Alaska Airlines and Horizon Air 2014 Annual Report Download - page 52

• Meridian does not provide other services to
Alaska Air Group or its subsidiaries.
Meridian’s services are limited to providing
the Committee with advice and information
solely on executive and director
compensation and related corporate
governance matters.
• The amount of fees paid by the Company
during the 12-month period ended
December 31, 2014 represents less than
one percent of Meridian’s total annual
revenues for calendar year 2014.
• Meridian maintains policies designed to
prevent conflicts of interest, which policies
were detailed to the Committee.
• No Meridian partner, consultant or employee
who serves the Committee has any business
or personal relationship with any member of
the Committee.
• No Meridian partner, consultant or employee
who serves the Committee, or any of their
immediate family, owns any shares of stock
of the Company.
• No Meridian partner, consultant or employee
who serves the Committee, or any of their
immediate family, has any business or
personal relationship with any executive
officer of the Company.
How the Elements of the Company’s Executive
Compensation Program Were Selected
The Compensation and Leadership Development
Committee conducts periodic reviews of the
Company’s executive compensation to assess
its alignment with the Committee’s objectives.
The Committee considers how each component
of compensation motivates executives to help
the Company achieve its performance goals and
execute its strategic plan and how it promotes
retention of executives who share the Company’s
values. The compensation structure is designed
to promote initiative, resourcefulness and
teamwork by key employees whose performance
and responsibilities directly affect the
performance of the business.
The Committee uses both fixed compensation
and variable performance-based compensation
to achieve a program that is balanced,
competitive and provides appropriate incentives.
Base salaries, benefits, perquisites, retirement
benefits, and change-in-control benefits are
intended to attract and retain highly qualified
executives and are paid out on a short-term or
current basis. Annual incentives and long-term
equity-based incentives are intended to motivate
executives to achieve specific performance
objectives.
The Committee believes that this mix of short-
term and long-term compensation allows it to
achieve dual goals of attracting and retaining
highly qualified executives and providing
meaningful performance incentives for those
executives.
Deterrents to Excessive Risk-Taking
The Compensation and Leadership Development
Committee believes it has designed the overall
compensation program in such a way as to deter
excessive risk-taking, to encourage executives to
focus on the long-term success of the Company
and to align the interests of executives with
those of stockholders by:
• encompassing several different financial and
operational goals;
• setting financial and operational goals that
are reviewed and approved by the
independent members of the Committee;
• overlapping the performance periods of
awards;
• incorporating short-term and long-term
performance periods of varying lengths;
• maintaining executive ownership
requirements;
• capping short-term cash incentives;
• allowing Committee discretion to reduce
amounts otherwise payable under certain
awards;
• scaling compensation to the airline industry;
• considering internal equity among Company
executives; and
• reflecting the current business challenges
facing the Company.
40 EXECUTIVE COMPENSATION