SkyWest Airlines 2009 Annual Report Download - page 128

Download and view the complete annual report

Please find page 128 of the 2009 SkyWest Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 184

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184

• Compensation should be based upon individual responsibility, leadership ability, and experience.
• Compensation should reflect the fair market value of the services received.
• A significant amount of total compensation should be incentive based, and should correlate to
the Company’s financial performance, as well as the achievement of operational and individual
goals.
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 Committee. The Compensation Committee has responsibility for establishing and
monitoring the Company’s executive compensation programs and for making decisions regarding the
compensation of the Named Executives. Compensation Committee meetings are regularly attended by
the Chief Executive and the Company’s Vice President of Planning and Corporate Secretary. The
Compensation Committee also meets in executive session. The Compensation Committee recommends
the compensation package of the Chief Executive to the Company’s Board of Directors, which then sets
the Chief Executive’s compensation. The Compensation Committee also reviews the recommendations
of the Chief Executive with respect to compensation of the other Named Executives, and after
reviewing such recommendations, sets the compensation of the other Named Executives. 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 Named Executives’
performance against established goals, leadership ability, Company responsibilities and current
compensation arrangements, the Compensation Committee relies on its judgment in making
compensation decisions. When setting total compensation for each of the Named Executives, the
Compensation Committee reviews tally sheets which show the Named Executive’s current
compensation, including base pay, short-term annual bonus target under various payout scenarios,
long-term, equity-based compensation targets, and deferred compensation retirement funding.
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
Company’s executive compensation procedures 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 compensation consultant for determining the amount or particular form of any
Named Executive’s compensation. The Compensation Committee utilized the services of Frederic W.
Cook & Co., Inc., an outside compensation consulting firm (‘‘F. W. Cook’’), to assist in the
development of the Company’s 2006 Long-Term Incentive Plan, as well as the SkyWest, Inc. 2010
Long-Term Incentive Plan which is the subject of Proposal 2 set forth in this proxy statement. The
Compensation Committee met with a representative of F. W. Cook once in 2009 to review recent
developments in executive compensation practices as they relate to equity-based compensation. The
Compensation Committee did not use or rely on any recommendation from F. W. Cook in the course
of determining the amount of compensation to be paid to any particular Named Executive. The
Company and the Compensation Committee have not retained any other compensation consultant to
render services regarding executive compensation, but may seek the advice of such persons in the
22