UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.__)
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Preliminary Proxy Statement | |
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JETBLUE AIRWAYS CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check | ||
No fee | ||
Fee paid previously with preliminary materials | ||
Fee computed on table | ||
MESSAGE FROM OUR CHIEF EXECUTIVE OFFICER |
JETBLUE AIRWAYS CORPORATION
27-01 Queens Plaza North
Long Island City, New York 11101
April 5, 20167, 2022
To our Stockholders:
It is our pleasureI am pleased to invite you to attend our 2016the 2022 JetBlue Airways Corporation annual meeting of stockholders, whichon Thursday, May 19, 2022 at 9 a.m., Eastern Daylight Time. This year’s annual meeting will be held at our corporate headquarters located at 27-01 Queens Plaza North, Long Island City, New York on Tuesday, May 17, 2016, beginning at 10:00 a.m. (Eastern Time). You may also attend the meetingconducted virtually, via the Internet atwww.virtualshareholdermeeting.com/jblu2016, where youlive audio webcast. Stockholders of record as of March 21, 2022 will be able to vote electronically andattend virtually, submit questions during the meeting. You will needmeeting, and vote your shares electronically during the 12-digitmeeting by logging in at www.virtualshareholdermeeting.com/jblu2022 using the 16-digit control number included within your Notice of Internet Availability of the proxy materials, on your proxy card or on the voting instructions form accompanying these proxy materialsmaterials. We recommend that you log in a few minutes before the scheduled meeting time on May 19, 2022 to attendensure you are logged in when the meeting starts.
We are holding a virtual only annual meeting virtually. meeting. We value innovation and we welcome expanded access, improved communication and cost savings for our stockholders and JetBlue afforded by the virtual format. As we have learned over the many years we have hosted virtual annual meetings, they enable increased stockholder attendance and participation from locations around the world, which provides for a more meaningful forum for our stockholders. In addition, the virtual format allows us to communicate more effectively via a pre-meeting portal that stockholders can enter by visiting www.proxyvote.com and logging in with your control number. We encourage you to log on in advance and ask any questions you may have, which we will try to address during the meeting.
The following notice of annual meeting of stockholders outlines the business to be conducted at the meeting.our 2022 virtual annual meeting of stockholders. Only stockholders of record at the close of business on March 21, 20162022 will be entitled to notice of and to vote at the virtual annual meeting. Further details about how to attend the meeting online and the business to be conducted at the annual meeting are included in the accompanying notice of annual meeting and proxy statement.
We are again providing access to our proxy materials online under the U.S. Securities and Exchange Commission’s “notice and access” rules. As in the past,a result, we are usingmailing to many of our stockholders a notice instead of a paper copy of the proxy statement and our 2021 Annual Report on Form 10-K. The Notice of Internet as our primary meansAvailability of furnishingthe proxy materials contains instructions on how to stockholders. Accordingly, mostaccess documents online. The notice also contains instructions on how stockholders will notcan receive copiesa paper copy of our proxy materials. We instead are mailing a notice with instructions for accessingmaterials, including the proxy materialsstatement, our 2021 Annual Report on Form 10-K, and a form of proxy card or voting via the Internet (the “Notice of Internet Availability”). We encourage you to review these materials and vote your shares. This delivery method allows us to conserve natural resources and reduce the cost of delivery while also meeting our obligations to you, our stockholders, to provide information relevant to your continued investment in JetBlue.instruction card. If you received the Notice of Internet Availability by mail and would like to receive a printed copy of our proxy materials, please follow the instructions for requesting such materials included in the Notice of Internet Availability.
Your vote is important to us. Regardless of whether you attend the 2022 virtual annual meeting, we hope you vote as soon as possible. You may vote via the Internet,online or by telephonephone, or, if you receive areceived paper copies of the proxy materials by mail, you may also vote by mail by following the instructions on the proxy card in the mail, by mailing the completed proxyor voting instruction card. IfAdditionally, if you attend the 2022 virtual annual meeting, you may vote your shares at the meeting. Voting online, by phone, or by mail ensures your representation at the 2022 virtual annual meeting (in person or virtually viaregardless of whether you attend the Internet) even if you previously voted your proxy. Please vote as soon as possible to ensure that your shares will be represented and counted at the annual meeting.virtual meeting on May 19, 2022.
Very truly yours,
Robin Hayes
Chief Executive Officer President and Director
On behalf of the Board of Directors of JetBlue Airways Corporation
Table of ContentsTABLE OF CONTENTS
www.jetblue.com |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT2
TO BE HELD ONMAY 19, 2022 JETBLUE AIRWAYS CORPORATION | NOTICE of Annual Meeting of Stockholders |
This notice of annual meeting, proxy statement and form of proxy for JetBlue Airways Corporation (“JetBlue” or the “Company”) are being distributed and made available on or about April 7, 2022.
JETBLUE AIRWAYS CORPORATION
27-01 Queens Plaza North
Long Island City, New York 11101TIME AND DATE
Notice of Annual Meeting of Stockholders9 a.m., Eastern Daylight Time, on Thursday, May 19, 2022
To be held on May 17, 2016
10:00 a.m. (Eastern Time)
27-01 Queens Plaza North, Long Island City, New York and via the Internetat www.virtualshareholdermeeting.com/jblu2016.PLACE
Items of BusinessOnline at www.virtualshareholdermeeting.com/jblu2022
We are holding the 2016 annual meeting of stockholders for the following purposes:ITEMS OF BUSINESS
1. | To elect the ten directors |
2. | To approve, on an advisory basis, the compensation of our named executive officers (“say-on-pay” vote); |
To ratify the selection of Ernst & Young LLP, | |
To | |
5. | |
The proxy statement describes these items in more detail. As of the date of this notice, we have not received notice of any other matters that may be properly presented at the annual meeting.ADJOURNMENTS AND POSTPONEMENTS
Record Date:
March 21, 2016
Voting:
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attendAny action on the annual meetingitems of stockholders in person or virtually via the Internet, we urge you to vote and submit your proxy in order to ensure the presence of a quorum. You have the following options for submitting your vote before the 2016 annual meeting: Internet, toll-free telephone, mobile device or mail. If you are a beneficial owner whose shares are held of record by a broker, your broker has discretionary voting authority to vote your shares only on routine matters, which at our upcoming meeting will only be the ratification of the selection of our independent registered public accounting firm (Proposal No. 2), even if the broker does not receive voting instructions from you. Non-routine matters tobusiness described above may be considered at the annual meeting areat the election of directors (Proposal No. 1), the advisory vote to approve compensation of our named executive officers (Proposal No. 3),time and the approval of amendments to our certificate of incorporation to permit the removal of directors without cause (Proposal No. 4), as described further in the proxy statement. Your broker does not have discretionary authority to vote on non-routine matters without instructions from you, in which case a “broker non-vote” will occur and your shares will not be voted on these matters.
Date These Proxy Materials Are First Being Made Available on the Internet:
Ondate specified above or about April 5, 2016
IF YOU PLAN TO ATTEND
Only stockholdersat any time and certain other permitted attendees may attend the annual meeting. Please note that space limitations make it necessarydate to limit in person attendance to stockholders and one guest. Admission towhich the annual meeting willmay be onproperly adjourned or postponed.
RECORD DATE
You are entitled to vote only if you were a first-come, first-serve basis. Registration will begin at 9:00 a.m. Either an admission ticket or proof of ownership of JetBlue stock, as well as a form of government-issued photo identification, such as a driver’s license or passport, must be presented in order to be admitted to the annual meeting. If you are a stockholder of record, your admission ticket is attached to your proxy card. Stockholders holding stock in an account at a brokerage firm, bank, broker-dealer, or other similar organization (“street name” holders) will need to bring a copy of a brokerage statement reflecting their stock ownership as of the record date. No cameras, recording equipment, electronic devices, useclose of cell phones, large bags or packages will be permitted at the annual meeting.business on March 21, 2022.
You will need your twelve digit control number to attend and vote virtually.
By order of the Board of Directors
Brandon Nelson
General Counsel and Corporate Secretary
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 17, 201619, 2022
The notice of annual meeting, the proxy statement and our fiscal 20152021 annual report to stockholderson Form 10-K are available on our website athttp://investor.jetblue.com.Additionally, in accordance with the Securities and Exchange Commission rules, you may access our proxy materials atwww.proxyvote.com.
VOTE IN ADVANCE OF If your shares are held in the name of a broker, bank or other holder of record, follow the voting instructions you receive from the holder of record to vote your shares. | BY INTERNET Vote your shares at www.proxyvote.com Have your Notice of Internet Availability or proxy card in hand for the 16 digit control number needed to vote. | BY TELEPHONE Call 1-800-690-6903 (toll-free) Have your Notice of Internet Availability or proxy card in hand for the 16 digit control number needed to vote. | BY MAIL Sign, date and return the enclosed proxy card or voting instruction form. If your shares are held in the name of a broker, bank or other holder of record, follow the voting instructions you receive from the holder of record to vote your shares. |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT3
VOTING
Your vote is very important. Regardless of whether you plan to attend the virtual annual meeting, we hope you will vote as soon as possible. You may vote your shares over the Internet or via a toll-free telephone number. If you received a paper copy of a proxy or voting instruction card by mail, you may submit your proxy or voting instruction card for the annual meeting by completing, signing, dating and returning your proxy or voting instruction card in the pre-addressed envelope provided. In addition, stockholders of record and beneficial owners will be able to vote their shares electronically during the annual meeting. For specific instructions on how to vote your shares, please refer to the section entitled Questions and Answers About the Annual Meeting and Voting beginning on page 73 of the proxy statement.
VIRTUAL MEETING ADMISSION
Stockholders of record as of March 21, 2022, will be able to participate in the virtual annual meeting by visiting our annual meeting website www.virtualshareholdermeeting.com/jblu2022. To participate in the 2022 virtual annual meeting, you will need the 16-digit control number included on your Notice of Internet Availability of the proxy materials, on your proxy card or on the instructions that accompanied your proxy materials.
The 2022 virtual annual meeting will begin promptly at 9:00 a.m., Eastern Daylight Time on May 19, 2022. Online check-in will begin at 8:50 a.m., Eastern Daylight Time. Please allow ample time for the online check-in procedures.
ANNUAL MEETING WEBSITE AND PRE-MEETING PORTAL
We believe the online format for the 2022 annual meeting allows us to communicate more effectively with you. Stockholders can access our pre-meeting portal, where you can submit questions in advance of the annual meeting, by visiting our annual meeting website at www.proxyvote.comand logging in with your 16-digit control number. Stockholders can also access copies of our proxy statement and 2021 Annual Report on Form 10-K at the annual meeting website.
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT4
THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROXY STATEMENT. THIS SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION YOU SHOULD CONSIDER. PLEASE READ THE ENTIRE PROXY STATEMENT CAREFULLY BEFORE YOU VOTE.
Annual Stockholders Meeting (see pages 3-4)
Date | Time | Place |
May 19, 2022 | 9:00 a.m. (Eastern Daylight Time) | Via the Internet at www.virtualshareholdermeeting.com/jblu2022 |
Record Date: March 21, 2022
Mailing Date: This proxy statement was first mailed to stockholders on or about April 7, 2022
Meeting Agenda: The virtual annual meeting will cover the proposals listed under voting matters and vote recommendations below, and any other business that may properly come before the meeting.
Voting: Stockholders as of the record date are entitled to vote. Each share of common stock of JetBlue Airways Corporation (“JetBlue” or the “Company”) is entitled to one vote for each director nominee and one vote for each of the proposals.
Stock Symbol: JBLU
Exchange: Nasdaq
Common Stock Outstanding as of Record Date: 320,789,028
Registrar & Transfer Agent: Computershare Trust Company, N.A.
State of Incorporation: Delaware
Corporate Headquarters: 27-01 Queens Plaza North, Long Island City, NY 11101
Corporate Website: www.jetblue.com
Investor Relations Website: http://investor.jetblue.com
Voting Matters and Vote Recommendations
Proposals | Board Recommends | Reasons for Recommendation | See Page | ||||
1. | To elect ten directors named in the proxy statement | Vote FOR | The Board of Directors (the “Board”) and its Governance and Nominating Committee believe each of the ten director nominees possesses the skills and experience to effectively monitor performance, provide oversight and advise leadership on the Company’s long-term strategy. | 27 | |||
2. | To approve, on an advisory basis, the compensation of our named executive officers (“say-on-pay” vote) | Vote FOR | Our executive compensation programs demonstrate our execution of our pay for performance philosophy. | 35 | |||
3. | To ratify the selection of Ernst & Young LLP (“EY”) as our independent registered public accounting firm for the fiscal year ending December 31, 2022 | Vote FOR | Based on the Audit Committee’s assessment of EY’s qualifications and performance, the Board and the Audit Committee believe EY’s retention for fiscal year 2022 is in the best interests of the Company. | 65 | |||
4. | To vote on a stockholder proposal to reduce the special meeting threshold, if properly presented at the meeting. | Vote AGAINST | The Company and the Board believe that the stockholder proposal is not in the best interests of the Company. | 70 |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT5
HOW DO I VOTE? | ||||||||
BY INTERNET Vote your shares at www.proxyvote.com Have your Notice of Internet Availability or proxy card in hand for the 16 digit control number needed to vote. | BY TELEPHONE Call 1-800-690-6903 (toll-free) Have your Notice of Internet Availability or proxy card in hand for the 16 digit control number needed to vote. | BY MAIL Sign, date and return the enclosed proxy card or voting instruction form. If your shares are held in the name of a broker, bank or other holder of record, follow the voting instructions you receive from the holder of record to vote your shares. | AT THE MEETING Vote online during the meeting See p. 73 “Questions and Answers About the Annual Meeting” for details about voting at the meeting. |
Our Director Nominees
Other Public Boards | Committee Memberships* | |||||||||||||||||||||
Name | Age | Director since | Independent | Audit | Comp | Airline Safety | G&N | ESG Subcommittee | Finance | Technology | ||||||||||||
B. Ben Baldanza | 60 | 2018 | Y | 1 | ||||||||||||||||||
Peter Boneparth Independent Board Chair | 62 | 2008 | Y | 1 | ||||||||||||||||||
Monte Ford | 62 | 2021 | Y | 2 | ||||||||||||||||||
Robin Hayes | 55 | 2015 | N | 1 | ||||||||||||||||||
Ellen Jewett | 63 | 2011 | Y | 1 | ||||||||||||||||||
Robert Leduc | 66 | 2020 | Y | 2 | ||||||||||||||||||
Teri McClure | 58 | 2019 | Y | 3 | ||||||||||||||||||
Sarah Robb O’Hagan | 49 | 2018 | Y | – | ||||||||||||||||||
Vivek Sharma | 47 | 2019 | Y | – | ||||||||||||||||||
Thomas Winkelmann | 62 | 2013 | Y | – |
Chair | |
Member | |
Financial Expert | |
* | Memberships as of the 2022 annual meeting. |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT6
How Did We Do in 2021?
2021 Financial and Operational Performance
The Delta and Omicron variants of the COVID-19 pandemic significantly impacted our expectation of the recovery of our business in 2021. While we experienced a strong recovery over the summer peak periods, the two variants caused unexpected decreases in demand for air travel during the fall and winter periods. While we continue to monitor our liquidity level, we remain focused on strengthening our balance sheet for our continued recovery.
Our 2021 full year results were as follows:
(1) | Excludes special items. |
(2) | Liquidity is defined as cash, cash equivalents, and short-term investments. |
* | Non-GAAP financial measure. |
Please refer to our “Regulation G Reconciliation of Non-GAAP Financial Measures” in Appendix A for more information on non-GAAP measures.
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 7
2016 Proxy Statement – Summary2021 Highlights
This summaryFor JetBlue, 2021 was a challenging year where we saw summer peak demand return to near 2019 levels, despite the ongoing COVID-19 pandemic, including the Delta and Omicron spikes in case counts. We continue to exercise our “Safety from the Ground Up” program, but remain cautiously optimistic that 2022 will be a continuing path toward recovery. 2021 had several highlights information contained elsewhere in this Proxy Statement. This summary does not contain all ofdespite the information you should consider. You should read the entire Proxy Statement carefully before voting.challenging industry environment.
GENERAL INFORMATIONCustomers and Crewmembers
(see pages 6-9)Although we believe the COVID-19 pandemic is becoming endemic, in 2021 we continued to take steps to prioritize the safety of our customers and crewmembers, including the following:
■ | Provided enhanced flexibility to our customers by waiving change and cancel fees (except for customers who booked Blue Basic fares), while also extending the expiration date of travel credits. |
■ | Developed the JET (JetBlue Emerging Talent) Program, which provides a pathway for operational crewmembers to corporate positions, and the Gateway College, which provides crewmembers the opportunity to learn to be a pilot or licensed technician. |
In 2021, we also introduced several new enhancements for our customers, including the following:
■ | Along with American Airlines, launched the Northeast Alliance in February 2021, creating a viable third competitor in the Northeast region, which brings added capacity, seamless connectivity between American and us, and more choices for customers across the Northeast. |
■ | For new aircraft, updated our award-winning Mint® seats to provide direct aisle access to our customers in the Mint experience. |
■ | Introduced transatlantic service from New |
■ | Created a new fare class, Blue Basic, that allows customers to select the products or services they need or value when they travel, without having to pay for the things they do not need or value. |
Our Business
Some of the 2021 highlights include:
■ | Inaugurated the all new Airbus A220 aircraft in April 2021, which has lower fuel burn per seat compared to our Embraer E190 aircraft. |
■ | Generated revenue close to 2019 levels during the summer, including turning a profit in July and |
Preparing for Recovery
As the COVID-19 pandemic continues to evolve, in 2021 we took a number of steps to position the Company for recovery, such as:
■ | Managing our costs for 2022 and beyond, returning to our roots as a low cost carrier. |
■ | Strengthening our balance sheet by maintaining a healthy cash balance and by paying down a significant amount of debt. |
■ | Continuing to build-out our Northeast Alliance with American which will be the largest expansion of our network in the past 15 years, with nine new JetBlue BlueCities and 32 new routes. |
Record Date:JETBLUE AIRWAYS CORPORATION March 21, 2016 | 2022 PROXY STATEMENT 8
Stock Symbol: JBLU
Exchange: NASDAQ
Common Stock Outstanding as of Record Date: 322,046,556
Registrar & Transfer Agent: Computershare
State of Incorporation: Delaware
Corporate Headquarters: 27-01 Queens Plaza North, Long Island City, NY 11101
Corporate Website: www.jetblue.com
Investor Relations Website: http://investor.jetblue.com
2017 Annual Meeting Deadline for Stockholder Proposals:December 6, 2016
EXECUTIVE COMPENSATION
(see pages 24 -49)
CEO: Robin Hayes (age: 49, tenure as CEO 1 years)*
CEO 2015 Total Direct Compensation: $3,276,159
Employment Agreement: Yes (through 2018)
Clawback Policy: Yes
Tax Gross Up Policy: No new agreements for senior management going forward
Stock Ownership Guidelines: 3x base salary for CEO, 1x base salary for other named executive officers
CORPORATE GOVERNANCE PRACTICES
Director Nominees: 10
Director Term: One year
Election Standard for Director Election: Majority of votes cast (abstentions are not counted as votes cast)
Supermajority Vote Requirements: No
Board Meetings in 2015: 6
Standing Board Committees (Meetings in 2015):
ITEMS OF BUSINESS:
* Mr. Hayes became our Chief Executive Officer effective February 16, 2015.
JETBLUE’S APPROACH TO ENVIRONMENTAL, SOCIAL AND GOVERNANCE MATTERSPROXY STATEMENT 2016 ANNUAL MEETING OF STOCKHOLDERS
JetBlue’s mission is to Inspire Humanity. We strongly believe that strong corporate governance, informed by engagement directly with our stakeholders, creates the foundation that allows us to pursue our mission.
At JetBlue, we strive to conduct our business in ways that are principled, transparent, and accountable to key stakeholders. We have safeguarded our values of Safety, Caring, Integrity, Passion and Fun since our first flight.
We are making this proxy statement availablebelieve pursuing our mission generates long-term value. We focus our efforts where we can have the most positive impact on our business and the communities we serve, including issues related to you on or about April 5, 2015 in connection withenvironmental sustainability, youth and education, the solicitation of proxies by our board of directors (the “Board of Directors” or the “Board”) for the JetBlue Airways Corporation 2016 annual meeting of stockholders. At JetBluecommunity, culture and in this proxy statement, we refer to our employees as crewmembers. Also in this proxy statement, we sometimes refer to JetBlue as the “Company,” “we” or “us,” and to the 2016 annual meeting of stockholders as the “annual meeting.” When we refer to the Company’s fiscal year, we mean the annual period ended or ending on December 31human capital. As a reflection of the stated year. Informationimportance of these matters, our Governance and Nominating Committee oversees responsibility for ESG initiatives and reporting. We have more information about our efforts in this proxy statement for 2015 generally refers tothese areas on our 2015 fiscal year, which was from January 1 through December 31, 2015.
website at QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTINGhttp://blueir.investproductions.com/investor-relations/financial-information/reports/annual-reports.
What is the record date?Governance
The record date (the “Record Date”) forAt the annual meeting is March 21, 2016. Onend of 2019, our Board formed an ESG Subcommittee to the Record Date, there were 322,046,556 sharesGovernance and Nominating Committee to advise the Board on ESG matters and provide advice to management as well. In 2020, the ESG Subcommittee worked with the Board and leadership to develop a framework as to where the various pieces of our common stock outstanding and there were no outstanding shares of any other class of stock.ESG lie within the Board’s governance framework. Throughout 2021, we continued to refine these concepts.
Who is entitled to vote?
Only stockholdersBoard ESG Areas of record at the close of business on the Record Date are entitled to vote at the annual meeting and any postponement(s) or adjournments thereof. Holders of shares of common stock as of the Record Date are entitled to cast one vote per share on all matters.
What is the difference between holding shares as a holder of record and as a beneficial owner?
Most of our stockholders hold their shares in an account at a brokerage firm, bank, broker dealer or other nominee holder, rather than holding share certificates in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially.
Stockholder of Record
If on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare Trust Company, N.A., then you are a stockholder of record (also known as a “registered holder”) who may vote at the annual meeting. As the stockholder of record, you have the right to direct the voting of your shares by returning the enclosed proxy card to us or to vote in person or virtually at the annual meeting. Whether or not you plan to attend the annual meeting in person or virtually, please complete, date and sign the enclosed proxy card and provide specific voting instructions to ensure that your shares will be voted at the annual meeting.
Beneficial Owner
If on the Record Date, your shares were held in an account at a brokerage firm, bank, broker-dealer or other similar organization, you are considered the beneficial owner of shares held “in street name,” and the Notice is being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the annual meeting. As the beneficial owner, you have the right to instruct your nominee holder on how to vote your shares and to attend the annual meeting. However, since you are not the stockholder of record, you may not vote these shares in person virtually at the annual meeting unless you receive a valid proxy from your brokerage firm, bank, broker-dealer or other nominee holder. To obtain a valid proxy, you must make a special request of your brokerage firm, bank, broker-dealer or other nominee holder. If you do not make this request, you can still vote by completing your proxy card and delivering the proxy card to your nominee holder; however, you will not be able to vote online at the annual meeting.Risk Oversight
Full Board Responsibilities | ||
Awareness of the JetBlue ESG strategy | ||
Ensure ESG competency and fluency of Board |
Committee | ||||||
Areas of Risk Oversight | ESG | Governance & Nominating | Audit | Compensation | Airline Safety | |
Governance | ESG risk assessment and response | |||||
Executive compensation tied to ESG metrics | ||||||
Supply Chain | Supplier engagement on ESG | |||||
Human Capital | Workforce diversity, equity and inclusion | |||||
Integrate ESG competency within executive succession planning | ||||||
Talent management and leadership development | ||||||
Physical & Reputational | Environmental management including emissions and waste management | |||||
Regulatory | Risks and opportunities relating to ESG regulations and reporting |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 9
How do I vote?Environmental Sustainability Initiatives and Reporting
Registered holdersWe believe it is our responsibility to manage our impact on the environment and communities around us and to explore the associated environmental and social risks and opportunities that may vote:
If your shares are heldaffect our business. JetBlue has been consistently recognized for its sustainability and ESG performance. In March 2022, Fast Company included JetBlue within its list of the 10 most innovative companies in the nametransportation industry due to our work in SAF and decarbonization. In 2021, Cowen recognized JetBlue as one of a broker, bank or other holder of record, followits best ESG investment ideas when we achieved the voting instructions you receivehighest industry ESG score from Truevalue Labs, which we maintained throughout the holder of record to vote your shares.year.
Why did I receiveTo execute this work, we employ a Notice indedicated Sustainability and ESG leader to oversee the mail regarding the Internet availabilitysustainability efforts of proxy materials insteadour entire airline and keep our leadership team and Board aware of a full set of proxy materials?climate-related risks and opportunities when developing targets, strategy, performance, and budgets. Our Sustainability and ESG group leads climate change risk and opportunity assessment efforts and performs risk assessments related to possible emissions regulations on an on-going basis.
Pursuant to rules adopted by the Securities and Exchange Commission (“SEC”), the Company has elected to provide access to its proxy materials over the Internet. Accordingly, the Company is sending such NoticeIn late 2019, our Board formed an ESG Subcommittee to the Company’s stockholdersGovernance and Nominating Committee to ensure the Board is aware of recordJetBlue’s strategy to address climate related risks and beneficial owners. All stockholders willopportunities, among other ESG matters. In 2021, the ESG Subcommittee met three times to discuss ESG topics most material to JetBlue during the year.
As part of our commitment to transparency, we have shared our social and environmental efforts and impacts publicly since 2006. In 2016, we moved our standardized reporting to follow Sustainability Accounting Standards Board (“SASB”) guidelines. These standards identify material sustainability factors that are likely to impact financial performance. Designed to be cost-effective for companies and decision-useful for investors, SASB provides both parties the ability to accesscompare and benchmark performance. In 2017, we were among the proxy materialsfirst companies to introduce voluntary climate-related disclosures recommended by the Task Force on Climate-related Financial Disclosures (“TCFD”). The TCFD standards seek to improve market understanding and analysis of climate-related risks and opportunities by developing disclosure recommendations that are useful to stakeholders in understanding material risks. In 2021, we reported our first climate risk scenario analysis, which offered an estimate of how climate-related risks and opportunities may impact JetBlue over time. We expect to continue to evolve our reporting and target setting activities to provide what our investors are asking for –including submitting a near term Science Based Target aligned to the SBTI’s strategy guidance, and voluntarily report increasingly granular and specific ESG metrics and targets.
To JetBlue, sustainability means leading the way to a lower-carbon operation, preparing our business today for a changed future.
In 2020,JetBlue became the first U.S. airline to voluntarily offset all of the carbon dioxide emissions for all our domestic flights. In 2021 we maintained our domestic neutrality, and extended it to cover all of our transatlantic flights to London as well. All of JetBlue’s purchased carbon offsets are audited, verified and retired on the website referredairline’s behalf, and projects are sourced from three expert carbon offsetting partners.
JetBlue, however, views carbon offsetting as a bridge as we build up lower-carbon technologies and innovations. In late 2021, JetBlue, along with our venture capital subsidiary JetBlue Technology Ventures (“JTV”), formed the Aviation Climate Taskforce with nine other airlines and the Boston Consulting Group. Together, we plan to invest in and facilitate the development of emerging technologies to decarbonize aviation. This work supplements JTV’s investments in technologies that will help decarbonize aviation, including Universal Hydrogen and Joby Aviation.
JetBlue is also investing in sustainable aviation fuel (“SAF”) which will play a critical role in the Notice or requestaviation industry’s decarbonization. Throughout 2021 we took regular delivery of SAF from two partners: Neste out of San Francisco International Airport (SFO) and World Energy via World Fuel Services in Los Angeles International Airport (LAX). In 2021 we also announced a new SAF offtake agreement with SG Preston, in the Northeast. This deal is expected to receivedeliver at least 670 million gallons of SAF over 10 years and we believe it will drive substantial progress toward JetBlue’s long-term SAF targets. Enabled by our ongoing and forthcoming offtake agreements with various business partners, we believe we are well positioned to achieve our goal of converting 10% of our jet fuel usage to SAF on a printed setblended basis by 2030.
As we look forward, we have committed to achieve net-zero carbon emissions across all our operations by 2040, ten years ahead of the proxy materials. Instructions on howParis Agreement and the national target set by the FAA’s 2021 Aviation Climate Action Plan. We plan to accessreach net-zero by continuously increasing the proxy materials overfuel efficiency of our aircraft and operations, expanding the Internet oruse of sustainable aviation fuels, embracing and supporting alternative energy aircraft and technology, and offsetting any remaining and unavoidable emissions.
We also are committed to request a printed copy may be found inaddressing the Notice. In addition, stockholders may requestemission of greenhouse gases (“GHGs”) from our flights and we strive to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. The Board of Directors encourages youempower and inspire our customers and crewmembers to take advantage ofmeasures such as offsetting GHG emissions when they fly. Communities and their environments are inherently connected which is why we include environmental programs in our community engagement efforts. GreenUp is JetBlue’s annual campaign to support local environmental nonprofits and create customer engagement around preserving the availability of the proxy materials on the Internet.environment.
What does it mean if I receive more than one proxy card?JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 10
If your shares are registered differently or are held in more than one account, you will receive more than one proxy card. Please sign and return all proxy cards to ensure that all of your shares are voted.
How will my shares be voted at the annual meeting if I do not specify on the proxy card how I want my shares to be voted?
If you are the record holder of your shares and do not specify on your proxy card (or when giving your proxy by telephone or the Internet) how you want to vote your shares, your shares will be voted:
If you are a beneficial owner of shares and do not specify how you want to vote, your shares may not be voted by the record holder and will not be considered as present and entitled to vote on any matter to be considered at the annual meeting, except with respect to the ratification of the Company’s independent auditors. If your shares are held of record by a brokerage firm bank, broker-dealer, or other nominee, we urge you to give instructions to your brokerage firm bank, broker-dealer, or other nominee as to how you wish your shares to be voted so you may participate in the stockholder voting on these important matters.
What can I do if I change my mind after I vote?
Any proxy may be revoked at any time prior to its exercise at the annual meeting. A stockholder who delivers an executed proxy pursuant to this solicitation may revoke it at any time before it is exercised by (i) executing and delivering a later-dated proxy card to our Corporate Secretary prior to the annual meeting; (ii) delivering written notice of revocation of the proxy to our Corporate Secretary prior to the annual meeting; (iii) voting again by telephone, by mobile device or over the Internet prior to 11:59 p.m., Eastern Time, on May 16, 2016; or (iv) attending and voting online at the annual meeting. Attendance at the annual meeting, in and of itself, will not constitute a revocation of a proxy. If you hold your shares through a brokerage firm, bank, broker-dealer or other nominee, you may revoke any prior voting instructions by contacting that firm or by voting in person via legal proxy at the annual meeting.
What is a quorum?ESG Targets
To carry ondemonstrate our focus and commitment toward advancing our ESG performance, in 2021 we set ambitious targets across the ESG areas we consider most material to our business — some of the annual meeting, a minimum number of shares, constituting a quorum, must be present. The quorum for the annual meeting is a majority of the outstanding common stock of the Company represented in person or by proxy. Abstentions and “broker non-votes” (which are explained below) are counted as present to determine whether there is a quorum for the annual meeting.which we have already accomplished.
Environmental | Social | Governance | ||
Emissions excluding offsets ■ Reduce aircraft emissions 25% per available seat mile (ASM) by 2030 from 2015 levels, excluding offsets Emissions including offsets ■ Achieve net zero carbon emissions by 2040, including offsets Renewable Energy ■ 10% of fuel to be from blended SAF by 2030 ■ 40% of 3 most common owned ground service equipment (GSE) vehicle types to be converted to electric (eGSE) by 2025, and 50% by 2030 Waste ■ Maintain at least an 80% recycling rate for audited domestic flights ■ Eliminate single use plastics within service ware where possible. Where not possible, ensure plastic is recyclable | Leadership Diversity ■ Double our race and ethnic minority representation at the officer and director level, from 12.5% to 25% by 2025 ■ Increase our female representation at the officer and director level, from 32% to 40% by the end of 2025 Business Partner Engagement ■ Engage with 80% of top active business partners by spend on ESG principles within the Business Partner Code of Conduct by 2023 | Board ESG Oversight ■ An ESG subcommittee of the Board, consisting of at least 3 members, meets 3 times a year by 2021 ■ Board-level accountability and areas of ESG oversight published by 2021 Board ESG Fluency ■ Integrate ESG and DEI into Board member selection process by 2021 Executive Compensation ■ Establish ESG goals tied to senior leadership compensation by 2021 |
Social Impact Reporting
What are broker non-votes?JetBlue produces an annual social impact report using Global Reporting Initiative (“GRI”) Standards, the most widely adopted voluntary corporate responsibility reporting framework in the world. Through this report, JetBlue focuses on its corporate responsibility and impact through transparent reporting on its community partnerships; corporate giving; diversity, equity and inclusion; safety; and employment and relevant human resources data. The combination of GRI’s standards with social impact reporting provides customers, crewmembers, business and community partners and investors with context about JetBlue’s social impact strategy in the communities we serve.
A “broker non-vote” occurs when a beneficial owner of shares held by a broker, bank or other nominee fails to provide the record holder with voting instructions on any non-routine matters brought to a vote at the annual meeting. “Broker non-votes” are not counted as votes for or against the proposal in question or as abstentions. If you are a beneficial owner whose shares are held of record by a broker, your broker has discretionary voting authority to vote your shares only on routine matters, such as the ratification of selection of our independent registered public accounting firm (Proposal No. 2), even if the broker does not receive voting instructions from you. Non-routine matters include the election of directors (Proposal No. 1), the advisory vote to approve the compensation of our named executive officers (Proposal No. 3),Diversity, Equity and approval of amendments to amend our certificate of incorporation to permit the removal of directors without cause (Proposal No. 4). Your broker does not have discretionary authority to vote on non-routine matters without instructions from you, in which case a “broker non-vote” will occur and your shares will not be voted on these matters.
What vote is required to adopt each of the proposals?
Proposal 1: Election of DirectorsInclusion
We cultivate and measure the diversity of our workforce and leadership teams, recognizing that diversity supports enhanced organizational decision-making. Thematically, diversity, equity and inclusion falls under the social focus of ESG. The work itself is done cross functionally over multiple teams, including through our People Department (which is how we refer to human resources),Strategic Sourcing Department and Brand/Marketing Department. We have adopted majority voting proceduresongoing programs to encourage a diverse talent pipeline specifically for the election of directors in uncontested elections. If a quorum is present, a nominee for election to a position on the Board of Directors will be elected by a majority of the votes cast at the meeting (that is, the number of shares voted “for” the nominee must exceed the number of shares voted “against” the nominee). However, a director who fails to receive the required number of votes at the next annual meeting of stockholders at which he or she faces reelection is required to tender his or her resignation to the Board and the Board may either accept the resignation or disclose its reasons for not doing so in a report filed with the SEC within 90 days of the certification of election results. As discussed above, if your broker holds shares in your name and delivers this proxy statement to you, the broker is not entitled to vote your shares on this proposal without your instructions. Abstentions and broker non-votes are not countedtechnical roles, such as votes cast.pilots.
Proposal 2: RatificationWe are taking measured and organic steps toward building a leadership pipeline that is reflective of Selection of Independent Registered Public Accounting Firmour crewmember and customer base.
This philosophy also extends to our Board. Our Board continued to bring in new perspectives in 2021. The affirmative vote of a majority ofBoard immediately following the votes represented at the annual meeting, either in person or by proxy, and entitled to vote on this proposal, is required to ratify the selection of the independent registered public accounting firm. Abstentions will be counted as present for the purposes of this vote, and thereforeASM assuming all nominees are elected, will have the same effect as a vote against the proposal. Broker non-votes will be counted as presentthree female directors out of ten directors and are entitled to vote on the proposal.three ethnically/racially diverse directors.
Proposal 3: Approval, on an Advisory Basis, of the Compensation of Our Named Executive OfficersWe are committed to fighting against racial injustices and eliminating barriers through our Diversity, Equity and Inclusion strategy designed to support underrepresentative communities.
The affirmative vote of a majority of the votes represented at the annual meeting, either in person or by proxy, and entitled to vote on this proposal, is required to approve the advisory vote on executive compensation. The results of this vote are not binding on the Board, whether or not the proposal is passed. In evaluating the stockholder vote on an advisory proposal, the Board will consider the voting results in their entirety. Abstentions will be counted as present for the purposes of this vote, and therefore will have the same effect as a vote against this proposal. Broker non-votes will not be counted as present and are not entitled to vote on the proposal.JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 11
Proposal 4: Approval of Amendments to Our Certificate of Incorporation to Permit the Removal of Directors Without Cause
Approval of Proposal 4, the amendment of our certificate of incorporation to permit the removal of directors without cause, requires the affirmative vote of a majority of the votes represented at the annual meeting, either in person or by proxy, and entitled to vote on this proposal. Abstentions will be counted as present for the purposes of this vote, and therefore will have the same effect as a vote against the proposal. Broker non-votes will not be counted as present and are not entitled to vote on the proposal.
How do foreign owners vote?Some of our efforts in this context include:
■ | Developing DEI training unique to JetBlue crewmembers around cultural compentency, bias and sensitivity. |
■ | Reassessing our diversity recruitment iniatives to ensure a diverse slate of candidates during the interview and hiring process. |
■ | Expanding opportunities for minority and women-owned business partners. |
■ | Continuing our work with our Ops to Support Center Pathways program and Gateway Direct programs to create opportunities for our crewmembers to develop and grow at JetBlue. |
■ | Continung our dedication to the growth and development of our Crewmember Resource Groups as stewards of our culture. |
■ | Investing in students from underrepresented communities through the JetBlue Foundation to help increase access, reduce the barriers to entry and create educational and employment opportunities in the aviation industry. |
Through JetBlue’s products, services, branded words and actions, we strive to build emotional connections and make diverse crewmember and customer segments feel psychologically safe, included and represented.
To complyCorporate Social Responsibility
JetBlue For Good
JetBlue For Good is JetBlue’s platform for social impact and corporate responsibility. Giving back is part of JetBlue’s DNA and is core to its mission of inspiring humanity. Centered around volunteerism and service, JetBlue For Good focuses on the areas that are most important to the airline’s customers and crewmembers – community, youth/education and the environment. Combining JetBlue’s corporate efforts with restrictions imposedits customers’ and crewmembers’ passions, the common theme is Good – JetBlue For Good.
Youth/Education, Environment & Community-Focused Initiatives
JetBlue’s core programs and partnerships directly impact the areas where its customers and crewmembers live and work by federal law on foreign ownershipenhancing education and providing access to those that are traditionally underserved. Signature programs include the award-winning Soar with Reading initiative, which provides books to children who need them most; GreenUp which allows us to activate projects throughout the network to help support our blue and green spaces and Swing For Good, which raises funds for education and youth focused non-profits. JetBlue crewmembers have logged approximately 1.3 million volunteer hours since 2011.
Political Contributions
Recognizing the interest of U.S. airlines, our Amendedstockholders in establishing greater transparency about corporate political contributions, we disclose any political contributions to support candidates and Restated Certificate of Incorporationballot measures and our Amended and Restated Bylaws (the “Bylaws”) restrict foreign ownership of shareshow certain of our common stock. The restrictions imposed by federal law currently require that no more than 25%trade association membership dues are used for political activities in our annual SASB and TCFD reporting. As part of our voting stock be owned or controlled, directly or indirectly, by persons who are not United States citizens. Our Bylaws provide that no shares of our common stock may be voted by orcommitment to transparency, we developed the Political Contributions Policy, which discusses how we engage in the political process. The policy is available at the direction of non-citizens unless such shares are registeredinvestor relations page on a separate stock record, which we refer to as the “foreign stock record.” Our Bylaws further provide that no shares of our common stock will be registered on the foreign stock record if the amount so registered would exceed the foreign ownership restrictions imposed by federal law. Any holder of JetBlue common stock who is not a United States citizen and has not registered its shares on the foreign stock record maintained by us is not be permitted to vote its shares at the annual meeting. The enclosed proxy card contains a certification that by signing the proxy card or voting by telephone or electronically, the stockholder certifies that such stockholder is a United States citizen as that term is defined in the Federal Aviation Act or that the shares represented by the proxy card have been registered on our foreign stock record. As of the Record Date for the annual meeting, shares representing less than 25% of our total outstanding voting stock are registered on the foreign stock record.www.jetblue.com.
Under Section 40102(a)(15) of the Federal Aviation Act, the term “citizen of the United States” is defined as: (i) an individual who is a citizen of the United States, (ii) a partnership each of whose partners is an individual who is a citizen of the United States, or (iii) a corporation or association organized under the laws of the United States or a state, the District of Columbia or a territory or possession of the United States of which the president and at least two-thirds of the Board of Directors and other managing officers are citizens of the United States, and in which at least 75% of the voting interest is owned or controlled by persons that are citizens of the United States.
Who pays for soliciting the proxies?
We pay for the cost of soliciting the proxies. We have retained Morrow & Co., LLC, 470 West Avenue, Stamford, CT 06902, a professional soliciting organization, to assist in soliciting proxies from brokerage firms, custodians and other fiduciaries. The Company expects the fees for Morrow & Co., LLC to be approximately $7,500 plus expenses. In addition, our directors, officers and associates may, without additional compensation, also solicit proxies by mail, telephone, personal contact, facsimile email or through similar methods. We will, upon request, reimburse brokerage firms and others for their reasonable expenses in forwarding solicitation material to the beneficial owners of our stock.
Will the annual meeting be webcast?
Yes. In addition to attending in person, you may attend the meeting virtually via the Internet atwww.virtualshareholdermeeting.com/jblu2016, where you will be able to vote electronically and submit questions during the meeting. The audio broadcast will be archived on that website for at least 120 days.
What is “householding” and how does it affect me?Human Trafficking
The SEC has adopted rulesissue of human trafficking is one that permit companieshits close to home in our industry. Victims of this crime are often hidden in plain sight, including on aircraft and intermediaries such as brokersin airports. We work with the U.S. Department of Homeland Security and the U.S. Department of Transportation to satisfy delivery requirements for proxy statements with respectsupport the Blue Lightning initiative, a program aimed at stopping human trafficking. We educate our crewmembers on the issue and how to two or more stockholders sharing the same address by deliveringreport suspicious activities. We established a single proxy statement addressedcross-functional team working group to those stockholders. This process, which is commonly referredassess what additional policies and practices we can use to as “householding,” potentially provides extra convenience for stockholders and cost savings for companies. We and some brokers household proxy materials, delivering a single proxy statement or annual report to multiple stockholders sharing an address, unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker or us that they or we will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement or annual report, please notify us by sending a written request to Investor Relations, JetBlue Airways Corporation, 27-01 Queens Plaza North, Long Island City, New York 11101 or by calling us at (718) 286-7900. You may also notify us to request delivery of a single copy of our annual report or proxy statement if you currently share an address with another stockholder and are receiving multiple copies of our annual report or proxy statement.help combat this issue.
