Alaska Airlines and Horizon Air 2013 Annual Report Download - page 77

EXECUTIVE COMPENSATION
years of an employee’s last ten complete
calendar years of service. The annual
retirement benefit at age 62 (normal
retirement age under the Salaried
Retirement Plan) is equal to 2% of the
employee’s final average base salary times
years of credited service (limited to 40
years). Annual benefits are computed on a
straight-life annuity basis beginning at
normal retirement age. Benefits under the
Salaried Retirement Plan are not subject to
offset for Social Security benefits.
The tax law limits the compensation on
which annual retirement benefits are based.
For 2013, this limit was $255,000. The tax
law also limits the annual benefits that may
be paid from a tax-qualified retirement plan.
For 2013, this limit on annual benefits was
$205,000.
Supplementary Retirement Plans
In addition to the benefits described above,
the Named Executive Officers other than
Mr. Pedersen and Mr. Minicucci are eligible
to receive retirement benefits under the
Supplementary Retirement Plan. This plan is
a non-qualified, unfunded, defined-benefit
plan. Normal retirement benefits are payable
once the officer reaches age 60. Benefits
are calculated as a monthly amount on a
straight-life annuity basis. In general, the
monthly benefit is determined as a
percentage (50% to 75% of a participant’s
final average monthly base salary) with the
percentage determined based on both the
officer’s length of service with the Company
and length of service as an elected officer.
This benefit amount is subject to offset by
the amount of the officer’s Social Security
benefits and the amount of benefits paid
under the Salaried Retirement Plan to the
extent such benefits were accrued after the
officer became a participant in the
Supplementary Retirement Plan. (There is no
offset for any Salaried Retirement Plan
benefits accrued for service before the
officer became a participant in the
Supplementary Retirement Plan.)
Participants in the Supplementary
Retirement Plan become fully vested in their
benefits under the plan upon attaining age
50 and completing 10 years of service as an
elected officer. Plan benefits will also
become fully vested upon a change in
control of the Company or upon termination
of the participant’s employment due to
death or disability.
In lieu of the Supplementary Retirement
plan, Mr. Pedersen and Mr. Minicucci
participate in the Company’s Nonqualified
Deferred Compensation Plan. This plan is a
defined contribution plan. Under this plan,
the Company contributes 10% of the
officer’s eligible wages, as defined in plan
documents, minus the maximum legal
Company contribution that the Company
made, or could have made, under the
Company’s qualified defined-contribution
plan (the Alaskasaver 401(k) Plan).
On June 20, 2011, the Board of Directors
amended the Salaried Retirement Plan and
the Supplementary Retirement Plan to
provide that, effective January 1, 2014, both
plans would be frozen so that participants in
the plans would not accrue any benefits with
respect to services performed or
compensation earned on or after that date.
The Board also amended the Nonqualified
Deferred Compensation Plan so that,
effective January 1, 2014, officers who
previously participated in the Supplementary
Retirement Plan, including Mr. Tilden,
Mr. Johnson, and Mr. Loveless, and are then
employed by the Company, will be eligible to
participate in the Nonqualified Deferred
Compensation Plan.
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