5,600 hours in transport and rotary aircraft, including the C-17. General McNabb has held command and staff positions at squadron, group, wing, major command and DOD levels. During his over 37-year military career, General McNabb also served as the Air Force Deputy Chief of Staff for Plans and Programs with responsibility for all Air Force programs and over $500 billion in funding over the Air Force’s Five-Year Defense Plan (FYDP). He later served as Director of Logistics on the Joint Staff and was responsible for operational logistics and strategic mobility support to the Chairman of the Joint Chiefs and the Secretary of Defense. Before his final command at USTRANSCOM, McNabb served as the 33rd Vice Chief of Staff of the Air Force. General McNabb is also a Director and Chairman of the Government Security Committee of AT Kearney Public Sector & Defense Services (a privately held business), a member of the Boards of Directors of AAR Corp. and of Elbit Systems of America and AdvanTac Technologies (both privately held businesses), as well as a cofounder and a managing partner of Ares Mobility Solutions, Inc. (also a privately held business). He serves as Chairman of the Board of Trustees for Arnold Air Society and Silver Wings, Chairman of the Airlift/Tanker Association and is a member of the Board of Visitors of the United States Air Force’s Air University. Within the last five years, he was also a director of HDT Global (a privately held business).

				Board Skills and Qualifications: Civil and Governmental Aviation; Global Operations; International and National Trade; Legal, Regulatory and Government Affairs; Military Affairs; Procurement and Distribution; Strategic Planning; Transportation and Security

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		PROPOSAL NO. 1 – ELECTION OF DIRECTORS


John K. Wulff Independent Director Age: 68 Director since: 2016 Committees: Audit				Background and Experience: Mr. Wulff is the former Chairman of the board of directors of Hercules Incorporated, a specialty chemicals company, a position he held from July 2003 until Ashland Inc.’s acquisition of Hercules in November 2008. Prior to that time, he served as a member of the Financial Accounting Standards Board from July 2001 until June 2003. Mr. Wulff was previously Chief Financial Officer of Union Carbide Corporation, a chemical and polymers company, from 1996 to 2001. During his fourteen years at Union Carbide, he also served as Vice President and Principal Accounting Officer from January 1989 to December 1995, and Controller from July 1987 to January 1989. Mr. Wulff was also a partner of KPMG LLP and predecessor firms from 1977 to 1987. Mr. Wulff is also a member of the board of directors of Celanese Corporation and Chemtura Corporation. Within the last five years, Mr. Wulff served as a director of Moody’s Corporation and Sunoco, Inc.

				Board Skills and Qualifications: Finance, Accounting and Risk Management; Previous Public Company CEO/CFO/Executive Experience; Governmental and Regulatory; Capital Structure; Corporate Governance; Global Operations; Mergers and Acquisitions; Strategic Planning

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CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS

CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS

Our Board held five in-person meetings and five telephonic meetings in 2016. Pursuant to Board policy, Directors are expected to attend all Board and Committee meetings, as well as our annual meeting of shareholders. Each Director (other than Mr. Bolden who was elected Director in February 2017) attended more than 75% of the meetings of the Board and committees of the Board on which such Director serves. All of the Directors (other than newly-elected Mr. Bolden) attended the 2016 Annual Meeting.

Executive Sessions

The outside members of the Board, as well as our Board Committees, meet in executive session (with no management Directors or management present) on a periodic basis and upon the request of one or more outside Directors. The sessions have been generally scheduled and led by the Chairman of the Board, and executive sessions of our committees are chaired by the respective committee chair. The executive sessions include topics the outside Directors or Committee members deem appropriate.

Board Leadership Structure

The Chairman of the Board is an independent director. We have maintained separate roles for the Chairman of the Board and the CEO for more than 10 years. While we do not have a formal policy in place, the Board evaluates its leadership structure on a periodic basis to ensure it aligns with the evolving circumstances and needs of the Company. The Board believes that its current structure is in the best interest of the Company and its shareholders.

The separation of the roles contributes to the Board’s strong and independent oversight of a focused and effective management team. It allows the CEO to focus on the everyday operations of the business while also positioning the Chairman to provide independent counsel and leadership to the Board, CEO, and management team relating to Company operations, governance, and compensation matters. The independent Chairman’s key responsibilities include:

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Presiding over meetings of our Board of Directors, executive sessions of our non-management Directors and our annual meeting of shareholders;

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Briefing the CEO on issues discussed in executive sessions;

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Facilitating communications among directors and between the CEO and the Board, and supervising the circulation of information to the full Board;

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Developing, in conjunction with our CEO, and approving the agenda for our Board meetings;

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Recommending Board committee appointments and responsibilities in conjunction with the Nominating and Governance Committee;

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Leading the evaluation process of our CEO, with oversight of the annual Board or Committee self-evaluations;

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Overseeing the periodic review of management’s strategic plan; and

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Carrying out any other responsibilities requested by the CEO or the Board.

We currently believe that having an independent Chairman also promotes a greater role for the nonexecutive Directors in the oversight of the Company, including oversight of material risks facing the Company, encourages active participation by the independent Directors in the work of our Board of Directors, and enhances our Board of Directors’ role of representing shareholders’ interests.

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		CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS

Board Oversight of Risk Management Process

The Board of Directors is responsible for oversight of the Company’s risk assessment and management process.

The Board delegates to the Compensation Committee responsibility for oversight of management’s compensation risk assessment, and ensuring that the compensation practices of the Company continue to not encourage excessive risk-taking by management.

The Board delegates other risk management oversight matters to our Audit Committee. The Audit Committee’s responsibilities include:

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Direct oversight of our internal audit function, including the organizational structure and staff qualification, as well as the scope and methodology of the internal audit process; and

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A review, at least annually, of our enterprise risk management plan to ensure that appropriate measures and processes are in place, including discussion of the major risks, the key strategic plan assumptions considered during the assessment and steps implemented to monitor and mitigate such exposures on an ongoing basis.

The Audit and Compensation Committees report to the Board, as appropriate, when a matter rises to the level of a material, enterprise level risk. In addition to the reports from the Audit and Compensation Committees, the Board periodically discusses risk oversight, included as part of its annual detailed corporate strategy review.

The Company’s management is responsible for day-to-day risk management. Our Internal Audit, Safety, Security, Corporate Controller, Information Technology, Human Resources, Legal, Business Resiliency, and Treasury Departments serve as the primary monitoring and testing functions for Company-wide policies and procedures, and manage the day-to-day oversight of the risk management strategy for the ongoing business of the Company. This oversight includes identifying, evaluating, and addressing potential risks that may exist at the enterprise, strategic, financial, operational, technological, compliance, and reporting levels.

We believe that the division of risk management responsibilities as described above is an effective approach for addressing risks facing the Company.

Compensation of Outside Directors

Compensation for our outside Directors consists of the following:

Cash Retainer

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Each of our outside Directors receives a $95,000 annual cash retainer, payable quarterly in advance.

Equity Compensation — Restricted Stock Units

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On the date of our annual meeting of shareholders, each of our Directors (other than Mr. Flynn) receives an annual grant of restricted stock units for a number of shares having a value (calculated based on the closing price of our Common Stock on the date of grant) of $110,000.

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The RSUs generally vest and are automatically converted into common shares on the earlier of (i) the date immediately preceding the Company’s next succeeding annual meeting of shareholders or (ii) the one-year anniversary of the date of grant.

•

Beginning with RSUs granted in 2017, Directors are expected to be given the option to defer the receipt of common shares resulting from the vesting of their restricted stock units.

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CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS

Chairman Position

•

The Chairman of the Board receives $150,000 annually; and

•

The Chairs of the Audit Committee, the Compensation Committee and the Nominating and Governance Committee receive $20,000, $15,000 and $15,000, respectively, per year.

Meeting Fees

•

Directors do not receive regular meeting fees. However, if more than six meetings of the Board or any Committee occur (determined independently) in any given year, meeting fees are paid at the rate of $1,500 per meeting (with the Chairman of the Board or the Committee Chair being paid at the rate of $3,000 for any such meeting).

Medical, Dental and Vision Care Insurance

•

Optional medical, dental and vision care coverage are made available to our nonemployee Directors and their eligible dependents on terms and at a premium cost similar to that charged to Company employees.

•

Nonemployee Directors who opt not to stand for re-election to the Board after age 60 and who have 10 or more years of Board service are eligible to participate in the Company’s medical plans (at full premium cost to the Director) until they become eligible for Medicare benefits.

2016 Total Compensation of Nonemployee Directors

The following table shows (i) the cash amount paid to each nonemployee Director for his or her service as a nonemployee Director in 2016, and (ii) the grant date fair value of restricted stock units awarded to each nonemployee Director in 2016, calculated in accordance with the accounting guidance on share-based payments. Mr. Flynn did not receive any additional compensation for his service as a Director in 2016.


Name	Fees Paid in Cash ($)		Stock Awards ($)⁽¹⁾		Total ($)
Robert F. Agnew		121,500		110,018		231,518
Timothy J. Bernlohr		118,500		110,018		228,518
James S. Gilmore III		120,500		110,018		230,518
Bobby Griffin		61,657		110,018		171,675
Carol B. Hallett		120,500		110,018		230,518
Frederick McCorkle		266,000		110,018		376,018
Duncan J. McNabb		108,500		110,018		218,518
John K. Wulff		61,657		110,018		171,675

⁽¹⁾	The value of stock equals the grant date fair value of $44.38 per share on May 24, 2016.

Nonemployee Directors’ Outstanding Equity Awards at Fiscal Year-End 2016

There were no outstanding equity awards held by our outside Directors as of December 31, 2016. Any RSUs awarded to the outside Directors in 2016, all originally scheduled to vest in May 2017 vested on September 20, 2016 in accordance with their terms, when the Company’s shareholders approved the issuance by the Company of shares of its common stock representing up to 20% (and up to an additional 10% in the event of increased future business) of the Company’s outstanding shares of Common Stock upon exercise of the warrants issued by the Company to Amazon in May 2016 to satisfy a stock exchange listing requirement.

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		CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS

Communications with the Board

The Board of Directors welcomes input and suggestions. Shareholders and other interested parties who wish to communicate with the Board may do so by mail to the Office of the Secretary, Atlas Air Worldwide Holdings, Inc., 2000 Westchester Avenue, Purchase, NY 10577, or e-mail to corporate.secretary@atlasair.com. All communications received by Directors from third parties that relate to matters within the scope of the Board’s responsibilities will be forwarded to the Chairman of the Board. All communications received by Directors from third parties that relate to matters within the responsibility of one of the Board committees will be forwarded to the Chairman of the Board and the Chairman of the appropriate committee. All communications received by Directors from third parties that relate to ordinary business matters that are not within the scope of the Board’s responsibilities are forwarded to AAWW’s General Counsel.

Board Effectiveness and Annual Assessment

Each year our Board and its Committees conduct self-evaluations to ensure they are performing effectively and to identify opportunities to improve Board and Committee performance. The written self-assessment is conducted under the oversight of the Nominating and Governance Committee. Anonymous evaluation responses are reviewed and assessed. A written report, based on the anonymous written feedback from the Directors and senior management is compiled and presented by the chair of the Nominating and Governance Committee. The final report is discussed by the Nominating and Governance Committee, and the Nominating and Governance Committee shares and discusses these responses with the full Board and the other committees of the Board, as applicable.

During 2016, continuing the process developed and implemented in 2015, the full Board, under the guidance of the Nominating and Governance Committee, undertook a thorough review of the skills, qualifications and tenure of our incumbent Directors, as well as the size of the Board, in the context of our long-range strategic plan. Through this process, the Board identified Mr. Bolden as a candidate for election to the Board in February 2017. See “Director Core Competencies” above for additional information.

A copy of our Corporate Governance Principles can be found on the “Corporate Governance” page of the “Corporate Background” portion of our website at www.atlasair.com. Our Corporate Governance Principles are described in greater detail below.

Director Independence

The Nominating and Governance Committee has determined that all Directors, excluding Mr. Flynn, are independent under Company standards and SEC and NASDAQ rules. The Nominating and Governance Committee classifies the following Directors nominated for election at the Annual Meeting as independent: Messrs. Agnew, Bernlohr, Bolden, Gilmore, Griffin, McCorkle, McNabb, Wulff, and Ms. Hallett.

Our Nominating and Governance Committee Charter includes categorical standards to assist the Nominating and Governance Committee in making its determination of Director independence within the meaning of the rules of the SEC and the Marketplace Rules of NASDAQ. The Nominating and Governance Committee will not consider a Director to be independent if, among other things, he or she:

•

was employed by us at any time in the last three years;

•

has an immediate family member who is, or in the past three years was, employed by us as an executive officer;

•

has accepted or has an immediate family member who has accepted any compensation from us in excess of $120,000 during a period of 12 consecutive months within the three years preceding the determination of independence (other than compensation for Board service, compensation to a family member who is a nonexecutive employee, or benefits under a tax-qualified retirement plan or nondiscretionary compensation);

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CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS

•

is, was or has a family member who is or was a partner, controlling shareholder, or executive officer of any organization to which we made or from which we received payments for property or services in the current year or any of the past three fiscal years in an amount that exceeds the greater of $200,000 or 5% of the recipient’s consolidated gross revenues for the year;

•

is or has a family member who is employed as an executive officer of another entity where at any time during the last three years any of the Company’s executive officers serve or served on the entity’s compensation committee; or

•

is or has a family member who is a current partner of the Company’s independent registered public accounting firm or was or has a family member who was a partner or employee of the Company’s independent registered public accounting firm who worked on the Company’s audit at any time during the last three years.