Is there a list of stockholders entitled to vote at the annual meeting?JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 12
The names of stockholders entitled to vote at the annual meeting will be available at the annual meeting and for ten days prior to the annual meeting for any purpose germane to the annual meeting, between the hours of 9:00 a.m. and 4:30 p.m. (Eastern Time), at our principal executive offices at 27-01 Queens Plaza North, Long Island City, New York 11101, by contacting our General Counsel, James Hnat.
When will the voting results be announced?
We will announce preliminary voting results at the annual meeting. We will report final results on our website atwww.jetblue.com and in a filing with the SEC on a Form 8-K.
There are currently eleven membersJetBlue’s mission is to Inspire Humanity. We strongly believe that strong corporate governance that is informed by engaging directly with our stakeholders creates the foundation that allows us to pursue our mission. Corporate governance at JetBlue is designed to promote the long-term interests of our Board of Directors. Assuming the election of all nominees, immediately following the annual meeting the size of our Board of Directors will be set at ten directors. Mr. Jens Bischof, a director since 2011, is not standing for re-election in May. The Company thanks Mr. Bischof for his exemplary service to JetBlue. As discussed in greater detail below, the Board is recommending that you reelect all of the nominees for a one-year term.stockholders, maintain internal checks and balances, strengthen leadership accountability, and foster responsible decision making and accountability.
Based on the recommendation of the Corporate Governance and Nominating Committee, the Board of Directors has nominated Peter Boneparth, David Checketts, Stephan Gemkow, Virginia Gambale, Robin Hayes, Ellen Jewett, Stanley McChrystal, Joel Peterson, Frank Sica and Thomas Winkelmann, each a current director of the Company, each to be elected as a director of the Company to serve on our Board of Directors until the 2017 annual meeting of stockholders or until such time as until their respective successors have been duly elected and qualified or until his or her prior death, disability, resignation, retirement, disqualification or removal from office.
We do not know of any reason why any nominee named in this proxy statement would be unable or unwilling to serve as a director if elected. If any nominee is unable or unwilling to serve as a director if elected, the shares of common stock represented by all valid proxies will be voted at the annual meeting for the election of such substitute as the Board may recommend. The Board may reduce the number of directors to eliminate the vacancy or the Board may fill the vacancy at a later date after selecting an appropriate nominee. If a quorum is present, a nominee for election to a position on the Board of Directors will be elected by a majority of the votes cast at the meeting (that is, the number of shares voted “for” the nominee must exceed the number of shares voted “against” the nominee). Abstentions and broker non-votes are not counted as votes cast. However, a director who fails to receive the required number of votes at the next annual meeting of stockholders at which he or she faces reelection is required to tender his or her resignation to the Board and the Board may either accept the resignation or disclose its reasons for not doing so in a report filed with the SEC within 90 days of the certification of election results.Corporate Governance
The Board of Directors recommends that stockholders vote “FOR” each nominee.
Nominees for Director
Independent | Standing Committee | ||||
Name | Age | Position(s) with the Company | Director Since | (Y/N) | Memberships |
Peter Boneparth | 56 | Director | 2008 | Y | Audit |
David Checketts | 60 | Director | 2000 | Y | Compensation |
Virginia Gambale | 56 | Director | 2006 | Y | Audit, Compensation |
Stephan Gemkow | 56 | Director | 2008 | Y | Compensation |
Robin Hayes | 49 | President, CEO & Director | 2015 | N | Airline Safety |
Ellen Jewett | 57 | Director | 2011 | Y | Audit |
Stanley McChrystal | 61 | Director | 2010 | Y | Airline Safety, G&N |
Joel Peterson | 68 | Chairman of the Board | 1999 | Y | G&N |
Frank Sica | 65 | Vice Chairman of the Board | 1998 | Y | G&N |
Thomas Winkelmann | 56 | Director | 2013 | Y | Airline Safety |
Director QualificationsProvides Operational and Biographical Information
Our Board is composed of a diverse group of leaders in their respective fields. Many of the current directors have leadership experience at major domestic and international companies with operations inside and outside the United States, as well as experience on other companies’ boards, which provides an understanding of different business processes, challenges and strategies. Other directors have experience at academic institutions or from the U.S. military which brings unique perspectives to the Board. Further, each of the Company’s directors has other specific qualifications that make them valuable members of our Board, such as financial literacy, talent and brand management, customer service experience and crewmember relations, as well as other experience that provides insight into issues we face.Strategic Oversight
The Board reviews diversity of viewpoints, background, experience, accomplishments, educationoversees leadership, business affairs and skills when evaluating nominees. Theintegrity, works with leadership to determine the Company’s mission and long-term strategy, oversees risk management, performs the annual CEO evaluation, oversees CEO succession planning, and oversees internal controls over financial reporting and the external audit function. In addition, Board believes this diversity is demonstrated incommittees focus on the range of experiences, attributes and skills of the current members of the Board. The Board believes that such diversity is important because it provides varied perspectives, which promotes active and constructive discussion among Board members and between the Board and management, resulting in more effective oversight of management’s formulation and implementation of strategic initiatives. The Board believes that directors should contribute positively to the existing chemistry and collaborative culture among the Board members. The Board also believes that its members should possess a commitment to the success of the Company, proven leadership qualities, sound judgment and a willingness to engage in constructive debate. While we have no formal policy on director diversity, the Corporate Governance and Nominating Committee seeks to attract and retain directors who have these qualities to achieve an ultimate goal of a well-rounded Board that functions well as a team, something which is critically important to thefollowing:
Financial reporting; internal and external audit; cybersecurity, including in support of the Board’s role in oversight of cybersecurity risks; certain other risks not otherwise assigned; legal, regulatory, political contribution and PAC matters; compliance and business continuity matters | ||
Compensation | Compensation and benefits; succession planning at the officer level, including the CEO (together with the Governance and Nominating Committee); human capital management | |
Governance and Nominating | Board effectiveness; identifying director nominees; director qualifications; onboarding and continuing education of directors; stockholder engagement; governance framework; CEO succession planning | |
ESG Subcommittee | Environmental and sustainability initiatives; social and governance issues, including diversity, equity and inclusion | |
Airline Safety | Operational safety culture; flight operations safety; overview of all aspects of airline safety | |
Finance | Financial condition, financing activities, capital planning and special projects, budget and related activities | |
Technology | Relevant emerging and competing technologies; strategic direction and planning for technology and innovation; overall trends in the deployment of technologies in the travel industry |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 13
Company. In determining whetherLeadership Drives Our Strategy and Operations
Led by our CEO, the senior leadership team is responsible for leading the Company towards achieving our mission, establishing and delivering on our strategy, maintaining and inspiring our culture and crewmembers, inspiring and creating an incumbent director should stand for reelection,innovative and disruptive customer experience, establishing accountability, and controlling risk. The senior leadership team also aligns our structure, operations, people, policies, and compliance efforts to our mission and strategy. The senior leadership team consists of those leading the Corporate Governance and Nominating Committee considersoperation, the above factors,commercial team, as well as that director’s personalthose leading central functions like Finance, Legal, IT and professional integrity, attendance, preparedness, participation and candor, the individual’s satisfactionPeople. Members of the criteria forsenior leadership team meet with the nomination ofBoard regularly, with most attending a Board or committee session at least quarterly, and also interact with our directors set forth in our Corporate Governance Guidelinesoutside the boardroom.
Representatives from the Company’s Legal and Government Affairs groups address public policy, regulatory, government affairs, compliance, legal risk, and other relevant factors as determined byissues. The Company’s internal audit function provides objective audit, investigative, and advisory services aimed at providing assurance to senior leadership and the Board that the Company is continuously anticipating, identifying, assessing, and prioritizing risks. Our Tax and Treasury departments report regularly to the Board. Periodically,Our Infrastructure Development team, along with others, assists the Corporate GovernanceBoard in its governance of major real estate transactions. Our Board and Nominating Committee reviewsits committees also work closely with representatives from the Company’s short-People department, the ESG and long-term business plans to gauge what additional currentDEI teams, the Cybersecurity team and future skills and experience may be required of the Company’s Board and any future Board candidates. The Corporate Governance and Nominating Committee seeks to use the results of the assessment process as it identifies and recruits potential director candidates.
Mr. Boneparth served as Senior Advisor of Irving Capital Partners, a private equity group, from 2009 through 2014. He served as president and Chief Executive Officer of the Jones Apparel Group from 2002 to 2007. Mr. Boneparth is a director of Kohl’s Corporation. As a senior retail executive, Mr. Boneparth’s qualifications and experience include finance and investment experience, talent management, international business experience, knowledge of brand enhancement and customer service, oversight of risk management and crewmember relations.
Mr. Checketts is the Managing Partner of Checketts Partners Investment Management, a private equity firm founded in 2011 focused on sports, media and entertainment investments. Its portfolio companies include ScoreBig,Inc. and Veritone Inc. Mr. Checketts served as Chairman and CEO of Legends Hospitality Management, founded by the NY Yankees and Dallas Cowboys, from December 2011 to October 2015. Mr. Checketts founded SCP Worldwide in 2006 which owned and operated the St. Louis Blues, Scottrade Center, the 2009 Major League Soccer Champions Real Salt Lake, Rio Tinto Stadium and ESPN 700 Sports talk radio. From 1994 to 2001, Mr. Checketts was President and Chief Executive Officer of Madison Square Garden Corporation. From 1991 to 1994, Mr. Checketts was the President of the New York Knicks professional basketball team. From 1990 to 1991, he was Vice President of Development for the National Basketball Association. From 1984 to 1990, Mr. Checketts was President of the Utah Jazz professional basketball team. As an investor and chairman of an investment firm, Mr. Checketts’ qualifications and experience include business operations, finance and investment experience, knowledge of our competitive landscape, and experience with customer service, brand and talent management.
Ms. Gambale has been a Managing Partner of Azimuth Partners LLC, a strategic and advisory firm in the field of technology and data communications solutions, since 2003. Prior to founding Azimuth Partners, Ms. Gambale was a Partner at Deutsche Bank Capital and ABS Ventures from 1999 to 2003. Prior to that, she held the position of Chief Information Officer at both Bankers Trust Alex Brown and Merrill Lynch. Ms. Gambale serves on the National Association of Corporate Directors Risk Oversight Advisory Council. Ms. Gambale is an adjunct faculty member for Columbia University’s Masters in Technology Leadership program and is also one of 3 members of the Executive Advisory Board of Columbia University’s Center for Technology Management. Within the past five years, Ms. Gambale served as a director of Piper Jaffray Companies and Motive, Inc. As a former Chief Information Officer and a partner at a firm involved with technology and data communications, Ms. Gambale’s qualifications and experience include the management of large-scale, high-transaction volume systems and technology infrastructure, as well as investing in innovative technologies and developing the ability to adapt and grow these technologies to significantly enhance the performance of operations, risk management and delivery of new products.
Mr. Gemkow became the Chief Executive Officer of Franz Haniel & Cie. GmbH in August 2012. From 2006-2012, he was the Chief Financial Officer of Deutsche Lufthansa AG and a member of the Deutsche Lufthansa AG Executive Board. Mr. Gemkow joined Deutsche Lufthansa AG in 1990, working in various management capacities before serving as Senior Vice President Group Finance from July 2001 until January 2004. Mr. Gemkow then joined the Executive Board of Lufthansa Cargo AG, where he was responsible for Finance and Human Resources. Within the past five years, Mr. Gemkow served on the boards of GfK SE, a public company in Germany, Amadeus IT Holding S.A., and Celesio AG. Currently, Mr. Gemkow is Chairman of the Supervisory Board of TAKKT AG as well as member of the Supervisory Board of Evonik Industries AG. As the former Chief Financial Officer of an international airline, Mr. Gemkow’s experience and qualifications include finance and investment experience, a deep understanding of human resources and labor relations, airline operational experience, knowledge of the competitive landscape, experience with government and regulatory affairs, risk management, including commodities risk, customer service and brand enhancement, international experience and general airline industry knowledge.
Mr. Hayes became JetBlue’s Chief Executive Officer, President and a memberdepartment. Members of the Board have access to all of Directors in February 2015. Prior to this position, Mr. Hayes was JetBlue’s President, responsible for the airline’s commercial and operations areas including Airport Operations, Customer Support (Reservations), Flight Operations, Inflight, System Operations, Technical Operations, as well as Communications, Marketing, Network Planning and Sales from December 2013 until February 2015. He served as JetBlue’s Executive Vice President and Chief Commercial Officer from August 2008 until December 2013. Prior to joining JetBlue, he was British Airways’ Executive Vice President for The Americas. Over the spanour crewmembers outside of a 19-year career with British Airways, he also served as Area General Manager for Europe, Latin America and the Caribbean. As a senior airline executive, Mr. Hayes’ qualifications include over 25 years of aviation experience, knowledge of the competitive landscape, brand enhancement and management.
Ms. Jewett is Managing Partner of Canoe Point Capital, LLC, an investment firm providing capital for early stage companies that have social purpose. From 2010 through 2015, Ms. Jewett was the Managing Director Head of U.S. Government and Infrastructure for BMO Capital Markets covering airports and infrastructure banking. She sat on the Management Committee of the U.S. Fixed Income Division. Prior to that, Ms. Jewett spent more than 20 years at Goldman, Sachs & Co. specializing in airport infrastructure financing, most recently serving as head of the public sector transportation group, and previously, as head of the airport finance group. Ms. Jewett serves as President of the Board of the Brearley School. As a finance professional, Ms. Jewett’s qualifications and experience include domestic and international finance, business and investment experience, talent management and experience in the areas of airports and infrastructure.
General (Ret.) McChrystal is a retired 34-year U.S. Army veteran of multiple wars. Gen. McChrystal commanded the U.S. and NATO’s International Security Force in Afghanistan, served as the director of the Joint Staff and was the Commander of Joint Special Operations Command, where he was responsible for the nation’s deployed military counter terrorism efforts. Gen. McChrystal is a graduate of the United States Military Academy at West Point, the United States Naval Command and Staff College and was a military fellow at both the Council on Foreign Relations and the Kennedy School of Government at Harvard University. General McChrystal is currently teaching a seminar on leadership at the Jackson Institute for Global Affairs at Yale University and serves alongside his wife Annie on the Board of Directors for the Yellow Ribbon Fund, a non-profit organization committed to helping wounded veterans and their families. Gen. McChrystal is a director of Navistar International Corp. and serves on their Finance Committee. He serves as Chairman of the board of Siemens Government Technologies, Inc., a wholly-owned indirect subsidiary and a Federal Business Entity of Siemens AG, since December 2011. Since August 2011, he has served as a member of the Board of Advisors of General Atomics, a world leader of resources for high-technology systems ranging from the nuclear fuel cycle to remotely operated surveillance aircraft, airborne sensors, and advanced electric,
electronic, wireless and laser technologies. Within the last five years, Gen. McChrystal served in the board of Knowledge International. As a former senior military leader, Gen. McChrystal has experience in logistics, air traffic issues, talent management and experience with government and regulatory affairs.
Mr. Peterson is the founding partner of Peterson Partners, LLP, a private equity firm he founded in 1995. He is also the founding partner of Peterson Ventures, which manages a portfolio of small, early-stage investments and Whitman I Peterson, a real estate investment fund founded in 2008. From 1973 through 1990, Mr. Peterson served in several positions at Trammell Crow Company, a commercial real estate development company, including Chief Executive Officer from 1988 through 1990 and Chief Financial Officer from 1977 to 1985. Mr. Peterson has taught at the Stanford University Graduate School of Business since 1992 where he is the Robert L. Joss Consulting Professor of Management and has served as a director for the Center for Leadership Development and Research and on the Advisory Council to the School. He is also an overseer for the Hoover Institution, a policy think tank at Stanford University, and serves on the board of Franklin Covey. Within the last five years, Mr. Peterson served on the Board of Ladder Capital Finance Corp. As a private equity investor and former Chief Executive Officer and Chief Financial Officer of a commercial real estate company, Mr. Peterson’s qualifications and experience include knowledge of real estate, customer service, talent management and leadership development.
Mr. Sica has served as a Managing Partner at Tailwind Capital, a private equity firm, since 2006. From 2004 to 2005, Mr. Sica was a Senior Advisor to Soros Private Funds Management. From 2000 to 2003, Mr. Sica was President of Soros Private Funds Management LLC, which oversaw the direct real estate and private equity investment activities of Soros. In 1998, Mr. Sica joined Soros Fund Management, where he was a Managing Director responsible for Soros’ private equity investments. From 1988 to 1998, Mr. Sica was a Managing Director in Morgan Stanley’s Merchant Banking Division. In 1996, Mr. Sica was elevated to Co-CEO of Morgan Stanley’s Merchant Banking Division. From 1974 to 1977, Mr. Sica was an officer in the U.S. Air Force. Mr. Sica is a director of CSG Systems International, Inc., Safe Bulkers, Inc. and Kohl’s Corporation. Within the past five years, Mr. Sica also served as a director of NorthStar Realty Finance Corporation. As a private equity investor, Mr. Sica’s qualifications and experience include finance and investment experience, talent management, experience in the areas of real estate, technology, risk management oversight (including commodities risk), general airline industry knowledge and international business and finance experience.
Mr. Winkelmann has been Chief Executive Officer of Lufthansa German Airlines (Hub Munich) since January 1, 2016. He is also a member of the Group Executive Committee of Lufthansa Group. He served as Chief Executive Officer of Germanwings GmbH from September 2006 through December 2015. Previously, he served as Vice-President of the Americas for Lufthansa German Airlines. Mr. Winkelmann has held senior management positions for Lufthansa in the United States since 1998. He started as Manager of Area Management Latin America and the Caribbean. Since September 2000, as Vice-President of The Americas based in New York, Mr. Winkelmann was responsible for the entire Lufthansa organization in North and South America. His responsibilities included all operative functions, sales, marketing and the stations. Moreover, he was a member of the Executive Board of Eurowings Luftverkehrs AG from 2006 to 2008. Before joining Lufthansa in 1998, Mr. Winkelmann held management positions, among others, at Deutsche Reisebüro GmbH and at Kaufhof AG in Germany and in the U.S. As a senior airline executive, Mr. Winkelmann’s qualifications and experience include sales, marketing, revenue management, airline operations, knowledge of North America, Latin American and the Caribbean as well as general airline industry knowledge.
CORPORATE GOVERNANCE PRACTICES
Majority of Independent Directors
We have a majority of independent directors serving on our Board. We currently have only one employee director, Mr. Hayes, our Chief Executive Officer and President, on our Board of eleven members. For more information, see “Board Meetings and Board Committee Information—Independent Directors.”
Separation of Chairman of the Board and Chief Executive Officer—Board Leadership Structuremeetings.
The Board recognizesof Directors
Board Structure
Our Board has determined that one of its key responsibilitiesit is to evaluate and determine its optimal leadership structure so as to provide independent oversight of management. We believe thatin the best interests of the Company and its stockholders to maintain a separate independent Board Chair and CEO. Serving since the May 2020 Annual Meeting, Peter Boneparth is our stockholders are best served by separating the positions of Chief Executive Officer and Chairmanindependent Chair of the Board. We believe thisOur Board believes that our current structure, with an independent Chair who is well-versed in the needs of a complex business and has strong, well-defined governance duties, gives our Board a strong independent leadership and corporate governance structure empowers boththat best serves the Boardneeds of DirectorsJetBlue and the Chief Executive Officer, and promotes balance between the authority of those who oversee our business and those who manage it on a day-to-day basis.its stockholders. In our independent Chairman,Chair, our Chief Executive OfficerCEO has a counterpart who can be a thought partner. We believe this corporate structure also permits the Board of Directors to have a healthy dynamic that enables its members to function to the best of their abilities, individually and as a unit. Nevertheless, theOur Board recognizes that it is important to retain the organizational flexibility to determine whether the roles of the Chairman of the Board and Chief Executive Officer should be separated or combined in one individual and that, given the dynamic and competitive environment in which we operate, the right Boardbelieves its current leadership structure may vary as circumstances warrant. The Board may periodically evaluate whether the Boardis appropriate because it effectively allocates authority, responsibility, and oversight between leadership structure should be changed in light of specific circumstances applicable to us.
Annual Elections of Board Members
JetBlue’s Bylaws provide that directors are elected annually.
Majority Vote Policy
Each member of our Board of Directors is elected by a majority of the votes cast in an uncontested election. The majority vote standard requires that a director nominee receive a majority of the votes cast in an uncontested election in order to be formally elected. For the purpose of uncontested elections, abstentions and broker non-votes are not counted as votes cast.
Removal of Supermajority Provisions from our Charter Documents
As approved by our stockholders, we removed supermajority voting requirements from our Bylaws in order to give our stockholders a more meaningful vote in various corporate matters.
Executive Compensation Practices
We strive for transparent and balanced compensation packages, as discussed more fully in the Compensation Discussion and Analysis, which starts on page 25.
Equity Ownership Guidelines
Our directors hold their equity compensation until their retirement from our Board. Our Corporate Governance and Nominating Committee adopted stock ownership requirements for management: 3x base salary for our CEO and 1x base salary for our other named executive officers, to be implemented and met over a five year period, starting in calendar year 2012. Newly hired or newly appointed named executive officers have five years from the date of hire or appointment to meet the stock ownership guidelines. As of December 2015, each of our named executive officers met or exceeded our ownership guidelines, including common stock and unvested restricted stock units but excluding unvested performance stock units and vested underwater stock options. We anticipate reviewing and revising our executive stock ownership guidelines periodically.
Retirement and Pension Practices
We do not provide our executives with significant post-employment retirement or pension benefits. We sponsor a retirement plan with a 401(k) component for all of our crewmembers.
Environmental, Sustainability and Corporate Social Responsibility Practices
Our sustainability strategy focuses on safeguarding JetBlue’s ability to grow and profit through smart natural-resource planning and long-term consideration of our business impact. We are achieving this by focusing our sustainability programs on change management, stakeholder engagement and risk mitigation. This includes waste stream reduction in airports and on airplanes, greenhouse gas measuring and offsetting and biofuels research. Our Social Responsibility programs include a seasonal farm at T5, our terminal at John F. Kennedy International Airport, planting trees to improve air quality in our hometown communities and hosting reading programs in the cities we fly to. We engage in a variety of community initiatives involving business partners and crewmembers including, for example, building playgrounds, making and donating quilts to children in hospitals and donating books to the communities in which we live and work. We issue annual Global Reporting Initiative (GRI4) compliant Responsibility Reports, all of which are publically available for comment. More information on these efforts is available athttp://www.jetblue.com/green.
Corporate Governance Guidelines
We have adopted governance guidelines to help us maintain the vitality of our Board, including areas relating to Board and committee composition, annual meeting attendance, stockholder communication with the Board, qualifications and the director candidate selection process including our policy on consideration of candidates recommended by stockholders and our Code of Business Conduct and our values—Safety, Caring, Integrity, Passion and Fun. The Corporate Governance Guidelines cover a number of other matters, including the Board’s role in overseeing executive compensation, compensation and expenses for non-management directors, communications between stockholders and directors, Board committee structures and assignments and review and approval of related person transactions. These guidelines are available athttp://investor.jetblue.com.
Code of Business Conduct
We are committed to operating our business with high levels of accountability, integrity and responsibility. Our Code of Business Conduct, or the Code, governs our affairs and is a means by which we commit ourselves to conduct our business in an honest and ethical manner. The Code governs theindependent members of our Board. The Board of Directors, our crewmembersexpects to continue to evaluate its leadership structure on an ongoing basis and third parties that representmay make changes as appropriate to leadership for JetBlue and includes provisions relating to how we strive to deal with each other, our business partners, our investors and the public. The Code provides for granting of a waiver of the Code if approved. Any waiver that is granted, and the basis for granting the waiver, will be publicly communicated as appropriate, including by posting on our website, as soon as practicable. We granted no waivers under our Code of Business Conduct in 2015. The Code is available athttp://investor.jetblue.com. We intend to post any amendments and any waivers of our Code of Business Conduct on our website within four business days of such amendment or waiver.its future needs.
Independent Board | ||
Key responsibilities of the Chair include: ■ Calling meetings of the Board and executive sessions with independent directors. ■ Setting the agenda for Board meetings in consultation with other directors, the CEO, and the corporate secretary. ■ Chairing executive sessions of the independent directors. ■ Working with the Chairs of the Compensation Committee and the Governance and Nominating Committee with regard to the annual CEO performance evaluation. ■ Working with the Governance and Nominating Committee to (1) oversee assessments of the Board and its committees and (2) recommend changes to enhance Board, committee and director effectiveness. ■ Engaging with stockholders. ■ Acting as an advisor to the CEO on strategic aspects of the CEO role with regular consultations on major developments and decisions likely to be of interest to the Board. ■ Performing the other duties specified in the Corporate Governance Guidelines or assigned by the Board. ■ Setting and maintaining Board culture. | ■ 9 of 10 director nominees are independent – We are committed to maintaining a substantial majority of directors who are independent of the Company and leadership. Except for our CEO Robin Hayes, all directors are independent, including, for directors serving on our Audit Committee and Compensation Committee, with respect to enhanced independence requirements for members of such committees, as applicable. ■ Quarterly executive sessions of independent directors – At each quarterly Board meeting, the independent directors meet in executive session without Company leadership present. Additional executive sessions are held, as needed. ■ Strategy – The independent directors meet in executive session at an annual strategy meeting. ■ Independent compensation consultant – The compensation consultant retained by the Compensation Committee is independent of the Company and leadership. |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 14
Stockholder Communications with the Board of DirectorsComposition
Stockholders may communicate with ourEnsuring the Board is composed of Directors by sending correspondence todirectors who bring diverse viewpoints and perspectives, exhibit a variety of skills, professional experience and backgrounds, and effectively represent the JetBluelong-term interests of stockholders, is a top priority of the Board of Directors, c/o Corporate Secretary, JetBlue Airways Corporation, 27-01 Queens Plaza North, Long Island City, New York 11101.and the Governance and Nominating Committee. The name of any specific intended director should be noted inBoard and the correspondence. Our Corporate Secretary will forward such correspondence to the intended recipient or as directed by such correspondence; however, our Corporate Secretary, prior to forwarding any correspondence, has the authority to disregard any communications he deems to be inappropriate, or to take any other appropriate actions with respect to such inappropriate communication. The Corporate Governance and Nominating Committee approved procedures with respectbelieve that different perspectives are critical to a forward-looking and strategic Board as is the ability to benefit from the valuable experience and familiarity that longer-serving directors bring. When recommending to the receipt, reviewBoard the slate of director nominees for election at the Annual Meeting of Stockholders, the Governance and processingNominating Committee strives to maintain an appropriate balance of diversity, skills, and any response to, written communications sent by stockholders and other interested persons to our Board of Directors, as set forth in our Corporate Governance Guidelines.tenure on the Board.
Any interested party,BOARD SKILLS AND EXPERIENCE MATRIX
BOARD MEMBER SKILLS AND EXPERIENCES
The skills and experience categories reflect self-identification by the directors. Information in this chart is presented as of March 2022.
BOARD DIVERSITY
The gender and race/ethnicity categories reflect self-identification by the director-nominees standing for election at the 2022 annual meeting, as of March 21, 2022.
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 15
Board Diversity Matrix | Female | Male | Prefer not to answer | |
Total Members of the Board: 10 | ||||
Part I: | Gender Identity | 3 | 6 | 1 |
Part II: | Demographic Background | 1 | ||
African American or Black | 1 | 1 | ||
Asian American | 1 | |||
White | 2 | 4 |
Board Structure: Committees
To support effective corporate governance, the Board delegates certain responsibilities to its committees, who regularly report on their activities to the Board.
■ | Six Standing Committees– Our Board has an Audit Committee, a Compensation Committee, a Governance and Nominating Committee, an Airline Safety Committee, a Finance Committee and a Technology Committee. Each Committee has a charter setting forth its specific responsibilities, which can be found on the investor relations page on our website. The table below provides current membership for each Board Committee. In 2019, our Board established an ESG Subcommittee to the Governance and Nominating Committee, to address specifically Environmental, Social and Governance issues pertinent to our business. |
■ | Committees are Independent– Our Audit Committee, Compensation Committee, Governance and Nominating Committee and Finance Committee are composed of exclusively independent directors. Our CEO serves on the Airline Safety and the Technology Committees. The ESG Subcommmittee is also composed of independent directors. |
■ | Regular Committee Executive Sessions of Independent Directors– Members of the Audit Committee, Compensation Committee and Governance and Nominating Committee regularly meet in executive session. |
■ | Committees have authority to engage legal counsel or other advisors or consultants– Each Committee is authorized to retain advisors or consultants as it deems appropriate to carry out its responsibilities. |
■ | Independent compensation consultant– The Compensation Committee retains Pay Governance LLC (“Pay Governance”) to advise on marketplace trends in executive compensation, leadership proposals for compensation programs, and executive officer compensation decisions. Pay Governance also evaluates compensation for non-employee directors, our senior leadership, and equity compensation programs generally. The Compensation Committee consults with Pay Governance about the Compensation Committee’s recommendations to the Board on CEO compensation. Pay Governance is directly accountable to the Compensation Committee. To maintain its independence, Pay Governance does not provide any services for JetBlue other than those described above. |
■ | The Compensation Committee consultant maintains its independence– Annually, the Compensation Committee assesses the independence of its compensation consultant considering the following factors: |
– | Is retained and terminated by, has its compensation fixed by, and reports solely to, the Compensation Committee | |
– | Maintains and adheres to the consultant’s independence policy to prevent conflicts of interest | |
– | Whether the consultant (or any individual employee of the consultant providing services) owns JetBlue common stock | |
– | Will not perform any work for Company leadership except at the request of the Compensation Committee Chair and in the capacity as the Compensation Committee’s agent | |
– | Whether the consultant provides any unrelated services or products to the Company, its affiliates, or leadership, except for surveys purchased from the consultant firm | |
– | Whether the consultant (or any individual employee of the consultant providing services) has any business or personal relationship with a Committee member or with an executive officer of JetBlue | |
– | The fees received for the JetBlue engagement, as a percentage of the consultant’s annual revenues |
The Compensation Committee believes that Pay Governance has been independent during its engagement as a consultant to the Compensation Committee.
■ | Audit Committee Financial Experts – The Board has determined that each Audit Committee member has sufficient knowledge in financial and auditing matters to serve on the Audit Committee. The members of the Audit Committee meet the Nasdaq Stock Market (“Nasdaq”) listing standard of financial sophistication and two are “audit committee financial experts” under Securities and Exchange Commission (“SEC”) rules (Ms. Jewett and Mr. Baldanza). |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 16
Responsibilities
AUDIT | |
Members*: Meetings held in 2021: 10 | Pursuant to its charter, the Audit Committee oversees: ■ the integrity of our financial statements, ■ the appointment, compensation, qualifications, independence and performance of our independent registered public accounting firm, ■ compliance with ethics policies and legal and regulatory requirements, ■ the performance of our internal audit function, ■ our financial reporting process and systems of internal accounting and financial controls, and ■ other items including risk assessment and compliance. The Audit Committee is also responsible for review and approval of any related party transactions required to be disclosed pursuant to Item 404(a) of Regulation S-K. The responsibilities and activities of the Audit Committee are further described in “Audit Committee Report” set forth elsewhere in this proxy statement and the Audit Committee charter. Each member of the Audit Committee is an independent director within the meaning of the applicable rules and regulations of the SEC and Nasdaq. The Board has determined that each member of the Audit Committee is financially literate within the meaning of the Nasdaq listing standards. In addition, the Board of Directors determined that Ms. Jewett and Mr. Baldanza each is an “audit committee financial expert” as defined under applicable SEC rules. The Audit Committee meets a minimum of four times a year, and holds such additional meetings as it deems necessary to perform its responsibilities. The charter of the Audit Committee is available on our website at http://investor.jetblue.com. |
COMPENSATION | |
Members*: Meetings held in 2021: 5 | Pursuant to its charter, the Compensation Committee: ■ determines our compensation policies and the level and forms of compensation provided to our Board members and executive officers (as discussed more fully under “Compensation Discussion and Analysis” beginning on page 36 of this proxy statement), ■ evaluates the performance of our named executive officers, ■ assesses and mitigates risks associated with our compensation plans, ■ reviews and recommends to the Board compensation for our non-employee directors, ■ reviews and approves stock-based compensation for our directors, officers and crewmembers, ■ oversees the administration of our 2020 Omnibus Equity Incentive Plan (“Omnibus Plan”) and 2020 Crewmember Stock Purchase Plan and predecessor or successor plans, and ■ prepares and recommends to the full Board for inclusion in this proxy statement a Compensation Committee report. The Compensation Committee is authorized to retain and terminate compensation consultants, legal counsel or other advisors to the Committee and to approve the engagement of any such consultant, counsel or advisor, to the extent it deems necessary or appropriate after specifically analyzing the independence of any such consultant retained by the Committee. Each Committee member is an independent director within the meaning of the applicable Nasdaq rules, including the enhanced independence requirements applicable to members of compensation committees. The Compensation Committee meets a minimum of four times a year, and holds such additional meetings as it deems necessary to perform its responsibilities. The charter of the Compensation Committee is available on our website at http://investor.jetblue.com. |
* | Memberships as of the 2022 Annual Meeting. |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 17
GOVERNANCE AND NOMINATING | |
Members*: Meetings held in 2021: 4 | Pursuant to its charter, the Governance and Nominating Committee is responsible for: ■ developing our corporate governance policies and procedures, and recommending those policies and procedures to the Board for adoption, ■ making recommendations to the Board regarding the size, structure and functions of the Board and its committees, identifying and recommending new director nominees in accordance with selection criteria established by the Board, ■ conducting the annual evaluation of the performance of the Board and its committees, ensuring that the Audit, Compensation, and Governance and Nominating Committees of the Board and all other Board committees are comprised of qualified directors, developing and recommending a succession plan for the CEO, and ■ developing and recommending corporate governance guidelines, policies and procedures appropriate to the Company. Each member of the Committee is an independent director within the meaning of the applicable Nasdaq rules. The Governance and Nominating Committee meets a minimum of four times a year, and holds such additional meetings as it deems necessary to perform its responsibilities. The charter of the Governance and Nominating Committee is available on our website at http://investor.jetblue.com. |
AIRLINE SAFETY | |
Members*: Meetings held in 2021: 6 | Pursuant to its charter, the Airline Safety Committee is responsible for: ■ monitoring and review of our flight operations and safety management system and reports to the Board on such topics. The Airline Safety Committee meets a minimum of four times a year, and holds such additional meetings as it deems necessary to perform its responsibilities. The charter of the Airline Safety Committee is available on our website at http://investor.jetblue.com. |
FINANCE | |
Members*: Meetings held in 2021: 7 | Pursuant to its charter, the Finance Committee is responsible for: ■ providing leadership with advice and counsel regarding the Company’s financial condition, financing activities, capital plan and budget and related matters. The charter of the Finance Committee is available on our website at http://investor.jetblue.com. |
TECHNOLOGY COMMITTEE | |
Members*: Meetings held in 2021: 3 | Pursuant to its charter, the Technology Committee is responsible for: ■ reviewing significant emerging and competing technologies relevant to the Company and adjacent industries. ■ consider risks and opportunities of new technology and digital strategies. ■ monitoring overall trends in the deployment of technologies in the travel industry. ■ reviewing technology and innovation policies. The charter of the Technology Committee is available on our website at http://investor.jetblue.com. |
ESG SUBCOMMITTEE | |
Members*: Meetings held in 2021: 3 | Pursuant to its charter, the ESG subcommittee is responsible for: ■ providing leadership to the Board and leadership on environmental and sustainability initiatives, social and governance issues, including diversity, equity and inclusion. The charter of the ESG subcommittee is available on our website at http://investor.jetblue.com. |
* | Memberships as of 2022 Annual Meeting. |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 18
Compensation Committee Interlocks and Insider Participation
None of the current members of our Compensation Committee (whose names appear under “Compensation Committee Report”) is, or has ever been, an officer or employee of the Company or any employee, may make confidential, anonymous submissions regarding questionable accounting or auditing matters or internal accounting controls and may communicate directly withof its subsidiaries. In addition, during the Chairmanlast fiscal year, no executive officer of the Company served as a member of the Board by letteror the compensation committee of any other entity that has one or more executive officers serving on our Board or our Compensation Committee.
Board Oversight
Stockholders elect the Board to oversee leadership of the Company and to serve stockholders’ long-term interests. Leadership is responsible for leading the Company towards achieving our mission, delivering on our strategy, creating our culture, inspiring and creating an innovative customer experience, establishing accountability, and controlling risk. The Board and its committees work closely with leadership to balance and align strategy, risk and other areas while considering feedback from stakeholders. Essential to the above address, marked forBoard’s oversight role is a transparent and active dialogue between the attentionBoard and its committees, and leadership. To support that dialogue, the Board and its committees have access to, receive presentations from, and conduct regular meetings with the senior leadership team, other business and function leaders, subject matter experts, the Company’s enterprise risk management and internal audit teams, and external experts and advisors.
Through oversight, review, and counsel, our Board works with leadership to establish and promote business goals, organizational objectives, and a strategy that is mindful of how our business affects and is affected by the broader environment.
Board Oversight of Strategy
One of the Chairman. Any written communicationBoard’s primary responsibilities is overseeing leadership’s establishment and execution of the Company’s strategy. As JetBlue looks to innovate along the travel ribbon, the Board works with leadership to respond to a dynamically changing environment. At least quarterly, the CEO, the senior leadership team, and leaders from across JetBlue provide detailed business and strategy updates to the Board. At least annually, the Board conducts an even more in-depth review of the Company’s overall strategy. At all of these reviews, the Board engages with the senior leadership team and other business leaders regarding accounting, internal accounting controls or other financial matters are processedbusiness objectives, technology updates, the competitive landscape, economic trends, and public policy and regulatory developments. At meetings occurring throughout the year, the Board also assesses the competitive landscape, the Company’s budget and capital plan, and performance for alignment to our strategy. The Board looks to the focused expertise of its committees to inform strategic oversight in accordance with procedures adopted by the Audit Committee.their areas of focus.
Board Oversight of Risk
Our Board of Directors oversees the management of risksrisk inherent in the operation of the Company’s businesses and the implementation of its strategic plan. The Board performs this oversight roleplan by relying on several different levels of review.
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 19
In connection with its reviews of the operations of the Company’s business and corporate functions, the Board addresses the primary risks associated with those unitsbusiness and corporate functions. In addition,The Board also reviews certain entity level type risks, including cybersecurity and diversity, equity and inclusion, environmental and sustainability risks.
The Board appreciates the rapidly evolving nature of threats presented by cybersecurity incidents and is committed to the prevention, timely detection, and mitigation of the effects of any such incidents on the Company. With respect to cybersecurity, the Board reviewsreceives regular reports from Company leadership, including updates on the risks associated with the Company’s strategic plan at an annual strategic planning sessioninternal and periodically throughout the year as part of its consideration of the strategic direction of the Company. external cybersecurity threat landscape, incident response, assessment and training activities, and relevant legislative, regulatory, and technical developments.
Each of the Board’s committees also oversees the management of Company risks that fall within that committee’s areas of responsibility. In performing this function, each committee has full access to management,leadership, as well as the ability to engage advisors. In addition, the Board monitors the ways in which the Company attempts to prudently mitigate risks, to the extent reasonably practicable and consistent with the Company’s long-term strategy.
Since 2020, the Board, through the Governance and Nominating Committee, has reviewed Board and committee functions through an ESG lens and revisited Board and committee level responsibilities for different aspects of ESG. As provided above (See “JetBlue’s Approach to ESG Matters — Governance — Board ESG Areas of Risk Oversight”) the Board has designated certain ESG risks across the ESG Subcommittee and Board committees, while retaining overall awareness, ESG fluency and strategy at the Board level.
The Audit Committee oversees the operation of the Company’s ethics and compliance program. In addition, the Audit Committee oversees the operation of the Company’s enterprise risk management program, including the identification of the primary risks to the Company’s business, such as financial, operational, privacy, cybersecurity, business continuity, legal and interim updates of thoseregulatory, and reputational risks, and reviews the steps leadership has taken to monitor and control these exposures. The Audit Committee also periodically monitors and evaluates the primary risks associated with particular business units and functions. The Audit Committee may, in its business judgment, escalate certain risks to the Board as a whole. The Company’s Corporate Audit personnel assist managementteam assists leadership in identifying, evaluating and implementing risk management controls and methodologies to address identified risks. In connection with its risk management role, at each of its meetings the Audit Committee meets privately with representatives from the Company’s independent registered public accounting firm, the head of Corporate Audit, as it deems appropriate, and may meet with the Company’s General Counsel.other members of leadership. The Audit Committee provides reports to the Board which describe these activities and related conclusions. The Audit Committee periodically reports
Leadership reviews the compensation practices and programs annually to determine if they present a risk to materially adversely affect the Company and presents the review annually to the BoardCompensation Committee. We believe that for the resultssubstantial majority of our crewmembers, the risk management programincentive for risk-taking is low, because their compensation consists largely of fixed cash salary and activitiesa cash bonus that has a capped payout. Furthermore, the majority of management’s risk committee.these crewmembers do not have the authority to take action on our behalf that could expose us to significant business risks.
As part of its oversight of the Company’s executive compensation program,Compensation Risk Analysis
In early 2022, the Compensation Committee considersreviewed the impact2021 cash and equity incentive programs for senior leaders and concluded that certain aspects of the Company’s executive compensation program, and the incentives created by the compensation awards that it administers, on the Company’s risk profile. Our management, with the Compensation Committee, reviews our compensation policies and procedures, including incentives that may create and factors that mayprograms reduce the likelihood of excessive risk taking,taking. These aspects include (i) the use of long-term equity awards to determine whether suchcreate incentives for senior leaders to promote long-term growth of the Company, (ii) our clawback policy, (iii) limiting the incentive to take excessive risk for short-term gains by imposing caps on annual cash incentive awards, and factors present a significant risk(iv) vesting the Compensation Committee with authority to exercise discretion to reduce payouts under our annual cash incentive awards program. In addition, in 2021, the Company.Company received federal pandemic support in the form of monies under the CARES Act, the Consolidated Appropriations Act and the American Rescue Plan, which restricted officer compensation.
Related Party Transaction PolicyFor these reasons, we believe that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on us.
