SkyWest Airlines 2014 Annual Report Download - page 149

actual pretax earnings, performance units granted, and the performance units that were earned under
the 2010 Plan for the year ended December 31, 2014 were as follows:
Targeted Actual Performance Performance
Pretax Earnings Pretax Earnings Units Units
(in Millions) (in Millions) Granted Earned
Jerry C. Atkin .......... $110.0 $(42.8) $472,838 $0
Russell A. Childs ........ $110.0 $(42.8) $302,573 $0
Wade J. Steel ........... $110.0 $(42.8) $152,852 $0
Bradford R. Rich ........ $110.0 $(42.8) $283,680 $0
Michael B. Thompson ..... $110.0 $(42.8) $145,274 $0
Bradford R. Holt ........ $110.0 $(42.8) $234,360 $0
Michael J. Kraupp ....... $110.0 $(42.8) $103,264 $0
Additional Discretionary Performance Unit Award With Respect to 2014. Additionally, in February
2015, the Compensation Committee exercised discretion and awarded discretionary performance unit
awards payable in cash on February 18, 2017 to certain of the Executives (subject to risk of forfeiture
in the event of termination prior to February 18, 2017) with respect to and based upon their 2014
service. Those discretionary performance unit awards were not based on attainment of pre-established
financial or operational goals for 2014, but were instead made to recognize the efforts made by
Executives in 2014 to address the unique challenges in 2014 related to weather, the effect of new pilot
duty and rest rules and changes in the composition of the Company’s fleet. The 2017 cash value of
those discretionary performance unit awards with respect to 2014 were $392,641 for Mr. Atkin,
$233,375 for Mr. Childs, $117,895 for Mr. Steel and $112,050 for Mr. Thompson. Because those
performance unit award amounts were earned based on service in 2014 and were both discretionary
and non-target-based, the amounts are included in the 2014 compensation shown in the Summary
Compensation Table below under the caption heading ‘‘Discretionary Bonus.’’ Messrs. Rich, Holt and
Kraupp did not receive any such additional discretionary performance unit awards with respect to 2014.
Long-Term Awards for 2015. The Compensation Committee determined to adjust the long-term
incentive awards for 2015 in an effort to better align the incentive awards with the creation of
shareholder value and to align the compensation package of the Executives with those of other regional
and major air carrier executive compensation programs. For 2015, the total annual targeted long-term
incentive grant value will be 125% of salary and targeted annual bonus for the Chief Executive Officer
and President, 100% of salary and targeted annual bonus for the Chief Commercial Officer, the Chief
Financial Officer and the Chief Operating Officers of the Company’s operating subsidiaries and 70% of
salary and targeted annual bonus for other Executives. The differing target percentages for the
Executives are due to differing entity level responsibilities. Each Executive’s 2015 long-term incentive
award will be allocated among three types of long-term awards as follows: (1) stock options (weighted
20%) with one-third of the stock options vesting on each anniversary of the date of grant, (2) restricted
stock units (weighted 40%) that will vest three years from the date of grant, and (3) performance
shares (weighted 40%) that will be earned based on meeting performance targets over a three year
period and will be issued, if earned, three years from the date of grant. The actual performance shares
issued can range as high as 150% and as low as 0% of the targeted number of shares underlying the
grant, depending on the attained level of performance with respect to the improvement in pretax
earnings, cash flow from operations, and pretax return on equity over the applicable three-year
measurement period.
Retirement and Other Benefits.
The Company and SkyWest Airlines sponsor a 401(k) retirement plan for their eligible employees,
including the Executives other than Mr. Holt. ExpressJet also maintains a substantially equivalent
401(k) plan for its eligible employees, including Mr. Holt. Both plans are broad based, tax-qualified
32