Alaska Airlines and Horizon Air 2013 Annual Report Download - page 68

EXECUTIVE COMPENSATION
in its sole discretion, determines to be
appropriate, it will obtain reimbursement or
effect cancellation of all or a portion of any
short- or long-term cash or equity incentive
payments or awards to an individual who
qualifies as an executive officer of the
Company for purposes of Section 16 of the
Securities Exchange Act of 1934 where:
(1) such payment or award of cash or shares
was made on or after the effective date of
this policy; (2) the amount of or number of
shares included in any such payment or
award was determined based on the
achievement of financial results that were
subsequently the subject of an accounting
restatement due to the individual’s
fraudulent or grossly negligent act or
omission; (3) a lesser payment or award of
cash or shares would have been made to
the individual based upon the restated
financial results; and (4) the payment or
award of cash or shares was received by the
individual prior to or during the 12-month
period following the first public issuance or
filing of the financial results that were
subsequently restated.
Agreements Regarding Change in Control
and Termination
The Company has change-in-control
agreements with the Named Executive
Officers that provide for severance benefits
if the executive’s employment terminates
under certain circumstances in connection
with a change in control.
The Company has entered into change-in-
control agreements with these executives
because it believes that the occurrence, or
potential occurrence, of a change-in-control
transaction would create uncertainty and
disruption during a critical time for the
Company. The payment of cash severance
benefits under the agreements is triggered if
two conditions are met: (1) actual or
constructive termination of employment and
(2) the consummation of a change-in-control
transaction. The Committee believes that
the Named Executive Officers should be
entitled to receive cash severance benefits
only if both conditions are met. Once the
change-in-control event occurs, the Named
Executive Officer’s severance and benefits
payable under the contract begin to diminish
with time so long as the executive’s
employment continues, until ultimate
expiration of the agreement 36 months
later. In November 2007, the Committee
amended its policy regarding the provision of
payments to executive officers for excise
taxes imposed under Section 280G such
that any new agreements between the
Company and its executives will not include
reimbursement for Section 280G excise
taxes. In February 2013, the Committee
further revised existing agreements to
eliminate any grandfathered provisions that
could have resulted in a reimbursement for
Section 280G excise taxes. Therefore, none
of the Company’s change-in-control
agreements provide for reimbursement for
excise taxes.
Policy with Respect to Section 162(m)
Section 162(m) of the Internal Revenue
Code generally prohibits the Company from
deducting certain compensation over $1
million paid to its CEO and certain other
executive officers unless such
compensation is based on performance
objectives meeting certain criteria or is
otherwise excluded from the limitation. The
Committee strives whenever possible to
structure its compensation plans such that
they are tax-deductible, and it believes that
a substantial portion of compensation paid
under its current program (including the
annual incentives, performance stock units
ŠProxy
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