We have established written policies and procedures that require approval or ratification by our Audit Committee of any transaction in excess of $120,000, which involves a “Related Person’s” entry into an “Interested Transaction”. As defined in our policy, an “Interested Transaction” is any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which (i) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (ii) the Company is a participant, and (iii) any Related Person has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10 percent beneficial owner of another entity). A “Related Person” is defined in our policy as any (i) person who is or was (since the beginning of the last fiscal year for which the Company has filed a Form 10-K and proxy statement, even if he or she does not presently serve in that role) an executive officer, director or nominee for election as a director, (ii) greater than 5 percent beneficial owner of the Company’s common stock, or (iii) immediate family member of any of the foregoing. Immediate family member includes a person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law and anyone residing in such person’s home (other than a tenant or employee). Our policies and procedures further provide that only disinterested directors are entitled to vote on any Interested Transaction presented for Audit Committee approval.JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 20
Transactions with Related Persons Since the Beginning of Fiscal Year 2015Stockholder Interests
Stock Retention and Ownership Guidelines
We believe that directors and executive officers should have a significant financial stake in JetBlue to further align their interests with the interests of our stockholders, thus we have established robust stock ownership and retention guidelines for our directors and executive officers. Our non-employee directors are required to hold 5x the annual cash retainer, or $400,000, in JetBlue equity until their retirement or separation from our Board. Beginning in 2020, directors were afforded the opportunity to select to receive their annual equity compensation award as either restricted stock units (“RSUs”) with a one year vesting period or as deferred stock units (“DSUs”) also with a one year vest. Director DSUs, once vested, are deferred until the director’s departure from JetBlue. These director DSUs are settled as common stock six months following a director’s separation from the Board. The Companyholding requirements for non-employee directors may be satisfied by holding common stock, vested and its subsidiaries have transactionsunvested RSUs and vested and unvested DSUs. As of December 2021, all of our non-employee directors met or exceeded our stock ownership guidelines, or were within the requisite time period since first becoming a director to acquire the applicable level of ownership, in accordance with our policy.
For 2021, our leaders had the following holding requirements: 6x base salary for our CEO and 2x base salary for our senior leaders. The policy has post-tax vesting holding requirements to provide executives with some liquidity options while they are on track to meet the guidelines. The holding requirements for executives may be satisfied by holding common stock, and vested and unvested RSUs. As of December 2021, all of our NEOs met or exceeded our stock ownership guidelines, or were within the requisite time period since first becoming subject to the guidelines to acquire the applicable level of ownership, in accordance with our policy. Our compensation restrictions related to our U.S. government support arising under the COVID-19 pandemic (see – Government Support: The CARES Act, the Consolidated Appropriations Act and the American Rescue Plan),may affect our NEOs’ compliance with the policy in the ordinary course of business with other corporations of which the Company’sfuture. We anticipate periodically reviewing, and may revise our director and executive officers or directors or members of their immediate families are directors, executive officers, or stockholders. Except as described below, during 2015, there were no actual or proposed transactionsstock ownership guidelines from time to be disclosed in which we were a participant and the amount involved exceeded $120,000 and in which any related person, including our executives and directors, had or will have a direct or indirect material interest.time.
PriorCompensation Clawback
Our Board adopted a policy, often referred to March 27, 2015, Deutsche Lufthansa AGas a clawback policy, which requires reimbursement of all or a portion of any bonus, incentive payment, or equity-based award granted to or received by any executive officer and certain other officers after January 1, 2010 where: (a) the payment was predicated upon the achievement of certain financial results that were subsequently the subject of a significant stockholder of JetBlue’s common stock. Each of Mr. Jens Bischof, an officer of Deutsche Lufthansa AG,restatement, (b) in the Board’s view the executive engaged in willful misconduct that caused or partially caused the need for the restatement, and Mr. Thomas Winkelmann, CEO of Germanwings,(c) a Lufthansa subsidiary, were memberslower payment would have been made to the executive based upon the restated financial results.
Hedging and Pledging Practices
Our Insider Trading Policy prohibits hedging and pledging of our Board of Directors designatedsecurities by Deutsche Lufthansa AG.all JetBlue insiders.
We Have Advanced Stockholder Rights
Majority Voting in Uncontested Director Elections
In 2015, Deutsche Lufthansa AG tendered and ultimately exchanged its €234 million convertible notes, which were secured by JetBlue common stock. The exchange was completedan uncontested election, directors are elected by the endmajority of votes cast.
Pursuant to our Amended and Restated Bylaws (“Bylaws”), the Board will not nominate for election as director any nominee who has not agreed to tender, promptly following the annual meeting at which he or she is elected as director, an irrevocable resignation that will be effective upon the failure to receive the required number of votes for reelection at the next annual meeting of stockholders at which he or she faces reelection and acceptance of such resignation by the Board.
If a nominee fails to receive the required number of votes for reelection, the Board (excluding the director in question) may either accept such director’s resignation or disclose its reasons for not doing so in a report filed with the SEC within 90 days of the first quarter 2015. Following the tendercertification of the notes and exchange of substantially all of the common stock, Deutsche Lufthansa AG is no longer deemed a “Related Person”.election results.
As previously reported, the Company receives nacelle maintenance services from Lufthansa Technik AG, a wholly owned subsidiary of Deutsche Lufthansa AG. We recorded approximately $7 million for the services, which were provided on an “as needed” basis in 2015.Annual Elections
The Company contracted to receive heavy maintenance services from Lufthansa Technik AG,All directors are elected annually. JetBlue does not have a wholly owned subsidiary of Deutsche Lufthansa AG. We recorded approximately $1 million for the services in 2015.classified board.
In 2015, the Company executed an agreement with Oakfield Farms, a partially owned subsidiary of Deutsche Lufthansa AG, for the provision of on board boxes. We recorded approximately $2 million for such services in 2015.JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 21
The Company contracted with Hawker Pacific, a subsidiary of Lufthansa Technik AG, to perform maintenance on E190 landing gear. We recorded approximately $6 million for the services in 2015.
As previously reported, the Company receives provisioning services from LSG SkyChefs, a subsidiary of Deutsche Lufthansa AG, in certain of our BlueCities. We recorded approximately $14 million for such services in 2015.
As previously reported, we have a contract with LH CityLine, a subsidiary of Deutsche Lufthansa AG, by which we provide simulator training. The agreement is structured for use of simulator services on an as needed basis. For 2015, no services were performed under this contract.
As previously reported, Lufthansa Technik AG, a wholly owned subsidiary of Deutsche Lufthansa AG began providing us with repair services of line replaceable units. There are no minimum commitments under this arrangement. In 2015, we expensed approximately $18 million.
The Audit Committee approved each arrangement described above as required by our related party transaction policy.
BOARD MEETINGS AND BOARD COMMITTEE INFORMATIONProxy Access
We have a market standard “Proxy Access” bylaw that permits eligible stockholders to nominate candidates for election to the JetBlue Board. To be eligible to nominate candidates to be included in the Company’s proxy statement and ballot, stockholders must meet certain requirements.
PROXY ACCESS Stockholders holding at least 3% of our common stock Holding the shares continuously for at least 3 years Can nominate the greater of two candidates or for election at an annual stockholders meeting if such nominating stockholder(s) and nominee(s) satisfy the requirements set forth in our Bylaws |
Right to Call a Special Meeting
Our stockholders who hold 20% ownership in our Company’s common stock have the right to request the Company call a special meeting.
The businessright of JetBluestockholders to request that the Company call special meetings is managed underalso subject to the direction ofnotice, information and other requirements and limitations set forth in our Board of Directors. It has responsibility for establishing broad corporate policies, counselingBylaws. If a requesting stockholder does not comply with the requirements and providing direction to our managementconditions provided in the long-term interestsBylaws, a special meeting request by that stockholder will be invalid. Likewise, requests to call a special meeting to vote on matters recently voted on by stockholders or that will considered by stockholders imminently at an upcoming meeting of the Company, our stockholders will not be permitted. The requirements described above are important to, among other things, avoid duplicative and for our overall performance. It is not, however, involved in our operating details on a day-to-day basis. The Board is kept advised of our business through regular reports and analyses and discussions with our Chief Executive Officer and other officers.unnecessary special meetings regarding matters recently considered by stockholders or that stockholders will imminently consider at an upcoming stockholder meeting.
Independent DirectorsRight to Act by Written Consent
Our Boardstockholders who hold at least 25% of Directors currently has eleven members: Jens Bischof, Peter Boneparth, David Checketts, Virginia Gambale, Stephan Gemkow, Robin Hayes, Ellen Jewett, Stanley McChrystal, Joel Peterson, Frank Sica and Thomas Winkelmann. The size of our Board will be reduced to ten members effective at the conclusion of our 2016 annual meeting. Mr. David Barger, who resigned as a director effective February 15, 2015, was the only director who served on our Board during 2015, other than Mr. Hayes, determined not to be independent.
In connection with the annual meeting and the election of directors, our Board of Directors reviewed the independence of each director-nominee under the standards set forth in the NASDAQ listing standards. The NASDAQ definition of independent director includes a series of objective tests. Specifically, a director is deemed independent under the NASDAQ rules if such director is not an executive officer or employee of the Company or any other individual having a relationship which, in the opinionoutstanding shares of the Company’s stock may request that the Board would interfereset a record date to determine the stockholders entitled to act by written consent. To provide transparency, stockholders requesting action by written consent must provide the Company with certain information and representations including, but not limited to, the exerciseapplicable information and representations currently required of independent judgmentany Company stockholder seeking to bring a nomination or other business before a meeting of stockholders pursuant to the advance notice provisions contained in carrying out the responsibilities of a director. Generally, the following persons are not considered independent:Company’s Bylaws.
Director Onboarding and Education
Directors Receive Robust Orientation and Continuing Education Resources
The enhanced orientation process includes directors going to our orientation classes for new crewmembers and “shadowing” certain operational leaders to help them appreciate the industry’s complexities. The Board works with leadership on an ongoing basis to continue to enhance the orientation program. | |
Continuing education – We provide our directors with educational opportunities to enhance the skills and knowledge they use to perform their responsibilities, including a |
In making these determinations, the Board reviewed and discussed information provided by the directors with regard to each director’s business and personal activities as they may relate to JetBlue and our management. Our full Board affirmatively determined that each of Peter Boneparth, David Checketts, Virginia Gambale, Stephan Gemkow, Ellen Jewett, Stanley McChrystal, Joel Peterson, Frank Sica and Thomas Winkelmann are independent. With respect to Ms. Gambale, Mr. Checketts and Mr. Gemkow, the Board considered all factors specifically relevant to determining whether a director has a relationship to the Company which is material to that director’s ability to be independent from management in connection with the duties of a Compensation Committee member. Further, with respect to Mr. Boneparth, Ms. Gambale and Ms. Jewett, the Board considered the additional requirements of NASDAQ and the SEC specifically relevant to whether a director is independent for purposes of serving on the Audit Committee. Based upon the Board’s review, each of our Audit Committee, Compensation Committee, and Corporate Governance and Nominating Committee of the Board are comprised of directors who have been determined to be independent under the applicable NASDAQ listing standards and applicable rules and regulations of the SEC. Mr. Hayes is not independent as defined.JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 22
Board Structure and Meetings
Our Board of Directors conducts its business through meetings of the Board and through activities of its committees. The Board of Directors and its committees meet throughout the year on a set schedule and also hold special meetings and act by written consent from time to time as appropriate. Board agendas include regularly scheduled executive sessions of the non-management directors to meet without the presence of management, which are presided over by our Chairman of the Board, who is currently Joel Peterson. Our Board of Directors currently has an Audit Committee, a Compensation Committee, a Corporate Governance and Nominating Committee and an Airline Safety Committee. The Board has delegated various responsibilities and authority to different committees of the Board. From time to time, the Board of Directors appoints ad hoc committees to oversee special projects for the Board. Committees regularly report on their activities and actions to the full Board of Directors. Members of the Board have access to all of our crewmembers outside of Board meetings. The Board of Directors held a total of six meetings during 2015. All of the directors attended at least 75% of the aggregate of all meetings of the Board and of each committee at the times when he or she was a member of the Board or such committee during fiscal year 2015. The Company has a policy encouraging at least a majority of our directors to attend each annual meeting of stockholders. All of the members of our Board of Directors attended our 2015 annual meeting of stockholders held on May 21, 2015.
COMMITTEE MEMBERSHIP AS OF MARCH 2016Evaluation Components – Board, Committees, Directors
Under the leadership of the committee Chair, the Governance and Nominating Committee oversees the Board’s annual evaluation process focused on three components: (1) the Board, (2) Board committees and (3) the Board chair. In addition, the Governance and Nominating Committee regularly discusses Board composition and effectiveness during its committee meetings.
In 2021, to continue to enhance its processes, the Board performed a robust self-evaluation, involving individual interviews and feedback provided to the General Counsel. The General Counsel provided the Board with themes and areas of opportunity for the Board to discuss and to consider in the future. This process generated meaningful comments and engaged discussion at all levels of the Board, including with respect to Board composition, Board meeting structure and content, Company internal controls and compliance and leadership succession planning and talent.
Our Corporate Governance Framework
Our governance framework is designed to ensure our Board has the necessary skills, expertise, authority and practices in place to review and evaluate leadership and our business operations in an independent manner. Our goal is to align the interests of directors, leadership, stockholders and our other stakeholders, and comply with or exceed the requirements of Nasdaq and applicable law and implement best practices. This framework establishes the practices our Board follows with respect to, among other things, Board composition and director nominations, Board meetings and involvement of senior leadership, director compensation, CEO performance evaluation, leadership succession planning, and Board committees.
Our Corporate Governance Documents | |||||
Amended and Restated Certificate of Incorporation | Audit Committee Charter | ||||
Amended and Restated Bylaws | Compensation | ||||
Governance and Nominating Committee | |||||
Airline Safety Committee Charter | |||||
Finance Committee Charter | |||||
Technology Committee Charter | |||||
Audit CommitteeHow to Communicate with Our Board
On behalfStockholders may communicate with our Board by sending correspondence to the JetBlue Board of Directors, c/o Corporate Secretary,JetBlue Airways Corporation, 27-01 Queens Plaza North, Long Island City, New York 11101. The name of any specific intended director should be noted in the correspondence. Our Corporate Secretary will forward such correspondence to the intended recipient or as directed by such correspondence; however, our Corporate Secretary, prior to forwarding any correspondence, has the authority to disregard any communications he deems to be inappropriate, or to take any other appropriate actions with respect to such inappropriate communication.
The Governance and Nominating Committee approved procedures with respect to the receipt, review and processing of, and any response to, written communications sent by stockholders and other interested persons to our Board, as set forth in our Corporate Governance Guidelines.
Any interested party, including any JetBlue crewmember, may make confidential, anonymous submissions regarding questionable accounting or auditing matters or internal accounting controls and may communicate directly with the Chair of the Board by letter to the above address, marked for the attention of Directors, the Audit Committee oversees (i) the integrity of our financial statements, (ii) the appointment, compensation, qualifications, independence and performance of our independent registered publicChair. Any written communication regarding accounting, firm, (iii) compliance with ethics policies and legal and regulatory requirements, (iv) the performance of our internal audit function and (v) our financial reporting process and systems of internal accounting andcontrols or other financial controls. The Audit Committee is also responsible for determining whether to approve any related party transactions required to be disclosed pursuant to Item 404(a) of Regulation S-K. The responsibilities and activities of the Audit Committeematters are further describedprocessed in “Report of the Audit Committee” and the Audit Committee charter. The Audit Committee operates under a written charter, which wasaccordance with procedures adopted by the Board of Directors and is available on our website athttp://investor.jetblue.com.Audit Committee.
The current members of the Audit Committee are Peter Boneparth (Chair), Virginia Gambale and Ellen Jewett, each of whom is an independent director within the meaning of the applicable rules and regulations of the SEC and NASDAQ. The Board has determined that each member of the Audit Committee is financially literate within the meaning of the NASDAQ listing standards. In addition, the Board of Directors determined that Mr. Boneparth is an “audit committee financial expert” as defined under applicable SEC rules. The Audit Committee meets a minimum of four times a year, and holds such additional meetings as it deems necessary to perform its responsibilities. The Audit Committee met ten times during fiscal year 2015. A report of the Audit Committee is set forth elsewhere in this proxy statement.JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 23
Compensation Committee
The Compensation Committee determines our compensation policies and the level and forms of compensation provided to our Board members and executive officers, as discussed more fully under “Compensation Discussion and Analysis” beginning on page 25 of this proxy statement. In addition, the Compensation Committee reviews and approves stock-based compensation for our directors, officers and employees, and oversees the administration of our Amended and Restated 2011 Incentive Compensation Plan (the ���2011 Incentive Compensation Plan”) and our Amended and Restated 2011 Crewmember Stock Purchase Plan (the “2011 Crewmember Stock Purchase Plan”). Additionally, the Compensation Committee approves the “Compensation Discussion and Analysis” with respect to compensation of the Company’s executive officers in accordance with applicable rules of the SEC and provides a report in the Company’s annual proxy statement indicating that the Committee recommends to the Board of Directors that the “Compensation Discussion and Analysis” be included in the Company’s annual proxy statement and annual report on Form 10-K. The Compensation Committee is authorized to retain and terminate compensation consultants, legal counsel or other advisors to the Committee and to approve the engagement of any such consultant, counsel or advisor, to the extent it deems necessary or appropriate after specifically analyzing the independence of any such consultant retained by the Committee. The charter of the Compensation Committee is available on our website athttp://investor.jetblue.com. The current members of the Compensation Committee are David Checketts, Virginia Gambale (chair), and Stephan Gemkow, each of whom is an independent director within the meaning of the applicable NASDAQ rules, including the enhanced independence requirements applicable to members of compensation committees. The Compensation Committee meets a minimum of four times a year, and holds such additional meetings as it deems necessary to perform its responsibilities. The Compensation Committee met seven times during fiscal year 2015. A report of the Compensation Committee is set forth elsewhere in this proxy statement.
Corporate Governance and Nominating Committee
Director Nominee Selection Process
The Corporate Governance and Nominating Committee is responsible for developing our corporate governance policies and procedures, and for recommending those policies and procedures to the Board a slate of director nominees for adoption. This Committee also is responsible for making recommendations to the Board regarding the size, structure and functionselection at each annual meeting of the Board and its committees.stockholders. The Corporate Governance and Nominating Committee identifies and recommends new director nominees in accordance with selection criteria established by the Board.considers a wide range of factors when assessing potential nominees. This Committee also is responsible for conducting the annual evaluationassessment includes a review of the performancepotential nominee’s judgment, experience, independence and understanding of the Company’s business and of the industry in which the Company operates and such other factors as the Committee concludes are pertinent in light of the current needs of the Board its committeesbased on the Company’s short and each director, ensuring that the Audit, Compensation,longer term strategy. The Board considers diversity of viewpoints, background, race, gender, LGBTQ+ status, ethnicity, experience, accomplishments, education and Corporate Governance and Nominating Committees of the Board and all other Board committees are comprised of qualified directors, developing and recommending a succession plan for the Chief Executive Officer, and developing and recommending corporate governance policies and procedures appropriate to the Company.skills when evaluating nominees. The charter of the Corporate Governance and Nominating Committee is availableformally engaged an external search firm to assist in identifying potential nominees in 2021 and has emphasized the importance of diversity in its instructions to the search firm. As with any board of directors, the Board’s needs change and develop over time. A potential nominee’s qualifications are evaluated to determine whether the potential nominee meets the qualifications required of all directors as well as the key qualifications and experience required to be represented on our website athttp://investor.jetblue.com. The current members of the CorporateBoard, as described above. Further, the Governance and Nominating Committee are Stanley McChrystal, Joel Peterson (Chair)assesses how each potential nominee would impact the skills, experience, culture and Frank Sica, eachdiversity represented on the Board as a whole in the context of whom is an independent director within the meaning of applicable NASDAQ rules. The Corporate GovernanceBoard’s overall composition and Nominating Committee meets a minimum of four times a year,the Company’s current and holds such additional meetings as it deems necessary to perform its responsibilities. The Corporate Governance and Nominating Committee met five times during fiscal year 2015.future needs.
Airline Safety Committee
The Airline Safety Committee is responsible for monitoring and review of our flight operations and safety management system and reports to the Board of Directors on such topics. The charter of the Airline Safety Committee is available on our website athttp://investor.jetblue.com. The current members of the Airline Safety Committee are Robin Hayes, Stanley McChrystal (Chair) and Thomas Winkelmann. The Airline Safety Committee meets a minimum of four times a year, and holds such additional meetings as it deems necessary to perform its responsibilities. The Airline Safety Committee met four times during fiscal year 2015.
Board Candidate Nomination Process
In evaluating and determining whether to nominate a candidate for a position on our Board, the Corporate Governance and Nominating Committee considers, among other criteria, integrity and values, relevant experience, diversity, and commitment to enhancing stockholder value. Candidates may come to the attention of the Corporate Governance and Nominating Committee through recommendations from a search firm, current Board members, stockholders, officers, crewmembers or other recommendations.stakeholders. The committee reviews all candidates inCommittee applies the same mannercriteria in reviewing all candidates regardless of the source of the recommendation.
Stockholder-Nominated Director Candidates
The Corporate GovernanceBoard adopted revisions to our Bylaws, putting into place balanced and Nominating Committee will consider stockholder recommendationsmarket-standard proxy access provisions. We believe that these provisions provide meaningful, effective and accessible proxy access rights to our stockholders, while balancing those benefits against the risk of candidates when the recommendationsmisuse or abuse by stockholders with special interests that are properly submitted in accordance with the provisionsnot shared by all or a significant percentage of our Bylaws. Astockholders. Our proxy access provisions permit a stockholder, who wishesor a group of up to recommend a prospective nominee for our Board should notify20 stockholders, owning continuously 3% or more of the Company’s Corporate Secretary in writingoutstanding common stock for at JetBlue Airways Corporation, 27-01 Queens Plaza North, Long Island City, New York 11101. The notice must set forth certain information specifiedleast three years to nominate and include in the Bylaws about the stockholder and the proposed action. The sizeCompany’s proxy materials for an annual meeting of our Board is currently set at eleven members but will be reducedstockholders up to ten members following the annual meeting. Directors are authorized to fill any vacancy on the Board.
Compensation Committee Interlocks and Insider Participation
None of the current members of our Compensation Committee (whose names appear under “— Report of the Compensation Committee”) is, or has ever been, an officer or employee of the Company or any of its subsidiaries. In addition, during the last fiscal year, no executive officer of the Company served as a member 20%of the Board of Directors or(or if such amount is not a whole number, the compensation committee of any other entity that has one or more executive officers serving onclosest whole number below 20%, but not less than two directors) if such nominating stockholder(s)and nominee(s) satisfy the requirements set forth in our Board or our Compensation Committee.Bylaws.
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 24
DIRECTOR COMPENSATIONBoard Membership Criteria
The Board and its Governance and Nominating Committee believe there are general qualifications that all directors must exhibit and other key qualifications and experience that should be represented on the Board as a whole, but not necessarily by each individual director. In addition, the Board conducts interviews of potential director candidates to assess intangible qualities, including the individual’s ability to ask difficult questions and, simultaneously, to work collegially.
BOARD MEMBERSHIP CRITERIA | |
Independence | |
Integrity | |
Track record of success | |
Business judgment | |
Innovative thinking | |
Diversity | |
Familiarity with and respect for corporate governance requirements and practices | |
Ability and willingness to commit sufficient time to the Board |
Our Board is composed of a diverse group of leaders in their respective fields. Many of our current directors have leadership experience at major companies with operations inside and outside the United States, as well as experience on other companies’ boards, which provides an understanding of different business processes, challenges and strategies. Other directors have experience at academic or financial services institutions which we believe brings unique perspectives to the Board. Further, each of our directors has other specific qualifications that make him or her a valuable member of our Board, such as financial literacy, talent and brand management, customer service experience and crewmember relations, as well as other experience that provides insight into issues we face.
In 2021, Nasdaq and the SEC issued a rule requiring disclosure of diversity of board members. Under the new rule, most Nasdaq-listed companies must have at least two diverse members of the board by the later of: (i) August 6, 2025; and (ii) the date of the filing of the proxy materials for the annual stockholders’ meeting held in 2025. We currently meet this threshold (see –Board Composition). While the Board does not have a specific diversity policy, it considers diversity of viewpoints, background, race, gender, ethnicity, LGBTQ+status, experience, accomplishments, education and skills when identifying and evaluating nominees. Diversity is important because the Board believes that a variety of points of view that comes from a board that is diverse contributes to a more effective decision-making process. When recommending director nominees for election by stockholders, the Board and its Governance and Nominating Committee focus on how the experience, skill set and diversity of each director nominee complements those of fellow director nominees to create a balanced Board with diverse backgrounds, viewpoints and deep expertise. The Board believes that directors should contribute positively to the existing chemistry and collaborative culture among Board members. The Board also believes that its members should possess a commitment to the success of the Company, proven leadership qualities, sound judgment and a willingness to engage in constructive debate. In determining whether an incumbent director should stand for reelection, the Governance and Nominating Committee considers, with respect to each nominee, the above factors, as well as that director’s personal and professional integrity, the prior years’ attendance record, preparedness, participation and candor, any additional criteria set forth in our Corporate Governance Guidelines and other relevant factors as determined by the Board. Periodically, the Governance and Nominating Committee reviews the Company’s short- and long-term business plans to gauge what additional current and future skills and experience should be represented on the Company’s Board. The Governance and Nominating Committee seeks to use the results of the assessment process as it identifies and recruits potential director candidates.
Director compensationIndependence
Having an independent Board is evaluateda core element of our governance philosophy. Our Corporate Governance Guidelines provide that a substantial majority of our directors will be independent, including within the meaning of the applicable independence requirements of Nasdaq. Our Board has adopted director independence guidelines to assist in determining each director’s independence. These guidelines are available on the investor relations page of our website, http://investor.jetblue.com.
Each year, in assessing director independence, the Board affirmatively determines whether a director has no relationship that would interfere with the exercise of independent judgment in carrying out his or her responsibilities as a director. Annually, each director completes a detailed questionnaire that provides information about relationships that might affect the determination with respect to his or her independence.
The Board analyzed the independence of each director and nominee and determined bythat Mses. Jewett, McClure and Robb O’Hagan and Messrs. Baldanza, Boneparth, Ford, Leduc, Sharma and Winkelmann meet the Compensation Committeestandards of independence under applicable Nasdaq listing standards, including, as applicable to members of those committees, the enhanced standards for audit and compensation committee independence, and that each member is free of any relationship that would interfere with her or his individual exercise of independent judgment. Robin Hayes, our CEO, is our only director who is not deemed to be independent.
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 25
Director Attendance
The Board held a total of 10 meetings during 2021. All of the directors attended at least 75% of the aggregate of all meetings of the Board and of each committee at the times when he or she was a member of the Board or such committee during fiscal year 2021. The Company has a policy encouraging all directors to attend each annual meeting of stockholders. All members of our Board attended our 2021 annual meeting of Directors. stockholders held on May 13, 2021.
2022 Director Nominees
There are currently ten members of our Board and, assuming the election of all nominees, immediately following the 2022 annual meeting the size of our Board will continue to be set at ten directors.
At the 2022 annual meeting, ten directors are to be elected to hold office until the 2023 annual meeting and until their successors have been elected and qualified. All nominees are current JetBlue Board members who were elected by stockholders at the 2021 annual meeting. Based on the recommendation of the Governance and Nominating Committee, the Board has nominated each of B. Ben Baldanza, Peter Boneparth, Monte Ford, Robin Hayes, Ellen Jewett, Robert Leduc, Teri McClure, Sarah Robb O’Hagan, Vivek Sharma and Thomas Winkelmann, to be elected as a director of the Company to serve on our Board until the 2023 annual meeting of stockholders and until such time as their respective successors have been duly elected and qualified or until his or her earlier death, disability, resignation, retirement, disqualification or removal from office.
The Board has no reason to believe that any of the nominees named in this proxy statement would be unable or unwilling to serve as a director if elected. However, if before the 2022 annual meeting, any nominee is unable to serve or for good cause will not serve as a director if elected, the Board may reduce the number of directors to eliminate the vacancy or the Board may fill the vacancy at a later date after selecting an appropriate nominee. If a quorum is present, a substitute nominee for election to a position on the Board will be elected by a majority of the votes cast at the 2022 annual meeting.
Included in each director nominee’s biography below is a description of select key qualifications and experience of such nominee based on the qualifications described above. The Board and the Governance and Nominating Committee believe that the combination of the various qualifications and experiences of the director nominees would contribute to an effective and well-functioning board and that, individually and as a whole, the director nominees possess the necessary qualifications to provide effective oversight of the business and quality advice and counsel to the Company’s leadership.
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 26
TO ELECT DIRECTORS
What are you voting on? ■ Stockholders are being asked to elect ten (10) director nominees for a one-year term. Voting recommendation: ■ FOR the election of each director nominee. The Board and its Governance and Nominating Committee believe that each of the ten (10) director nominees possess the necessary qualifications and experiences to provide quality advice and counsel to the Company’s leadership and effectively oversee the long-term interests of the stockholders. All nominees are current JetBlue Board members who were elected by the stockholders at the 2021 annual meeting. |
YOUR BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL. |
B. BEN Age 60 Director since: 2018 INDEPENDENT JETBLUE BOARD ■ Audit (Chair) ■ Airline Safety ■ Finance | EXPERIENCE: Current Role: ■ Owner and CEO of Diemacher, LLC, an advisory firm helping businesses restructure, grow revenue, and reduce costs. ■ CEO Semper Paratus Acquisition Corporation, a special purpose acquisition corporation seeking a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. Current Public Company Board: ■ JetBlue Airways Corporation ■ Six Flags Entertainment Corporation Prior Business and Other Experience: ■ From 2006 to 2016, Mr. Baldanza was the CEO, President and a member of the Board of Directors of Spirit Airlines, Inc., a commercial passenger airline, and in 2005, its President and Chief Operating Officer. Prior to his role at Spirit, Mr. Baldanza held positions in Finance, Marketing and Operations at other airlines, including American Airlines, Northwest Airlines, Continental Airlines, Taca Airlines and U.S. Airways. He has more than 30 years of experience in the aviation industry. | Key Qualifications: ■ As the former Chief Executive Officer of a domestic airline, Mr. Baldanza’s experience and qualifications include finance and investment experience, a deep understanding of human resources and labor relations, airline operational experience, knowledge of the competitive landscape, experience with government and regulatory affairs, risk management, including commodities risk, customer service and brand enhancement, international experience and general airline industry knowledge. Mr. Baldanza has extensive commercial and operational experience with expertise in revenue management and productivity. |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 27
PETER Age 63 Director since: 2008 INDEPENDENT INDEPENDENT BOARD CHAIR JETBLUE BOARD COMMITTEES*: ■ Finance (Chair) ■ Compensation ■ Governance & Nominating | EXPERIENCE: Current Role: ■ Former senior advisor to a division of The Blackstone Group, LLP, an investment management firm. Current Public Company Boards: ■ JetBlue Airways Corporation, Independent Board Chair ■ Kohl’s Corporation Prior Business and Other Experience: ■ Mr. Boneparth was a Senior Advisor of Irving Capital Partners, a private equity group, from February 2009 through 2014. He served as President and CEO of the Jones Apparel Group, an apparel company, from 2002 to 2007. | Key Qualifications: ■ As a senior retail executive, Mr. Boneparth’s qualifications and experience include finance and investment, talent management, international business experience, knowledge of brand enhancement and customer service, oversight of risk management and crewmember relations. |
MONTE FORD Age 62 Director since: 2021 INDEPENDENT JETBLUE BOARD COMMITTEES*: ■ Audit ■ Technology | EXPERIENCE: Current Role: ■ Principal Partner at the Chief Information Officer Strategy Exchange, a membership program for technology executives and a technology industry consultant. Current Public Company Boards: ■ JetBlue Airways Corporation ■ Akamai Technologies, Inc. ■ Iron Mountain Inc. Prior Business and Other Experience: ■ Mr. Ford served as Executive Chair and Chief Executive Officer of Aptean Software, an enterprise business software provider, from 2012 to 2013, and as Chief Information Officer of AMR Corporation (now known as American Airlines Group), an airline holding company, from 2000 to 2011. Prior to that, Mr. Ford held executive management positions with The Associates First Capital Corporation, Bank of Boston and Digital Equipment Corporation. He has served as a director of several institutions, as well as on the Research Board and CIO Strategy Exchange. | Key Qualifications: ■ As a thought leader and former technology executive, Mr. Ford’s qualifications and experience include diverse leadership experiences and an extensive background in information technology, including in the airline industry. |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 28
ROBIN HAYES Age 55 Director since: 2015 JETBLUE BOARD COMMITTEES*: ■ Airline Safety ■ Technology | EXPERIENCE: Current Role: ■ JetBlue CEO Current Public Company Board: ■ JetBlue Airways Corporation ■ KeyCorp Prior Business and Other Experience: ■ Mr. Hayes has been JetBlue’s CEO since June 2018. He served as president and Chief Executive Officer from 2015 to May 2018. From 2014 to 2015, Mr. Hayes was JetBlue’s President, responsible for the airline’s commercial and operations areas including Airport Operations, Customer Support (Reservations), Flight Operations, Inflight, System Operations, Technical Operations, as well as Communications, Marketing, Network Planning and Sales. He served as JetBlue’s Executive Vice President and Chief Commercial Officer from August 2008 until December 2013. Prior to joining JetBlue, Mr. Hayes was the Executive Vice President for The Americas for British Airways, a commercial airline. Over the span of a 19-year career with British Airways, he also served as Area General Manager for Europe, Latin America and the Caribbean. Mr. Hayes currently serves as the Board Chair of the IATA Board of Governors. | Key Qualifications: ■ As a senior airline executive, Mr. Hayes’ qualifications include over 30 years of aviation experience, knowledge of the competitive landscape, brand enhancement and management. |
ELLEN Age 63 Director since: 2011 INDEPENDENT JETBLUE BOARD COMMITTEES*: ■ Governance & Nominating (Chair) ■ ESG (Chair) ■ Audit ■ Finance | EXPERIENCE: Current Role: ■ Managing Partner of Canoe Point Capital, LLC, an investment firm focusing on early stage social ventures. Current Public Company Board: ■ JetBlue Airways Corporation ■ Booz Allen Hamilton Holding Corporation Prior Business and Other Experience: ■ Ms. Jewett was the Managing Director Head of U.S. Government and Infrastructure for BMO Capital Markets, a financial services institution, covering airports and infrastructure banking from 2010 to 2015. Prior to that, Ms. Jewett spent more than 20 years at Goldman, Sachs & Co., a global financial institution, specializing in airport infrastructure financing, most recently serving as head of the public sector transportation group, and previously, as head of the airport finance group. Ms. Jewett served as the President of the Board of the Brearley School through June 2018. She is a director for Foundation Credit Opportunities (FCO) U.S. and Offshore Feeder Funds and a Trustee of Children’s Aid in New York City. | Key Qualifications: ■ As a finance professional, Ms. Jewett’s qualifications and experience include domestic and international finance, business and investment experience, talent management and experience in the areas of airports and infrastructure. |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 29
ROBERT Age 66 Director since: 2020 INDEPENDENT JETBLUE BOARD COMMITTEES*: ■ Airline Safety ■ Audit ■ Finance | EXPERIENCE: Current Role: ■ Former President of UTC’s jet engine manufacturer, Pratt & Whitney and Sikorsky Aircraft. Current Public Company Board: ■ JetBlue Airways Corporation ■ Howmet Aerospace ■ AAR Corp. Prior Business and Other Experience: ■ Mr. Leduc served as President of Pratt & Whitney, an aerospace manufacturer, from 2016 until early 2020. He had led helicopter manufacturer Sikorsky Aircraft, an aircraft manufacturer, from 2015-2016, when UTC sold Sikorsky to defense contractor Lockheed Martin Corp. Previously, Mr. Leduc served in leadership positions at Hamilton Sundstrand and UTC Aerospace Systems, each an aerospace company. | Key Qualifications: ■ As a former senior aviation executive, Mr. Leduc’s qualifications include over 42 years of aviation experience, with significant maintenance and engine related experience, brand enhancement, finance and talent management. |
TERI Age 58 Director since: 2019 INDEPENDENT JETBLUE BOARD COMMITTEES*: ■ Compensation (Chair) ■ ESG ■ Governance & Nominating | EXPERIENCE: Current Role: ■ Former Chief Human Resources Officer of United Parcel Service. Current Public Company Board: ■ JetBlue Airways Corporation ■ Fluor Corporation ■ GMS, Inc. ■ Lennar Corp. Prior Business and Other Experience: ■ From 1995 until her retirement in 2019, Ms. McClure worked at UPS, serving most recently as Chief Human Resources Officer. She has also held additional positions and responsibilities on the UPS Executive Leadership Team, including General Counsel and Corporate Secretary, and Audit and Global Ethics and Compliance, among other roles. | Key Qualifications: ■ As a Chief Human Resources Officer and General Counsel as well as an aviation executive with nearly 25 years of experience, Ms. McClure’s qualifications and experience include legal acumen, talent management, labor issues, aviation management, risk management oversight and international business experience. |
SARAH ROBB Age 49 Director since: 2018 INDEPENDENT JETBLUE BOARD COMMITTEES*: ■ Compensation ■ Technology | EXPERIENCE: Current Role: ■ CEO of EXOS, the Human Performance Company Current Public Company Board: ■ JetBlue Airways Corporation Prior Business and Other Experience: ■ Prior to EXOS, Ms. Robb O’Hagan served as the Chief Executive Officer of the indoor cycling company Flywheel Sports from 2016 to 2018, and became the author and founder behind Extreme Living LLC, a content platform to unleash potential in diverse aspiring leaders. She previously served as global president of Equinox, a luxury fitness company, from 2012 to 2016, where she led the upgrading of the offering through a significant technology transformation, and global president of Gatorade, a sports nutrition business, from 2008 to 2012, where she successfully led the business through a major repositioning and business turnaround. | Key Qualifications: ■ As a CEO, entrepreneur and author, Ms. Robb O’Hagan’s qualifications and experience include marketing and brand expertise, digital transformation, lifestyle brands, talent management, technology, risk management oversight and international business and operating company experience. |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 30
VIVEK Age 47 Director since: 2019 INDEPENDENT JETBLUE BOARD COMMITTEES*: ■ Audit ■ Technology (Chair) | EXPERIENCE: Current Role: ■ CEO of InStride, a strategic enterprise education™ company. Current Public Company Board: ■ JetBlue Airways Corporation Prior Business and Other Experience: ■ Mr. Sharma previously served as Senior Vice President of eCommerce and Digital Guest Experience at The Walt Disney Company, a worldwide entertainment company, from 2013-2018, and is also an adjunct professor of data science at the University of Southern California’s Marshall School of Business. Earlier in his career, he was the General Manager of Yahoo Mail & Messenger, a web services provider, Vice President of Product Management of Yahoo Search, and Associate Partner with the Technology Practice of McKinsey & Company, a management consulting firm. | Key Qualifications: ■ As a CEO, entrepreneur, author and professor, Mr. Sharma’s qualifications and experiences include digital transformation data science, ecommerce and digital guest experience, workforce online education and talent management. |
THOMAS Age 62 Director since: 2013 INDEPENDENT JETBLUE BOARD COMMITTEES*: ■ Airline Safety (Chair) ■ Compensation ■ ESG ■ Governance & Nominating | EXPERIENCE: Current Role: ■ Executive Chair of Zeitfracht Group, a logistics company based in Berlin, Germany. Current Public Company Board: ■ JetBlue Airways Corporation Prior Public Company Board: ■ Lufthansa CityLine GmbH ■ Air Dolomiti S.p.A. Linee Aeree Regionali Europee. Prior Business and Other Experience: ■ Before joining Zeitfracht, Mr. Winkelmann served as CEO of airberlin, a commercial airline, from 2017 through 2018. He previously served as the Chief Executive Officer of Lufthansa German Airlines (Hub Munich), a commercial airline, since in 2016 and was a member of the Group Executive Committee of Lufthansa Group. From 2006 through 2015, he served as Chief Executive Officer of Germanwings GmbH, a commercial airline. | Key Qualifications: ■ As a senior airline executive, Mr. Winkelmann’s qualifications and experience include sales, marketing, revenue management, airline operations, knowledge of North America, Latin America and the Caribbean as well as general airline industry knowledge. |
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” EACH NOMINEE. |
* | Memberships as of the 2022 Annual Meeting. |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 31
Director Compensation
The Compensation Committee, with input from its independent compensation consultant, periodically reviews and evaluates director compensation. Our objective is to pay non-employee directors over time at or near the median of the proxy peer group, to award a significant component in equity, and to adjust as needed. Our Board reviews director compensation periodically, to ensure that the director compensation package remains competitive such that we are able to recruit and retain qualified directors.
COMPENSATION STRUCTURE FOR DIRECTORS FOR 2021 | |||
Annual base retainer (all non-employee directors) | $ | 80,000 | |
Annual equity award(1) | $ | 125,000 | |
Independent Board Chair supplemental fee | $ | 50,000 | |
Annual Audit Committee Chair supplemental fee | $ | 20,000 | |
Annual Compensation Committee Chair supplemental fee | $ | 15,000 | |
Annual G&N Committee Chair supplemental fee | $ | 10,000 | |
Annual Airline Safety Committee Chair supplemental fee | $ | 10,000 | |
Annual Finance Committee Chair supplemental fee | $ | 10,000 | |
Annual Committee membership fees: | |||
Audit | $ | 15,000 | |
Compensation, G&N, Airline Safety and Finance | $ | 10,000 | |
New directors DSU grant(2) | $ | 35,000 |
(1) | Directors annually elect DSUs or RSUs, each of which vest after one year of service. DSU settlement is deferred until a director’s separation from the Board. |
(2) | New director stock unit grants vest ratably over three years of service. Settlement is deferred until a director’s separation from the Board. |
As is customary in the airline industry, all members of the Board and their immediate family may travel without charge on our flights. We also provide directors with post-service travel benefits.
We reimburse our directors, including our full-time crewmember director, for expenses incurred in attending meetings. We do not provide gross-up payments to members of our Board.
In 2021, Mr. Leduc donated $5,585, Mr. Baldanza donated $2,700, and Ms. Robb O’Hagan donated $900 of the cash portion of their respective Board compensation to the JetBlue Crewmember Crisis Fund, a non-profit organization that assists JetBlue crewmembers facing emergency hardship situations.
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 32
Fiscal Year 2021 Director Compensation
The following table summarizes compensation paid to our non-employee directors for services rendered during the fiscal year ended December 31, 2015.2021. The footnotes to the table and narrative discussion followingpreceding the table describe details of each form of compensation paid to, or earned by, our directors and other material factors relating to the director compensation arrangements.
