01—Abstract
Summary
Summary of the 10-K/A filed April 30, 2014. Cited figures are marked; the original filing is the authoritative source.
This Amendment No. 1 to Delta Air Lines, Inc.'s Form 10-K for the fiscal year ended December 31, 2013 was filed on April 30, 2014 to add the Part III information required by Form 10-K, which the company had not included in its original annual report filed February 21, 2014.
It covers directors and executive officers, executive compensation (Compensation Discussion and Analysis, Summary Compensation Table, director compensation), security ownership, related-party transactions, director independence, and principal accountant fees. The filing states that the company is simultaneously filing a preliminary proxy statement for its 2014 annual meeting that also includes this information. The compensation section reports the company's 2013 performance as stated by management: excluding special items, net income of $2.7 billiona (an increase of more than 70% over 2012), free cash flow of $2.1 billion, and $350 million returned to stockholders through dividends and share repurchases.
Adjusted net debt was reduced to $9.4 billionb, and operating revenue rose $1.1 billion to $37.8 billion. The company reports GAAP net income of $8.5 billion for 2013 and debt and capital lease obligations of $11.3 billion at year-end. Management incentive plan payouts were 168.75% of target, and the profit sharing program paid a record $506 million.
For investors, the most relevant items are the executive pay structure tied to financial, operational and stock price metrics, the stock ownership guidelines, the Northwest-related medical benefits obligation for the CEO, and the director and officer ownership levels disclosed as of April 15, 2014. The Vanguard Group is reported as a beneficial owner of 5.86%c of outstanding common stock.
02—Key points
Key Highlights
- Net income excluding special items was $2.7 billion in 2013, up more than 70% from 2012; GAAP net income was $8.5 billion.
- Free cash flow of $2.1 billion, and $350 million returned to stockholders through dividends and share repurchases.
- Adjusted net debt was reduced to $9.4 billion, a $2.3 billion reduction from 2012.
- Operating revenue increased $1.1 billion to $37.8 billion, a 3% increase over 2012; return on invested capital was 15.1%.
- Executive annual incentive plan paid 168.75% of target; the 2013 Profit Sharing Program paid a record $506 million to employees.
- The 2013 LTIP was lengthened from a two-year to a three-year performance and vesting period, and stock ownership guidelines were significantly increased.
- Non-independent directors are Richard Anderson, Edward Bastian and Kenneth Rogers; the Board states that all other directors are independent.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-K/AFY2013filed April 30, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $37.77B$36.67B | +3.0% |
| Operating Expenses | $34.37B$34.49B | −0.4% |
| Operating Income | $3.40B$2.17B | +56.3% |
| Interest Expense | $852.00M$1.00B | −15.2% |
| Net Income | $10.54B$1.01B | +944.6% |
| EPS (Basic) | $12.41$1.20 | +934.2% |
| EPS (Diluted) | $12.29$1.19 | +932.8% |
| Shares Outstanding (Basic) | 849.00M845.00M | +0.5% |
| Shares Outstanding (Diluted) | 858.00M850.00M | +0.9% |
05—Questions
Frequently Asked Questions
Why was this 10-K/A filed?
The filing states that Delta filed its original Form 10-K on February 21, 2014, and is now filing this amendment under General Instruction G(3) to include the Part III information required by Form 10-K. The company is simultaneously filing a preliminary proxy statement for its 2014 annual meeting that also contains this information.
How much did Delta's chief executive earn in 2013?
The Summary Compensation Table reports total 2013 compensation of $14,375,902 for Richard H. Anderson, Chief Executive Officer, including stock awards of $8,910,176, a non-equity incentive plan payment of $2,446,876 and a salary of $725,000.
How is executive pay linked to performance?
The filing states that a substantial portion of executive pay is at risk: 94% of the CEO's and 90% of other named executive officers' total 2013 compensation. Annual incentives depend on pre-tax income, operational goals and revenue performance. Long-term awards depend on operating income margin relative to an industry group, customer service (Net Promoter Score), and return on invested capital.
What are the executive stock ownership requirements?
The company significantly increased ownership requirements in 2013. The CEO must hold shares equal to 8 times base salary or 400,000 shares, the President 6 times base salary or 200,000 shares, and Executive Vice Presidents 4 times base salary or 150,000 shares. The filing states that all executive officers exceeded these levels as of December 31, 2013.
Who are the largest beneficial owners of Delta common stock?
The filing reports that The Vanguard Group beneficially owned 49,674,722 shares, or 5.86% of the class as of April 15, 2014, based on a Schedule 13G filed February 14, 2014. Directors and executive officers as a group held 7,900,606 shares, including options exercisable within 60 days of April 15, 2014.
06—Continue