SkyWest Airlines 2014 Annual Report Download - page 160

Potential Payments upon Termination or Change in Control
The information below describes and quantifies certain payments or benefits that would be payable
under the existing plans and programs of the Company and its subsidiaries if an Executive’s
employment had terminated on December 31, 2014, or the Company had undergone a change in
control on December 31, 2014. These benefits are in addition to benefits generally available to all
salaried employees of the Company in connection with a termination of employment, such as
distributions from the 401(k) Plans, disability and life insurance benefits, the value of employee-paid
group health plan continuation coverage under the Consolidated Omnibus Reconciliation Act, or
‘‘COBRA’’ and accrued vacation pay. Except as noted below, the Executives do not have any other
severance benefits, severance agreements or change-in-control agreements.
Accelerated Vesting of Stock Options and Stock Awards Upon Change In Control. Under the
Company’s long-term incentive plans, all outstanding stock options, restricted stock units and
performance units held by an Executive on December 31, 2014, would have become fully vested upon a
‘‘change in control’’ occurring on that date without regard to whether the Executive terminated
employment in connection with or following the change in control. The Company’s long-term incentive
plans generally define a ‘‘change in control’’ as any of the following events: (i) the acquisition by any
person of 50% or more of the Company’s voting shares, (ii) replacement of a majority of the
Company’s directors within a two-year period under certain conditions, or (iii) shareholder approval of
a merger in which the Company is not the surviving entity, sale of substantially all of the Company’s
assets or liquidation. All shares of restricted stock previously issued under the Company’s 2006
Long-Term Incentive Plan and prior long-term incentive plans became fully vested prior to 2014;
accordingly, a change in control of the Company in 2014 would not have accelerated the vesting of
such restricted stock.
The following table shows for each Executive the intrinsic value of his unvested stock options,
unvested restricted stock units and performance units payable in cash, as of December 31, 2014, that
would have been accelerated had a change in control of the Company occurred on that date, calculated
in the case of restricted stock units and stock options, by multiplying the number of underlying shares
by the closing price of the Common Stock on the last trading day of 2014 ($13.28 per share) and, in
the case of stock options, by then subtracting the applicable option exercise price:
Early Vesting Early Vesting Early Vesting
Name of Stock Options of Restricted Stock Units of Performance Units
Jerry C. Atkin ......... $69,681 $1,007,408 $1,150,495
Russell A. Childs ....... $36,014 $ 559,725 $ 646,573
Wade J. Steel .......... $19,264 $ 214,153 $ 224,944
Bradford R. Rich ....... $49,645 $ 604,439 $ 706,988
Michael B. Thompson . . . $18,392 $ 203,051 $ 213,629
Michael J. Kraupp ...... $18,638 $ 220,023 $ 235,965
If a change in control with respect to the Company results in acceleration of vesting of an
Executive’s otherwise unvested stock options, unvested restricted stock units or performance unit
awards payable in cash, and if the value of such acceleration equals or exceeds three times the
Executive’s average W-2 compensation with the Company for the five taxable years preceding the year
of the change in control (the ‘‘Base Period Amount’’), the acceleration would result in an excess
parachute payment under Code Section 280G. An Executive would be subject to a 20% excise tax on
any such parachute payment in excess of the Base Period Amount, and the Company would be unable
to deduct the amount of the parachute payment in excess of the Base Period Amount for tax purposes.
The Company has not agreed to provide its Executives with any gross-up or reimbursement for excise
taxes imposed on excess parachute payments.
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