Name | Fees Earned or Paid in Cash | Stock Awards | Options | Total |
(a) | ($) (b) | ($)(1)(c) | ($)(2)(d) | ($) (h) |
Robin Hayes(3) | - | - | - | |
David Barger(3) | - | - | - | - |
Jens Bischof | 56,250 | 59,999 | - | 116,249 |
Peter Boneparth | 85,000 | 59,999 | - | 144,999 |
David Checketts | 59,500 | 59,999 | - | 119,499 |
Virginia Gambale | 78,500 | 59,999 | - | 138,499 |
Stephan Gemkow | 61,000 | 59,999 | - | 120,999 |
Ellen Jewett | 65,000 | 59,999 | - | 124,999 |
Stanley McChrystal | 70,000 | 59,999 | - | 129,999 |
Joel Peterson | 90,000 | 59,999 | - | 149,999 |
Ann Rhoades(4) | 35,500 | 59,999 | - | 95,499 |
Frank Sica | 60,000 | 59,999 | - | 119,999 |
Thomas Winkelmann | 58,750 | 59,999 | - | 118,749 |
Fees Earned or Paid in Cash ($) | Stock Awards ($) | (1) | All Other Compensation ($) | (2) | Total ($) | ||||||||||
Robin Hayes(3) | – | – | – | – | |||||||||||
Ben Baldanza | 135,000 | 124,984 | 1,726 | 261,710 | |||||||||||
Peter Boneparth | 166,667 | 124,984 | 14,524 | 306,175 | |||||||||||
Monte Ford(4) | 95,000 | 159,972 | 2,169 | 257,141 | |||||||||||
Virginia Gambale(5) | 50,000 | 124,984 | 492 | 175,476 | |||||||||||
Ellen Jewett | 125,000 | 124,984 | 3,520 | 253,504 | |||||||||||
Robert Leduc | 111,667 | 124,984 | – | 236,651 | |||||||||||
Teri McClure | 110,000 | 124,984 | – | 234,984 | |||||||||||
Sarah Robb O’Hagan | 90,000 | 124,984 | 5,198 | 220,182 | |||||||||||
Vivek Sharma | 95,000 | 124,984 | 1,474 | 221,458 | |||||||||||
Thomas Winkelmann | 120,000 | 124,984 | 6,190 | 251,174 |
(1) | Includes |
(2) | |
(3) | Mr. Hayes |
(4) | Mr. Ford joined the Board on January 19, 2021. |
(5) | Ms. |
In 2015, our director compensation package was composed of an annual retainer fee of $55,000 (paid quarterly) and a committee retainer, with Audit Committee members being paid $10,000 per year for committee membership, Compensation Committee members being paid $6,000 per year for committee membership, and Corporate Governance and Nominating Committee and Airline Safety Committee members each being paid $5,000 per year for committee membership. Committee chairs were paid the following annual retainers: Audit Committee: $30,000; Compensation Committee: $16,000; Corporate Governance and Nominating Committee: $10,000; and Airline Safety Committee: $10,000. The chairman of the Board is paid $25,000 per year. Board members also received an annual equity grant of $60,000 in deferred stock units, or DSUs, with a one-year vesting schedule. New directors were awarded $35,000 in DSUs with 3-year ratable vesting, made at the time a director joins Board. The intended cash-to-equity allocation of this package is 50% to 50%, with the objective of paying total annual compensation in the range of approximately $125,000 to $130,000 per Board member to each director who is not a committee chair, assuming attendance at all meetings of the Board and the standing committees on which the director serves.JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 33
In 2015, the Compensation Committee engaged Pay Governance LLC (“Pay Governance”), a compensation consulting firm, as its independent compensation advisor. At the Compensation Committee’s request, Pay Governance reviewed our director compensation program and recommended certain changes for the fiscal year 2016, including a recommendation to increase the amount of compensation our directors receive in the form of equity in order to ensure alignment with stockholder interests. Following Pay Governance’s recommendations, for the fiscal year 2016, our Board Compensation package consists of an annual retainer fee of $65,000 (paid quarterly). Fees beyond the annual retainer for both committee membership and Chair duties are described as “supplemental fees.” The Board chair’s supplemental fee is $50,000. Committee chairs are paid the following in supplemental fees: Audit Committee: $20,000; Compensation Committee: $10,000; Corporate Governance and Nominating Committee: $5,000; and Airline Safety Committee: $5,000. Committee membership fees were revised for 2016 as follows: Audit Committee members receive a supplemental fee of $15,000 per year, Compensation Committee members receive a supplemental fee of $10,000 per year, Corporate Governance and Nominating Committee members receive a supplemental fee of $10,000 per year and Airline Safety Committee members receive a supplemental fee of $10,000 per year.
Following the recommendation to increase in the amount of compensation our directors receive in the form of equity, the Compensation Committee raised the annual equity grant starting in 2016 to $100,000 in DSUs, with a one-year vesting schedule and a “hold until retirement” feature. No change was made to the initial equity grant for new directors, which is $35,000 in DSUs with a three-year ratable vesting. Given the retainer and supplemental fees described above, the intended cash-to-equity allocation of the revised package is 35% to 65%, with the objective of paying annual compensation of $165,000 per Board member to each director who is not on a committee.
Our Board expects to review director compensation periodically, to ensure that the director compensation package remains competitive such that we are able to recruit and retain qualified directors. Our non-employee directors receive flight benefits and reimbursement of expenses, as set forth below. As is customary in the airline industry, all members of the Board of Directors and their immediate family may travel without charge on our flights.
In 2015, Mr. Peterson donated his Board cash compensation and Mr. Sica donated $4,000 of the cash portion of his Board compensation to the JetBlue Crewmember Crisis Fund, a non-profit organization that assists JetBlue crewmembers facing emergency hardship situations.
We reimburse our directors, including our full-time crewmember directors, for expenses incurred in attending meetings. In 2015, no directors (including their family members) received $10,000 or more in aggregate perquisites or other personal benefits (including the incremental cost of flight benefits). We do not provide tax gross-up payments to members of our Board of Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSCertain Relationships and Related Transactions
We established a written policy that requires approval or ratification by our Audit Committee of any transaction in excess of $120,000, which involves a “Related Person’s” entry into an “Interested Transaction.” As defined in our policy, an Interested Transaction is any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which (i) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (ii) the Company is a participant, and (iii) any Related Person has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). A “Related Person” is defined in our policy as any (i) person who is or was (since the beginning of the last fiscal year for which the Company has filed a Form 10-K and proxy statement, even if he or she does not presently serve in that role) an executive officer, director or nominee for election as a director, (ii) greater than 5% beneficial owner of the Company’s common stock, or (iii) immediate family member of any of the foregoing. “Immediate family member” includes a person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law and anyone residing in such person’s home (other than a tenant or employee).
Our policy further provides that only disinterested directors are entitled to vote on any Interested Transaction presented for Audit Committee approval.
Joanna Geraghty, the Company’s President and Chief Operating Officer, is married to a partner in the law firm of Holland & Knight LLP (HK). The Company has used multiple lawyers at HK, including on occasion Ms. Geraghty’s husband, to perform various legal services for many years, and which period significantly predates Ms. Geraghty’s joining the Company in February 2005. In 2021, Ms. Geraghty’s spouse did not have a material interest in HK’s relationship with the Company as he was no longer involved in providing or supervising services that HK performs for the Company, he does not receive any direct compensation from the fees the Company pays to HK, and those fees in the last fiscal year were less than .18 percent of HK’s annual revenues. Under the Company’s related person transactions policy, the Audit Committee of the Company’s Board of Directors reviewed the Company’s relationship with HK. The Company has guidelines that require the Company’s General Counsel to review and pre-approve any future engagement of HK for legal services. The Company elected to voluntarily disclose its relationship with HK in this annual proxy statement.
Transactions with Related Persons since the Beginning of Fiscal Year 2021
The following table sets forth certain information known toCompany and its subsidiaries periodically enter into transactions in the Company regardingordinary course of business with other corporations of which the beneficial ownership of its common stock as of March 21, 2016, by (i) each person known by the Company to be the beneficial owner of more than 5% of the outstanding shares of its common stock, (ii) each of our directors and nominees, (iii) each of our namedCompany’s executive officers and (iv) allor directors or members of ourtheir immediate families may be directors, executive officers, and directors serving as of March 21, 2016, as a group. We have one class of voting securities outstanding which is entitled to one vote per share, subject to the limitations on voting by non-U.S. citizens described below under “Additional Information.” All share and option amounts and share prices and option exercise prices contained in this proxy statement have been adjustedor stockholders. There are no reportable transactions with related persons for our December 2002, November 2003 and December 2005 three-for-two stock splits.2021.
Common Stock Beneficially | ||||||
Owned and Shares | ||||||
Individuals Have the Right | Percentage | |||||
Executive Officers and Directors Name of Beneficial Owner | to Acquire within 60 Days(1) | Total(2) | of Class | |||
Robin Hayes | 400,893 | 603,216 | * | |||
Mark Powers | 241,908 | 346,758 | * | |||
James Hnat | 82,753 | 145,794 | * | |||
Martin St. George | 58,668 | 96,565 | * | |||
Alexander Chatkewitz | 1,045 | 9,364 | * | |||
Jens Bischof | - | 38,715 | * | |||
Peter Boneparth | - | 45,247 | * | |||
David Checketts | 27,000 | 79,247 | * | |||
Virginia Gambale | - | 52,247 | * | |||
Stephan Gemkow | - | 52,247 | * | |||
Ellen Jewett | - | 33,345 | * | |||
Stanley McChrystal | - | 38,597 | * | |||
Joel Peterson | 589,240 | 641,487 | * | |||
Frank Sica | 38,644 | 90,891 | * | |||
Thomas Winkelmann | - | 20,361 | * | |||
All executive officers and directors as a group (15 persons) | 1,498,819 | 2,294,081 | 0.5%, 0.7% | |||
5% Stockholders Name of Beneficial Owner | ||||||
BlackRock, Inc.(3) | 22,089,915 | 6.86% | ||||
FMR LLC(4) | 22,268,790 | 6.91% | ||||
PRIMECAP Management Company(5) | 20,107,514 | 6.24% | ||||
The Vanguard Group(6) | 23,771,021 | 7.38% | ||||
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 34
MANAGEMENT PROPOSAL 2
■ | Stockholders are being asked to approve, on an advisory basis, the compensation of the named executive officers as disclosed pursuant to the SEC’s compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the accompanying compensation tables and related narrative in this proxy statement). | |
■ | ||
As required by Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are providing stockholders with a non-binding advisory vote to approve the compensation of the named executive officers as described in the Compensation Discussion and Analysis, the accompanying compensation tables and related narrative in this proxy statement.
In deciding how to vote on this proposal, the Board encourages you to read the Compensation Discussion and Analysis, the accompanying compensation tables and related narrative in this proxy statement. For the reasons outlined above and elsewhere in this proxy statement, we believe that our executive compensation program is well designed, appropriately aligns executive pay with Company performance and incentivizes desirable behavior.
The Board recommends that stockholders vote FOR the following resolution:
“RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the Company’s Named Executive Officers, as disclosed in this proxy statement, including the Compensation Discussion and Analysis, the accompanying compensation tables and the related narrative.”
Because your vote is advisory, it will not be binding upon the Board. However, the Board values stockholders’ opinions, and the Compensation Committee will take into account the outcome of the advisory vote when considering future executive compensation decisions. The Board has adopted a policy of providing for annual advisory votes from stockholders on executive compensation. The next such vote will occur at the 2023 Annual Meeting of Stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 35
The Audit Committee of the Board has appointed Ernst & Young LLP as the independent registered public accounting firm to audit the Company’s consolidated financial statements and internal control over financial reporting for the fiscal year ending December 31, 2016. Representatives of Ernst & Young LLP will be present at the annual meeting to respond to appropriate questions from stockholders and make a statement if desired.
While the Audit Committee retains Ernst & Young LLP as our independent registered public accounting firm, the Board of Directors is submitting the selection of Ernst & Young LLP to the stockholders for ratification.
Unless contrary instructions are given, shares represented by proxies solicited by the Board will be voted for the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2016. If the selection of Ernst & Young LLP is not ratified by the stockholders, the Audit Committee will reconsider the matter. Even if the selection of Ernst & Young LLP is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change is in our best interests.
Fees to Independent Registered Public Accounting Firm
The following table presents fees for professional services rendered by Ernst & Young LLP for the years ended December 31, 2015 and 2014, respectively, and fees billed for other services rendered by Ernst & Young LLP during those periods.
2015 | 2014 | |||||||
Audit fees(1) | $ | 1,733,850 | $ | 1,598,900 | ||||
Audit-related fees(2) | $ | 35,750 | $ | 86,500 | ||||
Tax fees(3) | $ | 46,950 | $ | 99,895 | ||||
TOTAL | $ | 1,816,550 | $ | 1,785,295 |
COMPENSATION PHILOSOPHY AND GOVERNANCE | 37 |
COMPENSATION PROGRAM DESIGN | 41 |
FY 2021 COMPENSATION DECISIONS | 43 |
OTHER COMPENSATION POLICIES AND INFORMATION | 48 |
This Compensation Discussion and Analysis describes our compensation philosophy, policies and plans as well as our compensation-setting process and the 2021 compensation of our named executive officers (“NEOs”). In addition, we explain why we believe that our executive compensation program is in the best interests of JetBlue and you, our stockholders.
This Compensation Discussion and Analysis provides information about our fiscal year 2021 compensation program for our NEOs identified in the Summary Compensation Table as of December 31, 2021.
Chief Executive Officer | President and Chief Operating Officer | URSULA HURLEY Chief Financial Officer | CAROL CLEMENTS Chief Digital & Technology Officer | BRANDON NELSON General Counsel and Corporate Secretary |
Pre-Approval PoliciesNote: Stephen Priest, our CFO until June 2021 and Proceduresa 2021 NEO, departed the Company in June 2021 and is not pictured above.
This Compensation Discussion and Analysis contains forward-looking statements that are based on our current plan, considerations, expectations and determinations regarding future compensation programs. The actual compensation programs that we adopt in the future may differ materially from the programs as summarized in this discussion.
The Audit CommitteeCOVID-19 Pandemic, Federal Relief and the Impact on Leadership Compensation
In March of 2020, the effects of COVID-19 began to be felt in the United States, which had a drastic impact on JetBlue and the global aviation industry. We immediately experienced a significant drop in demand for air travel and a related decline in revenue due to the spread of COVID-19, burgeoning quarantines and lockdowns. In the year-plus since the start of the pandemic, the effects of pent up demand for travel, versus the onset of the Delta and Omicron variants, has adoptedlent to a policy that requires advance approval of all audit, audit-related, taxsee-saw effect on our business and other services performed by our independent registered public accounting firm. This policy provides for pre-approval byrevenues. For the Audit Committee of all audit and permissible non-audit servicescurrent NEOs who were with the Company before the firm is engaged to perform such services. The Audit Committee is authorized from time to time to delegate to oneonset of its members the authority to grant pre-approval of permitted non-audit services, provided that all decisions by that member to pre-approve any such services must be subsequently reported, for informational purposes only,pandemic, their earned compensation was below target due to the full Audit Committee.continuing impact of the pandemic. The Compensation Committee expects that this situation, coupled with CARES Act compensation limitations, creates a challenging compensation and retention environment in the near future for JetBlue.
The affirmative vote ofDuring 2021, JetBlue’s crewmembers had gone above and beyond during extraordinary times to continue operating, delivering a majority ofsafe JetBlue Experience and enabling the votes represented at the annual meeting, either in person or by proxy,airline to pivot from a growth mode to a survival mode and entitledback to vote on this proposal, is required to ratify the selection of the independent registered public accounting firm.a growth mode.
The Board of Directors recommends that stockholders vote “FOR” ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal year 2016.JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 36
AUDIT COMMITTEE REPORTWe experienced challenging summer peak travel that stressed our system, particularly our crewmembers, in a difficult labor environment. Correspondingly, our leaders managed through unexpected labor shortages and operational challenges as we moved toward a post-pandemic environment. The CARES Act, the Consolidated Appropriations Act and the American Rescue Plan (collectively, the “Government Support”), as discussed below, provided a lifeline to aviation workers into 2021, remains a restriction in our ability to appropriately compensate our leaders to market levels.
Government Support: The CARES Act, the Consolidated Appropriations Act and the American Rescue Plan
Since the beginning of the pandemic, we have participated in multiple government support programs which have implications for our executive compensation arrangements, including, The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, the Payroll Support Program 2 as established by the United States Consolidated Appropriations Act, 2021 (the “Payroll Support Program 2”), and the Payroll Support Program 3 as established by the American Rescue Plan Act of 2021 (the “Payroll Support Program 3”) (the CARES Act, Payroll Support Program 2 and the Payroll Support Program 3 are collectively referred to as the “Government Support”). Under these programs, the company received a total of $1,548,985,115 in grants and $535,279,336 in loans.
In accordance with any grants and/or loans received under the Acts, we are required to comply with the relevant provisions of the Acts which, among other things, includes the following: the requirement to use the Payroll Support Payments, the Payroll Support 2 Payments, and the Payroll Support 3 Payments exclusively for the continuation of payment of crewmember wages, salaries and benefits; the requirement that certain levels of commercial air service be maintained until March 1, 2022; the prohibitions on share repurchases and the payment of common stock dividends; and the various restrictions on the payment of certain executive compensation vary depending on the type of support received.
The Audit Committeecompensation restrictions under the Government Support programs apply to any officer or employee of JetBlue whose total compensation exceeded $425,000 in 2019, or during a subsequent reference period. Those officers or employees may not receive total compensation until April 2023 thereafter that exceeds, during any 12 consecutive months, the total compensation received by the officer or employee in 2019, or any subsequent reference period. Any officer or employee of JetBlue whose total compensation exceeded $3,000,000 in 2019 may not receive total compensation that exceeds, during any 12 consecutive months of such period, $3,000,000 plus 50% of the JetBlue Board of Directors is comprised of three non-employee directors, each of whom, in the Board’s business judgment, is independent within the meaningexcess over $3,000,000 of the applicable rules and regulations of the SEC and NASDAQ. The Audit Committee operates under a written charter adoptedtotal compensation received by the Board.officer or employee in 2019, or during a subsequent reference period. These limits applied to the compensation of our NEOs starting in 2020 following our receipt of Government Support, and will continue to apply until April 2023. As described more fully in its charter,a result, the Audit Committee oversees on behalfcompensation restrictions have impacted the compensation of the Board of Directors the Company’s accounting, auditingour NEOs to varying degrees, most notably our CFO Ursula Hurley.
Compensation Philosophy & Principles
Management hasDuring the primary responsibilitypandemic, we continue to lead with our values, by promoting a safe environment for our customers and crewmembers with our Safety From the Company’s financial statements and financial reporting process, including establishing, maintaining and evaluating disclosure controls and procedures, and establishing, maintaining and evaluating internal control over financial reporting. The Company’s independent registered public accounting firm, Ernst & Young LLP, or Ernst & Young, is responsibleGround Up Program. As we prepare our business for performing an independent audit ofa recovery from the Company’s consolidated financial statements in accordance with generally accepted auditing standards and issuing a report relatingpandemic periods, our goal continues to Ernst & Young’s audit; as well as expressing an opinionensure that our leaders’ focus remains on the effectivenessgrowth of internal control over financial reporting. In fulfilling its responsibilities, the Audit Committee held meetings throughout 2015 with Ernst &Young in private without members of management present.
In this context, the Audit Committee has reviewed and discussed with management and its independent registered public accounting firm the Company’s audited consolidated financial statements and the results of management’s assessment of the effectiveness of the Company’s internal control over financial reporting and the independent auditor’s audit of the Company’s internal control over financial reporting. Management represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States.
The Audit Committee discussed with the Company’s independent registered public accounting firm matters required to be discussed by applicable Public Company Accounting Oversight Board (PCAOB) rules, including the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of the disclosures in the financial statements. Ernst & Young also provided to the Audit Committee the written disclosures and letter regarding their independence required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence. The Audit Committee also discussed with Ernst & Young their independence from the Company and its management, and considered whether the non-audit services provided by the independent registered public accounting firm to the Company are compatible with maintaining the firm’s independence.enhancing stockholder value.
The Company also has an internal audit department that reports to the Audit Committee. The Audit Committee reviews and approves the internal audit plan once a year and receives updates of internal audit results throughout the year. The Audit Committee discussed with the Company’s internal auditors and independent registered public accounting firm the overall scope and plans for their respective audits. The Audit Committee met with the internal auditors and the independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal control over financial reporting, and the overall quality of the Company’s financial reporting.
In reliance on the review and discussions referred to above, and in the exercise of its business judgment, the Audit Committee recommended to the Board of Directors (and the Board of Directors approved) that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 as filed with the SEC. In addition, the Audit Committee has selected, and the Board has ratified, subject to stockholder ratification, the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016.
The Audit Committee reviews and assesses the adequacy of its charter on an annual basis. While the Audit Committee believes that the charter in its present form is adequate, it may in the future recommend to the Board of Directors amendments to the charter to the extent it deems necessary to react to changing conditions and circumstances.
Audit Committee of JetBlue
Peter Boneparth,ChairVirginia GambaleEllen Jewett
The Audit Committee Report does not constitute soliciting material, and shall not be deemed to be filed or incorporated by reference into any other Company filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates the Audit Committee Report by reference therein.We continue to:
STAY TRUE TO OUR VALUES | FOCUS ON PAY FOR PERFORMANCE | |||
| | | | | | ||
We aim to align compensation programs with business strategies targeted at conserving cash in the current demand restricted environment, with the goal of returning to long-term value creation for our stockholders as the demand for travel returns. | Despite the Government Support compensation restrictions, we utilize various compensation strategies to retain our key leaders, as well as design programs to attract new talent to join the Company. | We hold our NEOs accountable for their performance in light of drastically revised Company goals, emphasizing leadership and accountability during the pandemic. |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 37
In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) enacted in 2010, an advisory vote on the frequency of stockholders votes on executive compensation was conducted in connection with the 2011 annual meeting of stockholders. The Board recommended, our stockholders agreed, and the Board subsequently approved that the advisory vote on executive compensation be held on an annual basis. Accordingly, we are asking stockholders to approve an advisory resolution on compensation of our named executive officers as described in the “Compensation Discussion and Analysis” section, the compensation tables and related narrative discussion included in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives stockholders an opportunity to approve, reject or abstain from voting with respect to our fiscal year 2015 executive compensation programs and policies and the compensation paid to our named executive officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers as described in this proxy statement.
At the Company’s annual meeting of stockholders held in May 2015, our stockholders were asked to approve the Company’s fiscal 2014 executive compensation programs. A substantial majority (95.6%) of the votes cast on the “say-on-pay” proposal at that meeting were voted in favor of the proposal. TheDetermining Executive Compensation Committee believes that these results reaffirm our stockholders’ support of the Company’s approach to executive compensation.
Please read the Compensation Discussion and Analysis beginning on page 25 for additional details about our executive compensation program, including information about the fiscal year 2015 compensation of our named executive officers.
Our Compensation Committee has structured our executive compensation program to achieve the following key objectives:
Because your vote on this proposal is advisory, it will not be binding on us, the Compensation Committee or the Board. However, the Compensation Committee and the Board will take into account the outcome of the vote when considering future executive compensation arrangements. Furthermore, your advisory vote will serve as an additional tool to guide the Board and the Compensation Committee in continuing to align the Company’s executive compensation programs with the interests of JetBlue and its stockholders.
The Compensation Committee assists the Board with oversight and determination of compensation for the Company’s non-employee directors and executive officers. The Compensation Committee oversees the Company’s executive compensation policies and reviews and establishes the compensation for our CEO (subject to approval by our Board) and the Boardother NEOs. The Compensation Committee is charged with review of Directors believe that thepay levels and policies related to salaries, annual cash incentive awards and procedures articulated ingrants of equity and non-equity incentive awards and oversight of our equity incentive plans. In determining base salary, annual cash incentive awards, restricted stock units (“RSU”) and performance stock unit (“PSU”) equity awards, the Compensation DiscussionCommittee uses the relevant executive officer’s current level of total compensation as the starting point. The Compensation Committee bases any adjustments to the current pay level on several factors, including the scope and Analysis section are effectivecomplexity of the functions the executive officer oversees, the contribution of those functions to our overall performance, individual experience and capabilities, individual performance and competitive pay practices. Any variations in achievingcompensation among our goals and that the compensation of our named executive officers reportedreflect differences in this proxy statement has contributed tothese factors. The Compensation Committee may consider the Company’s recenteffect of the global pandemic and long-term success. Accordingly, we are asking you to endorse our executive compensation program by voting for the following resolution: RESOLVED,other linked economic and environmental pressures that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis section, compensation tables and narrative discussion is hereby APPROVED.may negatively impact results.
The affirmative vote of a majorityCompensation Committee relied on the following tools in determining the base salary, annual incentive cash targets, and equity awards for the NEOs in 2021, cognizant of the votes represented atrestrictions associated with the annual meeting, either in personGovernment Support:
■ | Competitive Peer Group Survey; |
■ | Leadership Input; and |
■ | Annual Performance Reviews. |
Compensation Consultant
The Compensation Committee is authorized to retain and terminate compensation consultants, legal counsel or by proxy,other advisors to the Committee and entitled to vote on this proposal is required to approve the advisory vote on executive compensation.engagement of any such consultant, counsel or advisor, to the extent it deems necessary or appropriate after specifically analyzing the independence of any such consultant retained by the Committee. The Chair of the Compensation Committee reports the Committee’s actions and recommendations for the previous quarter to the full Board at the next regularly scheduled Board meeting.
The BoardCompensation Committee engaged the services of Directors recommendsPay Governance as its independent advisor on matters of executive compensation for 2021. Pay Governance also evaluates compensation for non-employee directors, the next levels of senior leadership, and equity compensation programs generally. For 2021, the Compensation Committee assessed the independence of Pay Governance pursuant to the SEC and Nasdaq rules and concluded that stockholders vote “FOR”no conflict of interest exists that would prevent Pay Governance from independently representing the foregoing resolutionCompensation Committee.
As discussed below under “Peer Competitive Group Survey—Market Assessment,” Pay Governance provided the Company and the Committee with compensation data regarding the companies in our competitor peer group. Along with the other factors cited above, the Company used this data to develop its recommendations to the Compensation Committee for 2021 compensation levels for executives other than the CEO. The Compensation Committee and Pay Governance recommended CEO compensation changes to the Board. Pay Governance also provided suggestions on the design of the annual cash and long-term incentive awards that were used in 2021,and for the reasons outlined above.long-term performance based incentive program, including the performance measures and weightings, the factors for the Compensation Committee to review when determining whether to adjust the formulaic amount, and the general range of adjustments to apply. Pay Governance reports directly to the Compensation Committee and all services performed by Pay Governance were under the direction of the Compensation Committee.
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 38
COMPENSATION DISCUSSION AND ANALYSISPerformance Based Pay
ThisOur compensation program is designed to reward our NEOs for the Company’s continued success. Consistent with our compensation philosophy, the Compensation Discussion and Analysis section ofCommittee sets the proxy statement explains the key elementscompensation of our executive officers, including our NEOs, based in part on achievement of annual financial and operational objectives that we believe further our long-term business goals and the creation of sustainable long-term stockholder value. The majority of our NEOs’ total compensation programis tied to performance and is “at risk.” Despite the targeted compensation decisionsgoals, actual compensation was limited by the compensation restrictions associated with respectthe Government Support.
Competitive Peer Group Survey – Market Assessment
In September 2021, the Compensation Committee reviewed a report on the Company’s compensation programs for senior leadership, which incorporated data provided by Pay Governance. Pay Governance collected compensation data from the companies in our competitor peer group, as well as similarly-sized general industry companies. Pay Governance used a combination of peer group proxy and general industry survey data to develop the competitive market. The current general industry reference group continues to place greater emphasis on consumer-oriented companies, reflecting the role of customer service in JetBlue’s success. Given the impact of the pandemic on the aviation industry, the below chart shows the contrast of 2019 (the last full year prior to the following officers identified in the Summary Compensation Table below (the “named executive officers”) as of December 31, 2015:
Executive Summarypandemic) to 2021 revenue.
AtOur competitor peer group consists of the following U.S. airlines:
Company | FY2019 Revenue ($) (in millions) | FY 2021 Revenue ($) (in millions) | Competing in our Market | ||
American Airlines Group | 45,768 | 29,882 | |||
Delta Air Lines, Inc. | 47,007 | 29,899 | |||
United Continental Holdings, Inc. | 43,259 | 24,634 | |||
Southwest Airlines Co. | 22,428 | 15,790 | |||
Alaska Air Group, Inc. | 8,781 | 6,176 | |||
JetBlue Airways Corporation | 8,094 | 6,037 | |||
Spirit Airlines | 3,830 | 3,230 | |||
Hawaiian Holdings Inc. | 2,832 | 1,597 |
These companies, like JetBlue, Integrity isare airlines with significant revenue (over $1 billion, pre-COVID-19) and with significant operations employing a large number of individuals and operating a large number of aircraft in our competing markets. We believe this group provides a reasonable point of comparison to assist in our assessment of our compensation programs.
We recognize that this peer group has limitations from a statistical perspective given the limited number of airline peer companies and the wide variation in size. As a result, the Compensation Committee uses the competitive data as a reference point to monitor the compensation practices of these competitors. This data was not the sole determining factor in executive compensation decisions. Instead, as described above, it was one of our five core values; along with Safety, Caring, Passion and Fun. We believe honesty builds trust. We hold ourselves to a high standardmany factors reviewed by the Compensation Committee as part of integrity and strive for transparency with our executive compensation programs. JetBlue is a passenger airline that has established a new airline category based on service, style and cost. Known for its award-winning customer service and free TV as much as for its competitive fares, JetBlue believes it offers its customers a distinctive experience—the JetBlue Experience—with best-in-class offerings in the markets it serves.their assessment. The Compensation Committee believesalso considers the Company’s Northeast location, route network, cost structure, and size relative to other airlines, however we do not rely on this information to target any specific pay percentile for our executive officers. While we do not target a particular level of compensation within the peer group, the data is used
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 39
primarily to ensure that our executive compensation program as a whole is instrumental in helpingcompetitive when the Company achieves its targeted performance levels. While we do not target a specific market percentile ranking for the individual compensation elements that comprise total direct compensation, we review each element to achieve its business goalsensure it is reasonable relative to our peer group. We aim to position pay to maintain our competitive cost advantage versus our peer group and promote its values.recognize we compete in the same talent pool that some of the peer competitors which are significantly larger and more mature than we are.
ExecutiveConsistent with our compensation objectives discussed above, we incorporate flexibility into our compensation programs and in the executive assessment process to respond to, and adjust for, changes in the business and economic environment and individual accomplishments, performance and circumstances. The Compensation Program ElementsCommittee expects to continue to adjust relevant pay levels on a go forward, measured basis, contingent on corporate and individual performance in future years.
KEY FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAMBest Practices in Compensation Governance
In addition to the core compensation program, the Company provides or has implemented the following:
WE DO | WE DO NOT | |||
Emphasize performance-based, | No tax gross ups | |||
Apply rigorous, | No repricing | |||
Consider risk in our executive compensation program | No | |||
No evergreen provisions in our compensation plans | ||||
Have | No excessive perquisites | |||
Have director stock ownership requirements | No guaranteed bonuses or annual cash incentive awards | |||
No hedging or pledging JetBlue securities | ||||
Maintain an executive compensation clawback policy, which includes recoupment and forfeiture provisions | ||||
Use a structured approach to CEO performance evaluation and related compensation decisions | ||||
Emphasize a transparent and just culture | ||||
Review share utilization annually | ||||
Devote significant time to | ||||
Have double-trigger change in control provisions in our equity plans | ||||
Have our equity plans administered by an independent committee | ||||
Cap our incentive plans at 150-200% of Target | ||||
Use multiple metrics with little overlap to avoid “feast or famine” payout situations | ||||
Tie ESG and DEI to executive compensation |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 40
Annual Performance Review
Chief Executive Officer
Our Board evaluates our CEO’s performance and compensation on an annual basis. The CEO recuses himself from Board discussions relating to evaluations of his performance and his compensation package. The Chairs of the Board, Governance and Nominating Committee and the Compensation Committee conduct a performance review without the CEO’s participation and provides its recommendations to the full Board. The Board’s evaluation includes both objective and subjective criteria of the CEO’s performance, which include JetBlue’s financial performance, JetBlue’s performance with respect to our long-term strategic objectives and the development of our senior leadership team. Prior to the Board’s evaluation, the Compensation Committee evaluates the CEO’s compensation. The Compensation Committee uses the competitive market data discussed above to recommend total direct compensation for the CEO.
Other Named Executive Officers
The Compensation Committee, together with our CEO, evaluates the performance of the Company’s executive officers. The CEO provides a performance assessment and compensation recommendation to the Compensation Committee for the other NEOs within the overall team performance framework. The performance evaluation is based on factors such as achievement of corporate performance objectives; advancement of strategic initiatives; leadership and talent development; individual business area responsibilities; and performance as an executive team member and overall executive team performance.
The Compensation Committee also reviews total direct compensation data from the competitive data with respect to other senior executive officers. The Compensation Committee makes final determinations regarding other NEOs’ total compensation.
We believe that a significant amount of our NEO compensation should be tied to the Company’s performance and an increasing amount of it should be at risk. Our cash incentive and equity compensation goals (discussed in more detail beginning on page 44) are designed to drive business objectives that we believe further our long-term business goals and the creation of sustainable long-term stockholder value. The mix of compensation elements below is based on how the Compensation Committee views executive pay.
Overall 2021 Compensation Structure
In early 2021, the Compensation Committee approved target total direct compensation for the 2021 fiscal year, which is comprised of:
JetBlue’s pay mix targets a higher percentage of equity and performance based compensation.
TOTAL ACTUAL COMPENSATION MIX*
* | Compensation mix reflects salary and bonus reductions along with reductions as a result of compensation restrictions under our Government Support. |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 41
JetBlue’s long-term equity payouts are tied to performance targets aimed at aligning our leadership team with our stockholders interests. Our 2021 PSU awards were made in our normal course of business, in light of our compensation restrictions. See “--The COVID-19 Pandemic, Federal Relief and the Impact on Leadership Compensation.”
LONG-TERM INCENTIVES*
Our | performance. | ||
■ | |||
various strategic initiatives. | |||
Our annual and long-term performance awards are based on different metrics, with little or no overlap, | that we believe align with long-term business priorities. | ||
Our clawback policy serves as a risk | mitigator. | ||
■ | |||
are capped at a maximum of 150% to 200% of target. | |||
■ | Due to Government Support restrictions, as noted elsewhere, there are additional limits on our named executive officer compensation into at least 2023. |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 42
How Did We Do in 2015?
JetBlue reported strong results for 2015:Summary of Fiscal Year 2021 Compensation Program
Reward Element | Objective | Key Features | How Award Value is Calculated | 2021 Decisions | ||||||
Base Salary | To attract and retain the best talent. | Fixed element of compensation paid in cash. | Reviewed against individual’s level of skill, experience and responsibilities; compared against a group of comparably sized corporations and industry peers. | In accordance with the compensation restrictions as imposed by Government Support, reductions to NEO base salaries continued through the first quarter of 2021, and no merit increases were granted. | ||||||
Annual Cash Incentive Awards | To motivate and incentivize performance over a one-year period. | Award value and measures are reviewed annually to ensure they support our strategy. | Performance is measured against financial and non-financial corporate performance targets and individual goals. | The portion of the award tied to corporate performance paid out at 98.7%. For the | ||||||
Long-Term Incentive Equity Award RSUs | To incentivize performance and retention over the long-term; aligns leader’s interests with our long-term interests of stockholders. | Performance is measured annually and equity vests ratably over three years, subject to forfeiture. | Based on achievement of metric driven operational and strategic goals. | All NEOs met or exceeded targets. | ||||||
To motivate and incentivize sustained performance over the | Performance is measured at the end of a three year | Based on | 2019-2021 was anticipated to | |||||||
Executive Retention Awards (“ERA”) | To ensure retention of key leaders to guide the Company through the pandemic. | ERA will be paid, if and onlyif, the Government Support restrictions have lapsed, the NEO is still employed by the Company at the time of payment, certain Company performance metrics are met, and subject to final approval by the Compensation Committee or the Board. | ERA value is focused on |
ERAs were provided to key leaders to align with retention initiatives due to Government Support restrictions. |
For further information regarding our revenueWe also provide health and earnings per diluted share for the referenced periods, please see our Annual Report on Form 10-K for the year ended December 31, 2015, Item 6. Selected Financial Data (starting on page 28) and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (starting at page 31, and see page 33). In our proxy statement and Compensation Discussion and analysis, we refer to Operating Expenses per Available Seat Mile, ex-Fuel and Profit Sharing (“CASM”), Return on Invested Capital, Net Income and Pre-tax Income, excluding special items and Free Cash Flow, which are non-GAAP financial measures. Appendix B to this proxy statement contains a reconciliation of these non-GAAP measureswelfare benefits, available to our audited GAAP financial statements.
The following table summarizes some of our financial resultsfull-time crewmembers, including medical, dental, life insurance and disability programs; a 401(k) plan; and change in control severance plans. We provide retirement benefits (a 401(k) plan open to all crewmembers) and limited perquisites including space available flight privileges for 2015:
($ in millions, except per share amounts) | Fiscal 2014 | Fiscal 2015 | % Change | |||||||||
Operating Revenues | $ | 5,817 | $ | 6,416 | 10.3 | % | ||||||
Pretax income | $ | 623 | $ | 1,097 | 76 | % | ||||||
Operating margin | 8.9 | % | 19.0 | % | 134 | % | ||||||
Earnings per diluted common share excluding special items | $ | 0.70 | $ | 1.98 | 182 | % |
Onall crewmembers, and, as is common in the airline industry, positive space flight privileges for executive officers and their immediate family members; possible relocation assistance for supervisor level and above; and a GAAP basis, net incomewellness physical for the fourth quarter 2015 was $190 million, or $0.56 per diluted share. This comparesexecutives designed to JetBlue’s fourth quarter 2014 net income, excluding special items of $87 million, or $0.26 per diluted share. For the full year 2015, JetBlue reported net income of $677 million, or $1.98 per diluted share. This compares to JetBlue’s 2014 net income excluding special items of $232 million, or $0.70 per diluted share.further business continuity, available every other year.
In 2015, JetBlue reported record fourth quarter operating revenues of $1.6 billion. Revenue passenger miles for the fourth quarter increased 12.4% to 10.6 billion on a capacity increase of 10.4%, resulting in a fourth quarter load factor of 83.6%, an increase of 1.5 points year over year. Yield per passenger mile in the fourth quarter was 13.62 cents, down 3.6% compared to the fourth quarter of 2014. Passenger revenue per available seat mile (PRASM) for the fourth quarter of 2015 decreased 1.9% year over year to 11.39 cents and operating revenue per available seat mile (RASM) decreased 0.2% year over year to 12.62 cents.JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 43
Overall, we had a strong year on many fronts:Base Salary
2015 Financial Performance
KEY HIGHLIGHTS: ■ Prior to COVID-19, the Compensation Committee typically approved regular annual salary increases for the NEOs. ■Salaries for 2021 were restored to 2019 levels following the lapse of 2020 voluntary base salary reductions that extended through the first quarter of 2021. ■No NEOs received merit increases in 2021 above 2019 levels. |
The Compensation Committee annually reviews the base salaries of the NEOs, and adjusts them periodically as needed to maintain market position and consistency with evolving responsibilities for the relevant positions. As noted elsewhere, due to the impact of the pandemic, the NEOs voluntarily took pay reductions from April 2020 through March 2021 to help the airline retain cash and lower costs. From April through September 2020, Mr. Hayes and Ms. Geraghty took 50% salary reductions, Mr. Priest 35% and Mr. Nelson 20%. From October 2020 through March 2021, the voluntary pay reductions were adjusted to 20% for Mr. Hayes and Ms. Geraghty, 15% for Mr. Priest and 10% for Mr. Nelson and Ms. Hurley. As our NEOs continued to support voluntary pay reductions, their 2021 salaries continued to be below target.
Executive | 2020 Target Base Salary ($) | 2020 Adjusted Salary ($)(1) | 2021 Target Base Salary ($) | 2021 Adjusted Salary ($)(1) | ||||
Robin Hayes | 625,000 | 435,417 | 625,000 | 593,750 | ||||
Ursula Hurley | 283,500 | 246,937 | 283,500 | 276,412 | ||||
Joanna Geraghty | 565,000 | 393,417 | 565,000 | 536,750 | ||||
Carol Clements(2) | – | – | 500,000 | 342,629 | ||||
Brandon Nelson | 450,000 | 390,000 | 450,000 | 438,750 | ||||
Stephen Priest(3) | 520,000 | 405,750 | 520,000 | 214,834 |
(1) | As noted above, amounts reflect COVID-19-related voluntary pay reductions. |
(2) | Ms. Clements joined the Company in April 2021. |
(3) | Mr. Priest departed the Company in June 2021. |
Annual Cash Incentive Awards
KEY HIGHLIGHTS: ■ The Company set rigorous goals for the 2021 annual cash incentive awards. ■ Due to COVID-19’s significant impact on our business, we made several structural changes to our corporate performance ■ Given the uncertainty of the pandemic, as well as a non-linear recovery, we set and measured our 2021 financial and operational metrics by two halves of the year. |
Our total fuel costFor 2021, for Messrs. Hayes, Priest and Nelson and Mses. Geraghty and Clements, the annual cash incentive award was based 75% on our corporate performance factor and 25% on individual performance of goals set at the beginning of the year. For Ms. Hurley, before her promotion to CFO, her annual cash incentive award was based 50% on our corporate performance factor and 50% on individual performance of goals set at the beginning of the year. After her promotion to CFO, her annual cash incentive award was based 75% on our corporate performance factor and 25% on individual performance of goals, although limited by the compensation restrictions associated with the Government Support. Mr. Priest departed the Company in 2014 was $1.912 billion compared to $1.348 billion in 2015 or, $2.99 per gallon in 2014 versus $1.93 per gallon in 2015 (total costJune 2021 and average price per gallon each include related fuel taxes as well as effective fuel hedging gains and losses).did not receive any portion of his annual cash incentive award.
Our stock price gained 43% over the year and outperformed the airline index as well.
JETBLUE AIRWAYS STOCK APPRECIATION VS. AIRLINE INDEX (XAL), 2015CORPORATION | 2022 PROXY STATEMENT 44
We believe our differentiated product and culture, competitive costs and high-value geography relative to our competitors contributed to our continued success in 2015. Our 2015 highlights include:
Product enhancements – Throughout 2015 we continued to invest in industry-leading products which we believe will continue to differentiate our product offering from the other airlines.
