SkyWest Airlines 2010 Annual Report Download - page 152

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employed at the end of the tax year (other than the Company’s principal financial officer). The limit
does not apply to compensation that meets the requirements of Section 162(m) of the Code for
‘‘qualified performance-based compensation’’ (i.e., compensation paid only if the executive meets
pre-established, objective goals based upon performance criteria approved by the Company’s
shareholders). The Committee reviews and considers the deductibility of executive compensation under
Section 162(m) of the Code. In certain situations, the Committee may approve compensation that will
not meet the requirements of Code Section 162(m) in order to ensure competitive levels of total
compensation for its executive officers. Stock option grants and long-term performance unit awards in
2010 were intended to constitute ‘‘qualified performance-based compensation’’ under Section 162(m) of
the Code. The Company’s 2010 restricted stock unit grants and performance-based annual bonuses,
however, were not ‘‘qualified performance-based compensation.’’
Effect of Compensation on Risk
Based on the Company’s review of the various elements of the Company’s executive compensation
practices and policies, the Company believes its executive compensation policies and practices are
designed to create appropriate and meaningful incentives for the Company’s executive employees
without encouraging excessive or inappropriate risk taking. Among other factors, the Company
considered the following information:
• The Company’s compensation policies and practices are designed to include a significant level of
long-term compensation, which discourages short-term risk taking.
• The base salaries the Company provides to its employees are generally consistent with salaries
paid for comparable positions in the Company’s industry, and provide the Company’s employees
with steady income while reducing the incentive for employees to take risks in pursuit of
short-term benefits.
• The Company has established internal controls and adopted codes of ethics and business
conduct, which are designed to reinforce the balanced compensation objectives established by
the Committee.
•The Company has adopted equity ownership guidelines for its executive officers, which the
Committee believes discourages excessive risk-taking.
Based on the review outlined above, the Company has concluded that the risks arising from the
Company’s compensation policies and practices for its employees are not reasonably likely to have a
material adverse effect on the Company.
COMPENSATION COMMITTEE REPORT
The Committee has reviewed the foregoing compensation discussion and analysis and discussed
with the Company’s management the information set forth herein. Based on such review and
discussions with management, the Committee recommended to the Board that the foregoing
compensation discussion and analysis be included in this proxy statement.
The Compensation Committee
Henry J. Eyring, Chair
Margaret S. Billson
Steven F. Udvar-Hazy
Michael K. Young
30