Alaska Airlines and Horizon Air 2014 Annual Report Download - page 63
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issuance or filing of the financial results that
were subsequently restated.
Agreements Regarding Change in Control and
Termination
The Company has change-in-control agreements
with the Named Executive Officers that provide
for severance benefits if the executive’s
employment terminates under certain
circumstances in connection with a change in
control.
The Company has entered into change-in-control
agreements with these executives because it
believes that the occurrence, or potential
occurrence, of a change-in-control transaction
would create uncertainty and disruption during a
critical time for the Company. The payment of
cash severance benefits under the agreements
is triggered if two conditions are met: (1) actual
or constructive termination of employment and
(2) the consummation of a change-in-control
transaction. The Committee believes that the
Named Executive Officers should be entitled to
receive cash severance benefits only if both
conditions are met. Once the change-in-control
event occurs, the Named Executive Officer’s
severance and benefits payable under the
contract begin to diminish with time so long as
the executive’s employment continues, until
ultimate expiration of the agreement 36 months
later. None of the Company’s change-in-control
agreements provide for reimbursement of excise
taxes.
Policy with Respect to Section 162(m)
Section 162(m) of the Internal Revenue Code
generally prohibits the Company from deducting
certain compensation over $1 million paid to its
CEO and certain other executive officers unless
such compensation is based on performance
objectives meeting certain criteria or is otherwise
excluded from the limitation. The Committee
strives whenever possible to structure its
compensation plans such that they are tax-
deductible, and it believes that a substantial
portion of compensation paid under its current
program (including the annual incentives,
performance stock units and stock option grants
described above) satisfies the requirements
under Section 162(m). However, the Committee
reserves the right to design programs that
recognize a full range of performance criteria
important to its success, even where the
compensation paid under such programs may
not be deductible. For 2014, the Company
believes that no portion of its tax deduction for
qualified compensation paid to its Named
Executive Officers will be disallowed under
Section 162(m).
ŠProxy
EXECUTIVE COMPENSATION 51