Frontier Airlines 2004 Annual Report Download - page 72

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Compensation Committee Interlocks and Insider Participation
Lawrence J. Cohen, Mark L Plaumann and Jay L. Maymudes constitute the Company's Compensation Committee. None of our executive officers serve as a member of the board of
directors or compensation committee of any entity that has any executive officer serving as a member of our Board of Directors or Compensation Committee.
Compensation Committee Interlocks and Insider Participation
Lawrence J. Cohen, Mark L Plaumann and Jay L. Maymudes constitute the Company's Compensation Committee. None of our executive officers serve as a member of the board of
directors or compensation committee of any entity that has any executive officer serving as a member of our Board of Directors or Compensation Committee.
Report of the Compensation Committee on Executive Compensation
The Compensation Committee of our Board of Directors was formed in May 2004 and currently consists of Messrs. Cohen, Plaumann and Maymudes. The Compensation Committee is
charged with recommending to the Board of Directors the compensation for the Company's executives and administering the Company's stock incentive and benefit plans.
Plans on Executive Compensation
The Company and the Compensation Committee believe that executive compensation should be closely related to increased stockholder value. One of the Company's strengths
contributing to its successes is a strong management team, many of whom have been with the Company for a number of years. The compensation program is designed to enable the Company to
attract, retain and reward capable employees who can contribute to the continued success of the Company, principally by linking portions of compensation with the attainment of key business
objectives. Equity participation and a strong alignment to stockholder's interests are key elements of the Company's compensation philosophy. Accordingly, the Company's executive
compensation program is designed to provide competitive compensation, support the Company's strategic business goals and reflect the Company's performance.
The compensation program reflects the following principles:
Compensation should encourage increased stockholder value.
Compensation programs should reflect and promote the Company's values and reward individuals for outstanding contributions toward business goals.
Compensation programs should enable the Company to attract and retain highly qualified professionals.
Our executive compensation is comprised of two components, base salary and incentives, each of which is intended to serve the overall compensation philosophy.
Base Salary. The Company's salary levels are intended to be consistent with competitive pay practices and level of responsibility, with salary increases reflecting competitive trends, the
overall financial performance and resources of the Company, general economic conditions as well as a number of factors relating to the particular individual, including the performance of the
individual executive, and level of experience, ability and knowledge of the job.
Incentives. Incentives generally consist of stock option and cash awards paid to the Company's senior management executives. Non
-
guaranteed portions of bonuses payable to senior
executives are generally tied to the overall performance of the executive and Company.
The Committee strongly believes that the compensation program should provide employees with an opportunity to increase their ownership and potentially gain financially from Company
stock price increases. By this approach, the best interests of stockholders, executives and employees will be closely aligned. Therefore, executives and other employees are eligible to receive
stock options, giving them the right to purchase shares of common stock of the Company at a specified price in the future. The grant of options is based in large part on a key employee's
potential contribution to the Company's growth and profitability, based on the Committee's discretionary evaluation. Options are granted at the prevailing market value of the Company's common
stock and will only have value if the Company's stock price increases. Generally, grants of options vest over a period of time and executives must be employed by the Company for such options
to vest.
Compensation of the Chief Executive Officer
As Chief Executive Officer and Chairman of the Board, Mr. Bedford is compensated pursuant to an employment agreement with a term through June 2007. This agreement was
amended in December 2004 and currently provides for an annual salary of $340,000, with $170,000 of annual deferred compensation through the term of the agreement. In addition, Mr.
Bedford is eligible for an annual bonus in such amounts as the board of directors may determine in its direction.
The aggregate compensation of Mr. Bedford was deemed appropriate by the Compensation Committee considering the overall performance of the Company and Mr. Bedford.
Members of the Compensation Committee
Lawrence J. Cohen
Jay L. Maymudes
Mark L. Plaumann
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