SkyWest Airlines 2008 Annual Report Download - page 117

No Employment and Severance Agreements. The NEOs do not have employment, severance or
change-in-control agreements, although unvested options and restricted stock may become vested upon
a change in control. The NEOs serve at the will of the Board, which enables the Company to terminate
their employment with discretion as to the terms of any severance. This is consistent with the
Company’s performance-based employment and compensation philosophy.
Elements of Compensation
The Company’s executive compensation objectives and principles are implemented through the use
of the following elements of compensation, each discussed more fully below:
• Base Pay
• Annual Performance-Based Bonus
• Long-Term Equity Awards
• Retirement Benefits and Deferred Compensation
•Other Benefits
Base Pay. The NEOs’ base pay is set at levels that the Compensation Committee believes are
generally competitive with the compensation paid to similarly situated officers by the Peer Group
Airlines, with the expectation that shortfalls in base pay, if any, will be recouped through annual
performance bonuses if the Company’s performance entitles the NEO to receive the full amount of the
targeted annual bonus. The Compensation Committee recommends to the full Board the base pay of
the Chief Executive Officer and sets the base pay of the other NEOs after reviewing the
recommendation of the Chief Executive Officer. Annual adjustments are influenced by growth of the
Company’s operations, revenues and profitability, individual performance, changes in responsibility, cost
of living increases, and other factors considered relevant by the Compensation Committee.
For fiscal year 2008, the Compensation Committee increased the base salary of Mr. Atkin from
$355,000 to $362,000 and the base salary of Mr. Rich from $258,000 to $263,000, in each case primarily
to offset increases in the cost of living. The annual base salary of Mr. Childs was increased from
$200,000 to $230,000 to move his base salary closer to perceived market salary rates for chief operating
officers performing similar responsibilities in the Company’s industry. Mr. Holt’s annual base salary as
chief operating officer of ASA was left unchanged at $200,000.
For the fiscal year ending December 31, 2009, the Compensation Committee increased the base
salaries of Mr. Atkin and Mr. Rich to $373,000 and $271,000, respectively, to reflect cost-of-living
increases. For 2009, the Compensation Committee increased the base salaries of Mr. Childs and
Mr. Holt to $240,000 and $225,000, respectively, to bring their salaries closer to perceived market salary
rates for chief operating officers performing similar responsibilities in the Company’s industry. The
2009 base salary for Mr. Atkin was recommended by the Compensation Committee and approved by
the directors of the Company other than Mr. Atkin.
Annual Performance-Based Bonus. The Company maintains an annual bonus program for its
NEOs and other executive officers. Under such bonus program, NEOs are eligible to receive a cash
bonus following the conclusion of the Company’s fiscal year, contingent on the attainment of
predetermined performance goals. Additionally, the Compensation Committee has discretion to
increase or decrease the amount of the bonus at year end. The NEOs have an opportunity to defer all
of any portion of their annual bonus under the Company’s deferred compensation plans.
In an effort to encourage achievement of the Company’s performance objectives, the annual bonus
amounts payable to the NEOs for each year are set at levels that the Compensation Committee
determines will contribute to long-term shareholder value. General national economic conditions and
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