SkyWest Airlines 2009 Annual Report Download - page 133

level, the cash bonus payable to a Named Executive is increased or reduced proportionately, subject to
a maximum payment limitation. The goal for each Named Executive is based on the Company’s return
on shareholder equity, and there is no alternative operating company goal set for the Presidents of the
operating subsidiaries, thus encouraging teamwork and working towards the creation of long-term value
for the Company’s shareholders. Earned performance unit awards are paid in cash to reduce share
dilution and emphasize the real economic cost of officer incentives. The Company believes that the
performance unit grant provides an effective long-term incentive for the Named Executives to act in
the best interests of the Company’s shareholders, by focusing on return on shareholder equity, which
the Compensation Committee believes is one of the principal contributing factors to long-term
shareholder value over which the Named Executives can exercise influence.
Retirement Benefits.
The Company and SkyWest Airlines sponsor a 401(k) retirement plan for the eligible employees,
including the Named Executives. ASA also maintains a substantially equivalent 401(k) plan for its
eligible employees, including its President. Both plans are broad based, tax-qualified retirement plans
under which eligible employees, including the Named Executives, may make annual pre-tax salary
reduction contributions subject to the various limits imposed under the Internal Revenue Code of 1986,
as amended (the ‘‘Code’’). The sponsoring employers make matching contributions under the plans on
behalf of eligible participants; however the right of Named Executives and other officers to such
matching contributions is limited. The Compensation Committee believes that maintaining the 401(k)
retirement plans and providing a means to save for retirement is an essential part of a competitive
compensation package necessary to attract and retain talented executives.
The Company also maintains the SkyWest, Inc. 2002 Deferred Compensation Plan, a non-qualified
deferred compensation plan for the benefit of Company officers and other highly compensated
employees. The Chief Executive, CFO, and President of SkyWest Airlines participate in the deferred
compensation plan. ASA also maintains a separate but similar non-qualified deferred compensation
plan, the Atlantic Southeast Airlines, Inc. Executive Deferred Compensation Plan, for its highly
compensated management employees, including the President of ASA. Under both such deferred
compensation plans (the ‘‘Deferred Compensation Plans’’), the employer credits each Named
Executive’s account with a discretionary employer contribution equal to 15% of salary and annual
bonus. These amounts are included in the Summary Compensation Table under the column ‘‘All Other
Compensation’’. Additional information on the Deferred Compensation Plans is found in the section
‘‘Non Qualified Deferred Compensation for 2009,’’ below.
The SkyWest Inc. 2002 Deferred Compensation Plan (but not the Atlantic Southeast Airlines, Inc.
Executive Deferred Compensation Plan) also permits eligible executives, including the Named
Executives, to elect in advance of each calendar year to defer up to 100% of their cash salary and
annual bonus compensation for the year. For 2009 none of the Named Executive Officers elected to
defer any portion of their salary or annual bonus under the SkyWest Inc. 2002 Deferred Compensation
Plan.
The Company and its subsidiaries do not maintain any defined benefit pension plans for the
Named Executives.
Other Benefits. In additional to the benefits described above, the Company provides certain other
benefits to the Named Executives that the Compensation Committee believes are generally consistent
with the benefits provided to senior executives of companies comparable to the Company. The
Compensation Committee believes that those benefits, which are detailed in the footnotes to the
Summary Compensation Table applicable to the heading ‘‘All Other Compensation’’ below, are
reasonable, competitive and consistent with the Company’s overall executive compensation objectives.
Those benefits consist primarily of employer-paid premiums on health, dental and eye insurance, a
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