Alaska Airlines and Horizon Air 2007 Annual Report Download - page 69

• receive an annual incentive payment
equal to the higher of the executive’s
target Performance-Based Pay plan
incentive or the average of his annual
incentive payments for the three years
preceding the year in which the change
in control occurs;
• continue to accrue age and service
credit under our qualified and
non-qualified defined benefit retirement
plan; and
• participate in fringe benefit programs
that are at least as favorable as those
in which the executive was participating
prior to the change in control.
If the executive’s employment is terminated
by the Company without cause or by the
executive for “good reason” during the
employment period (or, in certain circumstances,
if such a termination occurs prior to and in
connection with a change in control), the
executive would be entitled to receive a lump
sum payment equal to the value of the payments
and benefits identified above that the executive
would have received had he continued to be
employed for the entire employment period. (The
terms “cause,” “good reason” and “change in
control” are each defined in the change in
control agreements.) In the event that the
executive’s benefits under the agreement are
subject to the excise tax imposed under Section
280G of the Internal Revenue Code, the
Company will make a tax payment to the
executive so that the net amount of such
payment (after taxes) he receives is sufficient to
pay the excise tax due.
In addition, as noted above, the executive’s
unvested benefits under our Supplementary
Retirement Plan and, unless two-thirds of our
Board determines otherwise, outstanding and
unvested stock options and restricted stock
units and the target number of performance
stock units generally become vested upon a
change in control irrespective of a termination of
employment.
In the table below, we have estimated the
potential cost to us of the payments and
benefits each Named Executive Officer would
have received if his employment had terminated
under the circumstances described above on
December 31, 2007. As described above, except
for the equity acceleration value, the amount an
executive would be entitled to receive would be
reduced pro-rata for any period the executive
actually worked during the employment period.
Cash
Severance(1)
Enhanced
Retirement
Benefit(2)
Benefit
Continuation(3)
Equity
Acceleration(4)
Excise Tax
Reimbursement(5) Total
William S. Ayer $2,160,000 $167,646 $184,985 $730,292 $1,357,663 $4,600,586
Bradley D. Tilden $1,365,000 $764,145 $240,328 $406,663 $ 907,756 $3,683,892
Gregg A. Saretsky $1,470,000 $771,914 $253,223 $474,440 $ 931,530 $3,901,107
Jeffrey D. Pinneo $1,244,250 $711,448 $162,700 $481,443 $ 800,179 $3,400,020
(1) Represents the amount obtained by multiplying three by the sum of the executive’s highest rate of base salary
during the preceding 12 months and the higher of the executive’s target incentive or his average incentive for
the three preceding years.
(2) Represents the sum of (a) the actuarial equivalent of an additional three years of age and service credit under
our qualified and non-qualified retirement plan using the executive’s highest rate of salary during the preceding
12-months prior to a change in control, (b) the present value of the accrued but unvested portion of the
non-qualified retirement benefits that would vest upon a change of control, and (c) the matching contribution
the executive would have received under our qualified defined contribution plan had the executive continued to
contribute the maximum allowable amount during the employment period.
(3) Represents the estimated cost of (a) three years of premiums under our medical, dental, life, disability, and
accidental death insurance programs and (b) three years of continued participation in fringe benefit programs.
(4) Represents the “in-the-money” value of unvested stock options and the face value of unvested restricted stock
and performance stock unit awards that would vest upon a change of control based on a stock price of $25.01
(the closing price of our stock on the last trading day of fiscal 2007).
ŠProxy
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