In June 2014, we launched our premium transcontinental product called MintTM. It includes 16 fully lie-flat seats, four of which are in suites with a privacy door, a first in the U.S. domestic market. During 2015, we announced additional transcontinental MintTMservice, as well as added two international MintTM destinations, Barbados and Aruba.
We continued to install our Fly-FiTM in-flight internet service across our Airbus fleet, and completed retrofitting all of our Airbus A321 and A320 aircraft by the end of October 2015. Our first Fly-FiTM enabled Embraer E190 aircraft made its inaugural commercial flight in October 2015. We anticipate retrofitting our remaining Embraer E190 aircraft with Fly-FiTM during 2016, at which point, free Fly-FiTM service will be available on our entire fleet.
We introduced Fare Options during the second quarter of 2015. As a result, customers have a choice to purchase tickets from three branded fares: Blue, Blue Plus, and Blue Flex. Each fare includes different offerings, such as free checked bags, reduced change fees, and additional TrueBlue® points.
Innovation continues to be a major driver in our product offerings. We were the first airline to accept Apple Pay in-flight. Our customers have been able to use their iPhone for all onboard purchases since March 2015. In December 2015, we released an enhanced suite of mobile applications aimed at bringing even more convenience to our customers. With the latest update, customers have even more control over their JetBlue Experience with the ability to select and change seat assignments after check in, purchase Even MoreTMSpace seats or other ancillary services, and use their phone’s camera feature to input credit card and passport information.
Fleet – In 2015, we converted six of the 10 Airbus A321 deliveries scheduled for 2016 to our MintTMcabin configuration. During the fourth quarter, we bought out the leases on six Airbus A320 aircraft. In 2015, we took delivery of 12 Airbus A321 aircraft, two of which were equipped with our MintTM cabin layout.
Network – We continued to expand and grow in our high-value geography. In 2015, we expanded our network with six new BlueCities, bringing our total as of the end of December 2015 to 93 BlueCities, and added several connect-the-dot routes. With the success of our MintTM service between New York and California, we launched new routes to the Caribbean in the fall of 2015 and expect to begin MintTM service from Boston in March 2016.
TrueBlue®and partnerships – We expanded our portfolio of commercial airline partnerships throughout 2015 and announced code-sharing agreements with Icelandair, Royal Air Maroc, Silver Airways and Seaborne Airlines.
Customer Service – JetBlue and our Crewmembers were recognized in 2015 for industry leading customer service. J.D. Power and Associates recognized JetBlue and our Crewmembers for the 11thconsecutive year as the “Highest in Airline Customer Satisfaction among Low-Cost Carriers.” Our score climbed to 801 on a 1,000-point scale, making us the first airline to ever surpass 800 points within the segment.
We also received the top score on the American Customer Satisfaction Index (ACSI) among airlines. Our score of 81 is 10 points above the average for the airline industry. Additionally, we received 7 out of 7 stars for safety, and 5 out of 5 stars for our product offering from Airline Ratings.
Our Crewmembers – During 2015, our Crewmembers recognized JetBlue as one of “America’s “Best Places to Work” by Forbes. JetBlue ranked #19 through a survey that asked individuals how likely they would be to recommend their employer to someone else.
2015 Pay Decisions (see page 31 for more details)
In 2015, with the tailwind of lower fuel prices and the benefits derived from exciting product enhancements and industry-leading service innovations to the JetBlue experience, JetBlue had an excellent year. As in years past, we had challenges. However, we approached them in true JetBlue fashion, adhering to our values even when things were not going well with the goal of doing the right thing for our customers, crewmembers and stockholders even as we sought to Inspire Humanity.
As more fully described below, our corporate performance factor came in at 130.7% of target. In the same time period, we shared a record 2015 profit sharing payout of approximately $147 million with our profit sharing eligible crewmembers! This was close to almost eight weeks of income for a full time crewmember, split into an early payment at the end of 2015 and the remainder in early 2016.
As part of our ongoing compensation program development, in 2013 we increased the amount of “at risk” pay for our senior executives by introducing a performance based pay structure for our executive leadership team. These performance stock units, or PSUs, are based on achievement of goals over a three year performance period. Assuming achievement of goals, these PSUs are payable in common stock following the completion of the relevant performance period upon certification of performance by the Compensation Committee. This is the first year our executives became eligible to receive PSUs, for the 2013-2015 performance period.
Although the Summary Compensation Table and Supplemental Summary Compensation Table include the PSU award amounts in the Stock Awards column, the amounts reflected for the 2014-2016 and 2015-2017 performance periods have not yet been paid and are notional at this point. The tables assume performance based on an assessment of performance to date, as required by the SEC’s rules and regulations. As noted above, in early 2016,For 2021, the Compensation Committee certifiedapproved the results of the 2013-2015 performance period and those awards, based on the performance period just completed, reflect actual performance achieved and amounts paid out. PSUs are awarded, if at all, following the completion of the relevant performance period upon the Compensation Committee’s certification of performance.
For 2015, Mr. Barger, our then-Chief Executive Officer did not receive a salary increase. When Mr. Hayes became our President and Chief Executive Officer effective February 16, 2015, he received a salary increase to $550,000 in light of his promotion to Chief Executive Officer. When Mr. St. George was promoted from Senior Vice President to Executive Vice President Commercial & Planning effective February 16, 2015, he received a salary increase to $400,000. Mr. Powers and Mr. Hnat each received a modest merit increase in 2015 to $425,000. For 2015, no change was made to the target bonus opportunities of anyfor most of our named executive officers.NEOs (which remain unchanged from 2020):
Executive | Incentive Award Opportunity (% of Salary) | |
Robin Hayes | 150 | |
Ursula Hurley | 30 | |
Joanna Geraghty | 100 | |
Carol Clements | 50 | |
Brandon Nelson | 60 | |
Stephen Priest | 90 |
The Compensation Committee may adjust the formulaic funding upwards or downwards by up to 35%, including reduction of payout to 0%, based on qualitative and quantitative factors.
Corporate Performance Factor
In early 2021, we established the 2021 corporate performance factor (“CPF”). The CPF is the set of company initiatives we set for leadership as a whole based on goals we want to substantially achieve within the year. The Compensation Committee considered the uncertainty around the timing and strength of industry recovery, and whether the Company was able to recalibrate compensation to reflect expected demand.
At year end, we reported on our achievement of the CPF to the Compensation Committee. The Compensation Committee relied on our performance assessment framework to evaluate our results on each metric and then performed a collective assessment across all goals to determine a CPF, which was then applied to our annual cash incentive bonus awards. For 2021, the CPF was determined as follows:
Measure | Weight | Target | Performance Achieved | Payout Achieved as a % of Target | Actual Payout Approved as a % of Target | |||||
Operating cash flow (first half 2021) | 16.67% | $300M | 150.0% | 25.0% | 98.7% | |||||
EBITDA (second half 2021) | 16.67% | $171M | 84.1% | 14.0% | ||||||
Customer Index (first half 2021)(1) | 16.67% | 44.5/78.9 | 29.0% | 9.7% | ||||||
Customer Index (second half 2021)(1) | 16.67% | 44.2/76.2 | ||||||||
Strategic Initiatives (full year 2021) | 33.33% | –(2) | 150.0%(3) | 50.0% |
(2) | Strategic Initiatives is a non-financial measure, and is comprised of five initiatives aimed at long-term growth in: DEI, fare options, new fleet induction, the implementation of the Northeast Alliance and achieving a “digital first” strategy. |
(3) | All of the Strategic Initiatives goals were achieved above target, as determined by the Compensation Committee. |
A “Met” target assessment would have resulted in a corporate performance factor of 100%, which would have resulted in a payout of 50% - 75%, of the annual cash incentive awards at the target level (for the corporate portion of the annual cash incentive award).
As noted, a NEO’s performance against individual goals counts toward the annual incentive award. Our CEO evaluates the other NEOs’ performance based on objective criteria, self-evaluations, and a subjective assessment based on perceived level of difficulty and enterprise impact of the goals. The Compensation Committee measures the CEO’s achievement, and the Compensation Committee makes a CEO compensation recommendation to the Board. Our CEO provides the entire assessment to the Compensation Committee.
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 45
Long-Term Equity Awards
KEY HIGHLIGHTS: ■ Prior to COVID-19 in February 2020, the Company awarded RSUs and PSUs consistent with its typical annual equity grant practices. ■ Given the significant impact of COVID-19 on our business, the 2019 PSU awards, set to pay out in 2022, will pay out at 0%, and no substitute compensation was made to our NEOs. ■ In light of the pandemic, the Company elected to pause 2020 grants of PSU awards, and no substitute awards or adjustments to other elements of compensation were made to replace the value of the 2020 PSU awards in 2020. ■ In 2021, we reinstated the PSU program with a view toward leadership retention, establishing metrics and targets intended to pay out in 2024. |
All of the equity-based elements of our compensation program for our NEOs either vest over a multi-year period or include long-term performance measures.
Equity grants directly align NEOs’ interests with the interests of stockholders by rewarding achievement of long-term performance goals and increases in the value of our share price. Such grants enable us to attract, retain and motivate highly qualified individuals for leadership positions within the Company.
We use RSUs, based on the achievement of individual goals set the previous year, and with a three-year service-based vesting period, to retain and motivate our crewmembers, including our NEOs. We also use PSUs, which vest based on Company performance as an equity vehicle.
Restricted Stock Units
We grant equity in the form of RSUs in connection with our annual performance review, and upon hire or promotion. Our annual equity grants are made following the Compensation Committee meeting during the first quarter of each year and vest in equal annual installments over the next three years and are forfeitable if the crewleader were to leave the Company before the awards are fully vested.
Based on the NEO’s role, we determine the NEO’s target opportunity. Individuals may receive between 50 to 200% of target based on their performance, as assessed by the Compensation Committee and Mr. Hayes. Actual awards are issued following the end of the performance year and are shown below.
The ranges were selected based on peer compensation data and in light of the Company’s internal pay equity considerations and its financial performance. In 2021, our NEOs had goals to support the Company’s financial security, ensure the safety of customers and crewmembers and maintain our culture, exhibiting leadership through the pandemic.
Mr. Hayes reviewed the performance of the senior executive officers, as well as other members of the senior leadership team. Mr. Hayes, in performing his reviews, also used his judgment in evaluating the degree of difficulty of achieving the individual’s goals. Each of the NEOs met or exceeded his or her individual performance goals, resulting in the equity awards shown in the applicable tables. However, the awards below reflect reductions for compliance with the compensation restrictions associated with our Government Support.
The Compensation Committee, in consultation with the Board, reviewed Mr. Hayes’ performance and leadership in 2021 in light of the Company’s overall performance and approved an award of $1,300,000 of RSUs to Mr. Hayes.
Based on the Compensation Committee’s, and, in connection with Mr. Hayes, the Board’s assessment of each NEO’s individual performance in 2021, the Company made the following RSU awards on February 23, 2022 based on targets set by the Compensation Committee in early 2021:
Name and Title | 2021 Target Opportunity for RSUs ($) | 2022 RSU Award (Fair Market Value $) | ||
Robin Hayes | 850,000 | 1,300,000 | ||
Ursula Hurley | 100,000(2) | –(3) | ||
Joanna Geraghty | 675,000 | 850,000 | ||
Carol Clements | 500,000 | 600,000 | ||
Brandon Nelson | 400,000 | 150,000(4) | ||
Stephen Priest(1) | 650,000 | – |
(1) | Mr. Priest departed the Company in June 2021 and forfeited the entirety of his award. |
(2) | Ms. Hurley’s 2021 Targets were based on her roles prior to promotion to CFO. |
(3) | Ms. Hurley’s compensation was restricted due to compensation restrictions associated with Government Support, which prevented us from awarding her any RSUs in 2022. |
(4) | Mr. Nelson’s RSU award was similarly restricted due to compensation restrictions associated with Government Support. |
We believe this approach is consistent with our pay for performance philosophy whereby we link our corporate results and individual goal achievement to each NEO’s compensation.
These awards were carefully calibrated so the individuals would not exceed the Government Support compensation limits.
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 46
Performance Stock Units
For the performance period 2021-2023, the Company’s long-term incentive metrics included an earnings before interest, taxes and depreciation and amortization (EBITDA), adjusted debt to capital ratio and an ESG index, weighted at 40%, 40% and 20%, respectively. The number of PSUs earned at the end of the three-year performance period will vary based on the actual performance over that period. The value earned will be delivered in common stock following the completion of a three-year performance period subject to our performance against the pre-established corporate goals and certification by the Compensation Committee. Payouts in respect of the 2021 PSU awards may range from 0 to 200% of the target award based on the Company’s performance measured against the EPS target and absolute ROIC growth.
The 2021 PSU opportunities, at target, are: $1,100,000 for Mr. Hayes, $470,000 for Mr. Priest, $625,000 for Ms. Geraghty, and $100,000 for Mr. Nelson. The PSU maximum is 200% of target and the minimum is 50% of target. If performance were to come in below the minimum award opportunity for the PSU goals, the PSU would pay out at zero. Mr. Priest departed the Company in June 2021 and forfeited the entirety of his 2021 PSU award.
We believe that the targets were designed to be challenging but attainable if the performance period results in what we consider to be successful years. We must meet or exceed the industry average to hit our target.
VESTING OF 2019 LONG-TERM INCENTIVE PROGRAM (“LTIP”) PERFORMANCE STOCK UNIT GRANTS
In March 2019, the Compensation Committee approved grants of PSUs, subject to a three-year performance period. The 2019-2021 performance cycle completed on December 31, 2021, but vesting remained subject to certification of performance results by the Compensation Committee.
The 2019 performance unit grants had two components. The performance goals were independent of each other and equally weighted for absolute ROIC growth and earnings per share. Depending upon actual Company performance relative to these performance goals, the exact number of shares that could have vested ranged from 0 to 200% of the target award.
At the conclusion of the performance period, the Compensation Committee calculated the Company’s performance relative to these goals during the three-year performance period to determine the vesting percentage for the 2019 performance unit grants. We measure our performance in both absolute ROIC growth and absolute earnings per share. During the performance period, both ROIC growth and earnings per share were not achieved due to significant impact of the pandemic.
With each achievement equally weighted, based on the Compensation Committee’s calculation of these performance measures, the 2019 PSU grants vested at 0%. The following table summarizes the performance results with respect to each of the performance measures applicable to the 2019 LTIP PSU grants.
Performance Measures - 2019-2021 | Result | Weight | Vesting |
Absolute Earnings per Share | ($2.51) | 50.0% | –% |
Absolute ROIC Growth | (6.6%) | 50.0% | –% |
TOTAL | –% |
The following table summarizes the number of units awarded for the 2019-2021 PSU grants and the number of units to be paid out with respect to such grants for our NEOs. Since these awards were subject to Compensation Committee certification at December 31, 2021, the awards are reflected as outstanding awards in the “Outstanding Equity Awards at Fiscal Year End” table. Based on the results of the two metrics, the 2019-2021 PSU awards paid out at 0%.
Vesting of 2019 Performance Unit Grants | ||||||
Name | Units at Grant Date (#) | Vesting Percentage (%) | Units Upon Vesting (#) | |||
Robin Hayes | 79,225 | – | – | |||
Ursula Hurley(1) | – | – | – | |||
Joanna Geraghty | 46,948 | – | – | |||
Carol Clements(2) | – | – | – | |||
Brandon Nelson | 8,802 | – | – | |||
Stephen Priest(3) | 41,079 | – | – |
(1) | Ms. Hurley was not eligible for a PSU award in 2019. |
(2) | Ms. Clements joined the Company in April 2021. |
(3) | Mr. Priest departed the Company in June 2021 and therefore his PSU award was forfeited. |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 47
Executive Retention Agreements
The Government Support has been critical for the Company, and the aviation industry in general. However, the Government Support required us to restrict how we compensate our leaders. See --Government Support: The CARES Act, the Consolidated Appropriations Act and the American Rescue Plan. In 2021, we instituted a new, fully “at-risk,” compensation tool that we call the Executive Retention Award (“ERA”). The ERAs that were granted to our NEOs are intended to retain and motivate key leaders to remain with the Company to guide JetBlue through the pandemic’s effect on the aviation industry. The amounts of the “at risk” ERAs were designed to help ensure key leaders of the Company with deep airline industry expertise to continue to steward the Company during the unprecedented economic disruption caused by the COVID-19 pandemic. The ERAs were designed to retain and motivate our key leaders and to further align their interests with those of our stockholders. When setting the terms of the ERAs, the Compensation Committee and the Board considered that each leader’s pay package was substantially reduced in 2020 into the first quarter of 2021 through a combination of base salary reductions, the suspension of performance stock unit awards for the 2020-2022 performance cycle (with no substitution awards or other adjustments made to replace their value), and the 0% Corporate Performance Factor payout under the annual cash incentive award program (resulting in awards being paid out significantly below target), notwithstanding our NEOs extraordinary leadership during these unprecedented times. In addition, the Compensation Committee and the Board considered the compensation and retention challenges expected over the next several years due to continued uncertainty as to the long-term effects of the COVID-19 pandemic on the industry coupled with certain Government Support limitations affecting the Company’s ability to provide market-competitive compensation opportunities. These concerns are particularly acute for the Company given these crewmembers’ expertise and demonstrated leadership, which are, to varying degrees, valued and transferrable to other companies both within – and outside – the airline industry. The ERAs are structured to be fully “at risk” compensation, dependent on: (i) the lapse of the compensation limitations under our Government Support; (ii) the continued employment of the NEO at the time of payment; (iii) certain Company performance criteria; and (iv) ultimately, the approval of our independent Compensation Committee.
Results of the 20152021 Advisory Vote on Executive Compensation (“Say-on-Pay”)
At our 20152021 annual meeting of stockholders, our stockholders were asked to approve, on an advisory basis, the Company’s fiscal 2014 executive2020 NEOs’ compensation programs (“say-on-pay”). Approximately 95.6%96.85% of the aggregate votes cast on the “say-on-pay” proposal at that meeting were voted in favor of the proposal. JetBlue engages with stockholders and other stakeholders to discuss a variety of aspects of our business and welcomes stockholder input and feedback.
The Compensation Committee strives to continue to ensure that the design of the Company’s executive compensation programs is focused on long-term stockholder value creation, emphasizes pay for performance and does not encourage the taking of short-term risks at the expense of long-term results. The Compensation Committee intends to continue to use the “say-on-pay” vote as a guidepost for stockholder sentiment and continuecontinues to take into account stockholder feedback in making compensation decisions.
Compensation Philosophy & Principles
We strive to apply the following principles for compensating our crewmembers, including our named executive officers:
How JetBlue Pays for Performance
Our compensation program is designed to reward our named executive officers for the Company’s continued success. Consistent with our compensation philosophy, the Compensation Committee sets the compensation of our executive officers, including our named executive officers, substantially based on their achievement of annual financial and operational objectives that we believe further our long-term business
goals and the creation of sustainable long-term stockholder value. The performance-based equity component of our executive compensation packages pays out, if at all, following the completion of the relevant three year performance period upon the Compensation Committee’s certification of performance results. As a result, the majority of our named executive officers’ total compensation is tied to performance and is “at risk.”
The following features of our 2015 compensation programs promote further aligning our compensation practices with best practices in compensation governance and with our overall compensation philosophy:
Summary of Fiscal Year 2015 Executive Compensation Decisions
We also provide health and welfare benefits, available to our full-time crewmembers, including medical, dental, life insurance and disability programs; a 401(k) plan; and change in control plans. We provide retirement benefits (a 401(k) plan open to all crewmembers) and limited perquisites including space available flight privileges for all crewmembers, and, as is common in the airline industry, positive space flight privileges for executive officers and their immediate family members; possible relocation assistance for supervisor level and above; and a wellness physical for executives designed to further business continuity, available every other year.
Best Practices in Compensation Governance
In addition to the core compensation program, the Company provides or has implemented the following:
Compensation Mix
We believe that a significant amount of our named executive officer compensation should be tied to the Company’s performance and an increasing amount of it should be at risk. Our bonus and equity goals (discussed in more detail beginning on page 34 ) are designed to drive business objectives that we believe further our long-term business goals and the creation of sustainable long-term stockholder value. The mix of compensation elements below for our named executive officers during 2015 (other than Mr. Barger who retired from the Company effective February 15, 2015) as illustrated below is based on the Compensation Committee’s executive compensation philosophy (as set forth in the Supplemental Compensation Table on page 33 ).
Determining Executive Compensation
The Compensation Committee assists the Board with respect to oversight and determination of compensation for the Company’s directors and executive officers. The Compensation Committee oversees the Company’s executive compensation policies and reviews and establishes, subject to approval by our Board of Directors, the compensation for our Chief Executive Officer. The Compensation Committee is charged with review of pay levels and policies related to salaries, bonuses and grants of awards and oversight of our equity incentive plans. In determining levels of base salaries, annual bonuses, RSU awards and PSU awards, the Compensation Committee uses the relevant executive officer’s current level of total compensation as the starting point. The Committee bases any adjustments to the current pay level on several factors, including the scope and complexity of the functions the executive officer oversees, the contribution of those functions to our overall performance, individual experience and capabilities, individual performance and competitive pay practices. Variations in compensation among our executive officers reflect differences in these factors.
The Compensation Committee used the following tools in determining executive vice presidents’ base salary, annual incentive cash targets, and equity awards:
Generally, at the Compensation Committee’s first quarter meeting(s) of any given year, the Compensation Committee approves target total direct compensation for the upcoming year, which is comprised of:
In the first quarter of 2016, the Compensation Committee reviewed the Company’s and the named executive officers’ performance for fiscal year 2015. After considering various data and input provided by management, the Compensation Committee approved the Company’s corporate performance factor, annual incentive bonus and equity awards for the named executive officers.
Compensation Consultant
The Compensation Committee has the authority to retain independent, third-party compensation consultants and to obtain independent advice and assistance from internal and external legal, accounting and other advisors. The Chair of the Compensation Committee reports the Committee’s actions and recommendations for the previous quarter to the full Board at the next regularly scheduled Board meeting.
The Compensation Committee engaged Pay Governance LLC (Pay Governance) as its independent advisor on matters of executive compensation for 2015. The Compensation Committee’s consultant reports directly to the Committee and provides no other services to the Company or any of its affiliates. For 2015, the Committee assessed the independence of Pay Governance pursuant to the SEC and NASDAQ rules and concluded that no conflict of interests exists that would prevent Pay Governance from independently representing the Compensation Committee.
As discussed below under “Peer Competitive Group Survey—Market Assessment,” Pay Governance provided the Company and the Committee with compensation data regarding the companies in our competitor peer group. The Company used this data to develop its recommendations to the Compensation Committee for 2015 compensation levels. Pay Governance also provided suggestions on the design of the annual bonus and long-term incentive plans, including for the long-term performance based incentive program, the performance measures and weighting, the factors for the Committee to review when determining whether to adjust the formulaic amount, and the general range of adjustments to apply. Pay Governance did not perform any separate additional services for management.
Competitive Peer Group Survey—Market Assessment
The Compensation Committee reviewed a report on the Company’s compensation programs for senior executive officers which incorporated data provided by Pay Governance. Pay Governance collected compensation data from the companies in our competitor peer group as well as similarly-sized general industry companies, using the 2015 Towers Watson U.S. CDB Executive Compensation Survey. Pay Governance proposed several enhancements to the approach used to determine the competitive market. While the enhancements described below resulted in higher estimated market pay levels, we believe the changes result in more comparable data versus our peers. Pay Governance used a combination of proxy peer group companies and general industry survey data to develop the competitive market. Specifically, we added Virgin America to the proxy peer group, resulting in a peer group of 9 companies. This improved our relative statistical positioning versus our peers, in light of revenue, market capitalization and number of employees. We modified our benchmarking to use a revenue measure that excludes fuel, to improve comparability and avoid measurement issues with volatile pricing of a key commodity and company expense. Finally, we refined the current general industry reference group to place greater emphasis on consumer-oriented companies, reflecting the importance of customer service and relationships in JetBlue’s success.
Our current peer group consists of the following U.S. airlines:
Market | ||||
Capitalization | FY2014 | |||
($ in millions) | Revenue | Competing | ||
Company | Incorporation | 10/30/2015 | ($ in millions) | in Our Market |
American Airlines Group | USA | 29,134 | 42,650 | |
Delta Air Lines, Inc. | USA | 39,984 | 40,362 | |
United Continental Holdings, Inc. | USA | 22,484 | 38,901 | |
Southwest Airlines Co. | USA | 30,105 | 18,605 | |
JetBlue Airways Corporation | USA | 7,827 | 6,400 | |
Alaska Air Group, Inc. | USA | 9,667 | 5,368 | |
Hawaiian Holdings Inc. | USA | 1,847 | 2,315 | |
Spirit Airlines | USA | 2,656 | 1,932 | |
Virgin America Inc. | USA | 1,564 | 1,490 | |
Republic Airways Holdings Inc. | USA | 293 | 1,375 |
These companies, like JetBlue, are airline companies with significant revenue (over $1 billion) and with significant operations employing a large number of individuals and aircraft in our competing markets. We believe this comparator group provides a reasonable point of comparison to assist in our assessment of our compensation programs.
We recognize that this peer group has limitations from a statistical perspective given the limited number of companies and the wide variation in size of our peers. As a result, the Compensation Committee uses the competitive data as a reference point to monitor the compensation practices of our primary competitors. It is not, and was not in 2015, the sole determining factor in executive compensation decisions. The Committee also considers our Northeast location, route network, cost structure, and size relative to other airlines. The data is used primarily to ensure that our executive compensation program as a whole is competitive when the Company achieves targeted performance levels. We do not rely on this information to target any specific pay percentile for our executive officers. Instead, we use this information as a general overview of market practices and to ensure that we make informed decisions on executive pay packages. While we do not establish a specific market percentile ranking for the individual compensation elements that comprise total direct compensation, we review each element to ensure it is reasonable relative to our peer group. We position pay to maintain our competitive cost advantage versus our peer group and recognize that some of the peer competitors are significantly larger and more mature than we are and yet we compete for the same talent pool. Consistent with our compensation objectives discussed above, we incorporate flexibility into our compensation programs and in the executive assessment process to respond to, and adjust for, changes in the business and economic environment and individual accomplishments, performance and circumstances. Based on its overall assessment of market pay levels, the Committee determined that the proposed 2015 total pay of our named executive officers is better positioned, competitively, although room to improve remains. The Committee expects to continue to adjust relevant pay levels on a go forward, measured basis, contingent on corporate and individual performance in future years.
Tally Sheets
The Compensation Committee uses tally sheets as a reference to ensure committee members understand the total compensation being delivered to executives each year and over a multi-year period. When making executive compensation decisions, the Compensation Committee reviews tally sheets for each senior executive officer. Tally sheets provide historical pay levels for the past five years, target and realized pay, value of unvested equity awards, and potential payments at termination for each senior executive officer. Tally sheets enable the Compensation Committee to assess whether the compensation strategy is effective over time.
Internal Pay Equity Review
Because of our team-based approach to executive officer compensation, the Company carefully considers the relative compensation levels among all members of the executive team for internal pay equity. Accordingly, the Company’s executive compensation program is designed to be internally consistent and equitable in order to further the Company’s success. The Committee looks at various factors to account for differences in pay levels among the named executive officers. These factors include competitive data, size and complexity of role and individual and team based goal achievement.
Performance Evaluation – Chief Executive Officer
Our Board of Directors evaluates our Chief Executive Officer’s compensation on an annual basis. The Chief Executive Officer recuses himself from Board discussions relating to evaluations of his performance. The Board’s evaluation includes both objective and subjective criteria of the Chief Executive Officer’s performance, which include JetBlue’s financial performance, JetBlue’s performance with respect to our long-term strategic objectives and the development of our senior management team. Prior to the Board’s evaluation, the Compensation Committee evaluates the Chief Executive Officer’s compensation. The Compensation Committee uses the competitive market data discussed above to recommend total direct compensation for the Chief Executive Officer. The Compensation Committee conducts a performance review without the Chief Executive Officer’s participation and provides its recommendations to the full Board.
Performance Evaluations – Named Executive Officers (Other Than the Chief Executive Officer)
The Compensation Committee, together with our Chief Executive Officer, evaluates the performance of our senior executive officers, including our named executive officers. The Chief Executive Officer provides a performance assessment and compensation recommendation to the Compensation Committee for the other named executive officers within the overall team performance framework. The performance evaluation is based on factors such as achievement of the corporate objectives and performance; advancement of strategic initiatives; leadership and talent development; individual business area responsibilities; and performance as an executive team member and overall executive team performance.
With respect to the total compensation of our senior executive officers other than our Chief Executive Officer, the Compensation Committee also reviews total direct compensation data. The Compensation Committee makes final determinations regarding the total compensation of our senior executive officers.
Supplemental Comparison of 2015 and 2014 Direct Compensation to Named Executive Officers
The supplemental compensation table below shows how the Committee assessed total direct compensation for our named executive officers in 2015 and 2014. It is consistent with the Committee’s analysis of information presented to it in tally sheets (see “Compensation Practices and Procedures — Use of Tally Sheets”) and the Committee’s evaluation of our performance relative to established performance targets. The Committee approves RSU awards when financial results for the previous year are finalized, which occurs early in the following year. The primary difference between this supplemental compensation table and the 2015 Summary Compensation Table is that the supplemental compensation table includes grants of restricted stock units in the performance year to which they relate, rather than in the year when granted. The supplemental compensation table presented below is not intended to be a substitute for the 2015 Summary Compensation Table, but provides a condensed summary of actual total direct compensation awarded to the named executive officers for their performance in 2015 and 2014. The amounts reported in this table differ from the amounts required to be reported under SEC rules in the Summary Compensation Table on page 38, and are not a substitute for such information.
Non-Equity | |||||||
Stock | Incentive Plan | All Other | |||||
Salary | Bonus | Awards | Compensation | Compensation | Total | ||
Name and Principal Position | Year | ($)(1) | ($)(2) | ($)(3) | ($)(4) | ($)(5) | ($) |
Robin Hayes | 2015 | 550,000 | - | 1,659,988 | 718,850 | 14,814 | 2,943,652 |
President and Chief Executive Officer(6) | 2014 | 490,000 | - | 1,749,995 | 360,150 | 14,259 | 2,614,404 |
Mark Powers | 2015 | 425,000 | - | 719,989 | 416,700 | 17,042 | 1,578,732 |
Executive Vice President | 2014 | 424,000 | - | 699,992 | 411,640 | 15,871 | 1,551,503 |
and Chief Financial Officer | |||||||
James Hnat | 2015 | 425,000 | - | 449,977 | 277,800 | 11,061 | 1,163,839 |
Executive Vice President | 2014 | 424,000 | - | 449,992 | 207,760 | 13,821 | 1,095,573 |
and General Counsel | |||||||
Martin St. George | 2015 | 400,000 | - | 449,992 | 257,500 | 14,127 | 1,1 2 1,61 9 |
Executive Vice President | 2014 | ||||||
Commercial & Planning | |||||||
Alexander Chatkewitz | 2015 | 265,000 | - | 124,983 | 119,600 | 594 | 510,176 |
Vice President and Controller | 2014 | ||||||
David Barger | 2015 | 600,000 | - | - | 75,000 | 13,605 | 688 ,605 |
Former Chief Executive Officer(7) | 2014 | 600,000 | - | 399,998 | 441,000 | 18,638 | 1,459,636 |
Base Salary
The below table, for comparative purposes, shows annualized base salaries for 2015 and 2014.
Executive | 2015 salary | 2014 salary | ||||||
Robin Hayes(1) | $ | 550,000 | $ | 490,000 | ||||
Mark Powers | $ | 425,000 | $ | 424,000 | ||||
James Hnat | $ | 425,000 | $ | 424,000 | ||||
Martin St. George(2) | $ | 400,000 | - | |||||
Alexander Chatkewitz(3) | $ | 265,000 | $ | 265,000 | ||||
David Barger(4) | $ | 600,000 | $ | 600,000 |
Annual Incentive Bonuses and Equity Compensation
The Company’s annual incentive targets and equity targets are payable according to the Company’s achievement of its annual performance metrics. Our program has a preliminary threshold of $1 of pre-tax income. Pre-tax income is also the threshold for profit sharing payments to non-management crewmembers. Profit sharing is primarily payable to non-equity-eligible crewmembers. Our manager level and above crewmembers, including our named executive officers, will not benefit from the corporate portion of bonus payments if, as a result of our financial results, our non-management crewmembers do not receive Retirement Plus (a Company discretionary contribution of 5% of eligible non-management crewmember compensation, which vests over three years) or profit-sharing.
In 2015, the targets for our corporate performance factor were expanded to include an operational goal, on time departure or “D0”. Our 2015 targets were D0 and Customer Net Promoter Score (“NPS”) (each weighted 20%) and Controllable Costs (cost per available seat mile ex-Fuel and Profit Sharing) and Pre-tax Margin (each weighted 30%). NPS is a brand loyalty analysis. Controllable Costs and Pre-Tax Margin are financial measures that we believe are important to our long-term success because Pre-Tax Margin measures our overall profitability levels and Controllable Costs measure our cost growth for operating the airline excluding fuel cost and profit sharing. Our annual incentive bonuses, which are payable in cash, aim to reward executive officers and members of leadership throughout the organization to the manager level for attaining annual corporate performance targets.
In addition, in recognition of the need to maintain competitiveness and noting the importance of an increased amount of “at risk” pay-for-performance based compensation, the Compensation Committee, for 2015, maintained our Chief Executive Officer’s target bonus opportunity at 100% (or $550,000), the target bonus opportunity of our Chief Financial Officer to 75%, and of our Executive Vice President and General Counsel at 50%. The target bonus opportunity of our remaining named executive officers were set at 50% and certain of our Vice Presidents at 30%.
The named executive officers’ maximum bonus is two times their target bonus.
The Compensation Committee may adjust the formulaic funding upwards or downwards by up to 35% based on qualitative factors, including operating and financial performance versus our peer group and the market, variances in fuel costs from the assumptions in the budget, total stockholder return in absolute and as compared to that of our peer group, and our long-term strategic plan development and execution.
The Compensation Committee relied on our performance assessment framework to evaluate our results on each goal and then perform a collective assessment across all goals to determine a corporate performance factor, which is then applied to our annual incentive bonus awards. For 2015, the corporate performance factor was determined as follows:
Payout | Actual Payout | ||||
Performance | Achieved as a | Approved as a | |||
Measure | Weight | Target | Achieved | % of Target | % of Target |
D0 | 20% | 65.0% | 60.9% | ||
Customer NPS(1) | 20% | 65.5% | 66.3% | ||
Controllable Cost(2) | 30% | 1.0% | 0.5% | 130.7% | 130.7% |
Pre-tax Margin(3) | 30% | 9.8% | 17.1% |
A “Met” target assessment would have resulted in a corporate performance factor of 100%, which would have resulted in a payout of the percentages of base salary for the named executive officers as discussed above. After evaluating the Company’s performance, the Compensation Committee chose to approve the recommended performance of 130.7%.
Long-Term Incentive Equity
Equity grants directly align executive officers’ interests with the interests of stockholders by rewarding increases in the value of our share price. Such grants enable us to attract, retain and motivate highly qualified individuals for leadership positions within the Company.
We have historically used RSUs, based on achievement of goals set the previous year, and with a three year vesting period, to retain and motivate our crewmembers, including our named executive officers. In 2013, we adopted a long-term incentive plan with performance PSUs as the relevant vehicle in order to continue to motivate our senior most leaders by introducing a performance-based compensatory element. In 2015, approximately 23% of the total PSU award target opportunity for eligible named executive officers is in the form of PSUs that are earned (or forfeited) based on the Company’s goal achievement. We believe this program more closely aligns the interests of our officers and stockholders. With this restructuring, we transitioned from a program that provided for large periodic equity awards to a steady and sustainable program of more consistent annual award opportunities.
Restricted Stock Units (RSUs)
We grant equity in the form of RSUs in connection with our annual performance review, and upon hire or promotion. Our annual equity grants are made following the Compensation Committee meeting during the first quarter of each year. We do not time our equity grants to coincide with the disclosure of non-public material information.
To avoid a situation where the same set of metrics triggered both bonus and equity payouts or paid out neither, we award RSUs that vest over three years to our named executive officers based on the individual’s achievement of individual performance goals. The executive’s degree of achievement of his individual goals, and a subjective assessment of the degree of difficulty of those goals, are reflected in the equity grants paid in 2016 based on 2015 performance as shown in the supplemental compensation table. The Committee believes that this maintains some variation in pay among the senior executive team and continues the process of moving them out of lockstep which the Compensation Committee no longer believes to be appropriate.
Our RSU equity target awards for 2015 performance are as follows (reported as fair market value on the date of the restricted stock unit grant):
The maximum is 200% of target and the threshold is 50%. The ranges were selected based on peer compensation data and in light of the Company’s internal pay equity considerations and its financial performance.
Our named executive officers are evaluated annually on their achievement of individual goals, tailored to that executive’s responsibilities and the workgroups he supervises. All of our officers had culture goals, since we believe our strong and unique culture is integral to our success. Our officers also had shared operational goals. In addition, our CEO had goals relating to innovation and safety, as well as financial and strategic goals, including driving free cash flow and a strong balance sheet, working with investor relations, and deciding on a corporate position on the Open Skies debate. Mr. Powers, Mr. Hnat, Mr. St. George, and Mr. Chatkewitz had culture goals, shared operational goals, goals supporting aspects of the Company’s overall plan and goals relating specifically to the departments which they lead.
Mr. Hayes reviewed the performance of the senior executive officers, as well as other members of his team. Mr. Hayes, in performing his reviews, used his judgment in evaluating the degree of difficulty of achieving these individual goals. Each of the other named executive officers met or exceeded his targets, resulting in the equity awards shown in the applicable tables.
The Compensation Committee, in consultation with the Board of Directors, reviewed Mr. Hayes’ performance and strong leadership in 2015 in light of the Company’s overall performance in approving his annual RSU grant.
Based on the assessments of both the Compensation Committee, and, with respect to Mr. Hayes, the Board of Directors, of individual performance in 2015 and the assessments of the Compensation Committee with respect to the other senior executive officers’ individual performance in 2015, the following RSU awards were made on February 24, 2016:
We believe this approach was consistent with our pay for performance philosophy whereby we link our corporate results and individual goal achievement to each named executive officer’s compensation. These RSUs vest in three equal annual installments on the first, second and third anniversaries of the grant date and are forfeitable if the officer were to leave the Company before the awards are fully vested.
Performance Stock Units (PSUs) and Settlement of 2013-2015 PSUs
As noted above, in 2013, the Compensation Committee adopted a long-term performance incentive program. For the 2015-2017 performance period, the Company’s long-term incentive metrics included one relative goal (relative to industry ex-Fuel CASM), weighted at one-third, and one absolute goal (ROIC), weighted at two-thirds. We believe our CASM and ROIC goals are consistent with maintaining our cost structure relative to the industry and our focus on efficient use of capital. The number of PSUs awarded at the end of the three-year performance period will vary based on the actual performance. The value earned will be delivered in common stock following the completion of a three-year performance period subject to our performance against the pre-established corporate goals and certification by the Compensation Committee. Payouts in respect of the 2015 PSU awards may range from 0 to 200% of the target award based on the Company’s performance measured against industry relative ex-Fuel CASM and ROIC. The PSU maximum is 200% of target and the threshold is 50% of target.
The 2015 PSU goals, at target, are as follows: $700,000 for the President and Chief Executive Officer, $370,000 for the Executive Vice President and Chief Financial Officer, and $150,000 for the other Executive Vice Presidents, including the Executive Vice President and General Counsel and the Executive Vice President Commercial & Planning.
The PSUs are another way in which the Committee has introduced variability into the named executive officer compensation packages. Actual amounts of awards granted in April 2015 are disclosed in the “Summary Compensation Table” and “Grants of Plan-Based Awards” table.
As in years past, the Company wanted to use more than one metric, while keeping the number of variables limited. For 2015, we felt that having one “absolute” and one “relative” metric, weighted two-thirds and one-third, respectively, reflected our emphasis on growing ROIC while still controlling costs. Our 2015 metrics, ROIC and relative ex-fuel CASM, are key measures we use to manage our business and are shared with investors. We feel that these metrics, align management’s and stockholders’ interests, of improving stockholder value over time.
Our long-term performance-based incentive plan covers three year forward looking performance periods. We believe our commitment to continued ROIC growth aligns with management’s and stockholders’ interests, of improving stockholder value over the long term. For the 2015-2017 performance period, our team is aiming for continued ROIC improvement, mindful that we are a growth airline. We do not disclose a specific ROIC target due to the highly volatile nature of our business. Moreover, the components of ROIC include highly sensitive data, such as projected net income, and we believe that such disclosure would result in serious competitive harm. These targets were designed to be challenging but attainable if we had what we considered to be successful years. For 2015, and going forward, we have incorporated “confidence factors” into our goal setting. This means that we will aim to set target goals that we have at least 50% confidence in achieving. We expect that using such confidence factors will help us set and achieve better goals and avoid negative incentive effects, despite otherwise positive performance.
For our relative ex-Fuel CASM target, we seek to maintain competitive cost positioning. We have not disclosed the relative ex-fuel CASM target because it is competitively sensitive as a forward looking metric. Given that our business strategy depends, in part, on growth that is profitable only when we maintain our cost advantage relative to our network carrier competitors, disclosing that figure on a prospective basis would subject us to serious competitive harm. This metric is difficult to achieve. We operate in a highly volatile industry and as such can experience unanticipated spikes in operating costs. Our industry is very sensitive to global economic forces. Further, our domestic competitors have all lowered their costs through bankruptcy or merger activity. We believe maintaining a competitive cost structure is important to our ability to grow. Maintaining management focus, through our LTI program, is important to this goal.
The number of shares of PSUs for the 2016-2018 performance period will be determined based on the closing price of the Company’s common stock on the grant date, April 12, 2016. The Compensation Committee approves the grant dates in advance.
Settlement of 2013-2015 Long-Term Incentive Program Performance Unit Grants
In March 2013, the Compensation Committee approved grants of performance units, subject to a three-year performance period. The original 2013-2015 PSU grants were made assuming a target performance, but remained subject to performance conditions. The performance period relating to the 2013 PSUs concluded on December 31, 2015, but the PSUs remained subject to the Compensation Committee’s certification of performance results.
The 2013 performance unit grants had two components, one relative and one absolute. The performance goals were independent of each other and equally weighted—an ROIC goal and a relative ex-Fuel CASM goal. Depending upon actual company performance relative to these performance goals, the exact number of shares that could have vested ranged from zero to 200 percent of the target award. Following the conclusion of the performance period, the Compensation Committee calculated the company’s performance relative to these goals during the three-year performance period to determine the vesting percentage for the 2013 performance unit grants.
