Alaska Airlines and Horizon Air 2007 Annual Report Download - page 55

Incentive award payments may range from zero to 200% of the Named Executive Officers’ target
based on the achievement of the objective performance standards set by the Compensation Committee
at the beginning of each year. For 2007, the Performance-Based Pay Plan metrics were set as follows:
Goal Weight
Threshold Target Maximum
Alaska Horizon Alaska Horizon Alaska Horizon
Operational Performance
• Safety on-the-job injuries
per 100 full time
employees
10% 9.06
or fewer
9.8
or fewer
8.61
or fewer
9.31
or fewer
8.15
or fewer
8.82
or fewer
• Employee Engagement
increase in favorable rating
(& no increase in
unfavorable)
10% 5% 3% 10% 5% 15% 8%
• CASM ex fuel (cost per
available seat mile)
10% 7.55¢ 13.88¢ 7.45¢ 13.68¢ 7.25 13.38¢
AAG Profitability
Adjusted Pretax Profit 70% $200 m $325 m $450 m
Target performance is set according to
measures that will keep the Company on course
for achieving its 2010 strategic plan. Maximum
targets are approximately one and one half times
target, and intended as “stretch” goals.
Threshold goals are set to improve year-over-year
performance. The 2007 Alaska Air Group
Profitability target was established by identifying
the level of profitability achieved with an 8%
adjusted pre-tax profit margin. The Safety and
Employee Engagement metrics were set to drive
continuous improvement on those measures.
The Cost Per Available Seat Mile metric was
similarly chosen to promote the Company’s
progress on its 2010 strategic plan.
Historically, the Performance-Based Pay plan
has paid out as follows:
44%
46%
61%
106%
149.7%
108%
149.6%
21.2% 20%
0%
50%
100%
150%
200%
Target Payout
History of Performance-Based Pay
2004
Alaska
2003 2004
Horizon
2005
Alaska
2005
Horizon
2006
Alaska
2006
Horizon
2007
Alaska
2007
Horizon
% of Target
ŠProxy
39