Alaska Airlines and Horizon Air 2012 Annual Report Download - page 58

EXECUTIVE COMPENSATION
no material business or personal
relationship with any member of the
Committee or with any executive officer of
Alaska Air Group; and that the Mercer
consultants do not own shares of Alaska Air
Group common stock.
Notwithstanding the Committee’s opinion
that 1) Mercer is organized to prevent a
conflict of interest, and 2) using the value of
other services provided as a one-
dimensional measure does not in itself
constitute a good test of independence,
beginning in 2013, the Committee has
retained Meridian Compensation Partners,
LLC as its independent compensation
consultant. Meridian provides no other
services to the Company.
When determining executive compensation,
the Committee considers input from a
variety of sources as well as several other
factors described below.
How the Elements of Our Executive
Compensation Program Were Selected
The Compensation and Leadership
Development Committee conducts periodic
reviews of the Company’s executive
compensation to ensure that it is structured
to satisfy the Committee’s objectives. The
Committee considers how each component
of compensation motivates executives to
help the Company achieve its performance
goals and how it promotes retention of
executives who share the Company’s
values. The compensation structure is
designed to promote initiative,
resourcefulness and teamwork by key
employees whose performance and
responsibilities directly affect the
performance of the business.
The Committee uses both fixed
compensation and variable performance-
based compensation to achieve a balanced
program that is competitive and provides
appropriate incentives. Base salaries,
benefits, perquisites, retirement benefits,
and change-in-control benefits are intended
to attract and retain highly qualified
executives and are paid out on a short-term
or current basis. Annual incentives and long-
term equity-based incentives are intended to
motivate executives to achieve specific
performance objectives.
The Committee believes that this mix of
short-term and long-term compensation
allows it to achieve dual goals of attracting
and retaining highly qualified executives and
providing meaningful performance incentives
for those executives.
Deterrents to Excessive Risk Taking
The Compensation and Leadership
Development Committee believes it has
designed the overall compensation program
in such a way as to deter excessive risk
taking, to encourage executives to focus on
the long-term success of the Company and
to align the interests of executives with
those of stockholders by:
• encompassing several different financial
and operational goals;
• overlapping the performance periods of
awards;
• incorporating short-term and long-term
performance periods of varying lengths;
• capping short-term cash incentives;
• allowing Committee discretion to reduce
amounts otherwise payable under certain
awards;
• scaling compensation to our industry;
• considering internal equity among
Company executives; and
• reflecting the current business challenges
facing the Company.
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