Pursuant to the Nominating and Governance Committee Charter and as further required by NASDAQ rules, the Nominating and Governance Committee made a subjective determination as to each outside Director that no relationship exists which, in the opinion of the Board, would interfere with such individual’s exercise of independent judgment in carrying out his or her responsibilities as a Director. As part of such determination, the Nominating and Governance Committee examined, among other things, whether there were any transactions or relationships between AAWW and an organization of which a Director or Director Nominee has been a partner, shareholder, or officer within the last fiscal year. The purpose of this review was to determine whether any such relationships or transactions were inconsistent with a determination that a Director is independent.

Board Committees

Our Board maintains three standing committees, an Audit Committee, Compensation Committee, and Nominating and Governance Committee, each of which has a charter that details the committee’s responsibilities. The charters for all the standing committees of the Board of Directors are available in the Corporate Background section of our website located at www.atlasair.com and by clicking on the “Corporate Governance” link. The charters are also available in print and free of charge to any shareholder who sends a written request to the Secretary at Atlas Air Worldwide Holdings, Inc., 2000 Westchester Avenue, Purchase, NY 10577.

Nominating and Governance Committee

The Nominating and Governance Committee currently consists of Mr. Gilmore (Chairman) and Messrs. Agnew, Bernlohr, McCorkle, and McNabb, each of whom is an independent Director within the meaning of the applicable NASDAQ rules. The principal functions of the Nominating and Governance Committee are to:

•

Identify and approve individuals qualified to serve as members of our Board;

•

Select Director Nominees for the next annual meeting of shareholders;

•

Review at least annually the independence of our Directors;

•

Oversee our Corporate Governance Principles; and

•

Perform or oversee an annual review of the CEO, the Board and its committees.

The Nominating and Governance Committee held four in-person meetings in 2016.

Evaluation of Director Nominees and Expansion of the Board

Our Nominating and Governance Committee is responsible for reviewing and developing the Board’s criteria for evaluating and selecting new Directors. The Nominating and Governance Committee’s charter sets forth the criteria for skills and characteristics for Directors (see “Election of Directors” for the qualifications and experience of current Directors). The Nominating and Governance Committee identifies new candidates from a variety of sources, including recommendations submitted by shareholders.

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		CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS

New and incumbent Directors are individually evaluated from a skills and characteristics perspective on a number of different factors, including having the following traits: high personal standards; the ability to make informed business judgments; literacy in financial and business matters; the ability to be an effective team member; a commitment to active involvement and an ability to give priority to the Company; no affiliations with competitors; achievement of high levels of accountability and success in his or her given fields; experience in the Company’s business or in professional fields or other industries or as a manager of international business so as to have the ability to bring new insight, experience or contacts and resources to the Company; no direct affiliations with major suppliers, customers or contractors; and preferably previous public company board experience with good references.

As part of the Nominating and Governance Committee’s ongoing evaluation of the Board’s composition, in early 2017, our Board elected Charles F. Bolden, Jr. a Director of AAWW, increasing the size of the Board from nine Directors to ten. Mr. Bolden was recommended as a Director candidate by the Nominating and Governance Committee following referrals by our current Directors as part of the Nominating and Governance Committee’s process for identifying potential Directors. Mr. Bolden has notable experience in the field of civil and governmental aviation, having served as the 12^th Administrator of the National Aeronautics and Space Administration for many years, as well as in military affairs having retired as a Major General in the U.S. Marine Corps following a 34-year career. Through his substantial experience as a director of several public companies, Mr. Bolden is also well versed in areas of global operations, corporate governance, strategic planning and transportation and security.

The Nominating and Governance Committee will also consider whether potential Nominees are independent, as defined in applicable rules and regulations of the SEC and NASDAQ. The Board will nominate new Directors only from candidates identified, screened, and approved by the Nominating and Governance Committee. The Company considers diversity as an important element of the Board section process but does not have a formal policy regarding the diversity of its Directors. The Nominating and Governance Committee uses the criteria specified above when considering candidates for a Board seat and then searches for candidates that best meet those criteria without limitations imposed on the basis of race, gender, or national origin. The Board will also take into account the nature of and time involved in a Director’s service on other boards in evaluating the suitability of individual Directors and making its recommendation to AAWW’s shareholders. Service on boards of other organizations must be consistent with our conflict of interest policies applicable to Directors and other legal requirements.

Our Nominating and Governance Committee will consider shareholder recommendations for candidates to serve on the Board, provided that such recommendations are made in accordance with the Nominating and Governance Committee’s policy on security holder recommendations of Director Nominees (the “Shareholder Nominating Policy”), which is subject to a periodic review by the Nominating and Governance Committee. Among other things, the Shareholder Nominating Policy provides that a shareholder recommendation notice must include the shareholder’s name, address, and the number of shares beneficially owned, as well as the period of time such shares have been held, and should be submitted to the Office of the Secretary, Atlas Air Worldwide Holdings, Inc., 2000 Westchester Avenue, Purchase, NY 10577. A copy of our current Policy on Security Holder Recommendation of Director Nominees is available in the Corporate Background section of our website at www.atlasair.com. In evaluating shareholder Nominees, the Board and the Nominating and Governance Committee seek to achieve a balance of knowledge, experience, and capability. As a result, the Nominating and Governance Committee evaluates shareholder Nominees using the same membership criteria set forth above.

Adoption of Proxy Access By-Law Provision

In addition to recommending candidates to serve on the Board pursuant to the Shareholder Nominating Policy described above, shareholders who satisfy certain requirements may nominate potential candidates to the Board by utilizing the proxy access provisions set forth in our By-Laws. In December 2016, the Board authorized and approved an amendment to our By-Laws to provide for proxy access. Under the proxy access By-Law, any shareholder, or group of up to 20 shareholders, owning three percent or more of our outstanding Common Stock continuously for at least three years, is eligible to nominate and include in our proxy materials Director Nominees constituting up to the greater of two Directors or 20% of the Directors then serving on the Board, provided that the

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CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS

nominating shareholder(s) and Director Nominee(s) satisfy the requirements specified in the proxy access By-Law. If an individual proxy access Director Nominee does not receive at least 25% of the votes cast for election of that nominee, the proxy access By-law prohibits the renomination of that individual under the proxy access By-law for the next two annual meetings. The Board’s adoption of proxy access followed (i) a series of discussions with various shareholders and (ii) careful evaluations by the Nominating and Governance Committee and the Board of shareholder views on proxy access, proxy advisory firms’ views on proxy access, the potential impact on the Company of the adoption of proxy access and proxy access frameworks adopted by other companies. The Board believes the Company’s proxy access By-Law strikes an appropriate and meaningful balance between enhancing shareholder rights and adequately protecting the interests of the Company and all of its shareholders.

Corporate Governance Principles

We annually review our Corporate Governance Principles, believing that sound corporate governance practices provide an important framework to assist the Board in fulfilling its responsibilities. The business and affairs of AAWW are managed under the direction of our Board, which has responsibility for establishing broad corporate policies, setting strategic direction, and overseeing management. An informed, independent, and involved Board is essential for ensuring our integrity, transparency, and long-term strength, and maximizing shareholder value. The Corporate Governance Principles address such topics as codes of conduct; Director nominations and qualifications; Board committees; Director compensation; conflicts and waivers of compliance; powers and responsibilities of the Board; Board independence; serving on other boards and committees; meetings; Director access to officers and other employees; shareholder communications with the Board; annual Board evaluations; financial statements and disclosure matters; delegation of power; and oversight and independent advisors. A copy of our Corporate Governance Principles is available in the Corporate Background section of our website at www.atlasair.com.

Audit Committee

The Audit Committee of the Board of Directors currently consists of four outside Directors: Messrs. Bernlohr (Chairman), Agnew, McNabb and Wulff, each of whom is an independent Director within the meaning of the applicable rules and regulations of the SEC and NASDAQ (see also “Director Independence” above). The Board has determined that Messrs. Agnew, Bernlohr, and Wulff are “audit committee financial experts” as defined under applicable SEC rules. The Board believes that Mr. Agnew possesses the attributes necessary to be deemed an audit committee financial expert, these attributes having been acquired by previously chairing the AAWW Audit Committee for ten years, among other things.

The Audit Committee’s primary function, as set forth in its written charter (available in the Corporate Background section of our website at www.atlasair.com under the heading “Audit Committee Charter”) is to assist the Board in overseeing the:

•

Quality and integrity of the financial statements of the Company;

•

Qualifications and independence of our independent registered public accounting firm;

•

Performance of the Company’s internal audit function and independent registered public accounting firm;

•

Compliance with legal and regulatory requirements by the Company; and

•

Effectiveness of the Company’s financial reporting process, disclosure practices and systems of internal controls.

The Audit Committee is also responsible for overseeing the Company’s Code of Ethics (see also “Code of Ethics” above) and related party transactions. The Audit Committee held four in-person meetings and four telephonic meetings in 2016.

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		CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS

Evaluation of Independent Registered Public Accounting Firm

As noted above, the Audit Committee assists the Board in overseeing the independent registered public accounting firm’s qualifications, independence and performance. The Audit Committee is also responsible for appointing the independent registered public accounting firm and approving, in advance, audit and permitted non-audit services in accordance with the Committee’s preapproval policy (see also “Proposal No. 2” below).

The Audit Committee received from AAWW’s independent registered public accounting firm, PricewaterhouseCoopers LLP (“PwC”), the written communications required by applicable requirements of the Public Company Accounting Oversight Board regarding communications with the Audit Committee concerning independence and satisfied itself as to the independence of PwC.

In addition to PwC’s independence, the Audit Committee considered several other factors in deciding whether to re-appoint PwC, including the quality of PwC’s staff and work; PwC’s procedures related to quality control; the communication and interaction with our PwC team; PwC’s capability and expertise to perform an audit of a company having the complexity of AAWW’s business; the length of time PwC has served as the Company’s independent registered public accounting firm; the appropriateness of PwC’s fees; and the potential impact of changing our independent registered public accounting firm. As a result, the Audit Committee has selected PwC as the Company’s independent registered public accounting firm for the year ending December 31, 2017.

Audit Committee Report

AAWW management has responsibility for preparing the Company’s financial statements and PwC is responsible for auditing those financial statements. In this context, the Audit Committee has reviewed and discussed AAWW’s audited consolidated financial statements as of and for the fiscal year ended December 31, 2016 with management and with PwC. The Audit Committee discussed with PwC the matters required to be discussed by Auditing Standard No. 1301 — Communications with Audit Committees.

Based upon its reviews and discussions, including the matters related to PwC’s independence, as described above, the Audit Committee recommended, and the Board of Directors approved, that AAWW’s audited consolidated financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2016, for filing with the SEC.

THE AUDIT COMMITTEE

Timothy J. Bernlohr, Chair

Robert F. Agnew

Duncan J. McNabb

John K. Wulff

Code of Ethics and Employee Handbook

We have adopted a Code of Ethics applicable to the CEO, Senior Financial Officers and Members of the Board of Directors that is monitored by our Audit Committee and that includes certain provisions regarding disclosure of violations and waivers of, and amendments to, the Code of Ethics by covered parties. The Code of Ethics is reviewed on an annual basis. Any person who wishes to obtain a copy of our Code of Ethics may do so by writing to the Office of the Secretary, Atlas Air Worldwide Holdings, Inc., 2000 Westchester Avenue, Purchase, NY 10577. A copy of the Code of Ethics is available in the Corporate Background section of our website at www.atlasair.com under the heading “Code of Conduct”.

We also have an Employee Handbook and Code of Conduct that sets forth the policies and business practices that apply to all of our executives and other employees globally (except as provided under applicable law) and excluding employees of our recently acquired subsidiary, Southern. Southern employees are currently subject to a separate Employee Handbook that is similar in content to our Employee Handbook and Code of Conduct. The

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CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS

Employee Handbook and Code of Conduct, or, in the case of Southern, the Employee Handbook, addresses such topics as compliance with laws, moral and ethical conduct, equal employment opportunity, promoting a work environment free from harassment or discrimination, and the protection of intellectual property and proprietary information, among other things. In 2015, we completed a year-long review of our Employee Handbook and Code of Conduct to remain compliant with applicable law and consistent with best practices. We also implemented and distributed an updated Employee Handbook and Code of Conduct to employees worldwide in 2015.

Environmental, Social and Governance Issues

As a leading global provider of outsourced and aviation operating services, we encounter and manage a broad range of environmental, social and governance (“ESG”) issues. We have identified the following ESG issues, by category, as among the most relevant to our business and of highest interest to our key stakeholders:

Environmental:

•

Our current fleet consists primarily of 747-8F, 747-400F and 777 aircraft, modern assets which we believe are superior in terms of fuel efficiency, range, capacity and loading capabilities

•

The -8Fs are about 15% more fuel efficient than our 400s, which translates into approximately 15% lower carbon dioxide emissions

•

The -8Fs are also approximately 30% less noisy than the 400 series

•

We conserve fuel wherever possible through our FuelWise fuel management information system, which uses our existing data to analyze fuel consumption performance, enabling us to track fuel burn rates more accurately and efficiently and to identify additional opportunities to conserve fuel

•

We work with our customers to plan routes that are more fuel efficient

•

We participate in industry and governmental initiatives to optimize air traffic management systems, where advances could result in substantial reductions in fuel use and emissions and fewer interruptions at airports

•

Our record on the ground is also very strong, with no significant spills of fuel, de-icing fluids or other liquids

Social

•

We are an Equal Opportunity Employer

•

We have affirmative action plans in place to ensure that qualified applicants and employees are receiving an equal opportunity for recruitment, selection, advancement and every other term and privilege associated with employment with AAWW

•

We seek to attract talented individuals as employees and to develop them to their fullest potential

•

We also seek to offer our employees highly competitive compensation and benefit packages to retain them for the long-term

•

The health and safety of our employees, particularly our crewmembers, is paramount, and our health and safety track record reflects this commitment

•

Our crewmembers are represented by the International Brotherhood of Teamsters, and we consider our relationship with the Teamsters to be good

•

We encourage diversity and inclusiveness in our workforce

•

We have policies in place prohibiting human trafficking

•

We have provided cost-free charter flights for disaster relief and have encouraged our employees to support disaster relief and related activities

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		CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS

•

We sponsor fundraising efforts and employee volunteer events for nonprofit organizations such as Junior Achievement and the American Red Cross, including Company matches of employee donations

Governance

•

We are firmly committed to maintaining a strong corporate governance program, which reflects best practices

•

We endorse the concept of Board and Committee refreshment, which has resulted in the election of three new Board members over the last two years and the rotation of the Chairman of the Board and the Chairs of the Audit Committee and Compensation Committee over the last three years. We expect to rotate the Chair of the Nominating and Governance Committee at the organizational meeting of the Board immediately following the Annual Meeting.

