SkyWest Airlines 2013 Annual Report Download - page 141

The specific income and other financial targets were 1) a designated amount of net income at the
operating subsidiary level, 2) a designated amount of controllable expenditures at the operating
subsidiary level, and 3) a designated amount of capital expenditures at the operating subsidiary level.
The bonus objective for net income and other financial targets was weighted 50% to net income at the
operating subsidiary level, 25% to controllable expenditures at the operating subsidiary level and 25%
to capital expenditures at the operating subsidiary level. The above identified measurements were
identified to encourage continued focus on overall net income and financial results, to encourage
continued integration of ExpressJet Holdings, Inc.’s operations, and to facilitate the exchange of best
practices between the operating subsidiaries of the Company.
In the case of Messrs. Atkin, Rich and Kraupp, the applicable net income and other financial
targets were based on the designated amounts of both operating subsidiaries SkyWest Airlines
(weighted 50%) and ExpressJet (weighted 50%). Because of his primary responsibility with respect to
operations of SkyWest Airlines, Mr. Childs’ net income and financial targets were set as the designated
amounts at the SkyWest Airlines level. Similarly, because Mr. Holt was principally engaged with respect
to the operations of ExpressJet, his net income and financial targets were designated amounts at the
ExpressJet level. At year-end, the Compensation Committee reviewed the actual net income and
financial results for the year, as well as other items taken into account in setting the annual net income
and financial targets, and determined the extent to which the applicable goals were met.
2013 Operational and Individual Targets Component. A portion of the Executives’ annual bonus is
based on their achievement of operational targets (weighted 50%) and individual targets (weighted
50%) established in advance each year. The Compensation Committee has adopted this approach
because it believes the use of operational and individual goals allows awards to reflect the individual
efforts and achievements of an Executive that may not be reflected by corporate net income
performance. The actual amount of the bonus payment for each Executive is determined by the
Compensation Committee based on the Executive’s achievement of his goals.
For fiscal year 2013, the Compensation Committee reviewed and approved the individual goals for
the Executives and following year-end, determined the extent to which those goals were attained. The
actual payout of the portion of an Executive’s annual bonus incentive related to individual goals is
increased or decreased, as applicable, based on the degree to which the Executive achieved his
individual goals.
The corresponding results for each Executive for the year ended December 31, 2013, are set forth
below as a percentage of each Executive’s salary.
Objective Net Income & Net Income & Operational & Operational & Total Annual
Percentage Financial Financial Individual Individual Bonus
of Salary Target Results Target Results Results
Jerry C. Atkin ...... 80% 40.0% 23.8% 40.0% 36.6% 60.4%
Bradford R. Rich .... 80% 40.0% 23.8% 40.0% 36.3% 60.1%
Russell A. Childs .... 80% 40.0% 41.9% 40.0% 39.4% 81.3%
Bradford R. Holt .... 80% 40.0% 6.0% 40.0% 33.6% 39.6%
Michael J. Kraupp . . . 60% 30.0% 17.9% 30.0% 27.5% 45.4%
Discretionary Bonus. In addition to the performance-based bonuses described above, the
Compensation Committee also exercised discretion in 2013 and paid a discretionary bonus of $80,000
to Mr. Holt in recognition of Mr. Holt’s efforts to address unique challenges attributable to
ExpressJet’s operations, including reimbursement rates payable under ExpressJet’s contracts with its
major partners, maintenance costs associated with ExpressJet’s aging fleet and collective bargaining
agreements with labor groups. Messrs. Atkin, Rich, Childs and Kraupp did not receive a discretionary
bonus.
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