Alaska Airlines and Horizon Air 2013 Annual Report Download - page 33

PROPOSALS TO BE VOTED ON
Neither amendment included a
restatement of financial information due to
an error in accounting or misapplication of
accounting principles.
As is common in the airline industry, the
Company excludes certain special charges
and write-offs from U.S. Generally
Accepted Accounting Principles (GAAP)
earnings. The Company excludes not only
special charges but also special benefits
from its GAAP earnings to provide
investors with a better sense of our future
cash flow opportunities so that they can
better value our Company and make
investment decisions. We disclose in the
Management’s Discussion and Analysis of
Financial Condition and Results of
Operations section of the Form 10-K the
reasons for the adjustments and a
reconciliation of our adjusted (non-GAAP)
earnings to GAAP earnings.
•The proponent correctly cites the fact that
that some of our board members are CEOs
of other companies, however, he portrays
this practice as poor governance practice.
The directors annually evaluate the
expertise needed on the Board to provide
robust oversight of strategy, risk,
succession and other board
responsibilities in light of the Company’s
evolving business strategy. Having a few
board members with current CEO
experience at other companies
contributes additional perspective and
expertise and diversity of thought to the
Board’s deliberations.
•
The proponent correctly cites the fact that
two board members have long tenures,
and the board wishes to provide the
following context.
The Board has added four new directors
over the past four years, and in 2013
adopted a 15-year maximum term limit
for new directors in order to ensure that
the Board is continually refreshed. The
two directors mentioned by the
proponent will reach mandatory
retirement age in 2014 and 2015,
making the expected average tenure ten
years in 2014 and, with the continued
addition of new directors, eight years in
2015.
•The proponent states that there is
potential for excessive “golden
parachute” payments and unvested
equity pay upon CEO termination.
The Compensation and Leadership
Development Committee has put in place
change-in-control severance
arrangements that trigger only if there
has been a change in control and the
CEO has been terminated not “for
cause.” The arrangements are in line
with market practice and fall within the
policy guidelines of ISS, a key proxy
advisory firm. For more information on
the arrangements, see Agreements
Regarding Change In Control and
Termination in the Compensation
Discussion and Analysis section of this
Proxy Statement.
•The proponent states that the CEO can
get long-term incentive pay for below-
medium performance.
The Board refers interested investors to
the Compensation and Leadership
Development Committee’s detailed
discussion of long-term incentive pay in
Current Executive Pay Elements in the
Compensation Discussion and Analysis
section of this Proxy Statement.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
AGAINST PROPOSAL 6.
26