SkyWest Airlines 2010 Annual Report Download - page 144

•A significant amount of total compensation should be performance-based, and should correlate
to the Company’s financial performance, as well as the achievement of operational and
individual goals.
• Compensation should not encourage the taking of undue, material risk.
Executive Compensation Procedures
To attain the Company’s executive compensation objectives and to implement the underlying
compensation principles, the Company follows the following procedures:
Role of the Committee. The Compensation Committee of the Board of Directors (the
‘‘Committee’’) has responsibility for establishing and monitoring the executive compensation programs
and for making decisions regarding executive compensation. The Chief Executive and the Company’s
Vice President of Planning and Corporate Secretary regularly attend the Committee meetings. The
Committee also meets in executive session. The Committee recommends the compensation package of
the Chief Executive to the Board of Directors, which then sets his compensation. The Committee also
reviews the recommendations of the Chief Executive with respect to compensation of the other
Executives, and after reviewing such recommendations, sets their compensation. The Committee also
monitors, administers and approves awards under the various incentive compensation plans for all
levels within the Company, including awards under the Company’s annual bonus plan, 2006 Long-Term
Incentive Plan and 2010 Long-Term Incentive Plan.
The Committee relies on its judgment in making compensation decisions in addition to reviewing
relevant information and results. When setting total compensation for each of the Executives, the
Committee reviews tally sheets which show the Executive’s current compensation, including base pay,
annual bonus objectives, long-term, equity-based compensation objectives, and deferred compensation
retirement funding.
The Committee also occasionally evaluates surveys and other available data regarding the executive
compensation programs of other regional and major air carriers. The Committee performed such a
review in 2010 that included a review of the executive compensation practices of peer airlines Midwest,
Pinnacle, Express Jet, Republic, Airtran, Jet Blue, Alaska, Southwest, US Airways, American, Delta Air
Lines, and United. The executive compensation procedures and the 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 Committee has any contractual arrangement
with any compensation consultant for determining the amount or particular form of any Executive’s
compensation. During 2010 the Company and Committee received advice from Frederic W.
Cook & Co., Inc. (‘‘F.W. Cook’’) with respect to the design and implementation of the Company’s 2010
Long-Term Incentive Plan and with respect to executive compensation practices and trends generally and
within the airline industry. The Company and Committee did not retain F.W. Cook or any other outside
compensation consultant to make recommendations regarding or to determine, the specific amount or
forms of compensation awarded to Executives in 2010. The Company and the Committee may, however,
seek the advice of such consultants in the future. The Committee has sole authority to hire and fire
outside compensation consultants.
No Employment and Severance Agreements. The Executives do not have employment, severance or
change-in-control agreements, although the vesting of stock options, restricted stock, restricted stock
units and performance units generally is accelerated upon a change in control of the Company. The
Executives serve at the will of the Board of Directors, which enables the Board of Directors to
terminate the employment of any Executive with discretion as to the terms of any severance. This is
consistent with the Company’s performance-based employment and compensation philosophy.
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