SkyWest Airlines 2012 Annual Report Download - page 150

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The 2012 goal for each Executive was based on the Company’s targeted net earnings, and there
was no alternative operating company goal set for the Presidents of the operating subsidiaries, thus
encouraging teamwork and working towards the creation of long-term value for the Company’s
shareholders. The targeted net earnings goal is adjusted to exclude accounting timing differences
between engine overhauls and related revenue collected from contracts. Earned performance unit
awards are paid in cash to reduce share dilution and emphasize the real economic cost of officer
incentives. The Company believes that the performance unit grant provides an effective long-term
incentive for the Executives to act in the best interests of shareholders, by focusing on net earnings,
which the Committee believes is one of the principal contributing factors to long-term shareholder
value.
For 2012, the actual adjusted shareholder net earnings for 2012 was $51.2 million, versus the
$47.5 million targeted net earnings. Accordingly, the Executive earned 107.8% ($51.2 million/
$47.5 million) of his performance units (subject to risk of forfeiture in the event of termination prior to
February 15, 2015).
The targeted net earnings, actual net earnings, performance units granted, and the performance
units earned (subject to forfeiture if the vesting period is not met) for the year ended December 31,
2012 were as follows:
Targeted Actual Performance Performance
Net Earnings Net Earnings Units Units
(in Millions) (in Millions) Granted Earned
Jerry C. Atkin .............. $47.5 $51.2 $515,000 $555,170
Bradford R. Rich ............ $47.5 $51.2 $324,500 $349,811
Russell A. Childs ............ $47.5 $51.2 $274,600 $296,019
Bradford R. Holt ............ $47.5 $51.2 $274,600 $296,019
Michael J. Kraupp ........... $47.5 $51.2 $ 98,280 $105,946
The following table summarizes the number and nature of long-term awards granted to the
Executives by the Board on February 15, 2012.
Time Vested LTI Performance-Contingent LTI
Shares/Stock Shares/Stock Other Units
Options Units Options Units (Cash)(1)
Jerry C. Atkin ........... 39,627 24,119 — 0 $515,000
Bradford R. Rich ........ 27,156 14,472 — 0 $324,500
Russell A. Childs ......... 22,979 12,253 — 0 $274,600
Bradford R. Holt ......... 22,979 12,253 — 0 $274,600
Michael J. Kraupp ........ 6,873 5,268 — 0 $ 98,280
(1) Number of performance units if 100% of target achieved. See table above for
performance units actually earned for 2012.
Retirement Benefits.
The Company and SkyWest Airlines sponsor a 401(k) retirement plan for their eligible employees,
including the Executives other than Mr. Holt. ExpressJet also maintains a substantially equivalent
401(k) plan for its eligible employees, including Mr. Holt. Both plans are broad based, tax-qualified
retirement plans under which eligible employees, including the Executives, may make annual pre-tax
salary reduction contributions subject to the various limits imposed under the Internal Revenue Code
of 1986, as amended (the ‘‘Code’’). The sponsoring employers make matching contributions under the
plans on behalf of eligible participants; however the right of Executives and other officers to such
matching contributions is limited. The Committee believes that maintaining the 401(k) retirement plans
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