•

We require our employees to act responsibly in full compliance with all applicable laws and standards and to maintain the highest level of ethical conduct in their dealings with customers, suppliers and other stakeholders

•

We provide recurrent training to our employees that supports their ability to act responsibly in full compliance with all applicable laws and standards

•

We are committed to maintaining a strong control environment and to making effective controls an integral part of our routine business practices and having effective checks and balances in place so that we can address many issues before they become larger problems

•

We are committed to frequent and extensive shareholder engagement to learn what issues are important to the owners of your Company

•

Your Board of Directors is committed to enhancing shareholder value and has approved a long-term strategic plan, which is designed to achieve this objective and which is being implemented by senior management under the Board’s close supervision

Compensation Committee

Duties and Responsibilities

The Board’s Compensation Committee assists the Board in discharging and performing its duties regarding the compensation of our executives, including our NEOs, executive succession planning, and other matters. The Compensation Committee also is the administrator of our long-term incentive award and annual bonus plans.

The Compensation Committee is also responsible for:

•

Reviewing, evaluating and establishing compensation plans, programs and policies for, and reviewing and approving the total compensation of, our senior executives at the level of executive vice president and above, including our CEO;

•

Monitoring the search for, and approving the proposed compensation for, all senior executives at the level of executive vice president and above and periodically reviewing and making recommendations to the full Board regarding the compensation of Directors; and

•

Retaining and overseeing the independent compensation consultant that provides advice regarding executive and Director compensation matters.

Processes and Procedures

Following approval of the annual budget, either before or during the first quarter of each year, the Committee establishes the minimum financial performance objective required before any annual incentive award payment may be made, as well as the year’s objectives for financial, on-time customer service reliability and individual performance goals and objectives for senior executives. All are taken into account in setting the performance

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CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS

range for each such executive and ultimately in determining the amount of each such executive’s annual award payment, if any. The Committee establishes these criteria, with the advice of the independent compensation consultant and outside counsel, as appropriate, after reviewing information submitted to the Committee by the CEO and Chief Human Resources Officer (at the request of the Committee). Our CEO and Chief Human Resources Officer also provide information to the Committee regarding annual and long-term incentive plans that the Committee considers, with the advice of the independent compensation consultant and outside counsel, in its determination of awards under those plans.

The Compensation Committee is required by its charter to meet at least four times annually. During 2016, the Compensation Committee held four in-person meetings and four telephonic meetings and acted twice by written consent. In 2016, the Compensation Committee consisted of four outside Directors, Ms. Hallett (Chair), Mr. Gilmore, Mr. Griffin and Mr. McCorkle, each of whom is an independent Director within the meaning of applicable SEC and NASDAQ rules.

Compensation Determination Process

The Compensation Committee has primary responsibility for determining and approving, on an annual basis, the compensation of our CEO and other executive officers. The Compensation Committee receives information and advice from its compensation consultant, as well as from our human resources department and management to assist in compensation determinations.

•

Role of Independent Compensation Consultants

•

The Compensation Committee engaged the services of Willis Towers Watson (and its predecessor firms) as its independent advisor on matters of executive compensation from July 2007 through November 2016. Thereafter, following a competitive and thorough selection process, the Committee retained Pay Governance LLC (“Pay Governance”) for the remainder of 2016 and thereafter. Each of the Committee’s consultants reported directly to the Committee and provided no other services to the Company or any of its affiliates. For 2016, the Committee assessed the independence of Willis Towers Watson pursuant to the SEC and NASDAQ rules and concluded that no conflict of interest existed that would prevent Willis Towers Watson from independently representing the Compensation Committee. At the time of the competitive bid process, the Committee assessed the independence of Pay Governance pursuant to the SEC and NASDAQ rules and concluded that no conflict of interests exists that would prevent Pay Governance from independently advising the Compensation Committee.

•

Pay Governance (and previously Willis Towers Watson) provides advice and analysis to the Compensation Committee on the design, structure and level of executive and director compensation, and, when requested by the Compensation Committee, attends meetings of the Compensation Committee and participates in executive sessions without members of management present. The independent compensation consultant reports directly to the Compensation Committee, and the Compensation Committee reviews, on an annual basis, the independent compensation consultant’s performance and provides the independent compensation consultant with direct feedback on its performance.

•

Role of Our Senior Executives

•

While the Compensation Committee has the responsibility to approve and monitor all compensation for our executive officers, management plays an important role in determining executive compensation. Management, at the request of the Compensation Committee, recommends financial goals that drive the business and works with Pay Governance to analyze competitive market data and to recommend compensation levels for our executive officers. Our CEO and Chief Human Resources Officer (“CHRO”). likewise assist the Compensation Committee by providing their evaluation of the performance of our other executive officers and recommending compensation for NEOs other than themselves, including adjustments to annual incentive compensation, based on individual performance. Any individual whose performance or compensation is to be discussed at a Compensation Committee meeting does not attend such meeting (or the applicable portion of such meeting) unless specifically invited by the Compensation Committee, and the CEO is not present during voting or deliberations regarding his compensation.

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		CORPORATE GOVERNANCE, BOARD AND COMMITTEE MATTERS

The Committee’s Risk Assessment of Our Compensation Policies

The Compensation Committee considered the structure and administration of our 2016 compensation program, the advice of Willis Towers Watson following its most recent evaluation completed in early 2016, and the observations of Pay Governance regarding the overall structure of the program and Willis Towers Watson’s evaluation when concluding that our 2016 compensation program is appropriately balanced and does not promote imprudent or excessive risk taking. Significant factors contributing to their conclusion included:

•

Extent of oversight. The Compensation Committee with members of management reviews the performance of our compensation plans.

•

Governance. Oversight roles are clearly defined throughout the company to ensure that pay plans are aligned with business goals and risk tolerances, stress tested under realistic assumptions, and balanced between corporate standards and business-unit autonomy.

•

Risk profile and balance within the incentive structure. Our plans are designed by the Compensation Committee to appropriately balance fixed and variable pay, cash and equity, short- and long-term incentives, and corporate, business unit and individual performance goals.

•

Plan design. Our plans are designed to avoid such features as very steep incentive slopes, unreasonable goals or thresholds, uncapped payouts, rigidly formulaic awards, undue focus on any one element of compensation, and misaligned timing of payouts and we maintain risk mitigating features including the Compensation Committee’s retained discretion with respect to assessing awards, clawbacks, and shareholding requirements.

•

Performance metrics. Performance metrics reflect risk and use of capital, quality and sustainability of results and do not provide an incentive to management to seek short-term results that encourage high-risk strategies designed to exact short-term results at the expense of long-term performance and value.

Compensation Committee Interlocks and Insider Participation

No member of our Compensation Committee serves as a member of the Board of Directors or the compensation committee of any entity that has one or more of our executive officers serving as members of the Board or Compensation Committee.

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COMPENSATION DISCUSSION AND ANALYSIS

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis, as well as the Executive Compensation Tables, are organized as follows:


Section	Subject	Page
Overview	◾ 2016 Performance Highlights and Key Achievements	25
	◾ Aligning Pay and Performance	25
	◾ How We Incorporate Pay-for-Performance into Our Programs	26
	◾ Pay for Performance in Action	28
	◾ Recent Compensation Program and Corporate Governance Changes	29
	◾ Best Practices and Risk Management	30
Discussion of our Compensation Program	◾ Peer Group	31
	◾ Components of Compensation	33
	◾ Base Salary	33
	◾ Performance-Based Compensation: Annual and Long-Term Incentive Compensation	33
	◾ Annual Incentive Program	36
	◾ Long-Term Incentive Compensation	40
	◾ 2016 Transformative Events Impacting Compensation	42
	◾ Other Elements of Compensation	43
	◾ Additional Compensation Policies	44
	◾ Executive Stock Ownership	44
	◾ Tax Considerations	44
	◾ Equity Grant Practices	45
	◾ Clawback Policy	45
Compensation Committee Report		45
Compensation Tables and Explanatory Notes	◾ 2016 Summary Compensation Table	46
	◾ 2016 Grants of Plan-Based Awards	49
	◾ 2016 Outstanding Equity Awards	51
	◾ 2016 Options Exercises and Stock Vested	52
	◾ Nonqualified Deferred Compensation	52
	◾ Employment Agreements	53
	◾ Potential Payments Upon Termination or Change of Control	54

24 | Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement


		COMPENSATION DISCUSSION AND ANALYSIS

LOGO

Overview

2016 Performance Highlights and Key Achievements

We delivered strong operating and share performance in 2016, with historic, transformative actions that position the Company for future earnings growth. In April 2016, we acquired Southern in a highly complementary transaction that expands our platform into 777 and 737 operations and provides our customers with access to a broader array of aircraft and operating services. A month later, we reached an agreement to provide air transport services for leading e-commerce retailer Amazon. In addition to leasing twenty 767-300 freighters to Amazon and operating them in support of package deliveries to its customers, our arrangements provide for future growth of the relationship as Amazon may increase its business with us.

Our long-term strategic plan to diversify our business and enhance our financial results is consistent with the metrics in our short- and long-term incentive plans, as described further under the heading “Direct Link between Compensation and Business Strategy” on page 27. The table below shows how selected company metrics have progressed during this period.


Long Term Performance Metrics ($ Millions for Adjusted EBITDA and Free Cash Flow)	2011	2016	Compound Annual Growth Rate

Adjusted EBITDA*	$211.8	$382.3		h 12.5%

Free Cash Flow*	$77.9	$182.2		h 18.5%

Year-end Stock Price per Share	$38.43	$52.15		h 6.3%

Five-Year ROIC*		31.0%

Block Hours	137,055	210,444		h 9.0%

Adjusted EBITDA, Free Cash Flow, and ROIC are non-GAAP measures. A reconciliation of such non-GAAP measures to the most directly comparable GAAP measures is contained in Exhibit A attached hereto.

Aligning Pay and Performance

Our Compensation Committee believes that our compensation practices have played a key role in our steady operating and financial results both during challenging times experienced generally in the global freight industry over the last several years and transformative growth periods like what we experienced in 2016. Our pay programs are designed to align executive compensation with Company and individual performance while providing incentives needed to attract, motivate, and retain executives that drive the Company’s creation of long-term shareholder value.

Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement | 25

LOGO


COMPENSATION DISCUSSION AND ANALYSIS

LOGO

How We Incorporate Pay-for-Performance into Our Programs

The Compensation Committee achieves its pay for performance goals by:

•

Aligning annual incentives with key annual financial, on-time customer service reliability, and operating objectives that directly tie to the company’s strategy and holistic approach to achieving success

•

Aligning long-term incentive awards with executive retention and our shareholders’ interests by basing awards on key Company financial metrics and long-term operating performance

•

Balancing pay mix appropriately between fixed and variable pay, short- and long-term pay and performance metrics that are tied to business strategy that aligns with shareholder interests and long-term value creation.

The below table summarizes the three primary components of our NEOs’ compensation:


Elements of Pay	Form	Links to Performance	Purposes
Base Salary	Cash	Fixed annual compensation	◾ Attract and retain executive talent ◾ Compensate executives for their responsibility, experience, sustained high performance and contributions to Company success
Annual Incentives	Cash	EPS	◾ Drives key business, operating and individual results on an annual basis (EPS) ◾ Derived from our annual operating plan (EPS) ◾ Strictly performance-based against measureable metrics; no payout guaranteed (all metrics)
		Objective on-time customer service reliability metrics
		Individual Performance Objectives
Long-Term Incentives	Performance Share Units (PSU) and Performance Cash	Average Growth in Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”)	◾ Links NEO and long-term shareholder interests ◾ Serves as a key retention tool and a strong long-term performance driver ◾ Performance-based against measureable metrics; no payout guaranteed
	Performance Share Units (PSU) and Performance Cash	Return on Invested Capital (“ROIC”)
	RSUs	Alignment with shareholder returns	◾ Multi-year long-term retention ◾ Value tied to share price

In 2016, we executed on our strategic initiatives to strengthen and diversify our business mix, expand our customer base, generate cost savings through operating efficiencies, and enhance our portfolio of assets and services. Our results reflected the strength of our ACMI and Dry Leasing businesses, growth in the Charter business, progress in our efficiency and productivity initiatives, and an increase in the average utilization of our operating fleet during the year as we capitalized on the market demand for our aircraft. See also “Pay for Performance in Action” on page 28.