During the performance period, we achieved an ROIC of 8.5%, resulting in a 146.4% vesting percentage for that half of the program. We achieved an ex-Fuel CASM to industry goal of 10.9%, resulting in a 122.5% vesting percentage for that half of the program. Based on the Compensation Committee’s calculation of these performance measures, the 2013 performance unit grants vested at 134.5%. The following table summarizes the performance results with respect to each of the performance measures applicable to the 2013 LTIP performance unit grants and the corresponding contributions to the vesting percentage.
Performance Measures — 2013-2015 | Result | Weight | Vesting | |||||||||
ROIC | 146.4 | % | 50 | % | 73 | % | ||||||
Relative ex-Fuel CASM | 122.5 | % | 50 | % | 61 | % | ||||||
TOTAL | 134.5 | % |
The following table summarizes the number of PSUs awarded for the 2013-2015 performance cycle in 2016 and the number of shares of common stock to be paid out with respect to such grants for our named executive officers, based on the 134.5% percent vesting percentage approved by the Compensation Committee in early 2016.
Vesting of 2013 Performance Unit Grants | ||||||||||||
Units at | Vesting | Units upon | ||||||||||
Grant Date | Percentage | Vesting | ||||||||||
Name(2) | (#) | (%) | (#) | |||||||||
Robin Hayes | 44,709 | 134.5 | % | 60,133 | ||||||||
Mark Powers | 29,806 | 134.5 | % | 40,089 | ||||||||
James Hnat | 14,903 | 134.5 | % | 20,044 | ||||||||
David Barger(1) | 59,612 | 134.5 | % | 50,397 |
All Other Compensation
Perquisites and Other Personal Benefits
We offer a limited amount of perquisites and other personal benefits to our named executive officers.NEOs. The Compensation Committee believes that these perquisites are reasonable and consistent with prevailing market practice and the Company’s overall compensation program. Perquisites are not a material part of our compensation program. The Compensation Committee periodically reviews the levels of perquisites and other personal benefits provided to our named executive officers.NEOs. See “—Summary Compensation Table — All Other Compensation.”
Post-Employment Benefits
To promote retention and recruiting, we also offer limited arrangements that provide certain post-employment benefits in order to alleviate concerns that may arise in the event of a crewmember’s separation from service with us and enable crewmembers to focus on Company duties while employed by us.
Severance Benefits.In the event of a change in control, post-employment severance benefits for our |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 48
Retirement Benefits.Our executive officers may participate in our 401(k) defined contribution retirement plan provided to substantially all other U.S. crewmembers and do not receive special retirement plans or benefits. For our executive officers as well as all other participating crewmembers, we match employee contributions under this plan 100% up to 5% of eligible earnings, subject to all applicable regulatory limits, and the match vests over |
Tax ImpactsConsiderations
With exceptions only for compensation paid pursuant to certain binding contracts as described in Section 162(m) of the Internal Revenue Code of 1986, as amended or(the “Code”), the Code, generally disallows a tax deduction for annual compensation in excess of $1,000,000 paid per year to each of our Chief Executive Officer and our three most highly paid othernamed executive officers (other than our Chief Financial Officer). Qualifying “performance-based compensation” is not subjectlimited to this deduction limitation if certain requirements are met. With regard to equity incentive plan compensation awards made in 2015, we intend to generally structure our compensation programs such that amounts payable under these programs are not subject to$1 million. Although the deduction limitationsCompensation Committee considers the impact of Section 162(m). However,, it believes that stockholder interests are best served by not restricting the Committee reserves the right to design programs that are intended to accomplish a full range of compensation objectives important to our success, even where the compensation paid under such programs may not be exempt from the deduction limitations of Section 162(m). For 2015, due toCompensation Committee’s discretion and flexibility in crafting the Company’s net operating loss carryforwards, the limitation on ourexecutive compensation deduction resulted in no significant income tax obligation.program, even if non-deductible compensation expenses could result.
Other provisions of the Code can also affect compensation decisions. Under Sections 280G and 4999 of the Code, a 20% excise tax is imposed upon certain individuals who receive payments uponin connection with a change in control if the payments received by them equal or exceed an amount generally approximating three times their average annual compensation. The excise tax ismay be imposed on all such payments generally exceeding one time an individual’s average annual compensation. A company will also lose its tax deduction for such “excess parachute payments”. As discussed under “Payments upon a Change in Control-Executive Change in Control Plan,payments.” below,In approving the Executive Plan providescompensation arrangements for tax “gross-up” payments to our named executive officers to coverNEOs, the Compensation Committee will consider all elements of the cost to the Company of thisproviding such compensation, including the potential impact of Section 280G of the Code. However, the Compensation Committee may, in its judgment, authorize compensation arrangements that could give rise to loss of deductibility under Section 280G of the Code and the imposition of excise tax.taxes under Section 4999 of the Code when it believes that such arrangements are appropriate to attract and retain executive talent.
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 49
The Compensation Committee has reviewed and discussed the “Compensation Discussion and Analysis” section with our management.Company leadership. Based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this proxy statement and incorporated by reference in the Company’s annual reportAnnual Report on Form 10-K for the fiscal year ended December 31, 2015.2021.
The Compensation Committee of JetBlue:
David CheckettsTeri McClure (Chair)Virginia Gambale(Chair)Peter BoneparthStephan GemkowSarah Robb O’Hagan
Thomas Winkelmann
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 50
The following table provides certain information concerning the compensation earned by NEOs for services rendered to us during the years ended December 31, 2015, 20142021, 2020 and 2013 by our named executive officers:2019:
Non-Equity | ||||||||||||||||||||||||||||
Stock | Incentive Plan | All Other | ||||||||||||||||||||||||||
Salary | Bonus | Awards | Compensation | Compensation | Total | |||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($)(1) | ($)(2) | ($)(3) | ($)(4) | ($) | |||||||||||||||||||||
Robin Hayes | 2015 | 542,500 | - | 1,999,996 | 718,850 | 14,814 | 3,276,159 | |||||||||||||||||||||
President and Chief Executive | 2014 | 490,000 | - | 1,012,489 | 360,150 | 14,259 | 1,876,898 | |||||||||||||||||||||
Officer(5) | 2013 | 445,833 | 40,590 | 912,493 | 208,710 | 13,435 | 1,621,062 | |||||||||||||||||||||
Mark Powers | 2015 | 424,917 | - | 769,981 | 416,700 | 17,042 | 1,6 76,421 | |||||||||||||||||||||
Executive Vice President | 2014 | 423, 917 | 100,000 | 824,993 | 311,640 | 15,871 | 1,675,504 | |||||||||||||||||||||
Chief Financial Officer | 2013 | 411,000 | 37,114 | 637,495 | 191,086 | 15,526 | 1,292,221 | |||||||||||||||||||||
James Hnat | 2015 | 424,917 | - | 499,996 | 277,800 | 11,061 | 1,213,774 | |||||||||||||||||||||
Executive Vice President | 2014 | 423, 917 | - | 537,494 | 207,760 | 13,821 | 1,1 82,075 | |||||||||||||||||||||
General Counsel | 2013 | 411,000 | 30,962 | 449,996 | 159,238 | 8,348 | 1,059,544 | |||||||||||||||||||||
Martin St. George | 2015 | 392,479 | - | 477,797 | 257,500 | 14,127 | 1,157,844 | |||||||||||||||||||||
Executive Vice President | ||||||||||||||||||||||||||||
Commercial & Planning | ||||||||||||||||||||||||||||
Alexander Chatkewitz | 2015 | 265,000 | 74,994 | 119,600 | 594 | 460,188 | ||||||||||||||||||||||
Vice President Controller | ||||||||||||||||||||||||||||
David Barger | 2015 | 75,000 | - | - | 75,000 | 13,605 | 163,605 | |||||||||||||||||||||
Former Chief Executive Officer(6) | 2014 | 600,000 | - | 2,024,991 | 441,000 | 18,638 | 3,084,629 | |||||||||||||||||||||
2013 | 600,000 | 67,550 | 2,024,996 | 347,850 | 15,588 | 3,055,984 |
Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Non-Equity Incentive Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | |||||||
Robin Hayes Chief Executive Officer | 2021 | 593,750 | 2,424,975 | 410,000 | 21,030 | 3,449,755 | ||||||||
2020 | 435,417 | 1,199,992 | 410,200 | 17,580 | 2,063,189 | |||||||||
2019 | 598,333 | 2,549,990 | 787,200 | 20,000 | 3,955,523 | |||||||||
Ursula Hurley Chief Financial Officer | 2021 | 276,412 | 99,987 | 110,000 | 28,722 | 515,121 | ||||||||
Joanna Geraghty President and Chief Operating Officer | 2021 | 536,750 | 1,524,965 | 371,000 | 26,062 | 2,458,777 | ||||||||
2020 | 393,417 | 718,740 | 282,500 | 17,030 | 1,411,687 | |||||||||
2019 | 535,833 | 1,424,979 | 510,100 | 17,257 | 2,488,169 | |||||||||
Carol Clements Chief Digital and Technology Officer | 2021 | 342,629 | 25,000 | 519,981 | 201,141 | 129,520(5) | 1,218,271 | |||||||
Brandon Nelson General Counsel and Corporate Secretary | 2021 | 438,750 | 319,994 | 220,000 | 27,924 | 1,006,668 | ||||||||
2020 | 390,000 | 312,495 | 220,000 | 21,681 | 944,176 | |||||||||
2019 | 403,333 | 374,978 | 221,900 | 27,476 | 1,027,687 | |||||||||
Stephen Priest(6) Former Chief Financial Officer | 2021 | 214,834 | 1,319,971 | — | 31,422 | 1,566,227 | ||||||||
2020 | 405,750 | 749,984 | 234,000 | 18,413 | 1,408,147 | |||||||||
2019 | 472,917 | 1,174,982 | 434,500 | 22,858 | 2,105,257 |
(1) | Compensation reported under this column consists of signing bonuses and spot bonuses. Annual performance-based |
(2) | Represents |
(3) | Represents annual cash incentive bonus earned in |
(4) | Represents Company 401(k) matching contributions under the JetBlue Airways Corporation Retirement Plan in which all of our |
(5) | Includes company-paid relocation expenses of $113,166. |
(6) | Mr. |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 51
The following table sets forth certain information as of December 31, 2015, concerning individual grants of equity and non-equity plan-based awards made to the named executive officersNEOs during the fiscal year ended December 31, 2015.2021:
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: | Grant Date | |||||||||||||||
Number of | Fair Value | |||||||||||||||||
Shares of | of Stock | |||||||||||||||||
Threshold | Target | Maximum | Threshold | Target | Maximum | Stock or Units | and Option | |||||||||||
Name | Grant Date | ($) | ($) | ($) | (#) | (#) | (#) | (#)(3) | Awards ($)(4) | |||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (l) | |||||||||
Robin Hayes | 2/13/2015 | 77,243 | 1,300,000 | |||||||||||||||
4/8/2015 | 18,144 | 36,288 | 72,576 | 699,996 | ||||||||||||||
275,000 | 550,000 | 1,100,000 | ||||||||||||||||
Mark Powers | 2/13/2015 | 23,767 | 399,999 | |||||||||||||||
4/8/2015 | 9,590 | 19,180 | 38,360 | 369,982 | ||||||||||||||
159,375 | 318,750 | 637,500 | ||||||||||||||||
James Hnat | 2/13/2015 | 20,796 | 349,997 | |||||||||||||||
4/8/2015 | 3,888 | 7,776 | 15,552 | 149,999 | ||||||||||||||
106,250 | 212,500 | 425,000 | ||||||||||||||||
Martin St. George | 2/13/2015 | 19,477 | 327,798 | |||||||||||||||
4/8/2015 | 3,888 | 7,776 | 15,552 | 149,999 | ||||||||||||||
100,000 | 200,000 | 400,000 | ||||||||||||||||
Alexander Chatkewitz | 2/13/2015 | 4,456 | 74,994 | |||||||||||||||
4/8/2015 | - | - | - | - | ||||||||||||||
39,750 | 79,500 | 159,000 | ||||||||||||||||
David Barger | 2/13/2015 | - | - | |||||||||||||||
4/8/2015 | - | - | - | - | ||||||||||||||
- | - | - |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | Closing Market Price on Date of Grant ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(4) | ||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (l) | |||||||||||
Robin Hayes | 2/25/2021 | — | — | — | 69,226 | 19.14 | 1,324,986 | |||||||||||||
4/13/2021 | 26,829 | 53,658 | 107,316 | 20.50 | 1,099,989 | |||||||||||||||
468,750 | 937,500 | 1,875,000 | ||||||||||||||||||
Ursula Hurley | 2/25/2021 | — | — | — | 5,224 | 19.14 | 99,987 | |||||||||||||
42,525 | 85,050 | 170,100 | ||||||||||||||||||
Joanna Geraghty | 2/25/2021 | — | — | — | 47,021 | 19.14 | 899,982 | |||||||||||||
4/13/2021 | 15,244 | 30,487 | 60,974 | 20.50 | 624,984 | |||||||||||||||
282,500 | 565,000 | 1,130,000 | ||||||||||||||||||
Carol Clements | 6/24/2021 | — | — | — | 30,022 | 17.32 | 519,981 | |||||||||||||
125,000 | 250,000 | 500,000 | ||||||||||||||||||
Brandon Nelson | 2/25/2021 | — | — | — | 11,494 | 19.14 | 219,995 | |||||||||||||
4/13/2021 | 2,439 | 4,878 | 9,756 | 20.50 | 99,999 | |||||||||||||||
135,000 | 270,000 | 540,000 | ||||||||||||||||||
Stephen Priest(5) | 2/25/2021 | — | — | — | 44,409 | 19.14 | 849,988 | |||||||||||||
4/13/2021 | 11,463 | 22,926 | 45,852 | 20.50 | 469,983 | |||||||||||||||
234,000 | 468,000 | 936,000 |
(1) | Represents |
(2) | Represents PSUs granted under our |
(3) | Represents RSUs granted under our |
(4) | Represents total grant date fair value of RSUs and PSUs as determined in accordance with FASB ASC Topic 718. Please refer to Note 7 of our consolidated financial statements in our |
(5) | Mr. Priest voluntarily departed from the Company in June 2021, and |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 52
Summary of Employment Agreement with Mr. Barger
On February 11, 2008, we entered into an employment agreement with David Barger, then our Chief Executive Officer, which was amended in 2009, 2010 and 2013. As amended, the agreement had a term through February 15, 2015 and provided for an annual salary, effective as of February 1, 2009, of $600,000. The agreement provided that Mr. Barger was eligible to receive an annual incentive bonus at a target of 50% and a maximum of 100% of his base salary; a restricted stock unit award with a minimum target at a fair market value of $250,000, with a then minimum award of $0 and a maximum award of $500,000 (the maximum award is aimed at 2 times his salary, adjusted over time), depending on his performance against targets as set and reviewed by the Compensation Committee; as well as participation in the Company’s benefit plans available to executive officers. (Mr. Barger received a supplemental grant of restricted stock units with a grant date fair value of $250,000 when his employment agreement was amended in 2009.) The agreement was terminable by Mr. Barger or by the Company. See “—Agreements Governing Termination.”
Summary of Employment Agreement with Mr. Hayes
On February 12, 2015, the Company and Mr. Hayes entered intoexecuted an employment agreement (the “Hayes Employment Agreement”) pursuant to whichfor Mr. Hayes was appointedas Chief Executive Officer and President of the Company. The agreement commenced on February 16, 2015, when Mr. Hayes became the Company’s CEO and President. On September 5, 2021, the Company and Mr. Hayes amended Mr. Hayes’s employment agreement to extend his term of employment through September 1, 2023. The agreement, as amended, provides that, effective as of February 16, 2015. The Hayes Employment Agreement has a term of three years, ending on February 28, 2018, with a renewal option for a second three -year term at the discretion of the Board. The Hayes Employment Agreement provides that1, 2020, Mr. Hayes will be paid an annual salary at the rate of $550,000$625,000 and an annual cash incentive bonusawards as provided by the Company to its senior executives currently at a target of 100%150% of the base salary, both salary and a maximum of 200% of base salary. The annual salary may be increased, but not decreased, from time to time, and the amount of bonus remains subject to the review and approval of the Compensation CommitteeBoard of Directors in its sole discretion.
The Hayes Employment Agreement also provides that Mr. Hayes will continue to be eligible to receive an annual award of RSUs and an annual award of PSUs pursuant to his employment agreement, as amended, both pursuant to the Company’s 2011 Incentive Compensation Planequity compensation plans and related award agreements, as applicable.agreements. The Hayes Employment Agreementagreement provides for health, fringe, welfare and flight benefits as provided to other senior executive officers of the Company. The Hayes Employment Agreementagreement provides for certaintermination for cause, and for severance payments should Mr. Hayes be terminated during the term without cause. It containsThe agreement provides for customary confidentiality, non-competition, non-solicitation and non-disparagement provisions. The Agreementagreement is terminable by Mr. Hayes or by the Company, in each case as more fully described below under “Potential Payments upon Termination or Change In Control.” See “—Agreements Governing Termination.”
EmploymentEffective April 1, 2020, Mr. Hayes agreed to a 50% reduction in his salary during the crisis as the Company grappled with the effects of COVID-19 on the aviation industry and JetBlue. The 50% salary reduction was in place through September 2020, and then reduced to 20% through the end of the first quarter of 2021.
Summary of Agreements with otherOther Named Executive Officers
NoneIn 2021, none of Mr. Powers, Mr. Hnat, Mr. St. George or Mr. Chatkewitz haveMessrs. Nelson nor Priest, Mses. Geraghty, Hurley nor Clements, had employment agreements with the Company.
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 53
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth information concerning all outstanding equity awards for each named executive officer NEO(1) at December 31, 2015.2021:
Option Awards | Stock Awards | |||||||||
Equity | Equity incentive | |||||||||
incentive plan | plan awards: | |||||||||
awards: | market or | |||||||||
Number | number of | payout value | ||||||||
Number of | Number of | of Shares | Market Value | unearned | of unearned | |||||
Securities | Securities | or Units of | of Shares or | shares, units | shares, units | |||||
Underlying | Underlying | Options | Stock That | Units of Stock | or other rights | or other rights | ||||
Unexercised | Unexercised | Exercise | Option | Have Not | That Have Not | that have not | that have not | |||
Options | Options | Price | Expiration | Vested | Vested | vested | vested | |||
Name | Grant Date | Exercisable | Unexercisable | ($) | Date | (#) | ($) | (#) | ($) | |
(a) | (1) | (b) | (c) | (e) | (f) | (g) | (h)(2) | (i)(3) | (j) | |
Robin Hayes | 2/13/2013 | - | - | - | - | 34,142 | 773,316 | - | - | |
4/8/2013 | - | - | - | - | - | - | 67,064 | 1,518,988 | ||
2/13/2014 | - | - | - | - | 44,066 | 998,095 | - | - | ||
4/8/2014 | - | - | - | - | - | - | 77,142 | 1,747,266 | ||
2/13/2015 | - | - | - | - | 77,243 | 1,749,554 | - | - | ||
4/8/2015 | - | - | - | - | - | - | 72,576 | 1,643,846 | ||
Mark Powers | 8/16/2006 | 9,000 | 10.365 | 8/16/2016 | - | - | - | - | ||
8/15/2007 | 9,000 | 9.025 | 8/15/2017 | - | - | - | - | |||
11/14/2007 | 13,500 | 7.790 | 11/14/2017 | - | - | - | - | |||
2/13/2013 | - | - | - | - | 24,387 | 552,366 | - | - | ||
4/8/2013 | - | - | - | - | - | - | 44,709 | 1,012,659 | ||
2/13/2014 | - | - | - | - | 41,128 | 931,549 | - | - | ||
4/8/2014 | - | - | - | - | - | - | 51,428 | 1,164,833 | ||
2/13/2015 | - | - | - | - | 23,767 | 538,323 | - | - | ||
4/8/2015 | - | - | - | - | - | - | 38,360 | 868,854 | ||
James Hnat | 5/16/2007 | 15,000 | 10.680 | 5/16/2017 | - | - | - | - | ||
2/13/2013 | - | - | - | - | 19,510 | 441,902 | - | - | ||
4/8/2013 | - | - | - | - | - | - | 22,355 | 506,329 | ||
2/13/2014 | - | - | - | - | 34,274 | 776,306 | - | - | ||
4/8/2014 | - | - | - | - | - | - | 17,142 | 388,266 | ||
2/13/2015 | - | - | - | - | 20,796 | 471,029 | - | - | ||
4/8/2015 | - | - | - | - | - | - | 15,552 | 352,253 | ||
Martin St. | 8/16/2006 | 29,000 | 10.365 | 8/16/2016 | - | - | - | - | ||
George | 8/15/2007 | 9,000 | 9.025 | 8/15/2017 | - | - | - | - | ||
2/13/2013 | - | - | - | - | 11,845 | 268,289 | - | - | ||
2/13/2014 | - | - | - | - | 14,688 | 332,683 | - | - | ||
2/13/2015 | - | - | - | - | 12,997 | 294,382 | - | - | ||
4/8/2015 | - | - | - | 6,480 | 146,772 | - | - | |||
4/8/2015 | - | - | - | - | - | - | 15,552 | 352,253 | ||
Alexander Chatkewitz | 2/13/2015 | - | - | - | - | 4,456 | 100,928 | - | - | |
David Barger | 4/8/2013 | - | - | - | - | - | - | 56,091 | 1,270,461 | |
2/13/2014 | - | - | - | - | 120,872 | 2,737,751 | - | - | ||
4/8/2014 | - | - | - | - | - | - | 18,701 | 423,566 |
Stock Awards | ||||||||||
Name(1) | Grant Date(2) | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#)(4) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($) | |||||
Robin Hayes | 02/25/2019 | 22,168 | $ 315,672 | |||||||
04/12/2019 | 39,612 | $ 564,075 | ||||||||
02/25/2020 | 41,906 | $ 596,741 | ||||||||
02/25/2021 | 66,178 | $ 942,375 | ||||||||
04/13/2021 | 53,658 | $ 764,090 | ||||||||
Ursula Hurley | 02/25/2019 | 2,416 | $ 34,404 | |||||||
02/25/2020 | 5,480 | $ 78,035 | ||||||||
02/25/2021 | 5,224 | $ 74,390 | ||||||||
Joanna Geraghty | 02/25/2019 | 12,077 | $ 171,976 | |||||||
04/12/2019 | 23,474 | $ 334,270 | ||||||||
02/25/2020 | 26,256 | $ 373,885 | ||||||||
02/25/2021 | 47,021 | $ 669,579 | ||||||||
04/13/2021 | 30,487 | $ 434,135 | ||||||||
Carol Clements | 06/24/2021 | 30,022 | $ 427,513 | |||||||
Brandon Nelson | 02/25/2019 | 4,348 | $ 61,916 | |||||||
04/12/2019 | 4,401 | $ 62,670 | ||||||||
02/25/2020 | 11,416 | $ 162,564 | ||||||||
02/25/2021 | 11,494 | $ 163,675 | ||||||||
04/13/2021 | 4,878 | $ 69,463 |
Please refer to the table below for the applicable vesting schedules of outstanding |
Grant Date | Vesting Schedule | ||
2/ | |||
One-third in three equal annual installments beginning on February | |||
4/ | 3 year cliff vesting beginning on April 12, 2019 and subject to meeting certain performance goals for fiscal years 2019, 2020, 2021, payable in 2022 | ||
2/25/2020 | One-third in three equal annual installments beginning on | ||
2/25/2021 | One-third in three equal annual installments beginning on February 25, 2022 | ||
4/ | 3 year cliff vesting beginning on April | ||
6/24/2021 | One-third in three equal annual installments beginning on June 24, 2022 |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 54
(3) | The amount listed in this column, Market Value of Shares or Units of Stock that have not vested, represents the product of the closing market price of the Company’s stock as of December 31, | |
(4) |
The following table provides information concerning the vesting of PSU awards and RSU awards during 2021 for each NEO:
STOCK AWARDS(1) | ||||
Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||
Robin Hayes | 111,215 | 2,126,854 | ||
Ursula Hurley | 7,200 | 131,689 | ||
Joanna Geraghty | 52,146 | 992,909 | ||
Carol Clements | — | — | ||
Brandon Nelson | 14,946 | 269,383 | ||
Stephen Priest | 40,711 | 775,739 |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 55
OPTION EXERCISES AND STOCK VESTED
The following table provides information concerning vesting of option awards and RSU awards during 2015 for each named executive officer:
Option Awards | Stock Awards | ||||
Number of | Number of | ||||
Shares Acquired | Value Realized | Shares Acquired | Value Realized | ||
on Exercise | on Exercise | on Vesting | on Vesting | ||
Name | (#) | ($) | (#) | ($) | |
Robin Hayes | 99,547 | 1,675,376 | |||
Mark Powers | 77,091 | 1,330,465 | |||
James Hnat | 21,000 | 166,643 | 56,554 | 951,804 | |
Martin St. George | 31,277 | 526,392 | |||
Alexander Chatkewitz | |||||
David Barger | 45,000 | 377,740 | 239,895 | 4,037,433 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Each of our named executive officersNEOs may receive various payments if his or her employment is terminated, depending on the grounds for the termination. Employment may be terminated in various ways, including the following:
Voluntary termination of employment by the | |
Termination of employment by the Company (with or without “cause”); | |
Termination in the event of the disability or death of the | |
Termination following a change in control of the Company. |
In the table beginning on page 47,60, we provide estimates of the payments that our named executive officersNEOs would have received had their employment been terminated as of December 31, 2015.2021.
Potential payments made to Mr. Hayes upon the termination of his employment or upon a change in control are governed by the terms of his employment agreement with the Company and the benefit plans in which he participates. In addition to Mr. Hayes, the remaining named executive officers participate in the JetBlue Airways CorporationThe Company has a Severance Plan (the “Severance Plan”) and the JetBlue Airways Corporation Executive Change in Control Severance Plan (the “Executive Plan”), which(as defined below) that would govern the potential payments due to our named executive officerscompensation payable upon athe termination of employment.our executives, including our NEOs. As of December 31, 2015,2021, none of Mr. Powers, Mr. Hnat, Mr. St. George or Mr. ChatkewitzMessrs. Priest and Nelson, nor Mses. Geraghty, Hurley and Clements had employment agreements with the Company.
Agreements Governing Termination (not in Connection with a Change in Control)
Potential Payments to Mr. Hayes upon Termination
TheWe have an employment agreement, as amended, with Mr. Hayes, Employment Agreementour CEO, until September 1, 2023. Under Mr. Hayes’s employment agreement, the agreement provides that, if Mr. Hayes were terminated without Cause (as defined in the Severance Plan) prior to or at the expiration of the initial three year term or subsequent three year term,, he would be paid as if eligible to receivefor severance and benefits under the Severance Plan. The Severance Plan providesUnder Mr. Hayes’ employment agreement, if the Company were to terminate Mr. Hayes’ employment for cash severance of 3 months of base pay for each full year of service, subject to a minimum of 12 months of base pay and a maximum of 24 months of base pay. The Severance Plan also provides for payment of pro-rated average annual bonus,Cause which is the average of the two most recently earned regular full-year annual bonus amounts (excluding any amount of any special, spot or pro-rated bonuses) and either forfeiture, continued vesting or acceleration of various outstanding equity awards (depending on award type and conditions upon grant). Mr. Hayes is also eligible to receive continued medical and/or dental benefits during the cash severance pay period, up to a maximum of 12 months, followed by executive-paid COBRA coverage for so long as the executive pays the applicable monthly COBRA cost of such continuation coverage, subject to the Company’s discretion. The continued medical and dental benefits and, in certain circumstances, the acceleration of equity, are subject to the execution of a separation agreement by the executive. Mr. Hayes is also eligible to receive Company-paid career transition consulting services, with a cost of up to $40,000. If, after termination of his employment without Cause, Mr. Hayes were to breach any of the confidentiality, non-competition, non-solicitation or return of proprietary materials provisions contained in the Hayes Employment Agreement, he would forfeit the foregoing payments. Pursuant to the Hayes Employment Agreement, if Mr. Hayes’ s employment is terminated for Cause,defined below or if Mr. Hayes were to resign from the Company, other than for Good Reason, Mr. Hayes would only be entitled to payment of unpaid base salary through and including the date of termination or resignation and any other amounts or benefits required to be paid or provided by law or under any plan, program, policy or practice of the Company. If, after termination of his employment without Cause, Mr. Hayes’sHayes were to breach any of the confidentiality, non-competition, non-solicitation or return of proprietary materials provisions contained in the agreement, he would forfeit, as of the date of such breach, all of the payments and benefits described in this paragraph. If Mr. Hayes’ employment were terminated by reason of his death or Disability (as defined in the Hayes Employment Agreement)employment agreement), the Company would pay to Mr. Hayes (or his estate, as applicable), his base salary through and including the date of termination and any other accrued compensation and benefits.
For purposes of this agreement, “Cause,” means a conviction of or a plea of no contest to a felony or other crime involving moral turpitude or dishonesty; fraud or wilful act of dishonesty against the Company or subsidiary that adversely materially affects the Company or subsidiary; wilful breach of CompanyJETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 56
policies that materially adversely affects JetBlue; intentional damage to JetBlue property or business; gross insubordination; or habitual neglect of his duties with JetBlue. “Disability” means that Mr. Hayes is (a) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company.
Our employment agreement with Mr. Barger expired by its terms in February 2015. See narrative disclosure to “Summary Compensation Table” and “Grants of Plan-Based Awards Table,” at page 40.
Potential Payments to Other Named Executive Officers
As of December 31, 2015,2021, we had no contractual obligations to make severance payments to any of our named executive officersNEOs other than Mr. Hayes (except as provided in the severance planSeverance Plan described below).
Severance Plan Summary
On May 22, 2014, upon recommendation of the Compensation Committee, the Board of Directors approved and adopted the JetBlue Airways Corporation Severance Plan (the “Severance Plan”). Capitalized terms used in this summary and not otherwise defined have the meanings ascribed to them in the Severance Plan. The Severance Plan provides that upon occurrence of a Severance Event, as defined in the Severance Plan, a crewmember who meets the plan conditions for eligibility (a “Participant”) will be paid cash severance, pursuant to a formula based on job level at the Termination Date as defined in the Severance Plan, and years of service. The Severance Plan also provides for payment of pro-rated average annual bonus, and either forfeiture, or continued vesting or acceleration of various outstanding equity awards (depending on award type and conditions upon grant). Participants may receive medical and/or dental benefits, COBRA payments, and career transition consulting services. If a crewmember is terminated for Cause, or without Good Reason, no severance benefits are payable. The Severance Plan defines “Cause” as a Participant’s (a) conviction of, or plea of no contest to, a felony or other crime involving moral turpitude or dishonesty; (b) participation in a fraud or willful act of dishonesty against the Company or a subsidiary of the Company that adversely affects the Company or any such subsidiary in a material way; (c) willful breach of the Company’s policies that affects the Company in a material way; (d) causing intentional damage to the Company’s property or business; (e) conduct that constitutes gross insubordination; or (f) habitual neglect of his or her duties with the Company or a subsidiary of the Company. The determination of whether a Termination of Employment is for Cause will be made by the Plan Administrator as defined in the Severance Plan, in its sole and absolute discretion, and such determination shall be conclusive and binding on the affected Participant. “Good Reason” is defined asAlthough the occurrenceSeverance Plan was amended in 2020 to add certain type of any oneopt outs to the list of the following conditions with respect to a Participant without the Participant’s prior written consent: (a) a material diminutionSeverance Events; NEOs were not included in the Participant’s base salary; or (b) a material change in geographic location at which the Participant must perform services on behalf of the Company or its subsidiary (for this purpose, a change in any such location will be considered material only if it increases the Participant’s current one-way commute by more that fifty (50) miles; in each case of clause (a) or (b), only if (i) the Participant provides written notice to the Company of the existence of the applicable condition described in such clause within 90 days of the initial existence of the condition, (ii) the Company fails to remedy the condition within 60 days after the Company receives such written notice and (iii) within the 30 day period immediately following the lapse of such 60 day period, the Participant elects to terminate his or her employment.amendment.
Arrangements Governing a Change in Control
Executive Change in Control Plan
On June 28, 2007, upon recommendation of the Compensation Committee, the Board approved and adopted the JetBlue Airways Corporation Executive Change in Control Severance Plan (the “Executive Plan”). A “change“Change in control,Control,” as defined in the Executive Plan, means: (i) a reorganization, merger, consolidation or other corporate transaction involving JetBlue, such that the stockholders of the Company immediately prior to such transaction do not, immediately after such transaction, own more than 50% of the combined voting power of the Company in substantially the same proportions as their ownership, immediately prior to such business combination, of the voting securities of the Company; or (ii) the sale, transfer or other disposition of all or substantially all of the Company’s assets, or the consummation of a plan of complete liquidation or dissolution of the Company. The Executive Plan provides severance and welfare benefits to eligible employees who are involuntarily terminated from employment without cause or when they resign during the two-year period following a change in control for “Good Reason” (a “Qualifying Termination Event”). “Good Reason” means the termination of employment by an eligible employee because of any of the following events: (1) a 10% reduction by the Company (other than in connection with a Company-wide, across-the-board reduction), in (x) his or her annual base pay or bonus opportunity as in effect immediately prior to the change in control date or (y) his or her bonus opportunity or 12 times his or her average monthly salary, or as same may be increased from time to time thereafter; (2) a material reduction in the duties or responsibilities of the eligible employee from those in effect prior to the change in control; or (3) the Company requiring the eligible employee to relocate from the office of the Company where an eligible employee is principally employed immediately prior to the change in control date to a location that is more than 50 miles from such office of the Company (except for required travel on the Company’s business to an extent substantially consistent with such eligible employee’s customary business travel obligations in the ordinary course of business prior to the change
in control date). For purposes of the Executive Plan, “cause” means a conviction of or a plea of nolo contendereno contest to any felony or a crime involving moral turpitude or dishonesty; fraud or breach of Company policies which materially adversely affects the Company; intentional damage to the Company’s property or business; habitual conduct that constitutes gross insubordination; or habitual neglect of his or her duties with the Company.
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 57
A named executive officerNEO who incurs a Qualifying Termination Event will be entitled to receive two years of salary and two times his or her target bonus for the year in which termination occurs. In addition, each employee covered by the Executive Plan will be entitled to: (i) payment of his or her accrued but unused paid time off as of the date of termination; (ii) a pro rata portion of his or her annual bonus for the year in which termination occurs; and (iii) payment for certain unreimbursed relocation expenses incurred by him or her (if any). Each employee covered by the Executive Plan who incurs a Qualifying Termination Event will also be entitled to receive reimbursement for all costs incurred in procuring health and dental care coverage for such employee and his or her eligible dependents under COBRA. Such reimbursements will be made for 18 months for our named executive officers. During the reimbursement period, if an eligible employee becomes covered under group health and dental care plans providing substantially comparable benefits to those provided to similarly situated active employees of the Company, then the Company’s COBRA reimbursement payments will be eliminated. In addition, named executive officers are eligible for flight benefits for two years following a Qualifying Termination Event.
With respect to named executive officers,NEOs, the Executive Plan also contains an excise tax gross-up provision whereby if such employees incur any excise tax by reason of his or her receipt of any payment that constitutes an excess parachute payment, as defined in Section 280G of the Code, the employee will be entitled to a gross-up payment in an amount that would place him or her in the same after-tax position he or she would have been in had no excise tax applied.
The Executive Plan may be amended or terminated by the Company at any time prior to a change in control. In addition, under the terms of the Executive Plan, the Board is required to reconsider the terms of the plan within the 90-day period immediately prior to the third anniversary of its adoption in light of then-current market practices. Such reconsideration took place in September 2010 and the Board made no changes to the Executive Plan in light of the then ongoing industry changes.
In 2013, JetBlue adopted a policy that affirmatively states that JetBlue Airways Corporation, going forward, will not make or promise to make to its senior executives any tax gross up payments except for those provided pursuant to a plan, policy or arrangement applicable to leadership employees generally, other than any tax gross up payments pursuant to existing contractual obligations or the terms of any compensation or benefit plan currently in effect. For this purpose, a “gross up” would be defined as any payment to or on behalf of a senior executive the amount of which is calculated by reference to his or her estimated tax liability.
Potential payments upon a change in control under the Executive Plan are estimated in the table below captioned “Potential Payments Upon Termination.”
Potential Payments in Connection with our Amended and Restated 2002 StockEquity Incentive Plan
In addition to the above, our Amended and Restated 2002 Stock Incentive Plan provides for immediate vesting of various equity grants in the event of a change in control. The phrase “change in control,” as used in the plan, means any of the following: a change in ownership or control of the Company effected through a merger, consolidation or other reorganization approved by our stockholders (unless securities representing more than 50% of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned our outstanding voting securities immediately prior to such transaction); the sale, transfer or other disposition of all or substantially all of our assets in a liquidation or dissolution; or the acquisition, directly or indirectly by any person or group of persons unaffiliated with us, of beneficial ownership of securities possessing more than 50% of the total combined voting power of our outstanding securities pursuant to a tender or exchange offer made to our stockholders.
Potential payments upon a change in control under the Amended and Restated 2002 Stock Incentive Plan are provided in the table below captioned “Potential Payments Upon Termination.”
Payments in Connection with our 2011 Incentive Compensation Plan
Under the 2011 Incentive Compensation Plan, a changeChange in controlControl of the Company (as defined in the 2011 Plan) will have no effect on outstanding awards under the plan that the Board of Directors or the Compensation Committee determines will be honored or assumed or replaced with new rights by a new employer (referred to as an alternative award), so long as the alternative award (i) is based on securities that are, or within 60 days after the change in control will be, traded on an established United States securities market; (ii) provides the holder with rights and entitlements (such as vesting and timing or methods of payment) that are at least substantially equivalent to the rights, terms and conditions of the outstanding award; (iii) has an economic value that is substantially equivalent to that of the outstanding award; (iv) provides that if the holder’s employment with the new employer terminates under any circumstances, other than due to termination for causeCause (as defined in the 2011 Plan) or resignation without good reason,Good Reason (as defined in the 2011 Plan), within 18 months following the changeChange in controlControl (or prior to a changeChange in control,Control, but following the date on which we agree in principle to enter into that changeChange in controlControl transaction), (1) any conditions on the holder’s rights under, or any restrictions on transfer or exercisability applicable to, the alternative award will be waived or will lapse in full, and the alternative award will become fully vested and exercisable, and (2) the alternative award may be exercised until the later of (a) the last date on which the outstanding award would otherwise have been exercisable, and (b) the earlier of the third anniversary of the change in control and expiration of the term of the outstanding award; and (v) will not subject the holder to additional taxes or interest under section 409A of the Code.
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 58
If the Board of Directors or the Compensation Committee does not make this determination with respect to any outstanding awards, then (i) the awards will fully vest and become non-forfeitable and exercisable immediately prior to the changeChange in control;Control; or (ii) the Board of Directors or the Compensation Committee will provide that in connection with the changeChange in controlControl (1) each outstanding option and SAR will be cancelled in exchange for an amount equal to the fair market value of our common stock on the changeChange in controlControl date, reduced by the option exercise price or grant price of the option or SAR, (2) each outstanding share of restricted stock, restricted stock unit and any other award denominated in shares will be cancelled in exchange for an amount equal to the number of shares covered by the award multiplied by the price per share offered for our common stock in the change in control transaction, or, in some cases, the highest fair market value of the common stock during the 30 trading days preceding the changeChange in controlControl date, (3) any outstanding award not denominated in shares, including any award the payment of which was deferred, will be cancelled in exchange for the full amount of the award; (4) the target performance goals applicable to any outstanding awards
will be deemed to be fully attained, unless actual performance exceeds the target, in which case actual performance will be used, for the entire performance period then outstanding; and (5) the Board of Directors or the Compensation Committee may otherwise adjust or settle outstanding awards as it deems appropriate, consistent with the plan’s purposes.
Under the Omnibus Plan, if within one year following a Change in Control (as defined in the Omnibus Plan), a participant’s employment or service with the Company terminates by reason of death, disability, retirement, without Cause, or for Good reason (each term as defined in the Omnibus Plan), all outstanding awards will vest and become immediately exercisable and payable, with all restrictions lifted. The Compensation Committee may take actions as it deems appropriate to provide for the acceleration of the exercisability, vesting and/or settlement of each or any outstanding award (or a portion thereof) in connection with a Change in Control, including: (1) with respect to all awards, it be assumed or substituted by the surviving entity; (2) with respect to options and SARs, for a period of at least 15 days prior to the Change in Control, any options or SARs be exercisable as to all shares subject to the option or SAR, and that upon the occurrence of the Change in Control, such option or SAR will terminate and be of no further force and effect; (3) with respect to awards not previously exercised or settled, it be cancelled in exchange for a payment in cash, stock or other property, in an amount equal to the fair market value of the consideration to be paid per share in the Change in Control, reduced by the exercise or purchase price per share under the applicable award; and (4) with respect to performance compensation awards, (A) those relating to performance periods ending prior to the Change in Control that have been earned but not paid be immediately payable, (B) all then-in-progress performance periods for end, and either (a) the participants be deemed to have earned an award equal to their target award opportunity for the performance period in question, or (b) at the Compensation Committee’s discretion, the Compensation Committee will determine the extent to w\ich performance criteria have been met with respect to each performance compensation award, if at all, (C) the Company pay to each participant their partial or full performance compensation award in cash, shares or other property as determined by the Compensation Committee within 30 days of the Change in Control based on the Change in Control consideration, or (D) it be terminated and canceled for no consideration. The Compensation Committee may vary the treatment of awards among participants, and among awards granted to a participant, in exercising its discretion upon a Change in Control, subject to applicable law s and regulations.
The phrase “change“Change in control,Control,” as used in the plan,2011 Plan and the Omnibus Plan, means, very generally, any of the following: (i)(a) the acquisition by certain persons of voting securities representing 30% or more of our common stock or of the combined voting power of all of our voting securities, (ii)(b) certain changes in the majority of the members of our Board of Directors, (iii)(c) certain corporate transactions, such as a merger, reorganization, consolidation or sale of substantially all of our assets, that result in certain changes to the composition of our stockholders, or (iv)(d) a complete liquidation or dissolution of JetBlue.
Potential payments upon a changeChange in controlControl under the 2011 Incentive CompensationPlan and the Omnibus Plan are provided in the table below captioned “Potential Payments Upon Termination.”
