SkyWest Airlines 2015 Annual Report Download - page 130

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2015 Cash Flow from Operations Target Component. In determining the annual cash flow from operations
target to be used for the purpose of determining each bonus amount for the Executives, the Compensation Committee
began with a targeted cash flow from operations objective which the Compensation Committee considered a key
measure of the financial health of the Company and the Board believes is reflective of the Company’s development of
shareholder value. The Compensation Committee then considered the planned budget for the year and other unusual or
non-recurring items. The above measurement was identified to encourage continued focus on overall generation of free
cash flow from operations and to facilitate the continued strength of the Company’s balance sheet.
2015 Operational Targets Component. A portion of the Executives’ annual bonus is based on their
achievement of operational targets established in advance each year. The Compensation Committee has adopted this
approach because it believes the use of operational goals allow awards to reflect the operational achievements of
operating subsidiaries of the Company that may not be reflected by corporate financial performance. The actual amount
of the bonus payment for each Executive is determined by the Compensation Committee based on the Company’s and/or
applicable subsidiary’s achievement of operational goals.
The corresponding results for each Executive performance-based annual bonus for the year ended December 31,
2015, are set forth below as a percentage of each Executive’s salary.
Pre-tax earnings & Financial Cash Flow From Operations
Objective Total Annual
Percentage Operational Bonus
of Salary Target Results Target Results Target Results Results
Jerry C. Atkin ...... 100 % 65.0 % 95.1 % 10.0 % 15.0 % 25.0 % 30.6 % 140.7 %
Russell A. Childs .... 100 % 65.0 % 95.1 % 10.0 % 15.0 % 25.0 % 30.6 % 140.7 %
Wade J. Steel
...... 80 % 52.0 % 76.1 % 8.0 % 12.0 % 20.0 % 24.5 % 112.6 %
Robert J. Simmons
... 80 % 52.0 % 76.1 % 8.0 % 12.0 % 20.0 % 24.5 % 112.6 %
Michael B. Thompson
80 % 52.0 % 74.1 % 8.0 % 12.0 % 20.0 % 23.3 % 109.4 %
Terry M. Vais(1)
.... 68 % 44.5 % 66.7 % 6.8 % 10.3 % 17.1 % 21.9 % 98.9 %
(1) Objective Percentage of Salary for Mr. Vais was adjusted to 80% from 60% effective with his promotion to
Chief Operating Officer in September 2015. The blended Objective Percentage of Salary for the entire year
for Mr. Vais was 68%.
Amount of 2015 Performance-Based Annual Bonus. The total annual performance-based bonus amounts
payable to the Executives for 2015 were: Mr. Atkin—$606,093; Mr. Childs—$464,277; Mr. Steel—$270,125;
Mr. Simmons—$337,656; Mr. Thompson—$235,624 and Mr. Vais—$163,371. Those amounts are included in the
amounts shown in the Summary Compensation Table below under the caption heading “Non-Equity Incentive Plan
Compensation.”
2016 Annual Bonus. The Compensation Committee determined to make some changes to the annual bonus
metrics for 2016 in an effort to better align the bonus with the creation of shareholder value and to align the
compensation packages of the Executives with the executive compensation programs of other regional carriers and major
airlines. The bonus objective will be based on two metrics, pre-tax earnings (weighted 75%) and operating performance
(weighted 25%).
Long-Term Awards. The Company grants discretionary long-term incentive awards, in the form of stock
options, restricted stock units and performance shares to the Executives annually.
Long-term incentive awards are made to encourage the Executives to continue their engagement with the
Company throughout the vesting periods of the awards and to align management and shareholder interests. In making
awards to the Executives, the grant size and the appropriate mix of equity- based awards are considered. The
Compensation Committee generally grants long-term incentive awards at its first meeting of each year. Except in the