26 | Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement


		COMPENSATION DISCUSSION AND ANALYSIS

Direct Link between Compensation and Business Strategy

Our compensation programs are designed to drive achievement of our business strategies and provide competitive opportunities, principally dependent on the successful achievement of performance goals closely tied to Company performance, as exemplified by the following 2016 features:


Annual Incentives
Company Performance Metric				NEO Performance Metric
Adjusted Earnings Per Share				Adjusted Earnings Per Share
Customer Service On-Time Reliability				Customer Service On-Time Reliability
Strategic Initiatives				Individual Performance Objectives
Long-Term Incentives – PSUs and Performance Cash
Adjusted EBITDA Growth				Adjusted EBITDA Growth
Return on Invested Capital				Relative Return on Invested Capital

CEO Compensation Opportunity

We design our CEO’s compensation opportunity to be largely performance-based. 67.2% of maximum total CEO compensation opportunity in 2016 was designed to be based on attainment of performance metrics, including approximately 43.3% in the form of long-term multi-year opportunities and 23.9% in annual incentive opportunity. An additional 20.9% of compensation opportunity was granted in the form of RSUs with four-year vesting.

Our CEO’s base salary has not been increased in the past five years, his bonus opportunity has not been increased since 2010 and his long term incentive opportunity was decreased from 4.75 multiple of salary to 3.75 multiple of salary in 2014 to be better aligned with peer group levels. The following charts illustrate our CEO’s total compensation opportunity in 2016, as well as the 2016 long-term incentive opportunity for our CEO (assuming payout at maximum levels):

Total CEO Compensation Opportunity

CEO’s Long-Term Incentive Opportunity

In connection with the Amazon transaction, as a result of our CEO’s retirement eligibility under our Company programs and timing requirements under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), in 2016 Mr. Flynn became entitled to certain components of his awards. Please see page 43.

Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement | 27

LOGO


COMPENSATION DISCUSSION AND ANALYSIS

LOGO

Compensation Risk Mitigating Policies and Practices

We maintain stock ownership guidelines, anti-hedging and anti-pledging policies, as further described below on pages 30 and 44. Through our compensation program design and related policies, we pursue the alignment of interests of our executives with those of our shareholders over a multi-year long-term basis and encourage thoughtful and appropriate business risk-taking.

Pay for Performance in Action

Our compensation program is structured to be strongly aligned with the performance of the Company, with a significant portion of our NEOs’ compensation based upon various performance metrics tied to our annual and long-term incentive plans. The performance metrics are designed to drive the achievement of key business, financial, on-time customer service, and operational annual and long-term results, in addition to individual contributions. The performance-based payouts for 2016 demonstrate the Compensation Committee has set rigorous goals that align with the Company’s strategy and reflect the performance outcomes over the past few years:

•

Performance-Based Long-Term Incentive (for three-year period 2014-2016): Payout reflecting transformative company growth and attainment of metrics due to Amazon transaction (as discussed under the heading “Amazon Transaction” below on page 42) and Southern acquisition (as discussed under the heading “Southern — 2016 Acquisition Incentive Program under the 2007 Incentive Plan” on page 42).

•

Annual Incentive (2016): Payout at 139.2% for our CEO and 149.2% for our other NEOs, reflecting our strong 2016 performance, which included the consummation of the Amazon transaction and the acquisition of Southern, high customer service reliability metric attainment, as well as a stock price increase of approximately 26%. Please see page 36 for a further discussion of our 2016 AIP payout.

•

No (zero) payout was made under the 2013-2015 LTl award based on the Committee’s review and consistent with the pay for performance structure of our long-term incentive plan, given that AAWW’s EBITDA and ROIC growth levels placed it below the threshold required, primarily due to the effect of the Company’s 2015 settlement of its legacy antitrust class action lawsuit (relating to alleged matters from 2000-2006). The fact that no payment was made under the 2013-2015 award grants reflects the strong link between our incentive compensation metrics and actual company performance.

28 | Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement


		COMPENSATION DISCUSSION AND ANALYSIS

Recent Compensation Program and Corporate Governance Changes

As discussed on page iv, we engage in extensive ongoing shareholder outreach in order to better understand their perspectives and consider ideas for further improvements to, among other things, our executive compensation programs and disclosures. This year we reached out to shareholders representing approximately 75% of our outstanding shares and were able to engage in discussions with those representing approximately one-half of our outstanding shares. We have made significant recent changes to our governance and compensation programs in response to insight gained during these discussions (as well as recommendations from our various advisors).

Although shareholders with whom we held discussions did not identify specific executive compensation practices suggesting changes, and such shareholders expressed very positive feedback about company performance in 2016, we gathered meaningful topical feedback (e.g., in-house metrics used by shareholders to assess pay for performance) which we carefully considered when setting and structuring 2017 compensation and during our ongoing review and enhancement of our compensation and governance programs and structures.

As highlighted in the table below, we have made significant changes in our governance and compensation practices over the last several years.



Annual Bonus Performance Metrics		• Company performance metrics for our NEOs increased to 60% of weighted performance metrics from 50% effective 2017. Company performance component for our CEO was raised from 50% to 60% effective 2016. (page 34) • Enhanced disclosure to clarify that 2017 company performance goals continue to be set at a higher level than actual company performance in 2016

Peer Group		• Reviewed and adjusted the benchmarked peer group to consist of ~20 companies in industries similar to ours, with median revenue size approximately equal to AAWW revenues (including revenues of Polar). (page 31)

CEO Compensation Benchmarking		• Our CEO’s base salary has not been increased in the past five years, his bonus opportunity has not been increased since 2010 and his long term incentive opportunity was decreased from 4.75 multiple of salary to 3.75 multiple of salary in 2014 to be better aligned with peer group levels. • CEO long-term incentive plan (LTI) award grant level revised in 2014 to be targeted at approximately the median of benchmarked peer group.

New Independent Compensation Consultant		• Following a competitive and thorough selection process, the Compensation Committee retained Pay Governance LLC as its new independent compensation consultant (Willis Towers Watson and its predecessor firms was our independent compensation consultant from July 2007 until November 2016). (page 22)

Proxy Access		• Proactively adopted proxy access provisions to our bylaws generally allowing shareholders having held at least 3% of our outstanding shares for 3 years to include nominees for up to the greater of two Directors or 20% of the Board (up to 20 holders may aggregate their shares to satisfy the 3% eligibility requirement).

Majority Voting		• Adopted majority voting standard in uncontested elections to enhance Director accountability and as a matter of best corporate governance practices.

Board Refreshment and Rotation		• Three new Directors were elected in 2016 and 2017, enhancing the Board’s overall level of skill and bringing new perspectives to the Board and Committee decision-making processes. (page 17) • Rotated the Audit and Compensation Committee Chair positions, as well as the Chairman of the Board within the last 2.5 years to ensure fresh perspectives and to enhance the Directors’ understanding of different aspects of the Company’s business and enabling functions. Mr. Griffin, one of the Directors elected at our 2016 Annual Meeting, is a member of the Compensation Committee, while Mr. Wulff, the second Director elected in 2016, is a member of the Audit Committee. (pages 9 and 11)

Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement | 29

LOGO


COMPENSATION DISCUSSION AND ANALYSIS

LOGO

Enhanced

Stock

Ownership

Guidelines

• Revised our Guidelines to increase target ownership requirements for the Directors and the NEOs.

• Target ownership levels for the Directors and the NEOs are now based on the lesser of: (1) 4x annual base cash retainer, or 7,500 shares, for independent Directors, (2) 5x base salary, or 100,000 shares, for the CEO, (3) 3.5x base salary, or 40,000 shares, for the Chief Executive Officer of Titan or the President of Atlas Air, and (4) 3x base salary, or 30,000 shares, for executive vice presidents. (page 44)

Best Practices and Risk Management

The Compensation Committee is required by its charter to meet at least four times annually. During 2016, the Compensation Committee held four in-person meetings and four telephonic meeting and acted twice by written consent. In 2016, the Compensation Committee consisted of four outside Directors, Ms. Hallett (Chair), Mr. Gilmore, Mr. Griffin and Mr. McCorkle, each of whom is an independent Director within the meaning of applicable SEC and NASDAQ rules.


Compensation Practice		AAWW Policy

Significant “At Risk” Compensation		✓ Morethan 65% of maximum total CEO and target total other NEOs compensation is designed to be “at risk” and subject to achievement of pre-established performance goals tied to operational, financial and strategic objectives.

“Clawback” Policy		✓ “Clawback”of annual incentive compensation to discourage imprudent risk taking.

No Adjustments for Shareholder Buybacks		✓ Executives’annual incentives do not benefit from share buybacks.

No Change of Control Gross Ups		✓ Changeof control payments are not grossed up for tax purposes.

Extended Vesting Requirements		✓ Time-basedequity award agreements generally provide for a four-year vesting schedule.

Limited Perquisites		✓ TheCompany strictly limits perquisites and does not provide for items such as personal use of airplanes, Company-provided autos, and/or auto allowances or club dues.

No Grants of Stock Options		✓ TheCompany provides full value equity awards with either performance-based vesting or extended time-vesting requirements and has not granted stock options for many years.

No Repricing		✓ Repricingof underwater stock options not allowed.

No Hedging or Pledging of Shares		✓ Insidersprohibited from engaging in hedging and monetizing transactions involving the Company’s securities and from engaging in certain speculative transactions in respect of the Company’s securities. No waivers, pre-clearance or exceptions are permitted.

Risk Management		✓ Compensationprogram design does not promote excessive risk taking.

162(m) Design		✓ AIPcompensation is intended to qualify as performance-based compensation under Section 162(m).

Performance Assessment		✓ TheCompensation Committee annually assesses its own performance.

30 | Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement


		COMPENSATION DISCUSSION AND ANALYSIS


Peer Group		Base Salary		Performance-Based Incentives		2016 Transformative Events		Other Elements		Additional Policies

Discussion of Our Compensation Program

Peer Group

Using a Sensibly Structured Peer Group to Aid Our Compensation Decisions

Our Compensation Committee, together with its independent compensation consultant, periodically reviews relevant competitive market pay data for executives in our industry and similar industries. The Committee identifies a core group of companies, used to periodically assess the Company’s compensation levels and practices, as one factor in the compensation-setting process.

The Compensation Committee believes that identification of peers using a broad industry sector code is inadequate and does not establish similarity of operations and business models, nor adequately represent past, current and future competitors for managerial talent — factors the Compensation Committee considers in the selection of companies for these purposes.

Given the global nature and structure of our business, we believe it is critical to recruit and retain executives with a breadth of experience in global markets. A significant portion of our revenue is derived from companies and business activity based outside of the United States, including those of our unconsolidated subsidiary, Polar Air, which is operated by our leadership team. In 2016, we operated 39,882 flights, serving 420 destinations in 119 countries. A significant portion of our revenue is derived from companies and business activity based outside the United States.

For 2016, our peer group includes companies that are, in comparison to AAWW:

•

Comparably sized as measured by revenue, with median revenue peer group in 2016 of $2.1 billion, and with revenues that range from 0.37x to 2.02x of AAWW’s revenue. (AAWW’s 2016 revenue (i) was approximately $2.5 billion, including approximately $645 million from Polar and (ii) estimated at $2.7 billion in 2017, inclusive of Polar revenue).

•

Operate and compete for business and talent in similar industries, including transportation, logistics and aerospace services industries.

For peer comparison purposes only, AAWW’s revenue includes Polar revenue. AAWW holds a 51% economic interest and a 75% voting interest in Polar. Polar operates a fleet of 747 and 767 freighters in time-definite, airport-to-airport scheduled air cargo service to North America, Asia, Europe and the Middle East. Although Polar’s revenues and results are not consolidated with those of AAWW for financial reporting purposes, Mr. Flynn serves as Chairman, CEO and President, Mr. Dietrich serves as Executive Vice President and Chief Transportation Officer and Mr. Kokas serves as Executive Vice President, General Counsel, Chief Human Resources Officer and Assistant Secretary of Polar. As executive officers of Polar, Messrs. Flynn, Dietrich and Kokas have significant Polar-related executive, operating and administrative responsibilities. In addition, Messrs. Flynn, Dietrich, Kokas and Schwartz are members of the Polar board of directors, with Mr. Flynn as Chairman.

Because AAWW controls the voting interests of Polar, has operational control of Polar’s complex global network, and AAWW’s NEOs serve in executive positions at Polar for the benefit of both AAWW (as majority owner of Polar) and Polar, we believe including Polar’s revenues among AAWW’s for purposes of peer group comparisons is appropriate.

We note that, aside from a $20,000 salary increase in 2015 in connection with Mr. Steen’s promotion, we have not raised base compensation levels for our NEOs in the past three years, and five years for our CEO. Accordingly we did not engage in benchmarking in 2016.

Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement | 31


COMPENSATION DISCUSSION AND ANALYSIS


Peer Group		Base Salary		Performance-Based Incentives		2016 Transformative Events		Other Elements		Additional Policies

Our 2016 peer group is comprised of the following companies:


Company	Description	Revenue for FY2016 ($ in millions)
AAR Corp.	Provider of aviation services to the worldwide commercial aerospace and government/defense industries	$	1,663
Alliant Techsystems Inc. (nka: Orbital ATK, Inc.)	Aerospace, defense, commercial products		4,455
Barnes Group Inc.	Aerospace and industrial manufacturer		1,231
B/E Aerospace Inc.	Aerospace fasteners and consumables distributor		2,933
Bristow Group Inc.	Offshore helicopter transport services		1,446
Curtiss-Wright Corp.	Engineered, technologically advanced products and services		2,109
Echo Global Logistics, Inc.	Technologically enabled business process outsourcing		1,716
Esterline Technologies Corp.	Aerospace and defense manufacturer		2,009
GATX Corporation	Railcar leasing		1,418
Hexcel Corporation	Industrial manufacturer		2,004
Kansas City Southern	International transportation		2,334
Park-Ohio Holdings Corp.	Industrial supply chain logistics and diversified manufacturing industries		1,277
Rockwell Collins, Inc.	Avionics and information technology systems and services provider		5,283
Ryder System, Inc.	Truck rental, supply chain and fleet management services		6,787
Spirit Aerosystems Holdings, Inc.	Aero structures manufacturer		6,793
Teledyne Technologies, Inc.	Provider of enabling technologies for industrial growth markets		2,150
Tidewater Inc.	Large offshore service vessels to global energy industry provider		1,496
TransDigm Group Inc.	Commercial and military aerospace components manufacturer		2,707
Trinity Industries, Inc.	Transportation, construction and industrial products manufacturer		4,588
Median Revenue of Peers*		$	*2,109*
Atlas Air Worldwide Holdings, Inc.			2,484

*	UTi Worldwide, Inc. underwent a merger in 2016 and is no longer part of our peer group.

