SkyWest Airlines 2013 Annual Report Download - page 140

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
• Long-Term Awards
• Retirement and other Benefits
The compensation objectives for each Executive are more fully described in the following
paragraphs.
Salary. Salary is provided with the objective of paying for the underlying role and responsibility
associated with the Executive’s position, which the Compensation Committee believes allows the
Company to attract and retain qualified executives. The Executives’ salaries are set at levels that the
Compensation Committee believes are generally competitive with the compensation paid to officers in
similar positions at other airlines. Salary adjustments are considered annually and influenced by growth
of the Company’s operations, individual performance, changes in responsibility, changes in cost of
living, and other factors. The salaries of the Executives are set forth in the Summary Compensation
Table set forth immediately following this section.
Annual Bonus. In an effort to encourage achievement of the Company’s objectives, an annual
performance-based bonus plan is maintained for the Executives. The combination of salary and annual
bonuses is intended to result in a cash compensation package for each Executive that falls within
competitive market standards as determined by the Compensation Committee based on its review and
understanding of other regional and major air carrier executive compensation programs when the
performance measures and personal goals are met. The purpose of the bonus plan is to reward the
Executives with an annual cash bonus in an amount that correlates (i) in part, to the level of net
income and other financial measurements of the Company or its operating subsidiaries achieved for the
year; and (ii) in part, to the achievement of specific operational goals and individual quantitative and
qualitative goals during the year. The 2013 annual bonus objective of 80% of salary for Messrs. Atkin,
Rich, Child and Holt was allocated between 40% of salary based on net income and other financial
targets established by the Compensation Committee, and 40% of salary based on the achievement of
specific operational and individual targets. Mr. Kraupp’s annual bonus objective of 60% of salary was
allocated between 30% of salary based on net income and other financial targets established by the
Compensation Committee and 30% of salary based on the achievement of specific operational and
individual targets. The differing percentages for the Executives are due to differing entity level
responsibilities. Details are explained below under the headings ‘‘2013 Net Income and Financial
Targets Component’’ and ‘‘2013 Operational and Individual Targets Component’’.
2013 Net Income and Financial Targets Component. In determining annual net income and other
financial targets to be used for the purpose of determining each bonus amount for the Executives, the
Compensation Committee began with a targeted net income objective which the Compensation
Committee believes is a key measure of the financial health of the Company and reflects the
Company’s development of shareholder value. The Compensation Committee then considered the
planned budget for the year, timing differences between the Company’s actual engine overhaul
expenses and the related revenue collected from the Company’s major partners, and other unusual or
non-recurring items, such as the transition and integration of the ExpressJet Holdings, Inc.’s operations.
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