2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 236 COMPENSATION DISCUSSION AND ANALYSIS COMPENSATION DISCUSSION AND ANALYSIS Our Compensation Discussion and Analysis (CD&A) describes Atlas Air’s executive compensation program, including total 2017 compensation, for our named executive officers listed below: William J. Flynn President and Chief Executive Officer John W. Dietrich Executive Vice President and Chief Operating Officer Michael Steen Executive Vice President and Chief Commercial Officer Adam Kokas Executive Vice President, General Counsel, Chief Human Resources Officer and Secretary Spencer Schwartz Executive Vice President and Chief Financial Officer The CD&A and the Executive Compensation Tables are organized as follows: Section Subject Page Overview ▪ 2017 Performance Highlights and Key Achievements 30 ▪ Pay for Performance 31 ▪ Program Design and Say-on-Pay Responsiveness 31 ▪ Pay for Performance in Action 34 ▪ Best Practices and Risk Mitigation 35 Discussion of our Compensation Program ▪ Components of Compensation 37 ▪ Base Salary 37 ▪ Performance-Based Compensation: Annual and Long-Term Incentive Compensation 37 ▪ Annual Incentive Program 38 ▪ Long-Term Incentive Compensation 41 ▪ 2016 Transformative Events 46 ▪ Peer Group 47 ▪ Other Elements of Compensation 49 ▪ Additional Compensation Policies 50 ▪ Executive Stock Ownership 50 ▪ Tax Considerations 50 ▪ Equity Grant Practices 50 ▪ Clawback Policy 50 Compensation Committee Report 51 Compensation Tables and Explanatory Notes ▪ 2017 Summary Compensation Table 52 ▪ 2017 Grants of Plan-Based Awards 54 ▪ 2017 Outstanding Equity Awards 55 ▪ 2017 Options Exercises and Stock Vested 56 ▪ Nonqualified Deferred Compensation 56 ▪ Employment Agreements 57 ▪ Potential Payments Upon Termination or Change of Control 58 Atlas Air Worldwide Holdings, Inc. 2018 Notice & Proxy Statement | 29 ATLAS AIR WORLDWIDE HOLDINGS, INC.