SkyWest Airlines 2010 Annual Report Download - page 170

PROPOSAL 5
SHAREHOLDER PROPOSAL REQUESTING THE BOARD TO TAKE ACTIONS
TO ADOPT A MAJORITY VOTE STANDARD FOR THE ELECTION OF DIRECTORS
The following shareholder proposal has been submitted to the Company by the International
Brotherhood of Teamsters:
RESOLVED: That the shareholders of SkyWest, Inc. (or the ‘‘Company’’) hereby request that the
Board of Directors initiate the appropriate process to amend the Company’s articles of
incorporation to provide that director nominees shall be elected by the affirmative vote of the
majority of votes cast at an annual meeting of shareholders, with a plurality vote standard retained
for contested director elections, that is, when the number of director nominees exceeds the number
of board seats.
Supporting Statement of the International Brotherhood of Teamsters
In order to provide shareholders a meaningful role in director elections, SkyWest’s director election
vote standard should be changed to a majority vote standard. A majority vote standard would require
that a nominee receive a majority of the votes cast in order to be elected. The standard is particularly
well-suited for the vast majority of director elections in which only board nominated candidates are on
the ballot. We believe that a majority vote standard in board elections would establish a challenging
vote standard for board nominees and improve the performance of individual directors and entire
boards. SkyWest presently uses a plurality vote standard in all director elections. Under the plurality
vote standard, a nominee for the board can be elected with as little as a single affirmative vote, even if
a substantial majority of the votes cast are ‘‘withheld’’ from the nominee.
The Corporate Library (‘‘TCL’’), a leading provider of independent corporate governance research and
analysis, reports ‘‘an increased concern related to board composition’’ at SkyWest, noting that ‘‘except
for Michael Young, the entire board failed to receive support from 35% to 75% of the votes cast in the
2010 election.’’ According to TCL, ‘‘While this suggests a significant level of dissatisfaction from the
company’s shareholders, these directors are not required to tender their registration due to the
company’s plurality voting standard without a resignation policy.’’
An increasing number of companies, including Alaska Air Group, Inc., Delta Air Lines, Inc., and
Southwest Airlines Co., have adopted a majority vote standard. Additionally, these companies have
adopted director resignation policies to address post-election issues related to the status of director
nominees who fail to win election. Other companies have responded only partially to the call for
change by simply adopting post-election director resignation policies.
We believe that a post-election director resignation policy without a majority vote standard in company
articles in an inadequate reform. The critical first step in establishing a meaningful majority vote policy
is the adoption of a majority vote standard. With a majority vote standard in place, the board can then
consider action on developing post-election procedures to address the status of directors that fail to win
election. A majority vote standard combined with a post-election role in determining the continued
status of an unelected director.
We urge shareholders to vote FOR this proposal.
Board of Directors’ Response
The Board has carefully considered the proposal submitted by the International Brotherhood of
Teamsters General Fund (the ‘‘Teamsters Proposal’’) and, following its review of the Teamsters
Proposal, does not believe the Teamsters Proposal is in the best interests of the Company or its
shareholders at this time. Accordingly, the Board unanimously recommends that the Company’s
shareholders vote AGAINST the Teamsters Proposal for the reasons set forth below.
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