32 | Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement


		COMPENSATION DISCUSSION AND ANALYSIS


Peer Group		Base Salary		Performance-Based Incentives		2016 Transformative Events		Other Elements		Additional Policies

Components of Compensation

Base Salary

Purpose: Compensate executives for their responsibility, experience, sustained high level of performance, and contribution to our success.

Process for setting salaries: The amount of any senior executive salary increase has been determined by the Compensation Committee based on a number of factors, including but not limited to:

the nature and responsibilities of the position;

the level of performance of the individual;

the expertise of the individual;

advice of the Compensation Committee’s independent compensation consultant, including survey data; and

recommendations of the CEO (except regarding his own salary) and the Chief Human Resources Officer (except regarding his own salary).

Salary levels for NEOs are generally reviewed annually by the CEO and the Compensation Committee as part of the performance review process.

Salary in 2016: The Compensation Committee made no adjustments to the salary for the CEO. The Compensation Committee has not increased the salary for the CEO in five years.

The Compensation Committee has not increased salaries for the other NEOs since 2014, except in February 2015 for Mr. Steen whose annual base salary was increased by $20,000 in connection with his promotion to President and CEO of the Company’s Titan dry leasing subsidiary, while also retaining his EVP position for AAWW.

Performance-Based Compensation: Annual and Long-Term Incentive Compensation

The Compensation Committee takes a holistic approach to incentive compensation, using a combination of related short- and long-term performance-based incentives to encourage achievement of the Company’s annual, as well as longer-term, strategic goals.

At-Risk Philosophy:

The Compensation Committee believes that a significant portion of a senior executive’s compensation should be “at-risk,” based upon the Company’s financial and operating performance. Performance-based compensation aligns senior executive compensation with our goals for corporate financial and operating performance and encourages a high level of individual performance. For 2016, 67.2% of our CEO’s maximum total direct compensation opportunity (base salary and maximum payout opportunity of annual and long-term incentive awards granted in 2016) was performance-based.

How we set our incentive metrics:

AIP financial and performance metrics are based on measurable performance-based criteria, including (i) EPS; (ii) on-time customer service reliability and (iii) individual annual objectives.

Long-term performance incentives are directly linked to strategic initiatives and are intended to enhance shareholder long-term interests — currently, Adjusted EBITDA growth and ROIC.

Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement | 33


COMPENSATION DISCUSSION AND ANALYSIS


Peer Group		Base Salary		Performance-Based Incentives		2016 Transformative Events		Other Elements		Additional Policies

We base a significant portion of our executives’ compensation on the Company’s financial and operating performance to align senior executive compensation with our goals for corporate financial as well as operating performance and to encourage a high level of individual performance. The annual and long-term metrics upon which our incentive plans are structured are designed to drive, on an integrated basis, the achievement of key business, financial, on-time customer service, and operational annual and long-term results, as well as to recognize the individual contributions of our executives towards these goals.

In designing the annual incentive awards for our executives, the Compensation Committee considers the Board-approved annual budget, as well as short- and long-term strategic goals, and then designs the annual and long-term incentive targets, including EPS, ROIC, and EBITDA, around the Board-approved budget and strategic plan. Notably, share repurchases do not contribute to the achievement of EPS performance under the AIP. We also believe that a significant portion of our executives’ total compensation should be equity-based, providing a strong alignment between the senior executive’s compensation and shareholders’ interests.

Our long-term business strategy contemplates initiatives which enhance our organizational and operating capabilities, generate additional operating efficiencies, broaden our portfolio of assets and services, and diversify our business mix.

Link Between Our Performance, Our Strategy and Our Incentive Metrics:

Set forth below are the metrics used under our performance incentive plans in 2016 to provide appropriate rewards for prudent risk-taking, key financial performance and objective results in support of our business strategy. In addition, we believe that our performance metrics align and underscore the link between incentive compensation and the successful execution of our business strategy, and reflect our ongoing commitment to a pay-for-performance compensation philosophy.

Note: Due to potential for competitive harm, detailed quantitative company financial performance targets for our incentive compensation plans are disclosed for the completed 2016 fiscal year but 2017 targets will be withheld for disclosure in next year’s Proxy Statement.

We have not disclosed the specific EBITDA growth and ROIC targets for the three-year performance period because they represent confidential, commercially-sensitive information that we do not disclose to the public and that could cause competitive harm if known in the marketplace. Both EBITDA growth and ROIC targets, as well as the factors that influence these measures, such as revenue and efforts to control costs, are inherently competitive and, if disclosed, would provide valuable insight into areas of focus for the Company. The Compensation Committee set the EBITDA growth and ROIC targets at a level that it believes would be challenging but possible for the Company to achieve.


Annual Incentives
Performance Metrics	Weighting	Rationale

EPS	CEO: 60% Other NEOs 2016: 50% Other NEOs 2017: 60%	• Promotes the creation of shareholder value and the achievement of financial performance targets, particularly profitability.

On-time customer service reliability	CEO: 20% Other NEOs: 20%	• Objective, measurable goals that provide an incentive to management to meet or exceed challenging standards set by our customers in the applicable service agreements (maintaining superior on-time customer service is essential to differentiating AAWW from its competitors and strengthening long-term customer relationships).

34 | Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement


		COMPENSATION DISCUSSION AND ANALYSIS


Peer Group		Base Salary		Performance-Based Incentives		2016 Transformative Events		Other Elements		Additional Policies


Annual Incentives
Performance Metrics	Weighting	Rationale

Individual annual objectives	CEO: 20% Other NEOs 2016: 30% Other NEOs 2017: 20%	• Tied directly into the annual and long-term goals set in our board-approved annual operating budget and long-term strategic plan, including continuous improvement and cost savings, diversifying our business, and enhancing our financial results.
Long-Term Incentives
Performance Metrics	Weighting	Rationale

Adjusted EBITDA growth	50% vesting based on a performance matrix	• Encourages management to pursue long-term profit potential and cash flow opportunities and is consistent with achievement of the Company’s long-term strategic goals. • Used for companies in industries like ours that require significant upfront financial investments. EBITDA is an appropriate measure of underlying profit potential and an indicator of operating cash flow.

ROIC	50% vesting based on a performance matrix	• Drives growth and profitability through the efficient use of our capital and encourages prudent risk-taking. • Used because the Company’s strategic plan involves a significant investment program in its aircraft fleet, and the ability of the Company to manage its balance sheet to generate returns is an important measure to investors.

For our long-term incentive awards, the Compensation Committee each year establishes the performance metrics for the following three-year award period. Our long-term incentive performance metrics relate to key Company long-term strategies and provide substantial payouts only upon achievement of exceptional performance.

At the end of the three-year period, the awards vest based on a performance matrix ranging from no vesting if the Company’s performance is in the bottom quintile of both EBITDA and ROIC metrics to 200% vesting if performance on both metrics is in the top quintile. Target vesting (100% of the award) is achieved if the Company’s performance is at the target level.

More detail on our AIP and LTIP, as well as more specifics relating to the awards granted in 2016 to our CEO and NEOs, is provided below.

Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement | 35


COMPENSATION DISCUSSION AND ANALYSIS


Peer Group		Base Salary		Performance-Based Incentives		2016 Transformative Events		Other Elements		Additional Policies

Annual Incentive Program

Annual cash incentive compensation awards to our executives are made under our AIP. Each of our executives is assigned a minimum threshold, target bonus opportunity and a maximum bonus opportunity. For 2016, Mr. Flynn had a target bonus opportunity of 100% and a maximum bonus opportunity of 200% of annual base salary; the target bonus opportunity for each of Messrs. Dietrich and Steen was 90% of annual base salary, and their respective maximum bonus opportunities were 180% of annual base salary. Messrs. Kokas and Schwartz had a target bonus opportunity of 85% of annual base salary, with a maximum bonus opportunity of 170% of annual base salary.

The AIP was part of the Company’s 2007 Incentive Plan for awards granted in respect of 2016 and will be a part of the Company’s 2016 Incentive Plan for awards granted after 2016. We collectively refer to the Company’s 2007 Incentive Plan and 2016 Incentive Plan herein as our “Incentive Plans”. Annual cash incentive awards under the AIP are intended to qualify as performance-based compensation as defined in Section 162(m) of the Code.

Bonuses are payable based on the achievement of the EPS, on-time customer service reliability, and individual business objectives as further described below. As a preliminary matter, the Company must generate a threshold level of EPS for any award to be payable under the AIP.

2016 Payout

Based on achievement of our EPS, on-time customer service reliability, and individual business objectives weighted for each executive as set forth above under “Link Between Our Performance, Our Strategy and Our Incentive Metrics”, management and the committee’s independent compensation consultant recommended an AIP payout for 2016 at 139.2% for our CEO and 149.2% for our other NEOs.

As described below, the Company exceeded the threshold EPS level for awards to be payable under the AIP for 2016, exceeded the service quality metric at 196% and individual business objectives of our CEO and our other NEOs were achieved at 200%. Actual bonus amounts paid to Messrs. Flynn, Dietrich, Steen, Kokas, and Schwartz under the AIP are included in the Summary Compensation Table for Fiscal 2016 under “Non-Equity Incentive Plan Compensation”.

EPS — Objective Metric. The most heavily weighted performance factor in the 2016 AIP was our EPS. For purposes of the AIP, the EPS performance range was (1) a threshold amount of $4.15 per share, (2) $5.19 per share for the target amount, and (3) $5.50 per share representing maximum achievement. The EPS number was calculated based on 25.49 million shares outstanding, which was set at the beginning of the year, (to avoid any benefits due to share repurchases, which could otherwise result in a higher bonus payout based solely on such share repurchases). For 2016, EPS was deemed achieved at target (100%) due to the triggering of certain change in control provisions set forth in the AIP as a result of our transaction with Amazon. (In fact, prior to the change in control, EPS was tracking at a near target level.)

In calculating pretax earnings, items contained in the Company’s board-approved annual operating budget do not result in any adjustment. However, limited listed items may be taken into account as adjustments to the extent that amounts related thereto were not included in the target for the Company’s operating plan as approved by the Board of Directors.

Our EPS metric under the AIP is designed to be rigorous. The target amount of $5.19 in 2016 represented an approximately 27% increase over the Company’s EPS target in 2015 as well as an increase over our actual Adjusted Diluted EPS from continuing operations, net of taxes of $5.01.* The EPS metric under the AIP is not benefitted by share repurchases.

^*	Adjusted Diluted EPS from continuing operations, net of taxes is a non-GAAP measure. A reconciliation to the most directly comparable GAAP measure is contained in Exhibit A attached hereto.

36 | Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement


		COMPENSATION DISCUSSION AND ANALYSIS


Peer Group		Base Salary		Performance-Based Incentives		2016 Transformative Events		Other Elements		Additional Policies

On-Time Customer Service Reliability — Objective Metric. An additional objective performance metric that was used to determine 2016 annual cash bonus payments was our on-time customer service reliability. Our 2016 on-time customer service quality goals are all objective, measurable goals that are set to meet or exceed challenging standards set forth in our customer service agreements. In 2016, we exceeded our on-time customer service reliability levels in all categories except for U.S. Military AMC performance, resulting in 196% performance attributable to this objective performance metric.

The on-time customer service reliability portion of our AIP is an objective on-time calculation. It is comprised of specific challenging, objective, measurable on-time customer service reliability goals set forth in our written customer contracts.


Customer Service Offering		2016 Result

ACMI		Exceeded all on-time objective customer service performance goals during the year without incurring net customer financial penalties.

CMI		Exceeded all on-time objective customer service performance goals during the year without incurring net customer financial penalties.

AMC/Military		On-time objective customer service performance goals during the year achieved in part. Both cargo and passenger performance were impacted by fewer mission counts (fewer flights), short-notice demand and higher rates of operational delays.

2016 Individual Business Objectives. Individual annual business objectives for our NEOs are reviewed with and approved by the Compensation Committee early in the year, or late the preceding year when the Company’s operating plan is being approved by the Board of Directors. These individual business objectives tie into our annual business plan and our long-term strategic plan, including continuous improvement and cost savings, diversifying our business, and enhancing our financial results, among others.

Set forth below are a representative sampling of the numerous individual business objectives and achievements applicable to each of our NEOs during 2016. All of our NEOs met or exceeded the maximum achievement on their individual business objectives (the third AIP performance metric), resulting in a 200% performance factor. This metric was weighted at 20% for our CEO and 30% for all other NEOs for 2016 and will be weighted at 20% for the CEO and all other NEOs in 2017.

