Alaska Airlines and Horizon Air 2010 Annual Report Download - page 87

POTENTIAL PAYMENTS UPON CHANGE IN CONTROL AND TERMINATION
Under the change-in-control agreements in
place with the Named Executive Officers, if a
change of control occurs, a three-year
“employment period” would go into effect.
During the employment period, the executive
would be entitled to:
• receive the highest monthly salary the
executive received at any time during
the 12-month period preceding the
change in control;
• receive an annual incentive payment
equal to the higher of the executive’s
target Performance-Based Pay plan
incentive or the average of his annual
incentive payments for the three years
preceding the year in which the change
in control occurs;
• continue to accrue age and service
credit under our qualified and
non-qualified defined benefit retirement
plans; and
• participate in fringe benefit programs
that are at least as favorable as those
in which the executive was participating
prior to the change in control.
If the executive’s employment is terminated
by the Company without cause or by the
executive for “good reason” during the
employment period (or, in certain
circumstances, if such a termination occurs
prior to and in connection with a change in
control), the executive would be entitled to
receive a lump-sum payment equal to the
value of the payments and benefits identified
above that the executive would have received
had he continued to be employed for the
entire employment period. (The terms
“cause,” “good reason” and “change in
control” are each defined in the change in
control agreements.) In the event that the
executive’s benefits under the agreement are
subject to the excise tax imposed under
Section 280G of the Internal Revenue Code,
the Company will make a tax payment to the
executive so that the net amount of such
payment (after taxes) he receives is sufficient
to pay the excise tax due.
In addition, outstanding and unvested stock
options, restricted stock units and the target
number of performance stock units would
become vested under the terms of our equity
plans. In the case of awards granted under
the 2004 Long-Term Incentive Equity Plan,
unless the Board determined otherwise, the
awards would vest upon a change in control
irrespective of a termination of employment.
Under the 2008 Performance Incentive Plan,
awards will not vest unless a termination of
employment without cause or for good
reason also occurs or an acquirer does not
assume outstanding awards. Finally, the
executive’s unvested benefits under the
Supplementary Retirement Plan would vest
on a change in control whether or not the
executive’s employment was terminated. The
outstanding equity awards held by the
executives as of December 31, 2010 are
described above under “Outstanding Equity
Awards at Fiscal Year End” and each
executive’s accrued benefits under our
retirement plans are described above under
“2010 Pension Benefits.”
In addition, in the event the executive’s
employment terminates by reason of death,
disability or retirement, (i) restricted stock
units would become vested under the terms
of our equity plans, and performance stock
units would vest at the conclusion of the
performance period based on actual
performance and a proration representing
the portion of the performance period
employed; and (ii) options would be fully
vested upon death or disability, vested to
the extent they would have vested in the
next three years upon retirement, and the
options can be exercised for three years
following term of employment. Furthermore,
Mr. Ayer would be entitled to lifetime air
travel on Alaska Airlines and Horizon Air
having an approximate incremental cost to
the Company of $10,956.
ŠProxy
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