UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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Securities Exchange Act of 1934
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March Dear On behalf of the Board of Directors, we invite you to attend Alaska Air Group’s In addition to We hope you will join us on May Sincerely, | ||
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Patricia M. Bedient |
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NOTICE OF |
The Board of Directors of Alaska Air Group, Inc. (Air Group or the Company) is soliciting proxies for the 20212023 Annual Meeting of StockholdersShareholders (the Annual Meeting). This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the meeting. Please read it carefully.
DATE | Thursday, May | |
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VIRTUAL MEETING ACCESS |
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MATTERS TO BE VOTED ON | 1. Election of the 2. Approval (on an advisory basis) of the compensation of the Company’s Named Executive Officers 3. Approval (on an advisory basis) of Frequency of Future Advisory Vote on Named Executive Officer Compensation 4. Ratification of the appointment of KPMG LLP as the Company’s independent registered public accountants (the independent accountants) for fiscal year
2023 5. Other business as may properly come before the meeting or any postponement or adjournment thereof |
The Board of Directors has set Friday, March 12, 2021,10, 2023 as the record date for the Annual Meeting. This means that owners of Alaska Air Group common stock as of the close of business on that date are entitled to receive this notice, attend and vote during the Annual Meeting. There were 124,388,615127,464,546 shares of Air Group common stock outstanding on the record date.
Internet Availability of Proxy Materials. On or aboutMarch 26, 2021, stockholders24, 2023, shareholders of record, beneficial owners and employee participants in the Company’s 401(k) plans were mailed a Notice of Internet Availability of Proxy Materials (the Notice) directing them to a websitewww.proxyvote.com where they can access the Company’s 20212023 Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 20202022 (the Annual Meeting Materials). The Company’s 20202022 Form 10-K was filed with the Securities and Exchange Commission (SEC) on February 26. 2021.13, 2023. If you prefer to receive a paper copy of the proxy materials, please follow the instructions on the Notice and the Annual Meeting Materials will be mailed to you.
Attending the Annual Meeting. We will host the 2021 Annual Meeting live via the Internet and telephone only.webcast. Any stockholdershareholder can listen to and participate in the Annual Meeting. Whether or not you attend the meeting, we encourage you to vote on-line or by Internet or phone or to complete, sign and mail your voting instruction form or proxy prior to the meeting.
Submit Your Questions. We invite you to submit any questions of general stockholdershareholder interest to the Assistant Corporate Secretary via email at allie.wittenberger@alaskaair.com, or via the Shareholder Forum at www.proxyvote.com. You can submit questions beginning on March 24, 2023. We will answer questions of general interest during the meeting as time permits. We will also include answers to your questions on www.alaskaair.com under About Alaska/Investor Relations following the meeting. If you encounter issues accessing the website or the virtual meeting, please contact allie.wittenberger@alaskaair.com.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT
TABLE OF CONTENTS
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Prohibition of Speculative Transactions in Company Securities |
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Proposal 2: Advisory Vote to Approve the Compensation of the Company’s Named Executive Officers |
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Compensation and Leadership Development Committee Interlocks and Insider Participation |
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A-1 | |
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING AND OTHER STATEMENTS
This Proxy Statement contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may be identified by words like “anticipate,” “expect,” “project,” “believe,” “plan,” “may,” “estimate,” “intend” and other similar words. These forward-looking statements are based on our beliefs, assumptions and estimates using information available to us at the time and are not intended to be guarantees of future events or performance. Factors that may cause actual results to differ materially from those contemplated by the statements in this Proxy Statement can be found in our most recent Annual Report on Form 10-K filed with the SEC and in the Quarterly Reports on Form 10-Q that we have filed or will file hereafter under the heading “Risk Factors” and “Safe Harbor for Forward-Looking Statements.” The forward-looking statements speak only as of the date of this Proxy Statement and undue reliance should not be placed on these statements. We disclaim any intention or obligation to publicly update or revise any forward-looking statements. This cautionary statement is applicable to all forward-looking statements contained in this document.
This Proxy Statement contains statements regarding individual and Company performance objectives and targets. These objectives and targets are disclosed in the limited context of our compensation plans and programs and should not be understood to be statements of management’s future expectations or estimates of future results or other guidance. We specifically caution investors not to apply these statements to other contexts.
Website References
You may also access additional information about Alaska Air Group at investor.alaskaair.com. References to our website throughout this Proxy Statement are provided for convenience only and the content on our website does not constitute a part of this Proxy Statement.
