Alaska Airlines and Horizon Air 2007 Annual Report Download - page 67

(2) In 2007, Mr. Pinneo became partially vested under the Supplementary Retirement Plan and earned sufficient
service under the Plan to accrue a benefit payable at his Normal Retirement Age. As a result of these changes,
$802,627 is included in the Pension Benefits table in Column (d) as the Present Value of Accumulated Benefit
and is attributable to Mr. Pinneo’s vesting and service accruals under the Supplementary Retirement Plan
during 2007. This accrual also includes Mr. Pinneo’s nonqualified benefits described in the paragraph below.
The Supplementary Retirement Plan benefits and the nonqualified benefits are payable over the long term after
Mr. Pinneo retires from the Company.
Regarding Mr. Pinneo’s nonqualified benefits, when Mr. Pinneo was elected President and CEO of Horizon Air
in 2002, he was 100% vested under the Salaried Retirement Plan (as defined below) on account of prior
service at Alaska. At that time, Horizon Air, which does not have a plan similar to the Salaried Retirement Plan,
agreed to supplement his benefits to ensure that his retirement benefit will be equivalent to what he would
have received had he been participating in the Salaried Retirement Plan during his tenure as President and
CEO of Horizon Air.
Pension and Other Retirement Plans
The Company maintains two primary defined
benefit pension plans covering the Named
Executive Officers. The Alaska Air Group, Inc.
Retirement Plan for Salaried Employees (the
“Salaried Retirement Plan”) is our qualified
defined benefit employee retirement plan, and
the Named Executive Officers participate in this
plan on the same general terms as our other
eligible employees. The Named Executive
Officers also participate in the Alaska Air Group,
Inc. 1995 Elected Officers Supplementary
Retirement Plan (the “Supplementary Retirement
Plan”).
Salaried Retirement Plan
The Salaried Retirement Plan is a
tax-qualified, defined-benefit retirement plan for
salaried Alaska Airlines employees hired prior to
April 1, 2003, in which all of the Named Executive
Officers participate. Each of our Named Executive
Officers is fully vested in his accrued benefits
under the Salaried Retirement Plan. Benefits
payable under the Salaried Retirement Plan are
generally based on years of credited service with
the Company and its affiliates and final average
base salary for the five highest complete and
consecutive calendar years of an employee’s last
ten complete calendar years of service. The
annual retirement benefit at age 62 (normal
retirement age under the Salaried Retirement
Plan) is equal to 2% of the employee’s final
average base salary times years of credited
service (limited to 40 years). Annual benefits are
computed on a straight life annuity basis
beginning at normal retirement age. Benefits
under the Salaried Retirement Plan are not
subject to offset for Social Security benefits.
The tax law limits the compensation on which
annual retirement benefits are based. For 2007,
this limit was $225,000. The tax law also limits
the annual benefits that may be paid from a
tax-qualified retirement plan. For 2007, this limit on
annual benefits was $180,000. To the extent the
retirement benefits of our Named Executive
Officers and certain other employees under the
Salaried Retirement Plan exceed these limits, the
excess benefits may be paid under the
Supplementary Retirement Plan as described
below.
Supplementary Retirement Plan
In addition to the benefits described above,
the Named Executive Officers are eligible to
receive retirement benefits under the
Supplementary Retirement Plan. The
Supplementary Retirement Plan is a
nonqualified, unfunded, noncontributory defined-
benefit plan. Normal retirement benefits are
payable once the officer reaches age 60.
Benefits are calculated as a monthly amount on
a straight life annuity basis. In general, the
monthly benefit is determined as a percentage
(between 50% to 75% of a participant’s final
average monthly base salary) with the
percentage determined based on both the
officer’s length of service with the Company and
length of service as an elected officer. This
benefit amount is subject to offset by the
amount of the officer’s Social Security benefits
and the amount of benefits paid under the
Salaried Retirement Plan to the extent such
benefits were accrued after the officer became a
participant in the Supplementary Retirement
Plan. (There is no offset for any Salaried
Retirement Plan benefits accrued for service
ŠProxy
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