Alaska Airlines and Horizon Air 2012 Annual Report Download - page 81

EXECUTIVE COMPENSATION
POTENTIAL PAYMENTS UPON CHANGE IN CONTROL AND TERMINATION
The Company has entered into change-in-
control agreements with each of the Named
Executive Officers. Under these agreements,
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 incentive
or the average of the executive’s 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 amount an executive would be entitled
to receive would be reduced on a pro-rata
basis for any time the executive worked
during the employment period. (The terms
“cause,” “good reason” and “change in
control” are each defined in the change-in-
control agreements.)
In November 2007, the Compensation and
Leadership Development Committee
amended its policy regarding the provision of
payments to executive officers for excise
taxes imposed under Section 280G such
that any new agreements between the
Company and its executives will not include
reimbursement for Section 280G excise
taxes. In February 2013, the Committee
further revised existing agreements to
eliminate any grandfathered provisions that
could have resulted in a reimbursement for
Section 280G excise taxes. Therefore, none
of the Company’s change-in-control
agreements provide for reimbursement for
excise taxes.
In addition, outstanding and unvested stock
options, restricted stock units and a pro-
rated number of the target number of
performance stock units would become
vested under the terms of our equity plans.
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, 2012 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
“Pension and Other Retirement Plans.”
In the event the executive’s employment
terminates by reason of death, disability or
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