2020Alaska Air Group has a history of navigating periods of post-downturn recovery with agility, emerging with stronger competitive positioning and durable advantages. This recovery is behind us,no different. In 2022, our industry faced unprecedented volatility and it waswe were challenged in unexpected ways. Our people rose to these challenges, delivering unwavering safety and the exceptional customer care that is unique to Alaska and Horizon.
In 2022 we experienced unprecedented leisure travel demand strength. This strength drove our revenue to a year like no other. The coronavirus pandemic forced nearly allrecord $9.6 billion, 10% above 2019 with capacity trailing our 2019 size by 9%. With this strong backdrop and our disciplined focus on efficient operations and low costs, we led the industry with an adjusted pre-tax margin of 7.6% (1). We expect to continue to build on this momentum and margin expansion again in 2023.
Our financial strength and the conservatism of our balance sheet are enduring trademarks of our business that have enabled us to change our daily lives, and for many it resulted in the loss of loved ones. On top of the tragedy of the coronavirus, we encountered senseless racial violence and experienced deep political division in our country. Any one of these events on its own would have been challenging but having them all in one year was harrowing. The resulting uncertainty and financial hardship were unlike anything we have experienced in our 88-year history.
In the very early days of the pandemic, we focused our attention on two critical priorities: maintaining the health and safety of our employees and guests, and ensuring our airlines come out of this crisis strong. The people of Alaska and Horizon delivered on both fronts, and our company is well prepared for the future because of it.
In April, we launched our Next-Level Care initiative, drawing on the expertise of medical and health care professionals with insights from employees and guests to change the travel experience with safety and comfort in mind. The layers of safety we created were instrumental in helping our guests and employees stay healthy and for rebuilding guest confidence in travel. We know these measures are working, as guest post-flight surveys indicate the vast majority experienced a safe and healthy environment when travelling with us.
Financially, our 2020 results were both sobering and a source of optimism. While our revenues declined a staggering $5.2 billion, our teams managed to reduce our cash burn to lessrecover more quickly than $4 million per day by the end of the year. This result was among the bestothers in the industry this cycle. In 2022, we produced $1.4 billion in cash flows from operations, and was integral to our preserving our balance sheet strength through this crisis. Our adjusted net debt which factors in debtto EBTIDAR was 1.0x (2), well below our target of 1.5x or lower. Given the renewed stability of our business, and lease obligationsimproving financial trajectory, we re-started our share repurchase program this February and backs out cash, was essentially unchangedwill spend up to $100 million on share buybacks this year to offset annual dilution from 2019. Havingour ESPP and employee compensation programs. Balanced capital allocation is a strong balance sheet and operating with low costs have been the cornerstonekey aspect of our management philosophy, and we are pleased to be one of the first airlines to take this step forward.
As we have shared previously, we are well positioned to grow 8% to 10% in 2023 before returning to our long-term target growth rate of 4% to 8% per year in 2024 and beyond. We recently expanded our order book with Boeing, bolstering our decades-long relationship with a great partner. In doing so, we also secured visibility to strategic growth for many years theyto come. Having completed most of our mainline single fleet transition in 2022, our growing fleet of new Boeing MAX aircraft is driving us forward to more cost-and fuel-efficient operations. Our fleet renewal remains a key component of our path to net zero along with our broader sustainability efforts and staying true to our values by doing the right thing to protect the beautiful places we serve and connect.
Recognizing and investing in our employees for their dedication and hard work is another key aspect of Alaska Air Group’s success. Last year we completed several labor deals, which was a significant achievement and is critical to support our long-term growth plans in this highly competitive industry. With the stability and clarity of these labor deals, we can fully focus on our future and grow together.
On the commercial side of our business, strategic partnerships and strong alliances are a growing source of strength for Alaska Air Group. Our renewed credit card deal with Bank of America drove significant revenue growth in 2022 and will continue to be critically important as we navigate the recovery ahead.
It has been inspiringgrow in 2023. We are always searching for ways to watch our employees rally behind the company as we faced these challenges. Employees helped our guests connect to our health and safety messaging in creative ways, like our Safety Dance video which featured several talented crew members. They also helped inspire guests to get back to travelling with our Friends and Family promotion. And, incredibly, thousands of employees took voluntary or incentive leaves and early retirements, which were instrumental for preserving cash and reducing the need to furlough as we navigated this crisis. We could not have accomplished all that we did this year without these incredible contributions.
