SkyWest Airlines 2013 Annual Report Download - page 139

including awards under the Company’s annual bonus plan and the Company’s 2006 Long-Term
Incentive Plan and 2010 Long-Term Incentive Plan (the ‘‘2010 Plan’’).
The Compensation 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 Compensation 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 Compensation 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 Compensation
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. In 2013, the Compensation Committee
did not perform or rely upon any updated review of peer company compensation practices or any
updated surveys of peer compensation, but did take into account the results of the 2012 review. The
executive compensation procedures and the Compensation 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 Compensation 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 Compensation 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 the Compensation Committee
retained F.W. Cook to make recommendations regarding the specific amount or forms of compensation
awarded to Executives in 2012. The Company’s approach to setting Executive compensation in 2013,
and the components of the 2013 Executive compensation, were consistent with the Company’s practices
in 2012. The Company and the Compensation Committee did not retain any consultants during 2013 or
rely on any new advice from compensation consultants. The Company and the Compensation
Committee will continue to periodically seek the advice of such consultants, as deemed necessary, in
the future. The Compensation Committee has sole authority to hire and fire external 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.
Compensation Committee Consideration of Shareholder Advisory Vote. At the Company’s Annual
Meeting of Shareholders held in May 2013, 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 85% of the shares represented at the
meeting. The Compensation Committee considered the results of the 2013 vote and views the outcome
as evidence of strong shareholder support of its executive compensation decisions and policies.
Accordingly, the Compensation Committee concluded that no significant revisions were necessary to
the Company’s executive compensation program for 2014. The Compensation 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
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