Potential Payments Upon Termination
The table below sets forth potential benefits that each named executive officer would be entitled to receive upon termination of employment under the various circumstances outlined above. Other than for Mr. Barger who retired from the Company in February 2015, theThe amounts shown in the table are the amounts that would have been payable under existing plans and arrangements if the named executive officer’s employment had terminated on December 31, 2015. For Mr. Barger, actual amounts paid to him in connection with his retirement are described below in the narrative immediately following this table.2021. Potential payments to each of Ms. Clements, Geraghty and Hurley, Messrs. Powers, Hnat, St. GeorgeHayes and ChatkewitzNelson upon the termination of their employment or upon a change in control are governed by the terms of the benefit plans in which they participate, including the Severance Plan, the Executive Change in Control Plan, the 2002 Stock Incentive Plan and 2011 Incentive Compensation Plan and 2020 Omnibus Equity Incentive Plan. None of Mses. Clements, Geraghty and Hurley, and Mr. Nelson have an employment agreement with the Company. Values for stock option and restricted stock unit grants are based on our common stock closing price of $22.65$14.24 on the NASDAQ Global Select Market on December 31, 2015.2021. The table below does not include amounts to which the named executive officers would be entitled that are already described in the other compensation tables appearing earlier in this proxy statement, including the value of equity awards that have already vested. The actual amounts that would be payable in these circumstances can only be determined at the time of the executive’s termination or a change in control and accordingly, may differ from the estimated amounts set forth in the table below.
Multiple of Base | Potential Post-Employment Compensation | |||||||||||||||
Salary | Accelerated | Accelerated | Accelerated | |||||||||||||
and | Vesting | or Continued | or Continued | Estimated | ||||||||||||
Target | Pro-Rata | of Stock | Vesting of | Vesting of | All Other | Tax Gross- | ||||||||||
Bonus | Annual | Options | RSUs | PSUs | Compensation | Up | Total | |||||||||
($)(1) | Bonus(2) | ($)(3) | ($) | ($) | ($) | ($)(4) | ($) | |||||||||
Robin Hayes | ||||||||||||||||
Termination by the Company without “cause” or by the Crewmember for good reason under Severance Plan(5) | 1,100,000 | 304,725 | 1,855,548 | - | 138,038 | 3,398,311 | ||||||||||
Termination for reasons of Death or | 550,000 | 1,449,464 | 1,970,324 | 3,969,788 | ||||||||||||
Disability(6) | ||||||||||||||||
Termination for reasons of Retirement(7) | - | |||||||||||||||
Qualifying Termination after Change of Control (double trigger)(8) | 2,200,000 | 550,000 | 3,520,965 | 2,999,426 | 145,557 | 2,218,404 | 11,634,352 | |||||||||
Mark Powers | ||||||||||||||||
Termination by the Company without “cause” or by the Crewmember for good reason under Severance Plan(5) | 850,000 | 319,920 | 1,197,581 | - | 138,038 | 2,505,539 | ||||||||||
Termination for reasons of Death or Disability(6) | 1,032,228 | 1,282,805 | 2,315,034 | |||||||||||||
Termination for reasons of Retirement(7) | - | |||||||||||||||
Qualifying Termination after Change | 2,022,237 | 1,886,088 | 145,557 | 1,297,287 | 7,157,419 | |||||||||||
of Control (double trigger)(8) | 1,487,500 | 318,750 | ||||||||||||||
James Hnat | ||||||||||||||||
Termination by the Company without “cause” or by the Crewmember for good reason under Severance Plan(5) | 850,000 | 198,980 | 987,064 | - | 127,863 | 2,163,907 | ||||||||||
Termination for reasons of Death or Disability(6) | 866,770 | 548,583 | 1,415,353 | |||||||||||||
Termination for reasons of Retirement(7) | - | |||||||||||||||
Qualifying Termination after Change of Control (double trigger)(8) | 1,275,000 | 212,500 | 1,689,237 | 772,524 | 130,294 | 4,079,555 |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 59
Multiple of Base | Potential Post-Employment Compensation | |||||||||||||||
Salary | Accelerated | Accelerated | Accelerated | |||||||||||||
and | Vesting | or Continued | or Continued | Estimated | ||||||||||||
Target | Pro-Rata | of Stock | Vesting of | Vesting of | All Other | Tax Gross- | ||||||||||
Bonus | Annual | Options | RSUs | PSUs | Compensation | Up | Total | |||||||||
($)(1) | Bonus(2) | ($)(3) | ($) | ($) | ($) | ($)(4) | ($) | |||||||||
Martin St. George | ||||||||||||||||
Termination by the Company without “cause” or by the Crewmember for good reason under Severance Plan(5) | 800,000 | 145,600 | 581,682 | - | 138,038 | 1,665,320 | ||||||||||
Termination for reasons of Death or Disability(6) | 434,291 | 47,633 | 481,924 | |||||||||||||
Termination for reasons of Retirement(7) | - | |||||||||||||||
Qualifying Termination after Change of Control (double trigger)(8) | 1,200,000 | 200,000 | 1,042,127 | 176,126 | 145,557 | 2,763,810 | ||||||||||
Alexander Chatkewitz | ||||||||||||||||
Termination by the Company without “cause” or by the Crewmember for good reason under Severance Plan(5) | 198,750 | 79,500 | 33,643 | - | 45,307 | 356,930 | ||||||||||
Termination for reasons of Death or Disability(6) | 29,558 | - | 29,558 | |||||||||||||
Termination for reasons of Retirement(7) | - | |||||||||||||||
Qualifying Termination after Change of Control (double trigger)(8) | 344,500 | 79,500 | 100,928 | - | 60,857 | 585,785 |
POTENTIAL POST-EMPLOYMENT COMPENSATION
Multiple of Base Salary and Target Bonus ($)(1) | Pro-Rata Annual Bonus(2) | Accelerated or Continued Vesting of RSUs ($) | Accelerated or Continued Vesting of PSUs ($) | All Other Compensation ($) | Estimated Tax Gross-Up ($)(3) | Total ($)(4) | ||||||||
Robin Hayes | ||||||||||||||
Termination by the Company without “cause” or by the Crewmember for good reason under Severance Plan(5) | 1,250,000 | 598,700 | 1,854,788 | — | 133,544 | 3,837,032 | ||||||||
Termination for reasons of Death or Disability(6) | 937,500 | 1,854,788 | 818,772 | 3,611,060 | ||||||||||
Termination for reasons of Retirement(7) | 1,854,788 | 1,854,788 | ||||||||||||
Qualifying Termination after Change of Control (double trigger)(8) | 3,125,000 | 937,500 | 1,854,788 | 1,892,254 | 79,918 | 7,889,460 | ||||||||
Ursula Hurley | ||||||||||||||
Termination by the Company without “cause” or by the Crewmember for good reason under Severance Plan(5) | 567,000 | 109,550 | 98,213 | — | 73,148 | 847,911 | ||||||||
Termination for reasons of Death or Disability(6) | 136,599 | — | 136,599 | |||||||||||
Termination for reasons of Retirement(7) | — | |||||||||||||
Qualifying Termination after Change of Control (double trigger)(8) | 737,100 | 85,050 | 186,829 | — | 50,964 | 1,059,943 | ||||||||
Joanna Geraghty | ||||||||||||||
Termination by the Company without “cause” or by the Crewmember for good reason under Severance Plan(5) | 1,130,000 | 396,300 | 582,103 | — | 131,528 | 2,239,931 | ||||||||
Termination for reasons of Death or Disability(6) | 973,657 | 478,981 | 1,452,638 | |||||||||||
Termination for reasons of Retirement(7) | — | |||||||||||||
Qualifying Termination after Change of Control (double trigger)(8) | 2,260,000 | 565,000 | 1,215,441 | 1,102,674 | 78,228 | 5,221,343 | ||||||||
Carol Clements | ||||||||||||||
Termination by the Company without “cause” or by the Crewmember for good reason under Severance Plan(5) | — | — | — | — | — | — | ||||||||
Termination for reasons of Death or Disability(6) | 427,513 | — | 427,513 | |||||||||||
Termination for reasons of Retirement(7) | — | |||||||||||||
Qualifying Termination after Change of Control (double trigger)(8) | 1,500,000 | 250,000 | 427,513 | — | 46,709 | 747,228 | 2,971,450 | |||||||
Brandon Nelson | ||||||||||||||
Termination by the Company without “cause” or by the Crewmember for good reason under Severance Plan(5) | 900,000 | 220,950 | 197,751 | — | 121,528 | 1,440,229 | ||||||||
Termination for reasons of Death or Disability(6) | 285,002 | 85,824 | 370,826 | |||||||||||
Termination for reasons of Retirement(7) | — | |||||||||||||
Qualifying Termination after Change of Control (double trigger)(8) | 1,440,000 | (9) | 270,000 | 388,154 | 194,803 | 78,228 | 2,371,185 |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 60
(1) | As of December 31, |
(2) | |
(3) | |
Under Sections 280G and 4999 of the Code, a 20% excise tax is imposed upon individuals who receive payments upon a change in control to the extent | |
(4) | Excludes the ERAs discussed above which the Company considers “at risk” compensation. Upon satisfaction of the terms and conditions of the Awards each of the recipients will receive an Award equivalent to a pre-established multiple of their respective base salaries as of April 15, 2021 as follows: Robin Hayes (3.36x), Joanna Geraghty (2.23x), Steve Priest (2.13x), and Brandon Nelson (2.09x). Payments pursuant to the Awards, if any, will be made in cash or fully vested shares of the Company’s common stock as determined by the Board (or Compensation Committee if delegated by the Board) in its sole discretion. No portion of the Award may be paid earlier than 30 days following the lapse of both the Government Support restrictions and achievement of the performance condition. |
(5) | As the assumed termination date for this table is December 31, 2021, the amounts listed do not reflect pro-ration. Under the terms of the Severance Plan, |
(6) | Assumes |
(7) | Assumes continued vesting in the event of a termination due to retirement with a termination date of December 31, |
(8) | Potential payments to each of |
(9) | This amount includes a portion of Mr. |
Mr. Priest has voluntarily departed JetBlue in June 2021 and has not incurred a triggering event represented in this table.
In 2013, JetBlue adopted a policy that affirmatively states that JetBlue Airways Corporation, going forward, will not make or promise to make to its senior executives any tax gross up payments except for those provided pursuant to a plan, policy or arrangement applicable to management employees generally, other than any tax gross up payments pursuant to existing contractual obligations or the terms of any compensation or benefit plan currently in effect. For this purpose, a “gross up” would be defined as any payment to or on behalf of a senior executive the amount of which is calculated by reference to his or her estimated tax liability.
Mr. Barger retired from JetBlue on February 15, 2015. In connection with his retirement, Mr. Barger received a pro-ratedJETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 61
As required under the rules the SEC adopted under the Dodd-Frank Act, we are providing the following disclosure about the ratio of the annual non-equity incentive bonustotal compensation of $75,000 on February 20, 2015,our CEO to the annual total compensation of our estimated median employee:
■ | The total annual compensation of our estimated median employee who was employed on December 31, 2021 was $50,115 |
■ | The total annual compensation of our CEO was $3,449,755 |
■ | Based on this information, the ratio of the annual total compensation is reasonably estimated to be 69 to 1 (which partially reflects Mr. Hayes’ voluntary reduction in base salary due to the financial concerns caused by COVID-19) |
The Company calculated the 2021 compensation for the median crewmember using the same methodology used to calculate the total annual compensation of the Company’s CEO, as disclosedreported in the “SummarySummary Compensation Table.” Upon Mr. Barger’s retirement, 90,580 unvested RSUs While 2020 was an unprecedented year for the airline industry given the pandemic, 2021 saw the industry begin to recover and as such had to focus on the ramp up of our operations and crewmember population. Additionally, there were forfeited and 120,872 RSUs became subject to continued vesting pursuant tono voluntary time off programs that impacted our crewmembers pay in 2021. For these reasons, the terms of the applicable RSU agreement, of which 60,436 RSUs vested in February 2016 and 60,436 RSUs will vest in February 2017. Additionally, 50,531 PSUs were prorated in accordance with the terms of the applicable PSU award agreements and are subject to continued vesting and payable after certification of the performance metrics by the Compensation Committee after the performance periods have lapsed. Mr. Barger is eligibleCompany identified a new median employee for lifetime travel privileges on our flights as a founder of the Company.2021.
To identify the median employee as of December 31, 2021, we used a consistently applied compensation measure (“CACM”). We utilized information from Box 5 of Form W-2. We performed our calculations as of December 31, 2021, which is our measurement date, because employee census and compensation information are readily available on that date. We captured all full-time, part-time and temporary employees in the U.S., including our subsidiaries. We did not annualize the total cash compensation paid to employees who commenced work with us during 2021. No cost of living adjustments were applied. We excluded approximately 549 non-U.S. employees, as permitted under the de minimus exception to the rules. The countries from which the excluded employees come are: Antigua (1), Aruba (4), Bahamas (26), Barbados (4), Bermuda (2), Colombia (8), Costa Rica (4), Curacao (1), Dominican Republic (92), Ecuador (4), Grand Cayman (1), Grenada (1), Guatemala (3), Guyana (2), Haiti (5), Jamaica (7), London (7), Mexico (7), Peru (3), Puerto Rico (359), St. Lucia (1), St. Maarten (3), Trinidad & Tobago (2), Turks & Caicos (2).
The total number of U.S. employees and non-U.S. employees were 24,077 and 549, respectively, before taking into account such exclusions and for purposes of calculating the total compensation of that employee as we calculate total compensation for our named executive officers in the Summary Compensation and RiskTable.
Our Compensation Committee regularly conducts risk assessments to determine the extent, if any, to which our compensation practices and programs ensure compensation programs are fair and equitable and are aligned with our business objectives. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, exclusions and assumptions that reflect their compensation practices. As such, the pay ratio reported above may create incentives for excessive risk taking. Based on these reviews, we believe that fornot be comparable to the substantial majoritypay ratio reported by other companies, even those in a related industry or of a similar size and scope. Other companies may have different employment practices, regional demographics or may utilize different methodologies and assumptions in calculating their pay ratios.
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 62
The following table sets forth certain information known to the Company regarding the beneficial ownership of its common stock as of March 21, 2022, by (i) each person known by the Company to be the beneficial owner of more than 5% of the outstanding shares of its common stock, (ii) each of our employeesdirectors and nominees, (iii) each of our named executive officers and (iv) all of our executive officers and directors serving as of March 21, 2022, as a group. We have one class of voting securities outstanding which is entitled to one vote per share, subject to the incentive for risk taking is low, because their compensation consists largely of fixed cash salary and a cash bonus that has a capped payout. Furthermore, the majority of these employees do not have the authority to take actionlimitations on our behalf that could expose us to significant business risks.voting by non-U.S. citizens described below under “Additional Information.”
In 2015, as part of its assessment, the Compensation Committee reviewed the cash and equity incentive programs for senior executives and concluded that certain aspects of the programs actually reduce the likelihood of excessive risk taking. These aspects include the use of long-term equity awards to create incentives for senior executives to work for long-term growth of the Company, clawback policies, limiting the incentive to take excessive risk for short-term gains by imposing caps on annual bonuses, requiring compliance with our Code of Business Conduct and vesting the Compensation Committee with authority to exercise discretion to reduce payouts under our annual incentive bonus program.
Executive Officers and Directors Name of Beneficial Owner | Common Stock Beneficially Owned and Shares Individuals Have the Right to Acquire within 60 Days(1) | Total(2) | Percentage of Class | ||||
Robin Hayes | 584,926 | 788,623 | * | ||||
Ursula Hurley | 10,600 | 16,823 | * | ||||
Joanna Geraghty | 222,771 | 353,289 | * | ||||
Carol Clements | — | 69,237 | |||||
Brandon Nelson | 16,343 | 44,395 | |||||
Basil Ben Baldanza | — | 31,587 | * | ||||
Peter Boneparth | 13,379 | 86,234 | * | ||||
Monte Ford | — | 17,181 | * | ||||
Ellen Jewett | 13,379 | 72,698 | |||||
Robert Leduc | 14,030 | 25,939 | |||||
Teri McClure | 500 | 24,748 | * | ||||
Sarah Robb O’Hagan | — | 31,587 | * | ||||
Vivek Sharma | — | 24,051 | |||||
Thomas Winkelmann | 13,379 | 59,714 | * | ||||
All executive officers and directors as a group | 914,526 | 1,671,662 | .29% .52% | ||||
5% Stockholders Name of Beneficial Owner | |||||||
BlackRock Inc.(3) | 25,806,918 | 8.04% | |||||
FMR LLC(4) | 33,670,820 | 10.50% | |||||
The Vanguard Group(6) | 28,602,234 | 8.92% |
* | Represents ownership of less than one percent. |
For these reasons, we do not believe that our compensation policies and practices create risks that are reasonably likely to have a material adverse effect on us.JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 63
(1) | Beneficial ownership is determined in accordance with the rules of the SEC and consists of either or both voting or investment power with respect to securities. Shares of common stock issuable upon the exercise of options or warrants or upon the conversion of convertible securities that are immediately exercisable or convertible or that will become exercisable or convertible within 60 days of March 21, 2022 are deemed beneficially owned by the beneficial owner of such options, warrants or convertible securities and are deemed outstanding for the purpose of computing the percentage of shares beneficially owned by the person holding such instruments, but are not deemed outstanding for the purpose of computing the percentage of any other person. This column lists beneficial ownership of voting securities as calculated under SEC rules. Except as otherwise indicated in the footnotes to this table, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. Unless otherwise indicated, the address of each person listed in the table is c/o JetBlue Airways Corporation, 27-01 Queens Plaza North, Long Island City, New York 11101. All executive officers and directors as a group beneficially own, or have the right to acquire within 60 days of March 21, 2022, .29% of the outstanding common stock. A total of 320,789,028 shares of common stock were outstanding on March 21, 2022, pursuant to rule 13d-3(d)(1) under the Exchange Act. |
(2) | This column shows the individual’s total JetBlue stock-based holdings, including the voting securities shown in the “Common Stock Beneficially Owned and Shares Individuals Have the Right to Acquire within 60 Days” column (as described in footnote 1), plus non-voting interests including, as appropriate, deferred stock units, performance stock units and restricted stock units which will not vest or become exercisable within 60 days of March 21, 2022. If all of the equity represented in the Total column were to vest (with no equity cancelled or forfeited), all executive officers and directors, as a group, would own 0.52% of the outstanding common stock. |
(3) | The information reported is based on a Schedule 13G/A, as filed with the SEC on December 31, 2021, in which BlackRock, Inc. and certain of its subsidiaries reported that it had sole voting power 25,196,574 shares and sole dispositive power over 25,806,918 shares. The principal business address of BlackRock, Inc. is 55 East 52 St., New York, NY 10055. |
(4) | The information reported is based on a Schedule 13G/A, as filed with the SEC on February 9, 2022, in which FMR Corp. and certain of its affiliates reported that FMR LLC, a parent holding company, had sole voting power over 11,574,011 shares and shared dispositive power over 33,670,820 shares and members of the family of Abigail P. Johnson, a director, the Chairman of the Chief Executive Officer of FMR LLC., had shared dispositive power over 33,670,820 shares. The principal business address of FMR LLC is 245 Summer Street, Boston, MA 02210. |
(5) | The information reported is based on a Schedule 13G/A, as filed with the SEC on October 31, 2021, in which PRIMECAP Management Company reported that it held sole voting power over 15,036,653 shares and sole dispositive power over 15,815,756 shares. The principal business address of PRIMECAP Management Company is 177 East Colorado Blvd., 11th fl. Pasadena, CA 91105. |
(6) | The information reported is based on a Schedule 13G/A, as filed with the SEC on December 31, 2021, in which The Vanguard Group reported that it held sole voting power over 0 shares and sole dispositive power over 28,602,234 shares and shared voting power over 158,794 shares and shared dispositive power over 294,340 shares. According to the Schedule 13G/A, Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 28,896,574 shares of common stock of the Company as a result of its serving as investment manager of collective trust accounts. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act and the rules promulgated thereunder require our executive officers, directors and persons who beneficially own more than ten percent10% of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC and to furnish to us copies of all such filings. Based solely upon our review of the copies of such reports furnished to the Company and written representations that no other reports were required, one Form 4there were no late filings of any ownership reports under Section 16(a).
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 64
TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2022
What am I voting on? | |||
■ | Stockholders are being asked to ratify the selection of Ernst & Young LLP, a registered public accounting firm, to serve as the Company’s independent auditors for the fiscal year ending December 31, 2022. Although the Audit Committee has the sole authority to appoint the Independent Auditors, as a matter of good corporate governance, the Board submits its selection of the independent registered public accounting firm to our stockholders for ratification. If the stockholders should not ratify the appointment of Ernst & Young LLP, the Audit Committee will reconsider the appointment. | ||
Voting recommendation: | |||
■ | FOR the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2022. |
The Audit Committee has the sole authority and responsibility to hire, evaluate and, where appropriate, replace the Company’s independent auditors and, in its capacity as a committee of the Board, is directly responsible for Mr. Powers was filed late duethe appointment, compensation and general oversight of the work of the independent auditors.
The Audit Committee has appointed Ernst & Young LLP (“EY”) to administrative error, duringserve as the independent registered public accounting firm to audit the Company’s consolidated financial statements and internal control over financial reporting for the fiscal year endedending December 31, 2015.2022. EY has served as the Company’s independent auditors since 2001.
We expect that representatives of EY will be present at the annual meeting to respond to appropriate questions from stockholders and make a statement if desired.
Audit Committee Matters
Annual Evaluation and Appointment of Independent Auditors
In executing its responsibilities, the Audit Committee engages in an annual evaluation of EY’s qualifications, performance and independence, and considers whether continued retention of EY as the Company’s independent registered public accounting firm is in the best interest of the Company. The Audit Committee is also involved in the selection of EY’s lead engagement partner. While EY has been retained as the Company’s independent registered public accounting firm continuously since 2001, in accordance with SEC rules and EY’s policies, the firm’s lead engagement partner rotates every five years. In assessing EY’s qualifications, performance and independence in 2021, the Audit Committee considered, among other things:
Approval of AmendmentsJETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 65
■ | EY’s independence policies and its processes for maintaining its independence; |
■ | the quality and efficiency of the services provided by EY, including input from leadership on EY’s performance and how effectively EY demonstrated its independent judgment, objectivity and professional skepticism; |
■ | external data on audit quality and performance, including recent Public Company Accounting Oversight Board (PCAOB) reports on EY and its peer firms; |
■ | the appropriateness of EY’s fees, including those related to non-audit services; |
■ | EY’s tenure as the Company’s independent auditor and its depth of understanding of the Company’s global business, operations and systems, accounting policies and practices, including the potential effect on the financial statements of the major risks and exposures facing the Company, and internal control over financial reporting; |
■ | an analysis of EY’s known legal risks and significant proceedings that may impair its ability to perform the Company’s annual audit; |
■ | EY’s demonstrated professional integrity and objectivity, including through rotation of the lead audit partner and other key engagement partners; |
■ | any material issues raised by the most recent internal quality control review, or peer review; and |
■ | the advisability and potential impact of selecting a different independent public accounting firm. |
Benefits of Longer Tenure | Independence Controls | |
Enhanced audit quality – We believe EY’s significant institutional knowledge and deep expertise of the Company’s global business, accounting policies and practices and internal control over financial reporting enhance audit quality. Competitive fees – Because of EY’s familiarity with the Company, audit and other fees are competitive with peer companies. Avoid costs associated with new auditor – We believe bringing on new independent auditors would be costly and require a significant time commitment, which could lead to leadership distractions. | Audit Committee oversight – Oversight includes regular private sessions with EY, discussion with EY about the scope of audit and business imperatives, a comprehensive annual evaluation when determining whether to reengage EY and direct involvement by the Audit Committee and its Chair in the selection of the new EY lead assurance engagement partner in connection with the mandated rotation of that position. Limits on non-audit services – The Audit Committee pre-approves audit and permissible non-audit services provided by EY in accordance with its pre-approval policy. EY’s internal independence process – EY conducts periodic internal reviews of its audit and other work, assesses the adequacy of partners and other personnel working on the Company’s account and rotates the engagement partners, consistent with its independence requirements. A new lead engagement partner was appointed commencing with the 2019 audit. Strong regulatory framework – EY, as an independent registered public accounting firm, is subject to PCAOB inspections, “Big 4” peer reviews and PCAOB and SEC oversight. |
AtBased on this evaluation, the annual meeting, stockholders will be asked to approve amendments toAudit Committee and the JetBlue Airways Corporation Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to provide that a director may be removed from office with or without cause by the affirmative vote of the holders of a majority of the outstanding shares of voting stock of the Company entitled to vote at an election of directors.
Description and Purpose
Effective February 11, 2016, our board of directors unanimously adopted resolutions approving and declaring it advisable and in the best interests of the Company and of our stockholders, to amend Article III, Section 15 of the Company’s Bylaws to provide that a director of the Company may be removed from office with or without cause by the affirmative vote of the holders of a majority of shares entitled to vote at an election of directors.
Our Certificate of Incorporation currently provides that a director or the entire board may be removed only with cause by the holders of a majority of shares entitled to vote at an election of directors. Therefore, in connection with the approval of the amendments to Article III, Section 15 of the Company’s Bylaws effective February 11, 2016, the Company’s board of directors also approved, subject to stockholder approval, a conforming amendment to Article VI of the Company’s Certificate of Incorporation to provide that any director of the Company may be removed from office with or without cause by the affirmative vote of the holders of a majority of the outstanding shares of voting stock of the Company entitled to vote at an election of directors. The board of directorsBoard determined that this amendmentretaining EY to serve as independent auditors for the fiscal year ending December 31, 2022 is in the best interests of the Company and its stockholders. While the Audit Committee is responsible for the appointment, compensation, retention and oversight of EY as our independent registered public accounting firm, the Board is submitting the selection of EY to the stockholders and recommends its approvalfor ratification.
Unless contrary instructions are given, shares represented by proxies solicited by the stockholders.Board will be voted for the ratification of the appointment of EY as our independent registered public accounting firm for the year ending December 31, 2022. If the appointment of EY is not ratified by the stockholders, the Audit Committee will reconsider the matter. Even if the appointment of EY is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change is in the Company’s best interests.
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 66
Fees to Independent Registered Public Accounting Firm
The following table presents fees for professional services rendered by Ernst & Young LLP for the years ended December 31, 2021 and 2020, respectively, and fees billed for other services rendered by Ernst & Young LLP during those periods.
2021 | 2020 | |||||
Audit fees(1) | $ | 2,250,000 | $ | 2,653,000 | ||
Audit-related fees(2) | $ | 60,000 | $ | 39,000 | ||
Tax fees(3) | $ | 238,000 | $ | 243,000 | ||
TOTAL | $ | 2,548,000 | $ | 2,935,000 |
(1) | Audit fees include fees for services associated with the annual audits of JetBlue’s consolidated financial statements and internal controls over financial reporting, reviews of JetBlue’s quarterly reports on Form 10-Q, accounting consultations pertaining to matters related to the audits or interim reviews, registration statements filed with the SEC and statutory audit requirements. |
(2) | Audit-related fees include fees for services that are reasonably related to the performance of the audit or interim financial statement review and are not reported under Audit fees. These services include other audit services requested by leadership, which are in addition to the scope of the financial statement audits. |
(3) | Tax fees include fees for services primarily related to preparation of JetBlue’s income tax and non-income tax returns (e.g., VAT), within the U.S., Puerto Rico, and other jurisdictions in the Caribbean. |
Pre-Approval Policies and Procedures
The Audit Committee has adopted a policy that requires advance approval of all audit, audit-related, tax and other services performed by our independent registered public accounting firm. This policy provides for pre-approval by the Audit Committee of all audit and permissible non-audit services before the firm is engaged to perform such services. The Audit Committee is authorized from time to time to delegate to one of its members the authority to grant pre-approval of permitted non-audit services, provided that all decisions by that member to pre-approve any such services must be subsequently reported, for informational purposes only, to the full Audit Committee.
The affirmative vote of a majority of the votes represented at the annual meeting, either in person or by proxy, and entitled to vote on this proposal, is required to ratify the appointment of the independent registered public accounting firm.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2022. |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 67
As of February 9, 2022, the date of this report, the Audit Committee consisted of five members: B. Ben Baldanza, who serves as the Chair of the Committee, Monte Ford, Ellen Jewett, Robert Leduc, and Vivek Sharma. Each member is an independent director under Nasdaq and SEC rules, including the enhanced independence requirements applicable to audit committee members, and meets the standards for committee independence as set forth in JetBlue’s Corporate Governance Guidelines. The Audit Committee has the duties and powers described in its written charter adopted by the Board. A copy of the Certificatecharter is available on JetBlue’s website at http://investor.jetblue.com. The Committee assists the Board’s oversight and monitoring of:
■ | JetBlue’s financial statements and other financial information provided by JetBlue to its stockholders and others; |
■ | compliance with legal, regulatory, and public disclosure requirements; |
■ | the independent auditors, including their qualifications and independence; |
■ | JetBlue’s system of internal controls, including the internal audit function; |
■ | enterprise risk management, privacy, and data security; and |
■ | the auditing, accounting, and financial reporting process generally. |
The Audit Committee does not itself prepare financial statements or perform audits, and its members are not auditors or certifiers of Incorporation, markedJetBlue’s financial statements.
The Audit Committee is responsible for the appointment, compensation, retention, and oversight of the work performed by JetBlue’s independent registered public accounting firm, Ernst & Young LLP (“EY”). In fulfilling its oversight responsibility, the Audit Committee carefully reviews the policies and procedures for the engagement of the independent registered public accounting firm, including the scope of the audit, audit fees, auditor independence matters, performance of the independent auditors, and the extent to showwhich the proposed changes,independent registered public accounting firm may be retained to perform non-audit services. In fulfilling its responsibilities, the Audit Committee held meetings throughout 2021 with deleted text shownEY in strikethroughprivate without members of leadership present.
EY is responsible for performing an independent audit of JetBlue’s consolidated financial statements in accordance with generally accepted auditing standards and added text shownissuing a report relating to their audit; as double-underlined,well as expressing an opinion on (i) leadership’s assessment of the effectiveness of internal control over financial reporting and (ii) the effectiveness of internal control over financial reporting. Leadership has the primary responsibility for the Company’s financial statements and financial reporting process, including establishing, maintaining and evaluating disclosure controls and procedures and establishing, maintaining and evaluating internal control over financial reporting.
JetBlue maintains an auditor independence policy that, among other things, prohibits JetBlue’s independent registered public accounting firm from performing non-financial consulting services, such as information technology consulting and internal audit services. This policy mandates that the Audit Committee approve in advance the audit and permissible non-audit services to be performed by the independent registered public accounting firm and the related budget, and that the Audit Committee be provided with quarterly reporting on actual spending. This policy also mandates that JetBlue may not enter into engagements with JetBlue’s independent registered public accounting firm for non- audit services without the express pre-approval of the Audit Committee.
The Company also has an internal audit department that reports to the Audit Committee. The Audit Committee reviews and approves the internal audit plan once a year and receives updates of internal audit results throughout the year. The Audit Committee discussed with the Company’s internal auditors and independent registered public accounting firm the overall scope and plans for their respective audits. The Audit Committee met with the internal auditors and the independent registered public accounting firm, with and without leadership present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting.
The Audit Committee has reviewed and discussed the audited financial statements for the year ended December 31, 2021 with JetBlue’s leadership and EY. The Audit Committee has also discussed with EY the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC.
The Audit Committee also has received and reviewed the written disclosures and the letter from Ernst & Young required by applicable requirements of the PCAOB regarding EY’s communications with the Audit Committee concerning independence, and has discussed with EY its independence.
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Based on the reviews and discussions referred to above, in the exercise of its business judgment the Audit Committee recommended to the Board that the financial statements referred to above be included in JetBlue’s Annual Report on Form 10-K for the year ended December 31, 2021 for filing with the SEC. In addition, the Audit Committee has selected, and the Board has approved, subject to stockholder ratification, the appointment of EY as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022.
The Audit Committee reviews and assesses the adequacy of its charter on an annual basis. While the Audit Committee believes that the charter in its present form is attachedadequate, it may in the future recommend to this proxy statementthe Board of Directors amendments to the charter as Appendix A.it may deem necessary or appropriate.
Audit Committee of JetBlue
B. Ben Baldanza, Chair
Monte Ford
Ellen Jewett
Robert Leduc
Vivek Sharma
The Audit Committee Report does not constitute soliciting material, and shall not be deemed to be filed or incorporated by reference into any other Company filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates the Audit Committee Report by reference therein.
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STOCKHOLDER PROPOSAL
The Company has been advised that John Chevedden, 2215 Nelson Avenue, No. 205 Redondo Beach, CA 90278, who advises that he holds at least 100 shares of stock in the Company, intends to submit the following proposal at the 2022 annual meeting.
If the amendmentfollowing proposal is properly presented at the 2022 annual meeting, the Board unanimously recommends a vote AGAINST the proposal.
Proposal 4 - Special Stockholder Meeting
Shareholders ask our board to take the steps necessary to amend the appropriate company governing documents to give the owners of a combined of our outstanding common stock the power to call a special shareholder meeting.
It is important for a reasonable 10% of shares to have the right to call for a special shareholder meeting to help make up for our useless right to act by written consent. It is worse to have no right at all than to find that the right that is technically on the JetBlue books is useless.
JetBlue shareholders gave 61% support for a real shareholder right to act by written consent in 2019 and management in return “gave” JetBlue shareholders a useless right to act by written consent.
Why would any group of shareholders, who own 25% of our company, find it attractive to do so little as to obtain a written consent date on a calendar from management when the owners of a smaller group of 20% of JBLU shares can compel management to hold a special shareholder meeting?
To initiate written consent at JetBlue, 25% of shares now must petition management for the baby step of obtaining a record date.
Once a record date is obtained then shareholders are on a tight schedule to obtain the consent of 51% of shares outstanding which is equal to 60% of the shares that vote at the annual meeting. It would be hopeless to expect that shares that do not have time to vote would have the time to go through the special steps to act by written consent.
This turns into giving JetBlue shareholders a classic Catch-22 dilemma. In order to get a record date, 25% of shares must surrender their contact information to management. Thus it is easier than shooting fish in a barrel for JetBlue management, with free access to the Certificatecorporate war chest and professional proxy solicitors, to pester the 25% of Incorporationshares with messages and telephone calls to change their mind and revoke their support for acting by written consent.
Thus while the base of 25% of shares in favor of acting by written consent is approved byeasily venerable [sic] to management attack with deep pockets company money, these shareholders have the required voteformidable task of our stockholders, our boarddoubling their number to of directors intends to file the amended Certificate of Incorporation with the Secretary of Stateshares (which equals 60% of the Stateshares that vote at the annual meeting) in a limited time period with money out of Delaware (the “Secretarytheir own pockets.
We need a right for of State”). The amended Certificateshares to call for a special shareholder meeting to help make up for our useless right to act by written consent.
Please vote yes:
Proposal 4 — Special Shareholder Meeting Improvement
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Board of Incorporation will be effective immediately upon acceptance of filing by the Secretary of State or such later time as may be specifiedDirectors’ Statement in therein.Opposition to Proposal 4
The Board recommends that you vote against the proposal to lower the threshold required for stockholders to call a special meeting.
The Board has carefully considered the proposal and believes that lowering the threshold necessary for stockholders to call a special meeting is not necessary given our strong corporate governance practices and the potential for abuse of such a right.
The Board recommends that you vote against this stockholder proposal.
The Board maintains strong corporate governance practices and regularly reviews them. The Board believes that the Company’s strong corporate governance practices and stockholder rights provide the appropriate means for a stockholder and groups of stockholders to advance their interests without the potential risk of abuse that would come with lowering the threshold to call a special meeting.
Our leading corporate governance practices include:
■ | Independent Chair of the Board (Chair and CEO positions have been separated since 2008) |
■ | Nine of ten director nominees are independent, with our CEO, as our sole non-independent director nominee |
■ | 30% of all director nominees are female and 30% of all director nominees are ethnically diverse |
■ | Independent directors regularly meet in executive session |
■ | Robust orientation program for new directors and ongoing training for continuing directors |
■ | All Audit Committee members are financially literate, and two are audit committee financial experts |
■ | Compensation Committee uses an independent compensation consultant |
■ | A majority vote standard in annual director elections |
■ | Thoughtful approach to board composition and refreshment, with 60% of our director nominees serving for less than six years on the Board |
■ | Annual board and committee evaluations |
■ | Limitation on the number of public company boards on which Directors may serve |
■ | Stockholders’ right to call a special meeting |
■ | Stockholders’ right to act by written consent |
■ | Proxy access |
The Board has carefully considered the implications of allowing stockholders to request that the Company call a special meeting of stockholders. The Board recognized that this right is increasingly considered to be an important aspect of good corporate governance. The Board also considered that the power to call a special meeting of stockholders has historically been a tool for acquirers in the hostile merger and acquisition context. Additionally, the Board reflected on the significant commitment of management time and attention that is necessary to organize and prepare for a special meeting, which can take focus away from important corporate priorities. The Board also considered the substantial legal, administrative and distribution costs on the Company.
As the Board is strongly committed to good corporate governance, it supported providing stockholders with the right to request that the Company call special meetings, provided that the request is made by stockholders owning (in an economic sense) a significant percentage of the shares of the Company. After due consideration, the Board presented a special meeting proposal for consideration by stockholders in connection with the 2020 Annual Meeting with a 20% ownership threshold. The Board believed a special meeting should only be held in extraordinary circumstances that must be addressed immediately, and not delayed until the next annual meeting, and that, importantly, are of interest to a broad base of stockholders.
In selecting the 20% threshold for the right of stockholders to request that the Company call a special meeting, the Board was striking a balance between the competing goals of providing stockholders with a true economic and non-transitory interest in the Company with the ability to call a special meeting and protecting against the risk that a small minority of stockholders with special interests, which may not be shared by the majority of the Company’s stockholders, could require that the Company call one or more special meetings resulting in unnecessary financial expense and disruption to our business. The Board continues to believe that the premises on which the stockholders voted at the 2020 Annual Meeting in favor of the right to call a special meeting remain true today.
The stockholder proposal seeks to reduce the threshold for the right of stockholders to request that the Company call a special meeting to 10%. The Board does not believe that reducing the threshold is warranted in light of the risks to which the Company would be exposed if the threshold were lowered. The Board continues to believe that a special meeting should only be held to address special or extraordinary events when fiduciary, strategic, significant transactional or similar considerations dictate that the matter cannot wait until the next annual meeting. The Board believes that setting the threshold too low would carry a risk of meeting requests promoting agenda items relevant to particular constituencies as opposed to stockholders generally, while generating significant cost and management distraction. Additionally, potential acquirers seeking to take over the Company for an inadequate price could more easily threaten to call a special meeting of stockholders to replace members of the Board to increase their negotiating leverage or to avoid negotiating at all with the Board. Finally, a similar stockholder proposal was presented to stockholders at our 2021 Annual Meeting and an overwhelming majority of the stockholders who voted at the 2021 Annual Meeting voted against reducing the special meeting threshold to 10%.
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In light of these considerations, maintaining a 20% threshold for the right of stockholders to request that the Company call a special meeting provides stockholders with a meaningful ability to request that the Company call a special meeting while helping protect the long-term interests of the Company and its stockholders. The Board believes that an ownership threshold of 20% is appropriate based on the Company’s current size and stockholder composition, as it would provide the Company’s stockholders with a meaningful right to request a special meeting, while mitigating the risk that corporate resources are wasted to serve the narrow self-interests of a few minority stockholders.
In addition, a 20% special meeting ownership threshold is in line with current market practice.
In summary, we believe that our current threshold for the right of stockholders to request that the Company call a special meeting is consistent with existing best practices and continue to reflect the governance framework that best protects stockholder rights. Accordingly, the Board believes that adoption of the stockholder proposal is not appropriate and is not in the best interests of our stockholders.
FOR THE REASONS STATED ABOVE, JETBLUE’S BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “AGAINST” THE PROPOSAL TO DECREASE THE THRESHOLD TO CALL A SPECIAL MEETING. |
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What is the record date?
The record date (the “Record Date”) for the 2022 virtual annual meeting is March 21, 2022. On the Record Date, there were 320,789,028 shares of our common stock outstanding and there were no outstanding shares of any other class of stock.
Who is entitled to vote?
Only stockholders of record at the close of business on the Record Date are entitled to vote at the annual meeting and any postponement(s) or adjournments thereof. Holders of shares of common stock as of the record date are entitled to cast one vote per share on all matters.
What is a difference between holding shares as a holder of record and as a beneficial owner?
Most of our stockholders hold their shares in an account at a brokerage firm, bank, broker-dealer or other nominee holder, rather than holding share certificates in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially through a bank, broker or other nominee.
Stockholder of Record
If on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare Trust Company, N.A., then you are a stockholder of record (also known as a “registered holder”). As the stockholder of record, you have the right to direct the voting of your shares by returning the enclosed proxy card to us or to vote via the Internet at the annual meeting. Whether or not you plan to attend the annual meeting via the Internet, please complete, date and sign the enclosed proxy card and provide specific voting instructions to ensure that your shares will be voted at the annual meeting.
Beneficial Owner
If on the Record Date, your shares were held in an account at a brokerage firm, bank, broker-dealer or other similar organization, you are considered the beneficial owner of shares held “in street name,” and the notice of the annual meeting is being forwarded to you by that organization, which is considered the stockholder of record for purposes of voting at the annual meeting. As the beneficial owner, you have the right to instruct your nominee holder on how to vote your shares and to attend the annual meeting. However, since you are not the stockholder of record, you may not vote these shares via the Internet at the annual meeting unless you receive a valid proxy from your brokerage firm, bank, broker-dealer or other nominee holder. To obtain such proxy, you must make a special request to your brokerage firm, bank, broker-dealer or other nominee holder. If you do not make this request, you can still vote by completing your proxy card and delivering the proxy card to your nominee holder; however, you will not be able to vote online during the annual meeting.
How do I vote?
Registered holders may vote:
■ | By Internet: go to www.proxyvote.com; |
■ | By telephone: call 1-800-690-6903 (toll-free); or |
■ | By mail (if you received a paper copy of the proxy materials by mail): mark, sign, date and promptly mail the enclosed proxy card in the postage-paid envelope. |
If your shares are held in the name of a broker, bank or other holder of record, follow the voting instructions you receive from the holder of record to vote your shares.
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Why did I receive a notice in the mail regarding the internet availability of proxy materials instead of a full set of proxy materials?
Pursuant to rules adopted by the SEC, the Company has elected to provide access to its proxy materials over the Internet. Accordingly, the Company is sending its Notice of the Internet Availability of proxy materials for the 2022 annual meeting of stockholders (the “Notice”) to the Company’s stockholders of record. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. The Board encourages you to take advantage of the availability of the proxy materials on the Internet.
What does it mean if I receive more than one proxy card?