In 2020 we spent time learning about systemic racism, listening to our employees and taking a hard look at the work we must do to advance racial equity at Alaska and Horizon and in our communities. We have recently published our 2025 diversity, equity and inclusion goals which will hold us accountable to our commitments to increase racial diversity, increase our employee engagement scores around inclusion related topics, and create career pathways for at least 175,000 young people by supporting programs that empower and enable opportunity through a lens of racial equity.
Signs of brighter days to come have recently begun to emerge. After slow and choppy recovery in 2020, the vaccine roll out is gaining momentum and we’ve experienced several weeks of encouraging bookings improvement. From a longer-term perspective, we’ve recently announced our plans to streamline our fleet.
Earlier this month we marked the 40-year anniversary of Alaska operating Boeing 737 aircraft and we put our first 737 MAX-9 into service. Under a new deal with Boeing, we will be taking more MAX aircraft to replace outgoing Airbus leases in our fleet. And, in the weeks ahead our guests can look forward to our entry into the oneworld alliance, which will bring fantastic global connectivity and more value to our loyalty program.guests, and we believe the expanded credit card benefits will do just that. Our membership in oneworldand our West Coast International Alliance with American Airlines are also bringing value to our guests by enhancing our global reach. Our partners’ international flights out of our hubs are set to increase, which means our guests have more options than ever, helping us fulfill our mission to keep guests and communities connected.
There are exciting changes on deck1
As we have for our leadership team as well. On March 31, Brad will retire from his role as CEO and Ben will assume the responsibilities. This succession has been severalmany years, in the making and the groundwork is in place for a smooth and seamless transition. Brad will continue as Board Chair.
Crises present unique opportunities to see what we are made of.investing in ways that serve our employees, our guests, our communities, and our shareholders. We believe this approach has enabled Air Group’s previous success and will deliver a strong future for all our stakeholders. Economic uncertainty and external volatility are incredibly proudlikely to remain part of our operating environment for the resultsforeseeable future, but leveraging our core DNA – including disciplined costs, operational excellence, and a remarkable caring culture – gives us great confidence that Alaska and Horizon delivered in such daunting circumstances. Our competitive advantages remain as strong as ever, and we are prepared to seize opportunities that will undoubtedly arise in the recoveryprimed for many more successful years ahead. The Board and our leadership team want to thank
Thank you for your support, of our business, and for your investment in Alaska Air Group.
Benito
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Patricia Bedient Board Chair | Ben Minicucci President and CEO |
CEO Elect, Alaska Air Group
(1) Refer to Appendix A for the reconciliation of adjusted pre-tax margin.
(2) Adjusted net debt to EBITDAR ratio can be reconciled to GAAP financial measures in the 2022 10-K (Item 7, page 42).
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Bradley D. TildenPROXY STATEMENT SUMMARY
Chairman, Alaska Air Group
Matters to be Voted On
Item for Business | Board Recommendation | Effect of Abstention | |
1. Elect | FOR each Director Nominee | None | |
2. Approve (on an advisory basis) the compensation of the Company’s Named Executive Officers | FOR |
| A Vote Against |
3. Approve (on an advisory basis) the frequency of the advisory vote on the compensation of the Company's Named Executive Officers |
| None | |
4. Ratify the appointment of KPMG LLP as the Company’s independent registered public accountants for Fiscal Year | FOR |
| A Vote Against |
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Governance Highlights
As part of Alaska Air Group’s commitment to high ethical standards, our Board follows sound governance practices. Many of these practices are described in more detail in our Corporate Governance Guidelines, which are available on the Company’s website at www.alaskaair.com under About Alaska/Investor Relations.
Topic | Practice |
Independence |
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Executive Sessions |
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Annual Election |
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Majority Voting |
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Director Evaluations |
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Stock Ownership |
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Other Directorships |
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Poison Pill |
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Proxy Access |
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Right to Call Special Meeting |
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Confidential Voting |
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Single Voting Class |
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Director Tenure |
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Topic | Practice |
Cybersecurity Practices | • The Board, through an independent Board committee, oversees the management of cybersecurity, including oversight of appropriate risk mitigation strategies, systems, processes and controls. |
Environmental Social Governance | • The Board, through an independent Board committee, oversees and monitors progress on the Company’s voluntary ESG goals and disclosures, annual reporting, and environmental and climate impacts. |
4
Our Board
The Board has nominated 11 director nominees for election at the Annual Meeting. Each of the director nominees currently serve on the Board and were previously elected by the Company’s shareholders at the 2022 Annual meeting.
