Alaska Airlines and Horizon Air 2007 Annual Report Download - page 77

BOARD OF DIRECTORS’ RESPONSE TO STOCKHOLDER PROPOSAL 5
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE AGAINST PROPOSAL 555
FOR THE FOLLOWING REASONS:
The Board believes that Alaska Air Group
shareholders already have a ‘say on executive
pay’ via annual elections for the Board of
Directors, direct communication with the Board,
and periodic votes on equity incentive plans.
In 2008 and every subsequent year, Air
Group shareholders will vote on the election of
all members of our Compensation Committee.
Inherent in that vote is the ability to
communicate approval of or dissention with their
actions regarding executive compensation. By
allowing stockholders to vote “for” or “against”
each director under our majority vote for director
policy, stockholders can hold directors
accountable with respect to executive
compensation.
Stockholders have the ability to
communicate directly with the Board about
executive pay. Feedback on compensation-
related concerns may be sent to the Board of
Directors in accordance with the Company’s
policy for stockholder communications, which is
described further under “Stockholder
Communications Policy” in this proxy statement.
Specifically, stockholders may submit their
feedback by writing to our Board of Directors or
to any specific directors at the following address:
Board of Directors, Alaska Air Group, Inc., PO
Box 68947, Seattle, WA 98168.
In addition, our stockholders have the ability
to influence the aggregate amount and types of
equity compensation available to be awarded to
our executives through their review and approval
of the Company’s equity incentive plans.
Our Compensation Committee is very active
and consists entirely of independent directors.
The Committee is solely responsible for
maintaining an executive compensation program
designed to attract, motivate and retain the most
highly qualified and experienced leadership for
the Company while also aligning management’s
interests with those of the Company’s
stockholders. The Compensation Committee held
six meetings during the course of the last year,
and undertook an in-depth review and analysis of
total direct compensation at the executive level
to ensure that it is structured to satisfy the
objectives of the Company’s executive
compensation program. The Board believes the
Compensation Committee provides effective,
thorough, and independent oversight of the
Company’s executive compensation, and that
such oversight has resulted in a compensation
program that is performance-driven and internally
equitable. As disclosed in more detail under the
caption “Compensation Discussion and
Analysis” beginning at page [ ] of this proxy
statement, the Compensation Committee
intentionally targets base compensation for its
Named Executive Officers at substantially below
the median for the Company’s industry peer
group and other large companies, with the idea
that the Company’s executives will have the
opportunity to earn market level compensation
through short- and long-term incentive programs
that pay when performance objectives are met.
Moreover, the Committee’s deliberate
consideration of the importance of internal equity
has resulted in a current level of Chief Executive
Officer total direct compensation that is two
times that of the next level, the Executive Vice
President level.
As opposed to the general nature of the
proposed, once-a-year, “for” or “against”
advisory vote, which may not clearly
communicate stockholder views on the type,
amounts or preferred improvements to the
Company’s executive compensation, the Board
believes that the ability to vote “for” or “against”
a director, direct feedback to the Board, and
votes on equity incentive plans are more
effective mechanisms for stockholders to provide
the Board with feedback about executive
compensation than the proposed once-a-year
advisory vote.
ACCORDINGLY, THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE AGAINST PROPOSAL 5.
ŠProxy
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