Alaska Airlines and Horizon Air 2013 Annual Report Download - page 57
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EXECUTIVE COMPENSATION
• capping short-term cash incentives;
• allowing Committee discretion to reduce
amounts otherwise payable under certain
awards;
• scaling compensation to our industry;
• considering internal equity among
Company executives; and
• reflecting the current business challenges
facing the Company.
Executive Pay Mix and the Emphasis on
Variable Pay
The Compensation and Leadership
Development Committee believes that
emphasis on variable compensation at the
senior executive levels of the Company is a
key element in achieving a pay-for-
performance culture and in aligning
management’s interests with those of the
Company’s stockholders. At the same time,
the Committee believes that the executive
compensation program provides meaningful
incentives for executives while balancing risk
and reward. When determining target
executive pay, the Committee attempts to
ensure that compensation is closely aligned
with the overall strategy of the Company and
that it motivates executives to achieve
superior performance and stockholder returns.
Total direct compensation for our Named
Executive Officers is tailored to place a
substantial emphasis on pay that is variable
and tied to performance objectives. For
2013, the Committee approved target-level
compensation for Mr. Tilden that is 80%
variable and tied to stockholder value
creation. With respect to the other Named
Executive Officers, the Committee approved
target compensation that is on average 72%
variable and tied to stockholder value
creation.
The Use of Benchmarking Against a Peer Group
Annually, the Committee reviews and
analyzes total direct compensation for the
Named Executive Officers. In analyzing the
information for 2013, the Committee
reviewed the total direct compensation for
executives of a peer group of airlines
excluding any companies that ceased
reporting compensation data during the
period because they were no longer public.
The following companies represent the
airline peer group selected by the
Committee as a comparator for determining
appropriate compensation levels for 2013:
• Air Canada
• Allegiant
• AMR Corporation (merged with US
Airways in 2013)
• Delta Air Lines
• Hawaiian Holdings
Total Direct Compensation of CEO
20%
80%
Base Pay Variable Pay Base Pay Variable Pay
Total Direct Compensation of Other NEOs
28%
72%
50