SkyWest Airlines 2012 Annual Report Download - page 145

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 in order to determine competitiveness
of the Company’s executive compensation programs. The Committee performed such a review in 2012
that included a review of the executive compensation practices of peer transportation companies
Southwest, Avis Budget Gp, Ryder System, UTi Worldwide, JetBlue, Alaska Air Group, Swift
Transportation, Hub Group, Republic Airways, Arkansas Best, Hawaiian Holdings, Pacer Intl, Atlas
Air, and Spirit Airlines. 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 2012, the Company and Committee received advice from Frederic W.
Cook & Co., Inc. (‘‘F.W. Cook’’) with respect to executive compensation practices and trends generally
and within the airline industry. The Company and Committee retained F.W. Cook to make
recommendations regarding the specific amount or forms of compensation awarded to Executives in
2012. The Company and the Committee did not retain any other outside consultants other than
F.W. Cook during 2012. The Company and the Committee will continue to periodically seek the advice
of such consultants, as deemed necessary, 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, which enables the Board 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.
Committee Consideration of Shareholder Advisory Vote. At the Company’s annual meeting of
shareholders held in May 2012, the Company submitted the compensation of its named executive
officers to the Company’s shareholders in a non-binding vote. The Company’s executive compensation
program received the support of more than 89% of the shares represented at the meeting. The
Committee considered the results of the 2012 vote and views the outcome as evidence of strong
shareholder support of its executive compensation decisions and policies. Accordingly, the Committee
concluded that no significant revisions were necessary to the Company’s executive compensation
program for 2013. The Committee will continue to review future shareholder voting results, including
the voting results with respect to ‘‘Proposal 2—Advisory Vote on Executive Compensation’’ described in
this Proxy Statement, and determine whether to make any changes to the Company’s executive
compensation program in light of such voting results.
Elements of Compensation
The Company’s executive compensation objectives and principles are implemented through the use
of the following principal elements of compensation, each discussed more fully below:
• Salary
• Annual Bonus
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