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WestJet Annual Report 2015 | 18
Salaries and benefits
Our compensation philosophy is designed to align corporate and personal success. We have created a compensation program
whereby a portion of our expenses are variable and are tied to our financial results. Our compensation strategy encourages
employees to become owners in WestJet, which creates a personal vested interest in our financial results and operational
accomplishments. The following table shows the major items included in salaries and benefits expense:
($ in thousands) 2015 2014 Change
Salaries and benefits plans 697,685
626,373
11.4%
Employee share purchase plan 86,776
79,942
8.5%
Share-based payment plans
17,254
18,626
(7.4%)
Total salaries and benefits 801,715
724,941
10.6%
Full-time equivalent employees (FTE) 9,211 8,698 5.9%
Salaries and benefits expense for the year ended December 31, 2015 was $801.7 million, a $76.8 million or 10.6 per cent
increase from $724.9 million in 2014. Salaries and benefits expense per ASM was 2.98 cents in 2015, representing a 5.3 per
cent increase from 2.83 cents in the prior year.
Salaries and benefits plans
Salaries and benefits are determined via a framework of job levels based on internal experience and external market data.
During the twelve months ended December 31, 2015, salaries and benefits increased by 11.4 per cent to $697.7 million, from
$626.4 million in 2014. This increase is primarily due to the 5.9 per cent increase in our total number of full-time equivalent
employees to 9,211 employees at December 31, 2015 (December 31, 2014 – 8,698 employees), and our annual market and
merit increases. In addition, 2015 includes a $5.1 million lump-sum payment associated with the new flight attendant
agreement reached in May 2015 and a $1.1 million lump-sum payment associated with the new WestJet Encore pilot
agreement reached in December 2015.
Employee share purchase plan (ESPP)
The ESPP encourages employees to become owners of WestJet and provides employees with the opportunity to significantly
enhance their earnings. Under the terms of the ESPP, WestJetters may, dependent on their employment agreement,
contribute up to a maximum of between 10 per cent and 20 per cent of their gross salary to acquire voting shares of WestJet
at the current fair market value. The contributions are matched by WestJet and are required to be held within the ESPP for a
period of one year. At December 31, 2015, approximately 84.6 per cent of our eligible active employees participated in the
ESPP, contributing an average of 14.2 per cent of their gross salaries, which remains relatively unchanged from the prior year.
Under the terms of the ESPP, we acquire voting shares on behalf of employees through open market purchases. For the year
ended December 31, 2015, our matching expense was $86.8 million, an 8.5 per cent increase from $79.9 million in 2014,
driven largely by the increased number of eligible employees compared to the prior year as well as the overall increase in
salaries, as discussed above under the heading
Salaries and benefits plan
.
Share-based payment plans
We have three equity-settled share-based payment plans whereby either stock options, restricted share units (RSUs) or
performance share units (PSUs) may be awarded to pilots, senior executives and certain non-executive employees. Our
equity-settled share-based payments are measured at the fair value of the instrument granted and recognized as
compensation expense with a corresponding increase in equity reserves on a straight-line basis over the related service period
based on the number of awards expected to vest. For the year ended December 31, 2015, share-based payment expense
totaled $17.2 million, representing a decrease of 7.4 per cent over the $18.6 million recognized in the prior year. This
decrease relates to fewer eligible executives for the majority of the year as well as a change in the number of options and
RSUs elected by pilots in the most recent grant versus the prior year. This was slightly offset by increases made to the
estimate of the number of PSU’s expected to vest in 2016.