If your shares are registered differently or are held in more than one account, you will receive more than one proxy card. Please sign and return all proxy cards to ensure that all of your shares are voted.
How will my shares be voted at the annual meeting if I do not specify on the proxy card how I want my shares to be voted?
If you are the record holder of your shares and do not specify on your proxy card (or when giving your proxy by telephone or the Internet) how you want to vote your shares, your shares will be voted:
■ | FOR the election of each of the ten director candidates nominated by the Board of Directors; |
■ | FOR approval, on an advisory basis, of the compensation of our named executive officers; |
■ | FOR the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022; |
■ | AGAINST approval of the stockholder proposal to reduce the special meeting threshold, if properly presented at the meeting; and |
■ | in accordance with the best judgment of the named proxies on any other matters properly brought before the 2022 virtual annual meeting and any postponement(s) or adjournment(s) thereof. |
If you are a beneficial owner of shares and do not specify how you want your shares to be voted, your shares may not be voted by the record holder (such as your bank, broker or other nominee) and will not be considered as present and entitled to vote on any matter to be considered at the annual meeting, except with respect to the ratification of the Company’s independent auditors. If your shares are held of record by a bank, broker, or other nominee, we urge you to give instructions to such record holder as to how you wish your shares to be voted so you may participate in the stockholder voting on these important matters.
What can I do if I change my mind after I vote?
Any proxy may be revoked at any time prior to its exercise at the 2022 annual meeting. A stockholder who delivers an executed proxy pursuant to this solicitation may revoke it at any time before it is exercised by: (i) executing and delivering a later-dated proxy card to our corporate secretary prior to the annual meeting; (ii) delivering written notice of revocation of the proxy to our corporate secretary prior to the annual meeting; (iii) voting again by telephone, by mobile device or over the Internet prior to 11:59 p.m., Eastern Daylight Time, on May 18, 2022; or (iv) attending and voting via the Internet at the 2022 virtual annual meeting. Attendance at the 2022 virtual annual meeting, in and of itself, will not constitute a revocation of a proxy. If you hold your shares through a broker, bank, or other nominee, you may revoke any prior voting instructions by contacting that firm or by voting online during the 2022 virtual annual meeting.
What is a quorum?
To carry on the business of the annual meeting, a minimum number of shares, constituting a quorum, must be present. The quorum for the 2022 virtual annual meeting is a majority of the outstanding common stock of the Company as of the Record Date present in person or represented by proxy. Abstentions and “broker non-votes” (which are explained under “What are broker non-votes?”) are counted as present to determine whether there is a quorum for the 2022 virtual annual meeting.
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What are broker non-votes?
A “broker non-vote” occurs when a beneficial owner of shares held by a broker, bank or other nominee fails to provide such record holder with voting instructions on any non-routine matters brought to a vote at the annual meeting. If you are a beneficial owner whose shares are held of record by a broker, your broker has discretionary voting authority to vote your shares only on routine matters, such as the ratification of appointment of our independent registered public accounting firm (Proposal No. 3), even if the broker does not receive voting instructions from you. Non-routine matters include the election of directors (Proposal No. 1), the advisory vote to approve the compensation of our named executive officers (Proposal No. 2), and the stockholder proposal (Proposal No. 4). Your broker does not have discretionary authority to vote on non-routine matters without instructions from you, in which case a “broker non-vote” will occur and your shares will not be voted on these matters.
What vote is required to adopt each of the proposals?
Proposal 1: Election of Directors
Directors will be elected by a majority of the votes cast at the 2022 annual meeting. If a quorum is present, a nominee for election to a position on the Board will be elected if the number of shares voted “for” that nominee exceeds 50 percent of the number of votes cast with respect to the election of that nominee. However, a director who fails to receive the required number of votes at the next annual meeting of stockholders at which he or she faces reelection is required to tender his or her resignation to the Board and the Board may either accept the resignation or disclose its reasons for not doing so in a report filed with the SEC within 90 days of the certification of election results. As discussed above, if your broker holds shares in your name and delivers this proxy statement to you, the broker is not entitled to vote your shares on this proposal without your instructions. Abstentions and broker non-votes are not counted as votes cast and therefore will have no effect on determining whether the required majority vote has been attained.
Proposal 2: Approval, on an advisory basis, of the compensation of our named executive officers
The affirmative vote of a majority of the votes represented at the 2022 annual meeting, either in person or by proxy, and entitled to vote on this proposal, is required to approve the advisory vote on executive compensation. The results of this vote are not binding on the Board. In evaluating the stockholder vote on an advisory proposal, the Board will consider the voting results in their entirety. Abstentions will be counted as present for the purposes of this vote, and therefore will have the same effect as a vote against this proposal. Broker non-votes will not be counted as present and are not entitled to vote on the proposal.
Proposal 3: Ratification of selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022
The affirmative vote of a majority of the votes represented at the annual meeting, either in person or by proxy, and entitled to vote on this proposal, is required to ratify the appointment of the independent registered public accounting firm. Abstentions and broker non-votes will be counted as present for the purposes of this vote, and therefore will have the same effect as a vote against the proposal.
Proposal 4: To vote on a stockholder proposal to reduce the special meeting threshold, if properly presented at the annual meeting
The affirmative vote of a majority of the votes represented at the annual meeting, either in person or by proxy, and entitled to vote on this proposal, is required to approve the proposal reduce the special meeting threshold. Abstentions will be counted as present for the purposes of this vote, and therefore will have the same effect as a vote against the proposal. Broker non-votes will not be counted as present and are not entitled to vote on the proposal.
How do foreign owners vote?
To comply with restrictions imposed by federal law on foreign ownership of U.S. airlines, our Amended and Restated Certificate of Incorporation and our Amended and Restated Bylaws (the “Bylaws”) restrict foreign ownership of shares of our common stock. The restrictions imposed by federal law currently require that no more than 25% of our voting stock be owned or controlled, directly or indirectly, by persons who are not United States citizens. Our Bylaws provide that no shares of our common stock may be voted by or at the direction of non-citizens unless such shares are registered on a separate stock record, which we refer to as the foreign stock record. Our Bylaws further provide that no shares of our common stock will be registered on the foreign stock record if the amount so registered would exceed the foreign ownership restrictions imposed by federal law. Any holder of JetBlue common stock who is not a United States citizen and has not registered its shares on the foreign
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 75
stock record maintained by us will not be permitted to vote its shares at the annual meeting. The enclosed proxy card contains a certification that by signing the proxy card or voting by telephone or electronically, the stockholder certifies that such stockholder is a United States citizen as that term is defined in the Federal Aviation Act or that the shares represented by the proxy card have been registered on our foreign stock record. As of the Record Date for the 2022 annual meeting, shares representing less than 25% of our total outstanding voting stock are registered on the foreign stock record.
Under Section 40102(a)(15) of the Federal Aviation Act, the term “citizen of the United States” is defined as: (i) an individual who is a citizen of the United States, (ii) a partnership each of whose partners is an individual who is a citizen of the United States, or (iii) a corporation or association organized under the laws of the United States or a state, the District of Columbia or a territory or possession of the United States of which the president and at least two-thirds of the Board of Directors recommendsand other managing officers are citizens of the United States, and in which at least 75% of the voting interest is owned or controlled by persons that are citizens of the United States.
Who pays for soliciting the proxies?
We pay the cost of soliciting the proxies. We have retained Morrow Sodali LLC, 470 West Avenue, Stamford, Connecticut 06902, a professional soliciting organization, to assist in soliciting proxies from brokerage firms, custodians and other fiduciaries. The Company expects the proxy solicitation fees for Morrow Sodali to be $7,500. In addition, our directors, officers and associates may, without additional compensation, also solicit proxies by mail, telephone, email, personal contact, facsimile or through similar methods. We will, upon request, reimburse brokerage firms and others for their reasonable expenses in forwarding solicitation material to the beneficial owners of our stock.
Stockholders who have any questions regarding voting procedures can contact Morrow Sodali at (800) 662-5200.
How can I attend the 2022 virtual annual meeting?
The 2022 virtual annual meeting is being held as a virtual only meeting this year. If you are a stockholder of record as of the Record Date, you may attend, vote and ask questions virtually at the meeting by logging in at www.virtualshareholdermeeting.com/jblu2022and providing your control number. This control number is included in the Notice or on your proxy card.
If you are a stockholder holding your shares in “street name” as of the Record Date, you may gain access to the meeting by following the instructions in the voting instruction card provided by your broker, bank or other nominee. You may not vote your shares via the Internet at the annual meeting unless you receive a valid proxy from your brokerage firm, bank, broker-dealer or other nominee holder. If you were not a stockholder as of the Record Date, you may still listen to the 2022 virtual annual meeting, but will not be able to ask questions or vote at the meeting.
The audio broadcast of the 2022 virtual annual meeting will be archived at www.virtualshareholdermeeting.com/jblu2022for at least one year.
Why is this annual meeting virtual only?
We are holding a virtual only meeting this year for a few reasons. First, safety is an important value for JetBlue, in the air and on the ground. While we are encouraged by the pace of COVID-19 vaccinations rolling out around the world, we do not know how many individuals will be vaccinated by May. Accordingly, we are choosing the virtual route to keep our stockholders attending the meeting safe from COVID-19. We also value innovation and we welcome expanded access, improved communication and cost savings for our stockholders and the Company afforded by the virtual format. As we have learned in the past, hosting a virtual meeting enables increased stockholder attendance and participation from locations around the world, which provides for a more meaningful forum. In addition, the virtual format allows us to communicate more effectively via a pre-meeting portal that stockholders vote “FOR”can enter by visiting www.proxyvote.com and logging in with control number. We encourage you to log on in advance and ask any questions you may have, which we will try to answer during the amendmentmeeting. We recommend that you log in to the Virtual Stockholder Meeting at www.virtualshareholdermeeting.com/jblu2022a few minutes before the scheduled meeting time on May 19, 2022 to ensure you are logged in when the meeting starts.
What if during the check-in time or during the annual meeting I have technical difficulties or trouble accessing the virtual meeting website?
We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting website. If you encounter any difficulties accessing the virtual meeting at or during the meeting time, please call the technical support number that will be posted on the Virtual Stockholder Meeting webpage.
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Will there be a question and answer session during the annual meeting?
As part of the virtual annual meeting, we will hold a live Q&A session, during which we intend to answer questions submitted online during or prior to the meeting that are pertinent to JetBlue and the meeting matters, as time permits. Only stockholders that have accessed the annual meeting as a stockholder by following the procedures outlined above in “How can I attend the annual meeting?” will be permitted to submit questions before or during the annual meeting. If you have questions, you may type them into the dialog box provided at any point during the meeting (until the floor is closed to questions). We ask that each stockholder limit questions to no more than two. Questions should be succinct and only cover a single topic. We will not address questions that are, among other things:
■ | irrelevant to the business of the Company or to the business of the 2022 annual meeting; |
■ | related to material non-public information of the Company, including the status or results of our business since our last earnings release; |
■ | related to any pending, threatened or ongoing litigation; |
■ | related to personal grievances; |
■ | derogatory references to individuals or that are otherwise in bad taste; |
■ | substantially repetitious of questions already made by another stockholder; |
■ | in excess of the two question limit; |
■ | in furtherance of the stockholder’s personal or business interests; or |
■ | out of order or not otherwise suitable for the conduct of the annual meeting as determined by the corporate secretary in their reasonable judgment. |
Additional information regarding the Q&A session will be available in the “Rules of Conduct” available on the Virtual Stockholder Meeting webpage for stockholders that have accessed the annual meeting as a stockholder by following the procedures outlined above in “How can I attend the annual meeting?”
What is “householding” and how does it affect me?
The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for stockholders and cost savings for companies. We and some brokers household proxy materials, delivering a single proxy statement or annual report to multiple stockholders sharing an address, unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker or us that they or we will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement or annual report, please notify us by sending a written request to Investor Relations, JetBlue Airways Corporation, Certificate27-01 Queens Plaza North, Long Island City, New York 11101 or by calling us at (718) 286-7900. You may also notify us to request delivery of Incorporation for the reasons outlined above.a single copy of our annual report or proxy statement if you currently share an address with another stockholder and are receiving multiple copies of our annual report or proxy statement.
Is there a list of stockholders entitled to vote at the annual meeting?
The names of stockholders entitled to vote at the virtual annual meeting will be available at the annual meeting and for ten days prior to the annual meeting for any purpose germane to the annual meeting, between the hours of 9:00 a.m. and 4:30 p.m. (Eastern Time), at our principal executive offices at 27-01 Queens Plaza North, Long Island City, New York 11101, by contacting our General Counsel. The list of these stockholders will also be available for examination by our stockholders during the virtual annual meeting on the Virtual Stockholder Meeting webpage for stockholders that have accessed the annual meeting as a stockholder by following the procedures outlined above in “How can I attend the annual meeting?”
When will the voting results be announced?
We will announce preliminary voting results at the annual meeting. We will report final results on our website at www.jetblue.comand in a filing with the SEC on a Form 8-K.
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As of the date of this proxy statement, we do not know of any other matters that may be presented for consideration at the annual meeting other than the items set forth in the notice of annual meeting above. If any other matter is properly brought before the annual meeting for action by stockholders, proxies in the enclosed form returned to the Company will be voted in accordance with the recommendation of the Board of Directors or, in the absence of such a recommendation, in accordance with the judgment of the proxy holder.
Stockholder Proposals for the 20172023 Annual Meeting
Pursuant to our Bylaws, no business may be brought before an annual meeting unless it is specified in the notice of the meeting or is otherwise brought before the meeting by or at the direction of the Board of Directors or by a stockholder entitled to vote at the meeting, who has delivered written notice to our Corporate Secretary at our principal executive offices (containing certain information specified in the Bylaws about the stockholder and the proposed action). To be timely, the notice must not be received earlier than January 17, 201719, 2023 (120 days prior to May 17, 2017,19, 2023, the one year anniversary of the 2016 annual meeting), nor later than February 16, 201718, 2023 (90 days prior to May 17, 2017, the one-year anniversary of the 2016 annual meeting)19, 2023). The notice must contain the information required by our Bylaws.
The foregoing Bylaw provisions do not affect a stockholder’s ability to request inclusion of a proposal in our proxy statement within the procedures and deadlines set forth in Rule 14a-8 of the SEC’s proxy rules and referred to in the paragraph below.rules. Pursuant to Rule 14a-8, stockholder proposals intended to be included in our proxy statement and voted on at our 20172023 annual meeting must be received at our offices ataddressed to the Corporate Secretary, JetBlue Airways Corporation, 27-01 Queens Plaza North, Long Island City, New York 11101, on or before December 6, 2016.8, 2022 (120 days prior to April 7, 2023, the one year anniversary of the 2022 Proxy mailing).
In January 2018, the Board adopted revisions to our Bylaws, putting into place proxy access provisions. These provisions permit a stockholder, or a group of up to 20 stockholders owning continuously 3% or more of the Company’s outstanding common stock for at least three years to nominate and include in the Company’s proxy materials for an annual stockholder meeting up to 20% of the Board (or if such amount is not a whole number, the closest whole number below 20%,but not less than two directors) if such nominating stockholder(s) and nominee(s) satisfy the requirements set forth in our Bylaws. To be timely, the notice must not be received earlier than December 20, 2022 (150 days prior to May 19, 2023, the one year anniversary of the 2022 annual meeting), nor later than January 19, 2023 (120 days prior to May 19, 2023). The notice must contain the information required by our Bylaws.
A copy of our Bylaws is available upon request to: Corporate Secretary, JetBlue Airways Corporation, 27-01 Queens Plaza North, Long Island City, NY 11101. The officer presiding at the meeting may exclude matters that are not properly presented in accordance with these requirements.
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 78
Annual Report to Stockholders
The fiscal 20152021 Annual Report to Stockholders (which is not a part of our proxy soliciting materials), is being mailed with this proxy statement to those stockholders that received a copy of the proxy materials in the mail. For those stockholders that received the noticeNotice of internet availabilityInternet Availability of proxy materials, this proxy statement and our fiscal 20152021 Annual Report to Stockholders are available aton our website atwww.jetblue.com. Additionally, and in accordance with SEC rules, you may access our proxy statement atwww.proxyvote.com, a “cookie-free” website that does not identify visitors to the site. A copy of the Company’s Annual Report on Form 10-K filed with the SEC will be provided to stockholders without charge upon written request directed to our General Counsel, JetBlue Airways Corporation, 27-01 Queens Plaza North, Long Island City, NY 11101. The Company’s copying costs will be charged if exhibits to the 20152021 Annual Report on Form 10-K are requested. The Company makes available on or through our website free of charge our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to such reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after filing.
By Order of the Board of Directors,
James G. HnatBrandon Nelson
General Counsel
and Corporate Secretary
April 5, 20167, 2022
Long Island City, New York
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT 79
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF JETBLUE AIRWAYS CORPORATION
The undersigned, Robin Hayes and James G. Hnat, hereby certify that:
ONE: They are the duly elected, qualified and acting Chief Executive Officer and Secretary, respectively, of JetBlue Airways Corporation, a Delaware corporation.
TWO: The Certificate of Incorporation of said corporation was originally filed in the Office of the Secretary of State of the State of Delaware on August 24, 1998 under the name New Air Corporation.
THREE: The Certificate of Incorporation of said corporation was subsequently amended and restated, and in each case the Amended and Restated Certificate of Incorporation of said corporation was originally filed in the Office of the Secretary of State of the State of Delaware on April 17, 2002, May 20, 2008 and May 26, 2010 under the name JetBlue Airways Corporation.
FOUR: The Amended and Restated Certificate of Incorporation of said corporation is further amended and restated to read in its entirety as follows:
ARTICLE I
The name of this corporation is JetBlue Airways Corporation (the “Corporation”).
ARTICLE II
The address of the Corporation’s registered office in the State of Delaware is 9 East Loockerman Street, City of Dover, County of Kent, Delaware. The name of the Corporation’s registered agent at such address is National Registered Agents, Inc.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “GCL”).
ARTICLE IV
The Corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares that the Corporation is authorized to issue is Nine Hundred Twenty Five Million (925,000,000). Nine Hundred Million (900,000,000) shares shall be Common Stock, par value $0.01 per share, and Twenty Five Million (25,000,000) shares shall be Preferred Stock, par value $0.01 per share. Immediately upon the filing of the Amended and Restated Certificate of Incorporation with the Office of the Secretary of State of the State of Delaware, each one (1) share of the Corporation’s Class A-1 Common Stock, Class A-2 Common Stock, Series A-1 Preferred, Series A-2 Preferred, Series B-1 Pre-ferred and Series B-2 Preferred was converted into one (1) share of Common Stock.
The Preferred Stock may be issued from time to time in one or more series, without further stockholder approval. The Board of Directors of the Corporation is hereby authorized to fix or alter the rights, preferences, privileges and restrictions granted to or imposed upon each series of Preferred Stock, and the number of shares constituting any such series and the designation thereof, or of any of them. The rights, privileges, preferences and restrictions of any such additional series may be subordinated to, pari passu with (including, without limitation, inclusion in provisions with respect to liquidation and acquisition preferences, redemption and/or approval of matters by vote), or senior to any of those of any present or future class or series of Preferred Stock or Common Stock. The Board of Directors is also authorized to increase or decrease the number of shares of any series prior or subsequent to the issue of that series, but not below the number of shares of such series then outstanding. In case the number of shares of any series shall be so decreased, the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series.
ARTICLE V
In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, repeal, alter, amend and rescind any or all of the Bylaws of the Corporation. In addition, the Bylaws may be amended by the affirmative vote of holders of at least a majority of the outstanding shares of voting stock of the Corporation entitled to vote at an election of directors.
ARTICLE VI
The number of directors of the Corporation shall be determined by resolution of the Board of Directors.
Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide. Advance notice of stockholder nominations for the election of directors and of any other business to be brought before any meeting of the stockholders shall be given in the manner provided in the Bylaws of this Corporation.
At each annual meeting of stockholders, directors of the Corporation shall be elected to hold office until the expiration of the term for which they are elected, or until their successors have been duly elected and qualified; except that if any such election shall not be so held, such election shall take place at a stockholders’ meeting called and held in accordance with the GCL.
Each director who is serving as a director on the date of this Amended and Restated Certificate of Incorporation and who is elected or appointed at or after the 2009 annual meeting of stockholders shall hold office until the next annual meeting of stockholders and until a successor has been elected and qualified, or until such director’s earlier resignation or removal from office. Directors elected prior to or at the 2009 annual meeting of stockholders, including those elected at the 2008 annual meeting of stockholders, shall continue to hold office until the expiration of the three-year terms for which they were elected, subject to such directors’ prior death, disability, resignation, retirement, disqualification or removal from office. Any person elected to a newly-created director position or any person elected to fill a vacancy on the Board of Directors shall serve until the next annual meeting of stockholders and until a successor has been elected and qualified, subject to such director’s prior death, disability, resignation, retirement, disqualification or removal from office. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.
Vacancies occurring on the Board of Directors for any reason may be filled only by vote of a majority of the remaining members of the Board of Directors, even if less than a quorum, at any meeting of the Board of Directors, or by a sole remaining director. A person so elected by the Board of Directors to fill a vacancy shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director’s successor shall have been duly elected and qualified. A director may be removed from officeonly if such removal is (i) forwith or without causeand (ii) by the affirmative vote of the holders ofat least a majority of the outstanding shares of voting stock of the Corporation entitled to vote at an election of directors.Directors may not be removed without cause.
ARTICLE VII
Stockholders of the Corporation shall take action by meetings held pursuant to this Amended and Restated Certificate of Incorporation and the Bylaws and shall have no right to take any action by written consent without a meeting. Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. Special meetings of the stockholders, for any purpose or purposes, may only be called by the Board of Directors of the Corporation and the Chief Executive Officer of the Corporation. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation.
ARTICLE VIII
To the fullest extent permitted by applicable law, this Corporation is authorized to provide indemnification of (and advancement of expenses to) directors, officers, employees and agents (and any other persons to which Delaware law permits this Corporation to provide indemnification) through Bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the GCL, subject only to limits created by applicable Delaware law (statutory or non-statutory), with respect to action for breach of duty to the Corporation, its stockholders, and others.
No director of the Corporation shall be personally liable to the Corporation or any stockholder for monetary damages for breach of fiduciary duty as a director, except for any matter in respect of which such director shall be liable under Section 174 of the GCL or any amendment thereto or shall be liable by reason that, in addition to any and all other requirements for such liability, such director (1) shall have breached the director’s duty of loyalty to the Corporation or its stockholders, (2) shall have acted in manner involving intentional misconduct or a knowing violation of law or, in failing to act, shall have acted in a manner involving intentional misconduct or a knowing violation of law, or (3) shall have derived an improper personal benefit. If the GCL is hereafter amended to authorize the further elimination or limitation of the liability of a director, the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the GCL, as so amended.
Each person who was or is made a party or is threatened to be made a party to or is in any way involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), including any appeal therefrom, by reason of
the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Corporation or a direct or indirect subsidiary of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another entity or enterprise, or was a director or officer of a foreign or domestic corporation which was a predecessor corporation of the Corporation or of another entity or enterprise at the request of such predecessor corporation, shall be indemnified and held harmless by the Corporation, and the Corporation shall advance all expenses incurred by any such person in defense of any such proceeding prior to its final determination, to the fullest extent authorized by the GCL. In any proceeding against the Corporation to enforce these rights, such person shall be presumed to be entitled to indemnification and the Corporation shall have the burden of proving that such person has not met the standards of conduct for permissible indemnification set forth in the GCL. The rights to indemnification and advancement of expenses conferred by this Article VIII shall be presumed to have been relied upon by the directors and officers of the Corporation in serving or continuing to serve the Corporation and shall be enforceable as contract rights. Said rights shall not be exclusive of any other rights to which those seeking indemnification may otherwise be entitled. The Corporation may, upon written demand presented by a director or officer of the Corporation or of a direct or indirect subsidiary of the Corporation, or by a person serving at the request of the Corporation as a director or officer of another entity or enterprise, enter into contracts to provide such persons with specified rights to indemnification, which contracts may confer rights and protections to the maximum extent permitted by the GCL, as amended and in effect from time to time.
If a claim under this Article VIII is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expenses of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce the right to be advanced expenses incurred in defending any proceeding prior to its final disposition where the required undertaking, if any, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the GCL for the Corporation to indemnify the claimant for the amount claimed, but the claimant shall be presumed to be entitled to indemnification and the Corporation shall have the burden of proving that the claimant has not met the standards of conduct for permissible indemnification set forth in the GCL. If the GCL is hereafter amended to permit the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment, the indemnification rights conferred by this Article VIII shall be broadened to the fullest extent permitted by the GCL, as so amended.
ARTICLE IX
At no time shall more than 25% of the voting interest of the Corporation be owned or controlled by persons who are not “citizens of the United States” (as such term is defined in Title 49, United States Code, Section 40102 and administrative interpretations thereof issued by the Department of Transportation or its successor, or as the same may be from time to time amended) (“Non-Citizens”). In the event that Non-Citizens shall own (beneficially or of record) or have voting control over any shares of capital stock of the Corporation, the voting rights of such persons shall be subject to automatic suspension to the extent required to ensure that the Corporation is in compliance with applicable provisions of law and regulations relating to ownership or control of a U.S. air carrier. The Bylaws shall contain provisions to implement this Article IX, including, without limitation, provisions restricting or prohibiting transfer of shares of voting stock to Non-Citizens and provisions restricting or removing voting rights as to shares of voting stock owned or controlled by Non-Citizens. Any determination as to ownership, control or citizenship made by the Board of Directors shall be conclusive and binding as between the Corporation and any stockholder for purposes of this Article IX.
ARTICLE X
The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.
FOUR: The foregoing amendment and restatement has been duly adopted by the Corporation’s Board of Directors in accordance with the applicable provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware.
FIFTH: The foregoing amendment and restatement was approved by the holders of the requisite number of shares of the Corporation in accordance with Section 228 of the General Corporation Law of the State of Delaware.
REGULATION G RECONCILIATIONSRECONCILIATION OF NON-GAAP FINANCIAL MEASURES
We sometimes use non-GAAP financial measures in this report. Non-GAAP financial measures are financial measures that are derived from the consolidated financial statements, but that are not presented in accordance with generally accepted accounting principles in the U.S.,United States, or U.S. GAAP. We believe these non-GAAP financial measures provide a meaningful comparison of our results to others in the airline industry and our prior year results. Investors should consider these non-GAAP financial measures in addition to, and not as a substitute for, our financial performance measures prepared in accordance with U.S. GAAP. Further, our non-GAAP information may be different from the non-GAAP information provided by other companies. The information below provides an explanation of each non-GAAP financial measure and shows a reconciliation of non-GAAP financial measures used in this filing to the most directly comparable GAAP financial measures.
Operating ExpensesExpense per Available Seat Mile, excluding fuel and profit sharingrelated taxes, other non-airline operating expenses, and special items (“CASM Ex-Fuel”)
Operating expenses per available seat mile, or CASM, is a common metric used in the airline industry. Our CASM for 2015 through 2011 are summarized in the table below. We exclude aircraft fuel profit sharing, and related taxes, operating expenses related to other non-airline businesses, such as our subsidiaries, JetBlue Technology Ventures and JetBlue Travel Products, and special items from operating expenses to determine CASM ex-fuel, which is a non-GAAP financial measure.
In 2021, special items include contra-expenses recognized on the utilization of federal grants received under various payroll support programs, contra-expenses recognized on the Employee Retention Credits provided by the CARES Act, and profit sharing. one-time costs related to the ratification of the collective bargaining agreement with our inflight crewmembers.
Special items in 2020 include contra-expenses recognized on the utilization of payroll support grants received under the CARES Act, contra-expenses recognized on the Employee Retention Credits provided by the CARES Act, impairment charges on our Embraer E190 fleet, losses generated from certain aircraft sale-leaseback transactions, and one-time costs associated with our voluntary crewmember separation programs.
Special items for 2019 include an impairment charge and one-time costs related to the Embraer E190 fleet transition as well as one-time costs related to the ratification and implementation of our pilots’ collective bargaining agreement.
We believe that CASM ex-fuel and profit sharingis useful for investors because it provides investors the ability to measure financial performance excluding items beyond our control, such as (i) fuel costs, which are subject to many economic and political factors, beyond our control, and (ii) profit sharing, which is sensitiveor not related to volatility in earnings.the generation of an available seat mile, such as operating expense related to other non-airline businesses. We believe this non-GAAP measure is more indicative of our ability to manage airline costs and is more comparable to measures reported by other major airlines. We are unable to reconcile such projected CASM ex-fuel and profit sharing as the nature or amount of excluded items are only estimated at this time.
Reconciliation of Operating expense per ASM, excluding fuel and profit sharing | ||||||||||||||||||||||||||||||||||||||||
(in millions; per ASM data in cents; | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||||||||||||||||||||||
percentages based on unrounded | ||||||||||||||||||||||||||||||||||||||||
numbers) | $ per ASM | $ per ASM | $ per ASM | $ per ASM | $ per ASM | |||||||||||||||||||||||||||||||||||
Total operating expenses | $ | 5,200 | 10.56 | $ | 5,302 | 11.78 | $ | 5,013 | 11.71 | $ | 4,606 | 11.49 | $ | 4,182 | 11.23 | |||||||||||||||||||||||||
Less: Aircraft fuel and related taxes | 1,348 | 2.74 | 1,912 | 4.25 | 1,899 | 4.43 | 1,806 | 4.50 | 1,664 | 4.47 | ||||||||||||||||||||||||||||||
Operating expenses, excluding fuel and related taxes | 3,852 | 7.82 | 3,390 | 7.53 | 3,114 | 7.28 | 2,800 | 6.99 | 2,518 | 6.76 | ||||||||||||||||||||||||||||||
Less: Profit sharing and related taxes | 151 | 0.31 | 25 | 0.05 | 12 | 0.03 | 3 | 0.01 | — | — | ||||||||||||||||||||||||||||||
Operating expense, excluding fuel, profit sharing and related taxes | $ | 3,701 | 7.51 | $ | 3,365 | 7.48 | $ | 3,102 | 7.25 | $ | 2,797 | 6.98 | $ | 2,518 | 6.76 |
Net Income and Pre-Tax Income, excluding special items
We exclude special items from net income and pre-tax income as we believe the exclusion of these items is helpful to investors to evaluate JetBlue’s recurring core operational performance in the periods shown. Therefore, we adjust for these amounts. Special items excluded in the tables below showing the reconciliation of net income and pre-tax income include the gain on the sale of JetBlue’s wholly-owned subsidiary LiveTV due to the non-recurring nature of this item.NON-GAAP FINANCIAL MEASURE
Reconciliation of Net Income, Income before Income Taxes and EPS excluding Special Items | ||||||||
Twelve Months Ended December 31, | ||||||||
(in millions, except per share amounts) | 2015 | 2014 | ||||||
Income before income taxes | $ | 1,097 | $ | 623 | ||||
Less: Gain on sale of subsidiary | — | 241 | ||||||
Income before income taxes excluding special items | 1,097 | 382 | ||||||
Less: Income tax expense | 420 | 222 | ||||||
Add back: Income tax relating to gain on sale of subsidiary(1) | — | 72 | ||||||
Net Income excluding special items | $ | 677 | $ | 232 | ||||
Basic: | ||||||||
Earnings per common share | $ | 2.15 | $ | 1.36 | ||||
Less: Special items, net of tax | $ | — | $ | 0.57 | ||||
Earnings per common share excluding special items | $ | 2.15 | $ | 0.79 | ||||
Diluted: | ||||||||
Earnings per common share | $ | 1.98 | $ | 1.19 | ||||
Less: Special items, net of tax | $ | — | $ | 0.49 | ||||
Earnings per common share excluding special items | $ | 1.98 | $ | 0.70 |
2021 | 2020 | 2019 | 2018 | 2017 | ||||||||||||||||||||||||||||||||||||
(in millions; per ASM data in cents) | $ per ASM | $ per ASM | $ per ASM | $ per ASM | $ per ASM | |||||||||||||||||||||||||||||||||||
Total operating expenses | $ | 6,117 | 11.30 | $ | 4,671 | 14.29 | $ | 7,294 | 11.43 | $ | 7,392 | 12.34 | $ | 6,039 | 10.78 | |||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||||||
Aircraft fuel and related taxes | 1,436 | 2.65 | 631 | 1.93 | 1,847 | 2.89 | 1,899 | 3.17 | 1,363 | 2.43 | ||||||||||||||||||||||||||||||
Other non-airline expenses | 43 | 0.08 | 35 | 0.10 | 46 | 0.08 | 44 | 0.07 | 35 | 0.06 | ||||||||||||||||||||||||||||||
Special items | (833 | ) | (1.54 | ) | (283 | ) | (0.86 | ) | 14 | 0.02 | 435 | 0.73 | — | — | ||||||||||||||||||||||||||
Operating expenses, excluding fuel | $ | 5,471 | 10.11 | $ | 4,288 | 13.12 | $ | 5,387 | 8.44 | $ | 5,014 | 8.37 | $ | 4,641 | 8.29 |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT A-1
ReturnReconciliation of Operating Expense, Income (Loss) before Taxes, Net Income (Loss) and Earnings (Loss) per Share, excluding special items and gain on Invested Capitalequity investments
ReturnOur GAAP results in the applicable periods were impacted by credits and charges that are deemed special items.
In 2021, special items include contra-expenses recognized on invested capital, or ROIC, is an important financial metric which we believe provides meaningful information as to how well we generate returns relativethe utilization of federal grants received under various payroll support programs, contra-expenses recognized on the Employee Retention Credits (ERCs) provided by the CARES Act, and one-time costs related to the capital investedratification of the collective bargaining agreement with our inflight crewmembers.
Special items in 2020 include contra-expenses recognized on the utilization of payroll support grants received under the CARES Act, contra-expenses recognized on ERCs, impairment charges on our business. During 2015,Embraer E190 fleet, losses generated from certain aircraft sale-leaseback transactions, and one-time costs associated with our ROIC improved to 13.7%, primarily duevoluntary crewmember separation programs.
Special items in 2019 include one-time costs related to the reduction in fuel prices. We are committedEmbraer E190 fleet transition as well as one-time costs related to taking appropriate actions which will allow us to continue to improve ROIC while adding capacitythe ratification and continuing to grow. Atimplementation of our Investor day in November 2014, we forecast that we believe we will improve ROIC to at least 10% by the end of 2017.pilots’ collective bargaining agreement.
Certain net gains on our equity investments were also excluded from our 2021 and 2019 GAAP results.
We believe this non-GAAP measure provides a meaningful comparisonthe impact of these items distort our overall trends and that our metrics are more comparable with the presentation of our results excluding the impact of these items. The table below provides a reconciliation of our GAAP reported amounts to the airline industrynon-GAAP amounts excluding the impacts of these items.
NON-GAAP FINANCIAL MEASURE RECONCILIATION OF OPERATING EXPENSE, INCOME (LOSS) BEFORE TAXES, NET INCOME (LOSS)
Year Ended December 31, | ||||||||||||
(in millions except per share amounts) | 2021 | 2020 | 2019 | |||||||||
Total operating revenues | $ | 6,037 | $ | 2,957 | $ | 8,094 | ||||||
Total operating expenses | $ | 6,117 | $ | 4,671 | $ | 7,294 | ||||||
Less: Special items | (833 | ) | (283 | ) | 14 | |||||||
Total operating expenses excluding special items | $ | 6,950 | $ | 4,954 | $ | 7,280 | ||||||
Operating income (loss) | $ | (80 | ) | $ | (1,714 | ) | $ | 800 | ||||
Add back: Special items | (833 | ) | (283 | ) | 14 | |||||||
Operating income (loss) excluding special items | $ | (913 | ) | $ | (1,997 | ) | $ | 814 | ||||
Operating margin excluding special items | (15.1 | )% | (67.5 | )% | 10.1 | % | ||||||
Income (loss) before income taxes | $ | (263 | ) | $ | (1,893 | ) | $ | 768 | ||||
Add back: Special items | (833 | ) | (283 | ) | 14 | |||||||
Less: Gain on equity investments | 44 | — | 15 | |||||||||
Income (loss) before income taxes excluding special items and gain on equity investments | $ | (1,140 | ) | $ | (2,176 | ) | $ | 767 | ||||
Pre-tax margin excluding special items and gain on equity investments | (18.9 | )% | (73.6 | )% | 9.5 | % | ||||||
Net income (loss) | $ | (182 | ) | $ | (1,354 | ) | $ | 569 | ||||
Add back: Special items | (833 | ) | (283 | ) | 14 | |||||||
Less: Income tax benefit (expense) related to special items | (249 | ) | (69 | ) | 4 | |||||||
Less: Gain on equity investments | 44 | — | 15 | |||||||||
Less: Income tax (expense) related to gain on equity investments | (13 | ) | — | (4 | ) | |||||||
Net income (loss) excluding special items and gain on equity investments | $ | (797 | ) | $ | (1,568 | ) | $ | 568 | ||||
Earnings (loss) per common share: | ||||||||||||
Basic | $ | (0.57 | ) | $ | (4.88 | ) | $ | 1.92 |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT A-2
Year Ended December 31, | ||||||||||||
(in millions except per share amounts) | 2021 | 2020 | 2019 | |||||||||
Add back: Special items, net of tax | (1.84 | ) | (0.77 | ) | 0.04 | |||||||
Less: Gain on equity investments, net of tax | 0.10 | — | 0.04 | |||||||||
Basic excluding special items and gain on equity investments | $ | (2.51 | ) | $ | (5.65 | ) | $ | 1.92 | ||||
Diluted | $ | (0.57 | ) | $ | (4.88 | ) | $ | 1.91 | ||||
Add back: Special items, net of tax | (1.84 | ) | (0.77 | ) | 0.03 | |||||||
Less: Gain on equity investments, net of tax | 0.10 | — | 0.04 | |||||||||
Diluted excluding special items and gain on equity investments | $ | (2.51 | ) | $ | (5.65 | ) | $ | 1.90 |
Adjusted Debt to Capitalization Ratio
Adjusted debt to capitalization ratio is a non-GAAP financial measure which we believe is relevant in assessing the Company’s overall debt profile. Adjusted debt includes aircraft operating lease liabilities, in addition to total debt and our prior year results.finance lease obligations. Adjusted capitalization represents total equity plus adjusted debt. Investors should consider this non-GAAP financial measure in addition to, and not as a substitute for, our financial performance measures prepared in accordance with GAAP.
Reconciliation of Return on Invested Capital (Non-GAAP) | |||||||||
Twelve Months Ended December 31, | |||||||||
(in millions, except as otherwise noted) | 2015 | 2014 | |||||||
Numerator | |||||||||
Operating Income | $ | 1,216 | $ | 515 | |||||
Add: Interest income (expense) and other | 1 | 1 | |||||||
Add: Interest component of capitalized aircraft rent (a) | 64 | 65 | |||||||
Subtotal | 1,281 | 581 | |||||||
Less: Income tax expense impact | 491 | 226 | |||||||
Operating Income After Tax, Adjusted | $ | 790 | $ | 355 | |||||
Denominator | |||||||||
Average Stockholders’ equity | $ | 2,869 | $ | 2,331 | |||||
Average total debt | 2,038 | 2,409 | |||||||
Capitalized aircraft rent(1) | 853 | 869 | |||||||
Invested Capital | $ | 5,760 | $ | 5,609 | |||||
Return on Invested Capital | 13.7 | % | 6.3 | % | |||||
(1) | Capitalized Aircraft Rent | ||||||||
Aircraft rent, as reported | $ | 122 | $ | 124 | |||||
Capitalized aircraft rent (7* Aircraft rent)(2) | 853 | 869 | |||||||
Interest component of capitalized aircraft rent (Imputed interest at 7.5%) | 64 | 65 |
NON-GAAP FINANCIAL MEASURE ADJUSTED DEBT TO CAPITALIZATION RATIO
December 31, | ||||||||
(in millions) | 2021 | 2020 | ||||||
Long-term debt and finance lease obligations | $ | 3,651 | $ | 4,413 | ||||
Current maturities of long-term debt and finance lease obligations | 355 | 450 | ||||||
Operating lease liabilities — aircraft | 256 | 273 | ||||||
Adjusted debt | $ | 4,262 | $ | 5,136 | ||||
Long-term debt and finance lease obligations | $ | 3,651 | $ | 4,413 | ||||
Current maturities of long-term debt and finance lease obligations | 355 | 450 | ||||||
Operating lease liabilities — aircraft | 256 | 273 | ||||||
Stockholders’ equity | 3,849 | 3,951 | ||||||
Adjusted capitalization | $ | 8,111 | $ | 9,087 | ||||
Adjusted debt to capitalization ratio | 53 | % | 57 | % |
Free Cash Flow (Non-GAAP)
The table below reconciles cash provided by operations determined in accordance with U.S. GAAP to Free Cash Flow, a non-GAAP financial measure. Management believesWe believe that Free Cash Flow is a relevant metric in measuring our financial strength and is useful in assessing our ability to fund future capital commitments and other obligations. Investors should consider this non-GAAP financial measure in addition to, and not as a substitute for, our financial measures prepared in accordance with U.S. GAAP.
Reconciliation of Free Cash Flow (Non-GAAP) | ||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||
(in millions) | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
Net cash provided by operating activities | $ | 1,598 | $ | 912 | $ | 758 | $ | 698 | $ | 614 | ||||||||||
Less: Capital expenditures(1) | (837 | ) | (806 | ) | (615 | ) | (542 | ) | (480 | ) | ||||||||||
Less: Predelivery deposits for flight equipment | (104 | ) | (127 | ) | (22 | ) | (283 | ) | (44 | ) | ||||||||||
Free Cash Flow | $ | 657 | $ | (21 | ) | $ | 121 | $ | (127 | ) | $ | 90 |
NON-GAAP FINANCIAL MEASURE
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT A-3 |
ROIC FORMULA FOR PSUs
We calculate ROIC for purposes of PSU grants as operating income (loss) after tax, as adjusted over invested capital, as illustrated below.
Return On Invested Capital (ROIC)
Numerator |
Operating income (loss) |
Add: Interest income (expense) and other |
Add: Interest component of capitalized aircraft rent(1) |
Add: Special items |
Subtotal |
Less: Income tax expense (benefit) impact |
Operating income (loss) after tax, adjusted |
Denominator |
Average stockholders’ equity |
Average total debt |
Capitalized aircraft rent(2) |
Invested capital |
Return on invested capital |
(1) | Interest component of capitalized aircraft rent is calculated at an imputed interest of 7.5% |
(2) | Capitalized aircraft rent is calculated as 7X reported aircraft rent |
JETBLUE AIRWAYS CORPORATION | 2022 PROXY STATEMENT B-1