Alaska Airlines and Horizon Air 2013 Annual Report Download - page 55

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EXECUTIVE COMPENSATION
annual salary, far exceeding the holding
requirement set in the stock ownership
policy. The other named executive
officers are also in compliance with the
Company’s share ownership policy.
The Compensation and Leadership
Development Committee has reviewed its
compensation programs for executives and
for non-executives and believes that
compensation is structured in a way that
does not create risks that would be
reasonably likely to have a material, adverse
effect on the Company. (See the discussion
of Deterrents to Excessive Risk-Taking
below.)
Objectives of our Executive Compensation
Program
The objectives of the executive
compensation programs, as determined by
the Alaska Air Group Board Compensation
and Leadership Development Committee,
are as follows:
•to attract and retain highly qualified
executives who share the Company’s
values and are committed to its strategic
plan by designing the total compensation
package to be competitive with an
appropriate peer group;
•to motivate executives to provide
excellent leadership and achieve
Company goals by linking incentive pay
to the achievement of specific targets
that are reflected in the short-term
incentive Performance-Based Pay Plan
and the Company’s strategic plan;
•to align the interests of executives,
employees, and stockholders by tying a
large portion of our executives’ total
direct compensation (defined as base
salary, short-term incentive pay and
equity awards) to the achievement of
objective goals related to the Company’s
financial performance, safety record,
cost structure, and customer
satisfaction; and
•to provide executives with reasonable
security to motivate them to continue
employment with the Company and
achieve goals that will help the Company
remain competitive and thrive for the
long term.
Compensation Philosophy
For the Named Executive Officers, the
Compensation and Leadership Development
Committee will generally set base salary at
approximately the 25th percentile of peer
companies and provide executives an
opportunity to achieve total direct
compensation at the 50th percentile if
annual and long-term incentive targets are
reached, and to surpass the 50th percentile
if those targets are exceeded. Base salary
for other elected officers will be targeted
between the 25th and the 50th percentiles
with an opportunity to earn total direct
compensation at the 50th percentile if
annual and long-term incentives are
reached, and to surpass the 50th percentile
if those targets are exceeded.
How Executive Compensation is
Determined
The Role of the Compensation and Leadership
Development Committee and Consultants
The Compensation and Leadership
Development Committee determines and
approves the Named Executive Officers’
compensation. Beginning in February 2013,
the Committee retained Meridian
Compensation Partners, LLC. (Meridian), to
assist the Committee with its
responsibilities related to the Company’s
executive and board of director
compensation programs. In choosing
48