2016 Individual Performance Objectives

William J. Flynn — President and Chief Executive Officer

✓

Execute the Company’s Long-Term Strategic Plan

Objective

Accomplishment

Identify and pursue specific plans to further diversify and grow revenue and profitability

Drive operational and financial growth and diversification, with a specific focus on growing the 777 and 737 platforms

Identification, pursuit and closing of:

- Amazon transaction (long-term lease and operation of 20 767-300s with future growth opportunity)

- Southern acquisition (which added five 777s and five 737s to our fleet)

Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement | 37


COMPENSATION DISCUSSION AND ANALYSIS


Peer Group		Base Salary		Performance-Based Incentives		2016 Transformative Events		Other Elements		Additional Policies

✓

Achieve Continuous Improvement Savings; Develop and Structure Corporate Balance Sheet to Fund Growth Initiatives


Objective		Accomplishment
Target cost savings and efficiency goal set		Savings attained and efficiencies realized significantly in excess of goal, including in connection with CF6-80 engine program and other procurement-related initiatives

John W. Dietrich — Executive Vice President and Chief Operating Officer

✓

Execute Strategic Plan

Objective

Accomplishment

Southern integration

On schedule or ahead of schedule:

- Single Operating Certificate expected August 2017

- Atlas and Polar certificates successfully moved from New York to Cincinnati (CVG)

✓

Continuous Improvement and Strategic Growth Initiatives


Objective		Accomplishment
Improve block hour utilization		Record block hour production of 184,047 hours flown in 2016 versus 178,061 in 2015
Manage pilot staffing and training to accommodate aggressive fleet growth plan		323 new hires. 502 Operating Experience completions by new hires and new seat trainees.


Objective		Accomplishment
Target cost savings and efficiency goal set		Savings attained and efficiencies realized significantly in excess of goal, including in connection with CF6-80 engine program and other procurement-related initiatives

Michael Steen — Executive Vice President and Chief Commercial Officer

✓

Develop and Implement Titan Growth Plan


Objective		Accomplishment
Execute fleet-type strategies to support growth		Titan became world’s second largest freighter lessor, with acquisition of 19 767-300BCFs

✓

Executing the Company’s Long-Term Strategic Plan and Business Development


Objective		Accomplishment
Develop/refine geographic growth opportunities		Record revenues in South America, despite continued economic crisis in Brazil, Argentina and Venezuela
Continue to pursue ACMI/CMI growth opportunities across all fleet and product types		Signed/extended/renewed numerous ACMI contracts, including with Asiana and NCA Signed a 5-year agreement with FedEx for peak-season lease of 5 747-400Fs

38 | Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement


		COMPENSATION DISCUSSION AND ANALYSIS


Peer Group		Base Salary		Performance-Based Incentives		2016 Transformative Events		Other Elements		Additional Policies

Spencer Schwartz — Executive Vice President and Chief Financial Officer

✓

Execute the Strategic Plan and Enhance Stakeholder Value

Objective

Accomplishment

Support plans to diversify and grow revenue and profitability

Identify and pursue appropriate acquisitions or investments to deliver shareholder value

Played key role in transformative Amazon transaction, which expands Company presence in growing e-commerce markets

Played key role in immediately accretive Southern acquisition which grows and diversifies revenues and earnings, and increases Company presence in the growing integrator-express markets

Supported continuous improvement bottom line savings initiatives

✓

Develop and Structure the Balance Sheet to Fund Growth Initiatives


Objective		Accomplishment
Determine financing initiatives to address growth and cash requirements		$70 million loan facility closed with an attractive rate to finance GEnx spare engines
Strong balance sheet and appropriate leverage		$14.8 million financing with an attractive rate for a 767 aircraft in CMI operation Established a $150 million revolving credit facility with attractive terms

Adam R. Kokas — Executive Vice President, General Counsel, Chief Human Resources Officer and Secretary

✓

Execute the Strategic Plan and Enhance Stakeholder Value

Objective

Accomplishment

Support plans to diversify and grow revenue and profitability

Identify and pursue appropriate acquisitions or investments to deliver stockholder value

Support of fleet plan strategy to provide for customer growth and fleet modernization

Key role in the structuring and negotiating the transformative Amazon transaction, which expands Company presence in growing e-commerce markets

Key role in the structuring and negotiating the accretive Southern acquisition which grows and diversifies revenues and earnings and increases Company presence in the growing integrator-express markets

Support of Titan dry leasing business - became second largest freighter lessor by way of numerous aircraft transactions in 2016

Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement | 39


COMPENSATION DISCUSSION AND ANALYSIS


Peer Group		Base Salary		Performance-Based Incentives		2016 Transformative Events		Other Elements		Additional Policies

✓

People Focus/Labor Relations

Objective

Accomplishment

Successfully implement Southern integration

Achieve key recruiting, retention and organizational development goals to support growth plan

Support management of pilot staffing and related matters

All material integration elements on or ahead of schedule. Single aircraft operating certificate (“AOC”), which requires FAA approval, is on track for 3rd quarter 2017. Atlas and Polar AOCs moved from New York to Cincinnati (CVG). Achieved economic synergies and cost savings significantly exceeding business case

Executed on key recruiting, retention and organizational goals, both with Southern integration process and meaningfully increasing ground staff (non-pilot) work force to support growth plan

Successfully executed significant pilot staffing demands. Over 320 pilot hired and trained, all in a timely fashion to support growth initiatives. Further supported other crewmember projects to support strategic plan

Long-Term Incentive Compensation

Under our Long-Term Incentive Plan, the Compensation Committee is authorized to grant to participants a variety of long-term incentives, including shares of common stock, restricted stock, share units, stock options, stock appreciation rights, performance units, and/or performance cash incentives. In granting these awards, the Compensation Committee is authorized to establish any conditions or restrictions, consistent with the Long-Term Incentive Plan, it deems appropriate.

During 2016, the Compensation Committee made long-term incentive grants to our NEOs in the form of performance share units, performance-based cash awards, and time-based restricted stock units, as set forth in the Grants of Plan Based Awards table appearing below.

2016 Long-Term Incentive Awards

The total long-term incentive grant in a given year is based on a multiple calculated as a percentage of base salary. For the CEO, the multiple is based on his actual base salary and for the other NEOs and other executives, the multiple is based on an average base salary for all executives at a particular level (for example Executive Vice President, Senior Vice President or Vice President). The multiple is converted into an aggregate LTI plan award opportunity, and for 2016 awards, which, consistent with prior years, was the average closing price for the 30 trading days ending on January 29, 2016.

For 2016, the award was granted in the form of an LTI award consisting of three-year performance units (25%) and performance cash awards (25%) (using target levels to allocate) and four-year vesting restricted stock units (50%), all as more fully described below. Assuming achievement at maximum performance opportunity, the performance share units and performance cash units together would then payout at two-thirds of the value of the award grant.

40 | Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement


		COMPENSATION DISCUSSION AND ANALYSIS


Peer Group		Base Salary		Performance-Based Incentives		2016 Transformative Events		Other Elements		Additional Policies

Performance-Based Share Units

Performance share units, or PSUs, are paid in AAWW common shares on vesting. Key characteristics of the PSUs granted in 2016 are as follows:

•

Pays out only if the Company achieves, over a three-year period, rigorous preset objective financial targets measured as compared to comparative financial targets for a peer group.

•

Subject to the following financial metrics for the 2016 grant: EBITDA growth and ROIC.

•

The grant date value is reported in the Summary Compensation Table, but actual value (if any) will not be realized by the NEOs until the three-year period ends and then only if the awards meet applicable performance criteria.

•

In connection with the Amazon transaction, the 2016 PSU performance goals were deemed satisfied at 200% performance levels in accordance with their terms due to the change of control, although such PSUs have not paid out to any of the NEOs other than the CEO in accordance with their “double-trigger” terms. (Our performance awards provide for 200% satisfaction in the event of change of control in order to provide retention incentives to key employees while appropriately adjusting for the changed performance environment.)

Cash-based long-term incentive awards are paid at the end of a three-year performance period. Key characteristics of the cash-based long-term incentive awards are as follows:

•

Pays out only if the Company achieves, over a three-year period, rigorous preset comparative financial targets.

•

Subject to the following financial metrics for the 2016 grant: EBITDA growth and ROIC.

•

In connection with the Amazon transaction, the 2016 performance goals applicable to cash-based long-term incentive awards were deemed satisfied at maximum performance levels in accordance with their terms due to the change of control. Therefore, pursuant to SEC rules, the value of the cash-based long-term incentive awards is reported in the 2016 Summary Compensation Table, even though, in the case of our NEOs other than our CEO (whose awards vested due to the change in control and his retirement eligibility), the awards will not be paid until after 2018, subject to the executives’ continued employment. (Our cash-based long-term incentive awards provide for deemed maximum satisfaction in the event of change of control in order to provide retention incentives to key employees while appropriately adjusting for the changed performance environment.)

Payout of 2014-2016 Performance LTI Awards. In the first quarter of 2017, the Compensation Committee reviewed AAWW’s performance over the three-year performance period ended December 31, 2016 for grants made in 2014. The performance metrics for these awards were set in 2014 and were EBITDA growth and three-year ROIC applied on an absolute basis. Performance LTI payouts for the 2014-2016 performance period were made in January 2017 for our NEOs other than Mr. Flynn, whose retirement eligibility entitled him to payout in September 2016. 2014-2016 Performance LTIs were paid out at the 200% level due to the triggering of certain change of control provisions set forth in the Performance LTI as a result of our transaction with Amazon. Our performance awards provide for 200% satisfaction in the event of change of control in order to provide retention incentives to key employees while appropriately adjusting for the changed performance environment. Immediately prior to the change in control provisions being triggered, performance pursuant to the original payment time of such awards was tracking toward 138% target payout attainment.

Restricted Stock Units

Restricted stock units, or RSUs, are paid in shares of Common Stock and have the following key characteristics:

•

Vest annually over a four-year period.

•

Align economic interests of management with long-term shareholders.

RSUs are designed to attract and retain executives by providing them with (1) stock ownership during the four-year vesting period, and (2) strong incentive to remain with the Company until at least the four-year vesting period ends.

Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement | 41


COMPENSATION DISCUSSION AND ANALYSIS


Peer Group		Base Salary		Performance-Based Incentives		2016 Transformative Events		Other Elements		Additional Policies

2016 Transformative Events Impacting Compensation

2016 was a truly historic and transformative year for Atlas Air Worldwide.

Southern — 2016 Acquisition Incentive Program under the 2007 Incentive Plan

In April 2016, we acquired Southern in a highly complementary transaction that expands our platform into 777 and 737 operations and provides our customers with access to a broader array of aircraft and operating services. Although the Company has acquired and financed many aircraft over the course of its operations over the past two decades, the Southern acquisition is the first acquisition of an airline we have made in the past 15 years, making it an extraordinary milestone.

On January 6, 2016, with the Southern transaction being competitively pursued at the time, our Compensation Committee adopted the Acquisition Incentive Program, a sub-plan under our 2007 Incentive Plan, pursuant to which certain of our key employees, including our NEOs, were eligible to receive performance-based bonuses if the Southern transaction was successfully consummated. Our Compensation Committee determined that it was important to adopt a supplemental bonus program so that it could, in a targeted way, motivate and incentivize those employees who were critical to our ability to successfully negotiate and complete the Southern transaction (the “Southern Transaction”), which was immediately accretive to our revenue and growth. In tandem with the Amazon transaction, the Southern Transaction was an important part of our long-term strategy to expand our platform into 777 and 737 operations and provide our customers with access to a broader array of aircraft and operating services. Bonus amounts under the plan were payable only upon the consummation of the Southern Transaction by December 31, 2016. Following consummation of the Southern Transaction on April 7, 2016, the Compensation Committee certified that the Southern Transaction met the performance metrics described above. Accordingly, our NEOs received the following amounts under the Acquisition Incentive Program: Mr. Flynn —$1,850,000, and each of Messrs. Dietrich, Kokas, Schwartz and Steen —$775,000.

Amazon Transaction

In May 2016, we reached an agreement to provide air transport services for leading e-commerce retailer Amazon. In addition to leasing twenty 767-300 freighters to Amazon and operating them in support of package deliveries to its customers, our arrangements provide for future growth of the relationship as Amazon may increase its business with us.

In connection with this transformative transaction, which obtained over 99% shareholder approval, the Company and Amazon entered into an Investment Agreement in May 2016, pursuant to which the Company issued to Amazon warrants (approved by the Company’s shareholders in September 2016) to acquire shares representing up to 20% (and up to an additional 10% in the event of increased future business) of the Company’s outstanding common stock as of May 4, 2016. This shareholder approval resulted in a change in control under the existing terms of certain of the Company’s plans and agreements and had the following effects on certain components of our NEOs’ compensation:

In early 2014, based on shareholder feedback from our outreach, we changed our LTI award grant practices from “single-trigger” to “double-trigger”. Due to the multiyear vesting schedule of our RSUs, legacy single-trigger 2013 awards were still outstanding at the time of the Amazon transaction. Thus, RSUs granted in 2013 to our NEOs vested in connection with the change in control and were settled in January 2017 in accordance with their terms. Note that these 2013 RSUs were three-quarters vested as of immediately prior to the change in control because each NEO had continued his employment through each of 2014, 2015 and 2016 in accordance with the time-based vesting requirements of the 2013 RSUs.

42 | Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement


		COMPENSATION DISCUSSION AND ANALYSIS


Peer Group		Base Salary		Performance-Based Incentives		2016 Transformative Events		Other Elements		Additional Policies

For our NEOs other than Mr. Flynn, in accordance with the “double-trigger” terms of their remaining RSUs, such RSUs will continue to vest over the remainder of the applicable four-year vesting period or will fully vest upon the earlier occurrence of a qualifying termination of employment (as described starting on page 54 under the heading “Potential Payments Upon Termination or Change of Control”).

