Alaska Airlines and Horizon Air 2014 Annual Report Download - page 49

Compensation Discussion and Analysis
Executive Summary
This CD&A contains a discussion of the material
elements of compensation earned during 2014
by the Company’s chief executive officer, its
chief financial officer, its three highest paid
executive officers and two executive officers who
would have been among the Company’s three
highest paid executive officers if they had not
retired before the end of 2014. Specifically, the
“Named Executive Officers” include: Bradley D.
Tilden, chairman, president and chief executive
officer of Alaska Air Group; Brandon S. Pedersen,
chief financial officer of Alaska Air Group; Benito
Minicucci, chief operating officer of Alaska
Airlines; Andrew R. Harrison, executive vice
president and chief revenue officer of Alaska
Airlines1; Joseph A. Sprague, senior vice
president communications and external affairs of
Alaska Airlines2; Glenn S. Johnson, former
president of operating subsidiary Horizon Air
Industries and executive vice president of Alaska
Air Group; and Keith Loveless, former general
counsel and executive vice president of Alaska
Air Group.
2014 Company Performance Highlights
Alaska Air Group had numerous financial and
operational achievements in 2014. For the year
ended December 31, 2014, Alaska Air Group:
• posted record full-year 2014 net income,
excluding special items, of $571 million, or
$4.18 per diluted share, compared to $383
million, or $2.70 per diluted share, in 2013;
• shared $116 million (exceeding one month’s
pay for most employees) in incentive rewards
with all employees;
• achieved return on invested capital of 18.6%,
compared to 13.6% in 2013;
• repurchased 7,316,731 shares of its
common stock, or 5.3% of shares
outstanding as of January 1, in 2014,
bringing total shares repurchased since 2007
to 49 million, at a total cost of $827 million;
• experienced an increase of more than 63% in
the price of a share of common stock;
• lowered adjusted debt-to-total-capitalization
ratio to 31% as of December 31, 2014;
• became one of only two U.S. airlines with
investment grade credit ratings;
• ranked “Highest in Customer Satisfaction
Among Traditional Network Carriers” by J.D.
Power for the seventh year in a row;
• ranked “number one” in on-time performance
among North American major airlines by
FlightStats for the fifth year in a row; and
• ranked “Best U.S. Airline” by the Wall Street
Journal for the second year in a row.
Governance Highlights
• Compensation decisions are made by a
committee of directors who meet SEC and
NYSE independence standards.
• The Compensation and Leadership
Development Committee retains an
independent consultant that provides no
other services to the Company.
• There is no provision for the gross-up of
excise taxes in connection with change-in-
control severance payments.
• Change-in-control severance payments
require a double-trigger event in order to
become effective.
• The Company maintains a recoupment policy
to recover compensation from executives
under certain circumstances.
1Mr. Harrison was vice president planning and revenue
management of Alaska Airlines until May 9, 2014. He was
senior vice president planning and revenue management of
Alaska Airlines from May 9, 2014 until February 11, 2015,
when he was elected executive vice president and chief
revenue officer.
2Mr. Sprague was vice president marketing of Alaska Airlines
until May 9, 2014, when he was elected senior vice president
communications and external affairs.
ŠProxy
EXECUTIVE COMPENSATION 37