SkyWest Airlines 2008 Annual Report Download - page 116

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•Compensation programs should foster long-term focus. The NEOs have a substantial portion of
their compensation tied to long-term performance and sustained increases in share value. This is
accomplished through the Company’s practice of granting long-term, equity-based awards.
Executive Compensation Procedures
To attain the Company’s executive compensation objectives and implement the underlying
compensation principles, the Company follows the procedures described below.
Role of the Compensation Committee. The Compensation Committee has responsibility for
establishing and monitoring the executive compensation programs of the Company and for making
decisions regarding the compensation of the NEOs. Compensation Committee meetings are regularly
attended by the Chief Executive Officer and the Company’s Vice President-Planning and Corporate
Secretary. The Compensation Committee also meets in executive session. The Compensation
Committee recommends the compensation package of the Chief Executive Officer to the full Board,
which then sets the Chief Executive Officer’s compensation. The Compensation Committee also reviews
the recommendations of the Chief Executive Officer with respect to compensation of the other NEOs,
and after reviewing such recommendations, sets the compensation of the other NEOs. The
Compensation Committee also monitors, administers and approves awards under the Company’s
various incentive compensation plans for all levels within the Company, including awards under the
Company’s annual bonus plan and 2006 Long-Term Incentive Plan.
After reviewing the performance of the Company and evaluating the executive’s performance
against established goals, leadership ability and responsibilities with the Company, and current
compensation arrangements, the Compensation Committee relies on its judgment in making
compensation decisions. When setting total compensation for each of the NEOs, the Compensation
Committee reviews tally sheets which show the NEO’s current compensation, including base pay,
short-term annual bonus target, and long-term equity-based compensation targets, and deferred
compensation retirement funding targets. The Compensation Committee also occasionally evaluates
surveys and other available data regarding the executive compensation programs of other regional air
carriers. The most recent review was in 2007 and included peer airlines Midwest, Pinnacle, Republic,
Frontier, Mesa, Horizon, ExpressJet, Air Tran, Jet Blue, Alaska and Southwest Airlines (the ‘‘Peer
Group Airlines’’). The compensation program for NEOs and the Compensation Committee assessment
process are designed to be flexible in an effort to promptly respond to the evolving business
environment and individual circumstances.
Role of Consultants. Neither the Company nor the Compensation Committee has any contractual
arrangement with any consultant for determining the amount or particular form of any NEO
compensation. The Compensation Committee utilized the services of Frederic W. Cook & Co., Inc., an
outside compensation consulting firm (‘‘Cook’’), to assist in the development of the Company’s 2006
Long-Term Incentive Plan. The Compensation Committee met with a representative of Cook in 2008 to
learn about market trends in the executive compensation area as they relate to equity-based
compensation. The Compensation Committee did not use or rely on any recommendations from Cook
as to the amount of compensation to pay to any particular NEO. The Company and the Compensation
Committee have not retained any other compensation consultant to render services regarding NEO
compensation, but may seek the advice of such persons in the future.
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