On February 13, 2023, Susan J. Li informed the Company that she will not stand for reelection to the Board of Directors at the Annual Meeting, in order to focus on her responsibilities as chief financial officer of Meta. Ms. Li has been on the Board since 2018, and serves on the Audit Committee and the Innovation Committee.
Jessie J. Knight, Jr., who has served on the Board for more than 17 years, and sits on the Safety Committee and the Compensation & Leadership Development Committee, will retire effective with the Annual Meeting in accordance with the Company’s director age limits.
In connection with these departures, the Boards of the Company and its principal subsidiaries Alaska Airlines, Inc. and Horizon Air, Inc. reduced the number of director seats from 13 to 11 effective with the Annual Meeting.
All nominees meet the New York Stock Exchange (NYSE) governance standards for director independence, except for Mr. Tilden and Mr. Minicucci, who areis not independent due to each nominee’shis position as an executive officer.officer of the Company.
Nominee and Principal Occupation
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| Age |
| Director Since |
| Committee Membership |
Patricia M. Bedient Former Executive Vice President and CFO The Weyerhaeuser Company |
| 67 |
| 2004 |
| Lead Independent Director Audit Governance and Nominating (Chair) |
James A. Beer Chief Financial Officer Atlassian Corporation |
| 60 |
| 2017 |
| Innovation (Chair) Safety |
Raymond L. Conner Former Vice Chairman The Boeing Company |
| 65 |
| 2018 |
| Compensation and Leadership Development (Chair effective February 2021) Safety |
Daniel K. Elwell President Elwell & Associates, LLC |
| 61 |
| 2021 |
| Audit Innovation |
Dhiren R. Fonseca Partner Certares LP |
| 56 |
| 2014 |
| Audit Innovation |
Chief People Officer and Executive Vice President of Human Resources Microsoft |
| 55 |
| 2019 |
| Compensation and Leadership Development Governance and Nominating (effective May 2021) |
Jessie J. Knight, Jr. Managing Director Knight Angels LLC |
| 70 |
| 2020 |
| Compensation and Leadership Development Safety (effective May 2021) |
Susan J. Li Vice President, Finance Facebook, Inc. |
| 35 |
| 2018 |
| Audit Innovation |
Benito Minicucci President (and CEO effective March 31, 2021) Alaska Airlines, Inc. |
| 55 |
| 2020 |
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Helvi K. Sandvik President, Kidways LLC and Former President NANA Development Corporation |
| 63 |
| 2013 |
| Safety (Chair) Compensation and Leadership Development (effective May 2021) |
J. Kenneth Thompson President and CEO Pacific Star Energy LLC |
| 69 |
| 1999 |
| Compensation and Leadership Development Governance and Nominating |
Bradley D. Tilden Chairman, President and CEO (Executive Chair effective March 31, 2021) Alaska Air Group, Inc. |
| 60 |
| 2010 |
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Eric K. Yeaman Founder and Managing Partner, Hoku Capital LLC |
| 53 |
| 2012 |
| Audit (Chair) Governance and Nominating |
Nominee and Principal Occupation
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| Age |
| Director Since |
| Committee Membership |
Patricia M. Bedient Former Executive Vice President and CFO The Weyerhaeuser Company |
| 69 |
| 2004 |
| Non-Executive Board Chair |
James A. Beer Former Chief Financial Officer Atlassian Corporation |
| 62 |
| 2017 |
| Innovation (Chair) Safety |
Raymond L. Conner Former Vice Chairman The Boeing Company |
| 67 |
| 2018 |
| Compensation and Leadership Development (Chair) Safety |
Daniel K. Elwell President Elwell & Associates, LLC and Former Deputy and Acting Administrator, Federal Aviation Administration |
| 63 |
| 2021 |
| Audit Innovation |
Dhiren R. Fonseca Advisor Certares LP |
| 58 |
| 2014 |
| Audit Innovation |
Kathleen T. Hogan Chief People Officer and Executive Vice President of Human Resources Microsoft |
| 58 |
| 2019 |
| Governance, Nominating and Corporate Responsibility (Chair) Compensation and Leadership Development |
Adrienne R. Lofton Vice President, Global Brand Marketing |
| 47 |
| 2021 |
| Innovation Safety |
Ben Minicucci President and CEO Alaska Air Group, Inc. and Alaska Airlines, Inc. |
| 57 |
| 2020 |
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Nominee and Principal Occupation
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| Age |
| Director Since |
| Committee Membership |
Helvi K. Sandvik President, Kidways LLC and Former President NANA Development Corporation |
| 65 |
| 2013 |
| Safety (Chair) Compensation and Leadership Development |
J. Kenneth Thompson President and CEO Pacific Star Energy LLC |
| 71 |
| 1999 |
| Compensation and Leadership Development Governance, Nominating and Corporate Responsibility |
Eric K. Yeaman Founder and Managing Partner, Hoku Capital LLC |
| 55 |
| 2012 |
| Audit (Chair) Governance, Nominating and Corporate Responsibility |
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Board Diversity and Skills Matrix
The Board recognizes that diversity brings unique perspectives, leads to more effective risk management and better alignment with guests, employees, and the communities in which the Company serves. The Board’s nomination process, detailed in the Director Nomination Policy section below, has routinely resultedaided in the identification of candidates with diverse qualifications, backgrounds, geography, race, ethnicity, gender and age. Currently, 60%66% of board leadership positions are held by female and/or racially/ethnically diverse directors, includingdirectors. Ms. Bedient became the Lead Independent Director andCompany’s first female Board committee chairs.Chair in 2022.
