Alaska Airlines and Horizon Air 2009 Annual Report Download - page 72

Potential Payments Upon Change in
Control and Termination
Under the change in control agreements in
place with the Named Executive Officers, if a
change of control occurs, a three-year
“employment period” would go into effect.
During the employment period, the executive
would be entitled to:
• receive the highest monthly salary the
executive received at any time during
the 12-month period preceding the
change in control;
• 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
plans; 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, outstanding and unvested stock
options, restricted stock units and the target
number of performance stock units would
become vested under the terms of our
equity plans. In the case of awards granted
under the 2004 Long-Term Incentive Equity
Plan, unless the Board determined
otherwise, the awards would vest upon a
change in control irrespective of a
termination of employment. Under the 2008
Performance Incentive Plan, awards will not
vest unless a termination of employment
without cause or for good reason also
occurs or an acquirer does not assume
outstanding awards. Finally, the executive’s
unvested benefits under the Supplementary
Retirement Plan would vest on a change in
control whether or not the executive’s
employment was terminated. The
outstanding equity awards held by the
executives as of December 31, 2009 are
described above under “Outstanding Equity
Awards at Fiscal Year End” and each
executive’s accrued benefits under our
retirement plans are described above under
“2009 Pension Benefits.”
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