Under our 2016 Annual Incentive Plan, performance goals were each deemed satisfied at no less than target level in accordance with the terms of plan. This had a very modest impact on the 2016 AIP payouts as the customer service & individual performance goals were satisfied well in excess of target level, while the EPS goal was tracking at a near target level. See “Annual Incentive Program” on page 36 for additional detail.

Our performance LTIs provide for deemed attainment of performance at 200% in the event of change in control in order to provide retention incentives to key employees while appropriately adjusting for the changed performance environment. Accordingly, in connection with the Amazon transaction, performance goals applicable to our performance LTIs were deemed satisfied at 200%. For our NEOs other than Mr. Flynn, in accordance with the “double-trigger” terms of their PSUs and cash-based long-term incentive awards, such awards would vest and be settled upon the regularly scheduled vesting date at the end of the applicable three-year performance period or upon the earlier occurrence of a qualifying termination of employment (as described starting on page 54 under the heading “Potential Payments Upon Termination or Change of Control”).

For reference, performance metrics under our PSUs and long-term performance cash were tracking as follows immediately prior to the change in control:


2014-2016 LTIs: 138%		2015-2017 LTIs: 139%		2016-2018 LTIs: N/A. Too early to determine.

In connection with the change in control and the fact that he satisfied certain tenure requirements related to retirement eligibility (which were structured to comply with timing requirements under Code Section 409A) under certain of the award agreements, Mr. Flynn’s performance LTIs vested and were settled immediately at the 200% level applied to our other NEOs, and his 2014, 2015 and 2016 RSUs were vested and settled immediately. Although it is difficult to project what future annual and long-term incentive payments would be due to various performance-based components, the amounts paid to Mr. Flynn in connection with the Amazon transaction and his retirement eligibility were not incremental and were designed to give him the same payments he would have received in the ordinary course.

In accordance with the terms of our 401(k) Restoration and Voluntary Deferral Plan, NEO account balances were paid out in connection with the change in control. All of our NEO’s account balances were already vested at the time of the change in control.

As described starting on page 54 under the heading “Potential Payments Upon Termination or Change of Control,” our NEOs would be entitled to receive certain separation payments and benefits in the event of a qualifying termination of employment prior to September 20, 2017 (the first anniversary of the change in control) in accordance with the terms of their employment agreements or the Company’s Benefits Program for Senior Executives, as applicable.

Other Elements of Compensation

Other Benefits and Limited Perquisites

We provide our executives with common benefits, which include health insurance (including certain limited retiree health benefits), severance benefits commensurate with position, 401(k) plan participation, and a retirement restoration program. The Compensation Committee believes that perquisites should be limited and not broad-based. Such perquisites are limited principally to financial counseling and limited travel-related benefits, including tax reimbursement payments related thereto. Details concerning these perquisites can be found in the footnotes to the “Summary Compensation Table for Fiscal 2016” below.

Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement | 43


COMPENSATION DISCUSSION AND ANALYSIS


Peer Group		Base Salary		Performance-Based Incentives		2016 Transformative Events		Other Elements		Additional Policies

Retirement Plans

In addition to the Company’s 401(k) plan, the Company maintains the 401(k) Restoration and Voluntary Deferral Plan (the “Retirement Restoration Plan”) for employees holding the title of Executive Vice President or higher. This plan is a nonqualified deferred compensation plan intended to make eligible employees whole for compensation limits imposed under our 401(k) plan. Under the retirement restoration plan, a participant is eligible to make elective deferrals and to receive employer credits equal to 5% of eligible compensation in excess of the limits described in Sections 401(a)(17) and 402(g) of the Code. Employer credits vest upon the third anniversary of the executive’s first three years of eligibility for the plan, and all employer credits after such anniversary are fully vested. Deferrals and employer credits are credited with notional earnings equal to the prime interest rate until distributed on the earliest of (i) the participant becoming disabled, (ii) the participant’s separation from service (including death), or (iii) a change of control of the Company.

Under our Benefits Program for Senior Executives, employees holding the rank of Executive Vice President or above would become retirement eligible upon attaining age 60 and 10 years of service. Of our NEOs, only Mr. Flynn is currently retirement eligible, and no other NEO is retirement-eligible for several years. Please see pages 54-56 for further detail regarding provisions relating to Mr. Flynn’s retirement eligibility.

Additional Compensation Policies

Executive Stock Ownership

In support of the Board philosophy that performance and equity incentives provide the best incentives for our NEOs and other members of management and promote increases in shareholder value, the Board monitors compliance with Stock Ownership Guidelines (the “Guidelines”) covering all Directors, NEOs, and other executives. Such guidelines include both stock ownership and recommended stock holding periods as described below. The Guidelines require executives to achieve certain levels of share ownership over a five-year period based on the lesser of a percentage of annual base salary or a fixed number of shares.

Current target share ownership levels for the Directors and the NEOs under the Guidelines are generally based on the lesser of: (1) 4x annual base cash retainer, or 7,500 shares, for independent Directors, (2) 5x base salary, or 100,000 shares, for the CEO, (3) 3.5x base salary, or 40,000 shares, for the Chief Executive Officer of Titan or the President of Atlas Air, and (4) 3x base salary, or 30,000 shares, for executive vice presidents.

All of our Directors and NEOs are in full compliance with the requisite Common Stock ownership levels set forth in the Guidelines.

If an individual covered by the Guidelines has not attained the requisite level of share ownership upon a vesting event or exercise of a stock option or otherwise receives stock as compensation from the Company, it is recommended that he or she retain the lesser of (i) a number of shares equal to 50% of the net value of shares acquired or vested (after deducting the exercise price and withholding taxes) or (ii) a number of shares necessary to reach the applicable stock ownership guidelines amount for such covered person.

Tax Considerations

Section 162(m) of the Code limits the deductibility of compensation in excess of $1 million paid to the Company’s Chief Executive Officer and to each of the other three highest-paid executive officers (other than the Chief Financial Officer). There is, however, an exception to this limit on deductibility for compensation that satisfies certain conditions for “qualified performance-based compensation” set forth under Section 162(m). The Company may implement compensation arrangements that qualify as tax-deductible performance-based compensation under the Long-Term Incentive Plan; provided, however, that such intended implementation should not be viewed as a guarantee that the Company will be able to deduct all such compensation and certain events could cause

44 | Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement


		COMPENSATION DISCUSSION AND ANALYSIS


Peer Group		Base Salary		Performance-Based Incentives		2016 Transformative Events		Other Elements		Additional Policies

awards intended to qualify as “qualified performance-based compensation” to lose such qualification and the Compensation Committee has made, and reserves the right in its discretion to make, payments or grant awards that do not qualify for tax deductibility under Section 162(m).

Equity Grant Practices

The Compensation Committee generally grants equity awards to NEOs in the first quarter of each year. The Compensation Committee does not have any programs, plans or practices of timing these awards in coordination with the release of material nonpublic information. We have never backdated, re-priced, or spring-loaded any of our equity awards.

Clawback Policy

In 2014, we adopted a compensation clawback policy to enhance the alignment of our compensation program features with best practices and consistent with feedback received from our shareholders. Our clawback policy permits us to seek to recover certain amounts of annual cash incentive compensation awarded to any executive officers on or after February 2014 if payment of such compensation was based on the achievement of financial results that were subsequently the subject of a substantial restatement of our financial statements due to material noncompliance and the executive officer’s intentional misconduct after February 2014 that contributed to higher amount of cash incentive compensation received.

Compensation Committee Report

Letter to the Shareholders from the Board of Directors

In managing the Company, our entire Board of Directors seeks to achieve long-term, sustainable performance and create value through the right strategies, prudent risk management, effective corporate governance practices and executive compensation programs, and well-functioning talent and succession planning. Please see “Letter to the Shareholders from the Board of Directors” appearing at the beginning of this Proxy Statement.

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis section with senior management. Based on this review, the Compensation Committee recommends to the Board of Directors that the Compensation Discussion and Analysis section be included in this proxy statement.

THE COMPENSATION COMMITTEE

Carol B. Hallett, Chair

James S. Gilmore III

Bobby J. Griffin

Frederick McCorkle

Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement | 45


2016 SUMMARY COMPENSATION TABLE

Compensation Tables and Explanatory Notes

2016 Summary Compensation Table

As described in the Compensation Discussion and Analysis “Overview” section of this Proxy Statement, based on our extensive shareholder outreach over the last several years, we have made numerous changes to our compensation programs, while maintaining and enhancing our pay for performance philosophy and ensuring that these programs do not promote excessive risk taking. Please read the Compensation Discussion and Analysis “Overview” appearing on pages 25-30 of this Proxy Statement, along with the remainder of the Compensation Discussion and Analysis section on pages 31-45 and the material presented below.

The following table provides information concerning compensation for our NEOs during fiscal year 2016:


Name and Principal Position (a)	Year (b)	Salary ($) (c)	Bonus ($) (d)	Stock Awards ($) (e)	Option Awards ($) (f)	Non-Equity Incentive Plan Compensation ($) (g)	All Other Compensation ($) (i)	Total ($) *(j) ()**
William J. Flynn	2016	1,035,040	—	2,717,144	—	9,112,626	622,977	13,487,787
President and Chief	2015	1,035,040	—	2,940,674	—	2,028,600	203,570	6,207,884
Executive Officer	2014	1,035,040	—	2,667,230	—	2,070,000	139,667	5,911,937
John W. Dietrich	2016	665,026	—	1,543,654	—	4,873,328	188,753	7,270,762
Chief Operating Officer	2015	665,026	—	1,670,631	—	1,173,060	155,044	3,663,761
	2014	665,026	—	1,374,905	—	1,130,500	113,602	3,284,033
Michael T. Steen	2016	600,023	—	1,543,654	—	4,786,044	179,606	7,109,328
Chief Commercial Officer	2015	600,023	—	1,670,631	—	1,058,400	119,361	3,448,415
	2014	580,022	—	1,374,905	—	986,000	98,521	3,039,448
Adam R. Kokas	2016	537,021	—	1,268,939	—	4,363,036	158,273	6,327,269
General Counsel and Chief	2015	537,021	—	1,515,846	—	894,642	113,411	3,060,920
Human Resources Officer	2014	537,021	—	1,374,905	—	912,900	92,387	2,917,213
Spencer Schwartz	2016	525,020	—	1,268,939	—	4,347,817	157,113	6,298,889
Chief Financial Officer	2015	525,020	—	1,515,846	—	874,650	118,061	3,033,577
	2014	525,020	—	1,374,905	—	892,500	88,379	2,880,804

46 | Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement


		PRO-FORMA SUMMARY COMPENSATION TABLE EXCLUDING AMAZON IMPACT

Pro Forma Summary Compensation Table (excluding Amazon Impact)

(*) The following table sets forth (a) our NEOs’ fiscal year 2015 compensation as set forth in the Summary Compensation Table and (b) a projection of our NEOs’ fiscal year 2016 compensation that would have been reported in the Summary Compensation Table had the Amazon transaction not occurred:


Name and Principal Position	Year		Salary (c)($)		Stock Awards (e)($)		Non-Equity Incentive Plan Compensation (g)($)(^)		All Other Compensation (i)($)(^)		Total (j)($)
*William J. Flynn*		2016		1,035,040		2,717,144		4,202,117		331,884		8,286,185
*President and Chief*		2015		1,035,040		2,940,674		2,028,600		203,570		6,207,884
*Executive Officer*
*John W. Dietrich*		2016		665,026		1,543,654		2,139,749		188,754		4,537,184
*Chief Operating Officer*		2015		665,026		1,670,631		1,173,060		155,044		3,663,761
*Michael T. Steen*		2016		600,023		1,543,654		2,055,242		179,606		4,378,525
*Chief Commercial Officer*		2015		600,023		1,670,631		1,058,400		119,361		3,448,415
*Adam R. Kokas*		2016		537,021		1,268,939		1,934,548		158,273		3,898,782
*General Counsel and Chief*		2015		537,021		1,515,846		894,642		113,411		3,060,920
*Human Resources Officer*
*Spencer Schwartz*		2016		525,020		1,268,939		1,919,814		157,113		3,870,886
*Chief Financial Officer*		2015		525,020		1,515,846		874,650		118,061		3,033,577

Includes adjustments to reflect lower payout levels that would have been attained absent the Amazon transaction (using projected estimates), and elimination of compensation events triggered by the Amazon transaction under the terms of our plans and agreements in effect prior to the change in control. Please see above under the heading “Amazon Transaction” for further discussion of these adjustments.

Summary Compensation Table Notes

Column (c) — Salary

Mr. Flynn did not receive a salary increase in 2016. Mr. Flynn’s last salary increase was in April 2012.

Aside from a $20,000 salary increase in 2015 in connection with Mr. Steen’s promotion, we have not raised base compensation levels for our NEOs in the past three years, and five years for our CEO.

Column (e) — Stock Awards

The amounts included reflect the grant date fair value of stock awards, computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures and with performance awards valued based on the probable outcome of performance conditions. For more information about the assumptions used in valuing these awards, see Note 15 in our Annual Report on Form 10-K. Stock awards for 2016 reflect the aggregate grant date fair value of (i) time-based restricted stock units vesting over four years and (ii) performance share units for the three-year performance period ending December 31, 2018 (see pages 35 and 41 for a discussion of the methodology followed by the Compensation Committee to determine the number of performance share units awarded) assuming target level performance. Performance share units are settled in shares of Common Stock at 0% to 200% of target based upon AAWW’s EBITDA growth and ROIC performance relative to internal targets over such three-year performance period. The performance goals were deemed satisfied at maximum performance levels in accordance with their terms in connection with the Amazon transaction due to the change of control. Assuming that the performance share units are paid at the maximum level, the aggregate dollar values of restricted stock unit and performance share unit awards for 2016 (based on the closing price of our Common Stock on the date of grant) would be $3,622,870 for Mr. Flynn, $2,058,218 for Mr. Dietrich and Mr. Steen and $1,691,919 for Mr. Schwartz and Mr. Kokas. In addition, as further discussed in the section entitled “Amazon Transaction” on

Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement | 47


PRO-FORMA SUMMARY COMPENSATION TABLE EXCLUDING AMAZON IMPACT

page 42, Mr. Flynn’s 2016 performance share units vested in connection with the Amazon transaction change of control and his retirement eligibility. This amendment did not result in any incremental fair value in accordance with accounting principles generally accepted in the United States of America (“GAAP”). For assumptions used to determine the fair value of stock awards, see Note 15 to the Company’s 2016 Consolidated Financial Statements.

