10-K/A: Mesa Air Group Amends Annual Report, Details Executive Compensation and Governance

Mesa Air Group, Inc. filed an amendment to its annual report to include previously omitted corporate governance and executive compensation details for the fiscal year ended September 30, 2024, highlighting compensation restrictions due to a U.S. Treasury loan.

Summary

• Mesa Air Group, Inc. (Mesa) filed an Amendment No. 1 on Form 10-K/A to its Annual Report on Form 10-K for the fiscal year ended September 30, 2024.
• The amendment includes previously omitted information for Items 10, 11, 12, 13, and 14 of Part III of Form 10-K, which were not incorporated by reference from a definitive proxy statement within 120 days of the fiscal year-end.
• The filing also adds new exhibits and certifications from the principal executive and financial officers.
• As of March 31, 2024, the aggregate market value of voting and non-voting stock held by non-affiliates was approximately $36,231,551.
• As of June 20, 2025, Mesa had 41,861,544 shares of common stock issued and outstanding.
• Executive compensation for Jonathan G. Ornstein (Chairman and CEO), Michael J. Lotz (President and CFO), and Brian S. Gillman (EVP, General Counsel and Secretary) was detailed, with base salaries of $600,000, $533,333, and $300,000 respectively for fiscal year 2024.
• Incentive bonuses and equity awards for named executive officers were reduced below contractual entitlements due to limitations imposed by the U.S. Department of the Treasury Loan Agreement (CARES Act) and a lack of available shares in the company's equity plan.
• The CEO-to-median-employee pay ratio for fiscal 2024 was 39.8 to 1, with the median employee's total annual compensation at $45,219.80 and the CEO's at $1,810,692.
• Non-employee directors received an annual retainer of $83,000, plus additional retainers for committee chairs and presiding independent director roles, and equity awards valued at $89,700, a portion of which was paid in cash due to limited shares.
• The company's 2018 Equity Incentive Plan had 5,318,542 shares of restricted stock unit awards outstanding and 113,353 shares remaining available for future issuance as of September 30, 2024, subject to an annual 1% increase.
• Key beneficial owners of common stock as of June 20, 2025, include United Airlines Holdings, Inc. (9.65%), The Yucaipa Companies LLC (7.1%), and Par Investment Partners, L.P. (5.1%).
• Audit fees for fiscal year 2024 were $1,184,016, paid to Marcum LLP, compared to $1,397,719 in 2023 paid to RSM US LLP.

Sentiment

Score: 4

Explanation: The document is a compliance filing correcting an omission, which is a negative. It also highlights restrictions on executive compensation and limited equity shares, which are minor negatives. However, it details robust corporate governance structures and policies, which are positive. The overall sentiment is slightly negative due to the compliance delay and compensation limitations.

Positives

• The company has a structured executive compensation philosophy aimed at aligning management interests with shareholder interests through performance-based and long-term incentives.
• A clawback policy was adopted in May 2023, allowing the company to recover incentive compensation in the event of accounting restatements due to material noncompliance.
• The Board of Directors has adopted a Code of Ethics for all employees, promoting ethical conduct.
• A majority of the company's directors are independent, and all Audit, Compensation, and Nominating & Corporate Governance Committee members meet independence requirements.
• The company maintains an Anti-Hedging and Anti-Pledging Policy for directors, officers, and employees to promote compliance with insider trading laws and prevent speculative transactions.

Negatives

• Executive incentive bonuses and equity awards for fiscal years 2024, 2023, and 2022 were reduced below contractual entitlements due to limitations imposed by the U.S. Department of the Treasury Loan Agreement (CARES Act).
• A portion of the annual equity awards for named executive officers and non-employee directors in fiscal 2024 was paid in cash due to a lack of available shares under the company's existing equity plan, indicating potential share limitations for future equity compensation.
• The company failed to file its definitive proxy statement containing Part III information within 120 days of its fiscal year-end, necessitating this 10-K/A amendment.

Risks

• Ongoing restrictions on executive compensation due to the U.S. Department of the Treasury Loan Agreement (CARES Act) may impact the company's ability to fully incentivize and retain key executives.
• Limited available shares in the company's equity plan could hinder future long-term equity-based compensation strategies and potentially affect executive and director retention.
• Failure to file required reports (like the definitive proxy statement) within mandated timelines can lead to regulatory scrutiny and potential penalties.

Future Outlook

No additional changes are planned for the 2025 compensation programs. The company's compensation philosophy aims to motivate executives for long-term success, profitable growth, and greater shareholder return.

Management Comments

• Jonathan G. Ornstein, Chief Executive Officer, certified that the report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made not misleading, and that financial information fairly presents the financial condition, results of operations, and cash flows.
• Michael J. Lotz, Chief Financial Officer, certified that the report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made not misleading, and that financial information fairly presents the financial condition, results of operations, and cash flows.

Industry Context

The company operates within the airline industry, with its business regularly transacting with major partners like United Airlines, Inc. and formerly American Airlines, Inc. The document notes that providing flight benefits to board members is common in the airline industry. Executive compensation practices are influenced by competitive market data within the transportation sector.

Comparison to Industry Standards

• The company's executive compensation policies aim to set compensation levels within the median to upper quintiles of surveyed companies, with guaranteed salary levels remaining reasonably consistent with median to upper quintile rates, indicating a competitive approach.
• The company considers the increasingly active market and correspondingly increased cash and equity compensation levels for executives with established track records, suggesting an awareness of broader industry compensation trends.
• The provision of flight benefits to board members is explicitly stated as common practice in the airline industry, aligning with sector-specific norms.

Management Changes

Corporate Governance

Related Party Transactions

• Mesa regularly transacts with its major partners, United Airlines, Inc. and, formerly, American Airlines, Inc., in the ordinary course of business, derived from passenger service under Mesa's CPAs.
• Mesa is a party to a Second Amended and Restated Credit and Guaranty Agreement, as amended, pursuant to which Mesa has borrowed funds from United Airlines, Inc.

Stakeholder Impact

• Shareholders: The amendment provides transparency on corporate governance, executive compensation, and beneficial ownership, which can influence investment decisions. The limitations on executive equity awards due to share availability could impact long-term alignment.
• Executives: Compensation, particularly incentive bonuses and equity awards, has been reduced below contractual entitlements due to the CARES Act, potentially affecting executive morale and retention.
• Employees: The CEO-to-median-employee pay ratio provides insight into compensation disparity. The 401(k) plan with company matching contributions is available to all employees.
• Creditors (U.S. Treasury, United Airlines): The company's compliance with the Treasury Loan Agreement, including compensation restrictions, directly impacts its relationship with the U.S. Treasury. The credit agreement with United Airlines is a significant financial relationship.

Next Steps

• The company will continue to comply with the covenants of the Treasury Loan Agreement, which restrict executive compensation.
• The 2018 Equity Incentive Plan's authorized shares are subject to an annual increase on January 1 through January 1, 2028, which may alleviate future share limitations for equity awards.

Key Dates

Keywords

SEC Filing, 10-K/A, Annual Report Amendment, Corporate Governance, Executive Compensation, Board of Directors, Audit Committee, Compensation Committee, Equity Compensation, Restricted Stock Units, CARES Act, Treasury Loan Agreement, Related Party Transactions, Shareholder Ownership, Mesa Air Group, Airline Industry