Alaska Airlines and Horizon Air 2013 Annual Report Download - page 67

EXECUTIVE COMPENSATION
maximum limitations imposed by the
Employee Retirement Income Security Act of
1974 and the Internal Revenue Code on the
annual amount of a pension which may be
paid under a qualified defined-benefit plan,
the benefits that would otherwise be
provided to these executives under the
Salaried Retirement Plan are required to be
limited. An unfunded defined-benefit plan,
the 1995 Elected Officers Supplementary
Retirement Plan (the Supplementary
Retirement Plan), provides make-up benefits
plus supplemental retirement benefits. In
lieu of the supplementary retirement
defined-benefit plan, Mr. Pedersen and
Mr. Minicucci participate in a defined-
contribution plan under the Company’s
Nonqualified Deferred Compensation Plan
and the Company’s Supplementary
Retirement Defined Contribution Plan.
The Named Executive Officers are also
permitted to elect to defer up to 100% of
their annual Performance-Based Pay
payments under the Company’s Nonqualified
Deferred Compensation Plan. The Company
believes that providing deferred
compensation opportunities is a cost-
effective way to permit executives to receive
the tax benefits associated with delaying the
income tax event on the compensation
deferred. The interest earned on this
deferred compensation is similar to what an
ordinary investor could earn in the market.
Please see the tables under Pension and
Other Retirement Plans and 2013
Nonqualified Deferred Compensation and
the information following the tables for a
description of these plans.
Stock Ownership Policy
The Compensation and Leadership
Development Committee believes that
requiring significant stock ownership by
executives further aligns their interests with
those of long-term stockholders. Within five
years of election, each executive officer
must beneficially own a number of shares of
the Company’s common stock with a fair
market value equal to or in excess of a
specified multiple of the individual’s base
salary as follows:
• five times base salary for the CEO; and
• two to three times base salary,
depending on their respective levels of
responsibilities, for the other Named
Executive Officers.
Executives are required to retain 50% of any
shares of common stock acquired in
connection with the vesting of restricted
stock units and performance stock units
until the holding target is reached.
Unexercised stock options, unvested
restricted stock units and unvested
performance stock units do not count toward
satisfaction of the ownership requirements.
The Committee reviews compliance with this
requirement annually.
Prohibition of Speculative Transactions in
Company Securities
Our insider trading policy prohibits our
executive officers, including the Named
Executive Officers, from engaging in certain
speculative transactions in the Company’s
securities, including short-term trading, short
sales, publicly traded options (such as puts,
calls or other derivative securities), margin
accounts, pledges or hedging transactions.
Recoupment of Certain Compensation
Payments
The Compensation and Leadership
Development Committee has adopted a
policy whereby, in such circumstances as it,
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