Column (g) — Non-Equity Incentive Plan Compensation

Reflects cash payments made under the AIP and the 2016 Acquisition Incentive Program, a subplan of our 2007 Incentive Plan as well as the value of the NEOs’ cash-based long-term incentive awards, for which the applicable performance goals were deemed satisfied at maximum performance in accordance with their terms in connection with the Amazon transaction. In the case of our NEOs other than Mr. Flynn, in accordance with the “double trigger” terms of these long-term incentive awards, they would vest and be settled upon the earlier to occur of regularly-scheduled settlement dates or a qualifying termination of employment, as described in the “Potential Payments Upon Termination or Change of Control” section of this Proxy Statement.

Column (i) — All Other Compensation

“All Other Compensation” includes Company matching contributions under our 401(k) plan. For 2016, these amounts totaled $12,000 for Mr. Flynn and Mr. Dietrich and $9,000 for each of the other NEOs.

We provide a limited number of perquisites and other personal benefits to our senior executives. We believe these benefits are reasonable, competitive and consistent with our overall executive compensation program and philosophy and with comparable programs maintained by the companies with which we compete for executive talent. The costs of these benefits constitute only a small percentage of each NEO’s total compensation. For 2016, these personal benefits included financial counseling fees and limited travel-related expenses. Reimbursement of taxes owed for these benefits for 2016 totaled $31,801 for Mr. Flynn, $23,408 for Mr. Dietrich, $21,154 for Mr. Steen, $19,929 for Mr. Schwartz, and $19,244 for Mr. Kokas. These amounts are included in the “All Other Compensation” column.

As described above in section entitled “Other Elements of Compensation — Retirement Plans”, our NEOs are entitled to receive an employer contribution under the Retirement Restoration Plan. The portion of account balances attributable to employer contributions made under the Retirement Restoration Plan to each of our NEOs during 2016 totaled $527,799 for Mr. Flynn, $121,668 for Mr. Dietrich, $112,683 for Mr. Steen, $99,744 for Mr. Schwartz, and $101,343 for Mr. Kokas. These amounts are included in the “All Other Compensation” column. See “Nonqualified Deferred Compensation” below for additional information about the Retirement Restoration Plan.

The “All Other Compensation” column also includes de minimis amounts for group term life insurance and long-term disability insurance.

48 | Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement


		2016 GRANTS OF PLAN-BASED AWARDS

2016 Grants of Plan-Based Awards

The grants set forth in the following table were made pursuant to (i) our 2007 Incentive Plan and related award agreements and (ii) our AIP, each of which is described in more detail in the section headed “Compensation Discussion and Analysis” above.


			Estimated Future Payouts Under Non-Equity Incentive Plan Awards						Estimated Future Payouts Under Equity Incentive Plan Awards⁽⁴⁾						All Other Stock Awards: Number of Shares of Stock or Units⁽⁵⁾(#) (i)		All Other Option Awards: Number of Securities Underlying Options (#) (j)		Exercise or Base Price of Option Awards ($) (k)		Grant Date Fair Value of Stock and Option Awards⁽⁶⁾ ($) (l)
Name (a)	Grant Date (b)		Threshold ($) (c)		Target ($) (d)		Maximum ($) (e)		Threshold (#) (f)		Target (#) (g)		Maximum (#) (h)						Exercise or Base Price of Option Awards ($) (k)
William J. Flynn
AIP⁽¹⁾				776,250		1,035,000		2,070,000		—		—		—		—		—		—		—
Southern⁽²⁾				1,850,000
LTIP–LTC⁽³⁾		2/11/16		—		970,313		1,940,626		—		—		—		—		—		—		—
LTIP–PSUs⁽⁴⁾		2/11/16		—		—		—		—		25,535		51,070		—		—		—		905,726
LTIP–RSUs⁽⁵⁾		2/11/16		—		—		—		—		—		—		51,069		—		—		1,811,417
John W. Dietrich
AIP⁽¹⁾				448,875		598,500		1,197,000		—		—		—		—		—		—		—
Southern⁽²⁾				775,000
LTIP–LTC⁽³⁾		2/11/16		—		551,250		1,102,500		—		—		—		—		—		—		—
LTIP–PSUs⁽⁴⁾		2/11/16		—		—		—		—		14,507		29,014		—		—		—		514,563
LTIP–RSUs⁽⁵⁾		2/11/16		—		—		—		—		—		—		29,013		—		—		1,029,091
Michael T. Steen
AIP⁽¹⁾				405,000		540,000		1,080,000		—		—		—		—		—		—		—
Southern⁽²⁾				775,000
LTIP–LTC⁽³⁾		2/11/16		—		551,250		1,102,500		—		—		—		—		—		—		—
LTIP–PSUs⁽⁴⁾		2/11/16		—		—		—		—		14,507		29,014		—		—		—		514,563
LTIP–RSUs⁽⁵⁾		2/11/16		—		—		—		—		—		—		29,013		—		—		1,029,091
Adam R. Kokas
AIP⁽¹⁾				342,338		456,450		912,900		—		—		—		—		—		—		—
Southern⁽²⁾				775,000
LTIP—LTC⁽³⁾		2/11/16		—		453,150		906,300		—		—		—		—		—		—		—
LTIP—PSUs⁽⁴⁾		2/11/16		—		—		—		—		11,925		23,850		—		—		—		422,980
LTIP—RSUs⁽⁵⁾		2/11/16		—				—		—		—		—		23,850		—		—		845,960
Spencer Schwartz
AIP⁽¹⁾				334,688		446,250		892,500		—		—		—		—		—		—		—
Southern⁽²⁾				775,000
LTIP—LTC⁽³⁾		2/11/16		—		453,150		906,300		—		—		—		—		—		—		—
LTIP—PSUs⁽⁴⁾		2/11/16		—		—		—		—		11,925		23,850		—		—		—		422,980
LTIP—RSUs⁽⁵⁾		2/11/16		—		—		—		—		—		—		23,850		—		—		845,960

⁽¹⁾	Represents the range of potential cash payouts under the AIP for 2016. The actual AIP payouts for 2016 are included in the Summary Compensation Table above.

⁽²⁾	Represents cash paid under the 2016 Acquisition Incentive Program, a subplan of our 2007 Incentive Plan.

⁽³⁾

Represents the grant (under the Long-Term Incentive Plan) of performance cash awards that vest only if certain preestablished performance criteria for the period beginning on January 1, 2016 and ending December 31, 2018 are achieved. The performance goals were deemed satisfied at maximum performance levels in accordance with their terms in connection with the Amazon transaction due to the change of control. Pursuant to SEC rules, the value of these awards is reported in the 2016 Summary Compensation Table even through, in the case of our NEOs other than our CEO, the awards will not be paid until 2018, subject to the executive’s continued employment.

⁽⁴⁾

Represents the grant (under the Long-Term Incentive Plan) of performance-based long-term stock awards that vest only if certain preestablished performance criteria for the period beginning on January 1, 2016 and ending December 31, 2018 are achieved. In connection with the Amazon transaction, the performance conditions associated with the PSUs was deemed achieved at 200%, PSUs for Mr. Flynn became fully vested and were settled due to his retirement eligibility and PSUs for our other NEOs remain subject to service-based vesting conditions through the applicable performance period.

Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement | 49


2016 GRANTS OF PLAN-BASED AWARDS

⁽⁵⁾	Represents award of time-based restricted stock units that vest ratably over a four-year period. In connection with the Amazon transaction and his retirement eligibility, Mr Flynn’s RSUs became fully vested and were settled.

⁽⁶⁾

The fair value of the restricted stock units and performance share units shown in the table is based on the closing market price of our Common Stock as of the date of the particular award, computed in accordance with GAAP, excluding the effect of estimated forfeitures and with performance awards valued based on the probable outcome of performance conditions. See footnote (e) to the Summary Compensation table for the assumptions used in valuing these awards and for the grant date fair value of awards if maximum levels of performance were achieved.

50 | Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement


		2016 OUTSTANDING EQUITY AWARDS

2016 Outstanding Equity Awards

The table below shows outstanding equity awards for our NEOs as of December 31, 2016. Market values reflect the closing price of our common stock on the NASDAQ Global Market on December 31, 2016, which was $52.15 per share.


Name (a)	Number of Securities Underlying Unexercised Options Exercisable (#) (b)		Number of Securities Underlying Unexercised Options Unexercisable (#) (c)		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d)		Option Exercise Price ($) (e)		Option Expiration Date (f)		Number of Shares or Units of Stock That Have Not Vested (#) (g)			Market Value of Shares or Units of Stock That Have Not Vested ($) (h)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (i)			Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j)
William J. Flynn⁽¹⁾		—		—		—		—		—		—			—		—			—
		—		—		—		—		—		—			—		—			—
		—		—		—		—		—		—			—		—			—
John W. Dietrich		—		—		—		—		—		14,291	⁽³⁾		745,276		28,582	⁽²⁾		1,490,551
		—		—		—		—		—		17,593	⁽⁵⁾		917,475		23,458	⁽⁴⁾		1,223,335
		—		—		—		—		—		29,013	⁽⁷⁾		1,513,028		29,014	⁽⁶⁾		1,513,080
Michael T. Steen		—		—		—		—		—		14,291	⁽³⁾		745,276		28,582	⁽²⁾		1,490,551
		—		—		—		—		—		17,593	⁽⁵⁾		917,475		23,458	⁽⁴⁾		1,223,335
		—		—		—		—		—		29,013	⁽⁷⁾		1,513,028		29,014	⁽⁶⁾		1,513,080
Adam R. Kokas		—		—		—		—		—		14,291	⁽³⁾		745,276		28,582	⁽²⁾		1,490,551
		—		—		—		—		—		15,963	⁽⁵⁾		832,470		21,284	⁽⁴⁾		1,109,961
		—		—		—		—		—		23,850	⁽⁷⁾		1,243,778		23,850	⁽⁶⁾		1,243,778
Spencer Schwartz		—		—		—		—		—		14,291	⁽³⁾		745,276		28,582	⁽²⁾		1,490,551
		—		—		—		—		—		15,963	⁽⁵⁾		832,470		21,284	⁽⁴⁾		1,109,961
		—		—		—		—		—		23,850	⁽⁷⁾		1,243,778		23,850	⁽⁶⁾		1,243,778

⁽¹⁾	All of Mr. Flynn’s outstanding equity awards vested as of September 20, 2016 in connection with the Amazon transaction and his retirement eligibility.

⁽²⁾

Performance share units awarded on February 21, 2014 vest on attainment of certain preestablished performance criteria during the three-year performance period ended December 31, 2016. The performance goals were deemed satisfied at maximum performance levels in accordance with their terms in connection with the Amazon transaction due to the change of control.

⁽³⁾

Restricted stock units awarded on February 21, 2014 vest 25% ratably on each of February 21, 2015, 2016, 2017, and 2018, and would fully vest upon certain terminations of employment, as described in more detail in the section entitled “Potential Payments Upon Termination or Change of Control — Payments Upon a Change of Control and Termination of Employment — Long-Term Incentive Awards”.

⁽⁴⁾

Performance share units awarded on February 24, 2015 vest on attainment of certain preestablished performance criteria during the three-year performance period ended December 31, 2017. The performance goals were deemed satisfied at maximum performance levels in accordance with their terms in connection with the Amazon transaction due to the change of control.

⁽⁵⁾

Restricted stock units awarded on February 24, 2015 vest 25% ratably on each of February 24, 2016, 2017, 2018, and 2019, and would fully vest upon certain terminations of employment, as described in more detail in the section entitled “Potential Payments Upon Termination or Change of Control — Payments Upon a Change of Control and Termination of Employment — Long-Term Incentive Awards.”

⁽⁶⁾

Performance share units awarded on February 11, 2016 vest on attainment of certain preestablished performance criteria during the three-year performance period ended December 31, 2018. The performance goals were deemed satisfied at maximum performance levels in accordance with their terms in connection with the Amazon transaction due to the change of control.

Atlas Air Worldwide Holdings, Inc. 2017 Notice & Proxy Statement | 51


2016 OPTION EXERCISES AND STOCK VESTED; NONQUALIFIED DEFERRED COMPENSATION

⁽⁷⁾

Restricted stock units awarded on February 11, 2016 vest 25% ratably on each of February 11, 2017, 2018, 2019, and 2020, and would fully vest upon certain terminations of employment, as described in more detail in the section entitled “Potential Payments Upon Termination or Change of Control — Payments Upon a Change of Control and Termination of Employment — Long-Term Incentive Awards.”

2016 Option Exercises and Stock Vested

The following table sets forth information relating to stock vesting during fiscal 2016 for each of our NEOs:


	Option Awards				Stock Awards
Name (a)	Number of Shares Acquired On Exercise (b)(#)		Value Realized on Exercise (c)($)		Number of Shares Acquired on Vesting (d)(#)		Value Realized on Vesting (e)($)
William J. Flynn		—		—		320,205		12,210,829
John W. Dietrich		—		—		29,298