SkyWest Airlines 2012 Annual Report Download - page 151

and providing a means to save for retirement is an essential part of a competitive compensation
package necessary to attract and retain talented executives.
The Company also maintains the SkyWest, Inc. 2002 Deferred Compensation Plan, a non-qualified
deferred compensation plan for the benefit of officers and other highly compensated employees. All of
the Executives participate in the SkyWest, Inc. 2002 Deferred Compensation Plan. ExpressJet also
maintains a separate but similar non-qualified deferred compensation plan, the ExpressJet Executive
Deferred Compensation Plan, for its highly compensated management employees, including Mr. Holt.
Under both such deferred compensation plans (the ‘‘Deferred Compensation Plans’’), the employer
credits each Executive’s account with a discretionary employer contribution equal to 15% of salary and
annual bonus. These amounts are included in the Summary Compensation Table under the column ‘‘All
Other Compensation’’. Additional information on the Deferred Compensation Plans is found in the
section ‘‘Non-Qualified Deferred Compensation for 2012,’’ below.
The SkyWest Inc. 2002 Deferred Compensation Plan (but not the ExpressJet Executive Deferred
Compensation Plan) also permits eligible executives, including the Executives, to elect in advance of
each calendar year to defer up to 100% of their cash salary and annual bonus compensation for the
year. None of the Executives elected to defer any portion of his salary or annual bonus for 2012. The
Company and its subsidiaries do not maintain any defined benefit pension plans for the Executives.
Other Benefits. In additional to the benefits described above, the Company provides certain other
benefits to the Executives that the Committee believes are generally consistent with the benefits
provided to senior executives of other airlines. The Committee believes that those benefits, which are
detailed in the footnotes to the Summary Compensation Table applicable to the heading ‘‘All Other
Compensation’’ below, are reasonable, competitive and consistent with overall executive compensation
objectives. Those benefits consist primarily of employer-paid premiums on health, dental and eye
insurance, a personal automobile allowance, and use of Company owned recreational equipment.
The Company and its subsidiaries also maintain a non-discriminatory, broad based program under
which all full-time employees and their dependents, including the Executives and their dependents, may
fly without charge on a space available basis on regularly scheduled flights of aircraft operated by the
Company’s operating airline subsidiaries.
Ownership Guidelines
The Company maintains ownership guidelines for the Executives to encourage the alignment of
their interests with the long-term interests of the s shareholders. Each Executive is required to maintain
a minimum ownership interest in the Company. The guideline ownership level is a number of shares of
Common Stock having a value equal to six times annual base salary for Mr. Atkin, and three times
annual base salary for Messrs. Rich, Childs, Holt and one times annual base salary for Mr. Kraupp.
Messrs. Atkin, Rich, and Kraupp met the guidelines at the end of the fiscal year ended December 31,
2012. Messrs. Child and Holt are continuing to make progress towards the ownership guideline. The
holdings of the Executives are summarized in the table entitled ‘‘Security Ownership of Certain
Beneficial Owners’’, below.
Deductibility of Executive Compensation
Section 162(m) of the Code imposes a $1 million annual limit on the amount that a publicly
traded company may deduct for compensation paid to the company’s principal executive officer during
a tax year or to any of the company’s three other most highly compensated executive officers who are
still 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).
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