SkyWest Airlines 2012 Annual Report Download - page 152
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The Committee reviews and considers the deductibility of executive compensation under
Section 162(m) of the Code. In certain situations, the Committee may approve compensation that will
not meet the requirements of Code Section 162(m) in order to ensure competitive levels of total
compensation for its executive officers. Stock options and 2012 long-term performance units awarded to
the Executives during 2012 were intended to constitute ‘‘qualified performance-based compensation’’
under Section 162(m) of the Code. The Company’s 2012 restricted stock unit grants and 2012
performance-based annual bonuses, however, were not ‘‘qualified performance-based compensation.’’
As a result, a portion of the compensation earned by Mr. Atkin for 2012 exceeded the deduction limit
of Section 162(m) of the Code.
Effect of Compensation on Risk
Based on the Committee’s review of the various elements of the Company’s executive
compensation practices and policies, the Committee believes the Company’s compensation policies and
practices are designed to create appropriate and meaningful incentives for the Company’s employees
without encouraging excessive or inappropriate risk taking. Among other factors, The Committee
considered the following information:
• The Company’s compensation policies and practices are designed to include a significant level of
long-term compensation, which discourages short-term risk taking.
• The base salaries the Company provides to its employees are generally consistent with salaries
paid for comparable positions in the Company’s industry, and provide the Company’s employees
with steady income while reducing the incentive for employees to take risks in pursuit of
short-term benefits.
• The Company’s incentive compensation is capped at levels established by the Committee, which
the Committee believes reduces the incentive for excessive risk-taking.
• The Company has established internal controls and adopted codes of ethics and business
conduct, which are designed to reinforce the balanced compensation objectives established by
the Committee.
• The Company has adopted equity ownership guidelines for its executive officers, which the
Committee believes discourages excessive risk-taking.
Based on the review outlined above, the Company has concluded that the risks arising from its
compensation policies and practices for its employees are not reasonably likely to have a material
adverse effect on the Company.
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