Independent Director Gender Diversity
| Name | Bedient | Beer | Conner | Elwell | Fonseca | Hogan | Lofton | Sandvik | Thompson | Yeaman |
| Director Since | 2004 | 2017 | 2018 | 2021 | 2014 | 2019 | 2021 | 2013 | 1999 | 2012 |
| Age | 69 | 62 | 67 | 63 | 58 | 58 | 47 | 65 | 71 | 55 |
| Skills Matrix | ||||||||||
| Airline/Transportation/Safety |
| X | X | X | O |
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| O | O |
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| Branding/Marketing |
| O | O |
| X |
| X | O | O | O |
| Business Development/M&A | X | X | X | O | X | O | O | X | X | X |
| Climate/Carbon | O |
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| X |
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| Cybersecurity | O | X | O | O | X |
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| Financial/Accounting | X | X | O | O | X |
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| Government/Public Affairs/Regulatory |
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| X | X | O |
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| HR/Organizational Strategy/ DE&I | O | O | X |
| O | X | O | X | X | O |
| Investor Relations | X | X | X |
| X |
| O | O | X | X |
| Public Company Governance | X | X | X | O | X | X |
| X | X | X |
| Technology | O | X | O | X | X | X | O |
| X | O |
| CEO, Active or Retired |
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| Y |
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| Diversity | ||||||||||
| Identifies as a Female | Y |
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| Y | Y | Y |
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| Identifies as a Male |
| Y | Y | Y | Y |
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| Asian |
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| Black or African-American |
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| Y |
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| Native American or Alaskan Native |
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| Y |
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| Native Hawaiian or other Pacific Islander |
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| Y |
| White | Y | Y | Y | Y |
| Y |
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| Y | Y |
| Veteran |
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Independent Director Racial/Ethnic Diversity
Executive Compensation Practices
Our executive compensation program is aligned with our business strategy and is designed to attract and retain top talent, align with our business strategy, and reward the achievement of key business goals. The following practices help ensure alignment of interests between stockholdersshareholders and executives and are considered good governance by our Compensation and Leadership Development Committee (the Committee) and historically by the majority of our stockholders.shareholders.
Topic | Practice |
Pay for Performance |
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“Say on Pay” |
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Stock Ownership Requirements |
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Change in Control Agreements | • We have double-trigger |
Clawback Policy |
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Independent Compensation Consultant |
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Hedging of Company Stock |
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Pledging of Company Stock |
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Severance Tax Gross-Ups |
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Repricing of Stock Options |
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Topic | Practice |
Environmental, Social and Governance Metrics | • Carbon emission reductions and advancement of racial equity goals are included in executive short-term and long-term incentive pay plans, respectively. |
Executive Officer Severance Policy | • The Company would be required to seek shareholder approval of severance arrangements with an executive officer if the value would exceed 2.99 times the individual's cash compensation plus the value of any accelerated equity awards, except for change in control, death and disability scenarios. |
CORPORATE GOVERNANCE |
The Company’s board leadership has generally includesincluded a combined chair and CEOchair-CEO role withcomplemented by a strong independent lead director role; however, for 2021role. However, the Board has approved the temporary separation of theseparates these roles of chair and CEOfrom time to time, at its discretion, as it did in connection with the recentMr. Minicucci’s transition to a new CEO.CEO in 2021 along with Ms. Bedient's election as non-executive Board Chair in 2022.
