SkyWest Airlines 2011 Annual Report Download - page 136

• Annual Bonus
• Long-Term Awards
• Retirement and other Benefits
The compensation objectives for each Executive are more fully described in the following
paragraphs.
Salary. Salary is provided with the objective of paying for the underlying role and responsibility
associated with the Executive’s position, which the Committee believes allows the Company to attract
and retain qualified executives. The Executives’ salaries are set at levels that the Committee believes
are generally competitive with the compensation paid to officers in similar positions at other airlines.
Salary adjustments are considered annually and influenced by growth of the Company’s operations,
individual performance, changes in responsibility, changes in cost of living, and other factors. The
salaries of the Executives are set forth in the Summary Compensation Table set forth immediately
following this section.
Annual Bonus. In an effort to encourage achievement of the Company’s objectives an annual
performance-based bonus plan is maintained for the Executives. The combination of salary and annual
bonuses is intended to result in a cash compensation package for each Executive that falls within
competitive market standards as determined by the Committee, based on its review and understanding
of other regional and major air carrier executive compensation programs, when the performance
measures and personal goals are met. The purpose of the bonus plan is to reward the Executives with
an annual cash bonus in an amount that correlates (i) in part, to the level of net income of the
Company or its operating subsidiaries achieved for the year; and (ii) in part, to the achievement of
specific operational goals and individual quantitative and qualitative goals during the year. The 2011
annual bonus objective for Messrs. Atkin, Rich and Holt was 40% of salary based on net income
targets established by the Committee and 40% of salary based on the achievement of specific
operational and individual goals described below. Mr. Child’s annual bonus objective was 60% of salary
based on net income targets established by the Committee and 20% of salary based on the achievement
of specific operational and individual goals. Mr. Kraupp’s annual bonus objective was 30% of salary
based on net income targets established by the Committee and 30% of salary based on the achievement
of specific operational and individual goals. The differing percentages for the Executives are due to
differing entity level responsibilities and the achievement of specific goals and objectives related to that
entity.
In determining annual net income targets to be used for the purpose of determining each bonus
amount for the Executives, the Committee began with a return on equity objective, which the
Committee believes is a key measure of the financial health of the Company and reflects the
Company’s development of shareholder value. The Committee then considered the planned budget for
the year, timing differences between the Company’s actual engine overhaul expenses and the related
revenue collected from the Company’s major partners, and other unusual or non-recurring items, such
as the transition and integration of the ExpressJet Holdings, Inc.’s operations. In the case of
Messrs. Atkin, Rich and Kraupp, the applicable net income target was set at a designated amount of
net income at the Company level. Because of his primary responsibility with respect to operations of
SkyWest Airlines, Mr. Childs’ net income target was set as a designated amount of net income of
SkyWest Airlines. Similarly, because Mr. Holt was principally engaged with respect to the operations of
ExpressJet, his net income target was a designated amount of net income of ExpressJet. At year-end,
the Committee reviewed the actual results from net income, as well as other items taken into account
in setting the annual net income targets and applied judgment as to the final amounts awarded for the
year.
25