Alaska Airlines and Horizon Air 2014 Annual Report Download - page 56

based on the achievement of performance goals
set by the Committee at the beginning of each
year. For each performance metric, performance
at the target level will generally result in a 100%
payout of the target amount for that metric, while
the payout is generally 200% for performance at
or above the maximum level and 25% for
performance at the threshold level. The payout
percentages are interpolated for performance
between the levels identified below, but if
performance for a particular metric is below the
threshold level, no payment will be made as to
that metric. The Committee retains discretion to
reduce bonus amounts below the level that
would otherwise be paid.
For 2014, the Performance-Based Pay Plan metrics were set as follows:
2014 Performance-Based Pay Metrics
Goal Weight
Threshold Target Maximum
Alaska Horizon Alaska Horizon Alaska Horizon
Operational Performance
Safety 10 %
Risk Level 3+ Events* ≤1.0 ≤1.0 ≤0.7 ≤0.7 ≤0.4 ≤0.4
Employee Engagement/Customer
Satisfaction 10 %
The number of months we exceed the
monthly customer satisfaction goal 66881111
CASM 10 %
Cost per available seat mile excluding
fuel and special items 7.65¢ 12.5¢ 7.55¢ 12.3¢ 7.45¢ 12.1¢
Alaska Air Group Profitability
Adjusted Pretax Profit** 70 % $350 million $550 million $750 million
*Safety Risk Level 3+ events are measured per 10,000 departures. These are events that elevate risk to the
operation and include such things as significant damage to aircraft or other assets, injuries to employees or
customers, or a significant reduction in safety.
**Adjusted pre-tax profit means the net income of Alaska Air Group as computed by Generally Accepted
Accounting Principles (GAAP) and adjusted for “Excluded Items” and “Alternative Accounting Treatments.”
“Excluded Items” means (a) income taxes, (b) pretax expense under any Alaska Air Group (or subsidiary) profit
sharing, performance-based pay, operational performance rewards, variable pay, or similar programs as
determined in the discretion of the Compensation and Leadership Development Committee, and (c) special
income or expense items that, in the discretion of the Committee, should be excluded because recognizing
them would not appropriately serve the goals of the Plan. These may include, without limitation, gain or loss
on disposition of capital assets, impairments or other fleet exit costs, expenses from voluntary or involuntary
severance programs, government refunds or assistance, and the cumulative effect of accounting changes.
“Alternative Accounting Treatments” means expense or income items that, for purposes of calculating
adjusted pre-tax profit, the Company (or any subsidiary) will account for based on non-GAAP methods because,
in the discretion of the Committee, using GAAP accounting methods would not appropriately serve the goals of
the Plan. These may include, without limitation, fuel hedge accounting on an as-settled basis.
44 EXECUTIVE COMPENSATION