In choosing generallydeciding whether to combineseparate the CEO and Board Chair roles, the Board considers, among other things, the experience and capacity of chair andthe sitting CEO, the Board takes into considerationrigor of independent director oversight of financial, operational, safety and governance issues, the highly technical naturelevel of the airline businesstransparency between management and the importance of deep, industry-specific knowledge along with a thorough understanding of the Company’s business environment. Combining the roles also provides a clear leadership structure for the management team. Because the CEO has a deep understanding of the complexities of the airline business, the regulatory environmentBoard, and the Company’s strategy – allexistence of which are critically important to the Company’s performance – theother checks and balances that help ensure independent thinking and decision making by directors.
The non-executive Board believes that he or she generally is best suited to serve as chair and to preside over the majority of the Board’s discussions in a way that focuses those discussions on key matters of strategic importance for the airline.
By creating an independent lead director role with specific authority, the Board is able to ensure objective evaluation of management decisions, company strategy and performance and to provide independent leadership for director and management succession planning and other governance issues.
The lead independent director’sChair responsibilities include:
presiding at all meetings where the board chair is not present or where the board chair could be perceived as having a conflict of interest, including but not limited to periodic meetings of independent directors;
approving the board meeting agendas and meeting schedules to ensure sufficient time for discussion;
leading the independent directors’ annual evaluation of the CEO;
conductingconducts interviews of independent directors annually, including a discussion of each individual director’s self-assessment of his or her contribution prior to nomination for election at the annual meeting;
discussingalong with the chair of the Governance, Nominating and Corporate Responsibility Committee, discusses any proposed changes to committee assignments with each affected director annually in advance of the Governance, Nominating and NominatingCorporate Responsibility Committee making committee membership recommendations to the Board;
being available for consultation and direct communication on appropriate matters if requested by a major stockholder;shareholder; and
performing such other duties as may be described in the Company’s Corporate Governance Guidelines or by the Board, including serving as liaison between the chair and independent directors and calling meetings of the independent directors or the full Board, if appropriate.
Notwithstanding the Board’s preference for combining the roles of chair and CEO, the Board may separate the CEO and chair roles from time to time, at its discretion, as it has recently done in connection with Mr. Minicucci’s transition to CEO and consistent with its previous temporary separation of these roles in connection with the transition of Mr. Tilden to CEO in 2012-2013. In deciding whether to separate the roles, the Board considers, among other things, the experience and capacity of the sitting CEO, the rigor of independent director oversight of financial, operational and safety regulatory issues, the current climate of openness between management and the Board, and the existence of other checks and balances that help ensure independent thinking and decision making by directors.
Executive Sessionsand Lead Independent Director
The Board holds executive sessions of independent directors quarterly, as provided in accordance with the Company’s Corporate Governance Guidelines. The lead independent directornon-executive Board Chair presides over these executive sessions. Each Committee also holds an executive session of independent directors quarterly (presided over in each case by the respective committee chair) and includes key management personnel, as appropriate, on an individual basis in order to ensure full transparencyadvance risk oversight and risk oversight.transparency.
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Risk Oversight
Alaska Air Group has adopted an enterprise-wide risk analysis and oversight program. This program is designed to:
identify the various risks faced by the organization,
assign responsibility for managing those risks to individual management executives who report directly to the applicable committee,committee; and
align those management assignments with appropriate board-level oversight.
The structure and reporting relationships and key areas of responsibility are shown below:
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As shown above, responsibility for identified risks has been assigned to appropriate executives, and assignments have been aligned for appropriate board oversight. Responsibility for managing these risks includes strategies related to both mitigation (acceptance and management) and transfer (insurance).
The risk matrix is approved annually by the Audit Committee and regularly reviewed by the Board. The Audit Committee also receives quarterly updates regarding the program and an annual in-person review of the program’s status by the audit and quality assurance executive. Under the program, the Audit Committee also works with the audit and quality assurance executive and members of the management executive committee to annually identify the most pressing risk
issues for the next year. This subset of the risk matrix is then used as a framework for periodic reports by the designated management executive to the appropriate board entity for heightened oversight. Furthermore, these areas of emphasis regarding risk are specifically reviewed and discussed with executive management annually and are incorporated into the development of the Company’s strategic objectives for the coming year.
The Company believes that its leadership structure, discussed in detail in the Board Leadership section in this Proxy Statement, supports the risk oversight function of the Board for the same reasons that it believes the leadership structure is most effective for the Company, namely that, while facilitating open discussion and communication fromwith independent members of the Board, it ensures that strategic discussions are led by an individual with a deep understanding of the highly technical and complex nature of the airline business.
For specific risk oversight functions, refer to Board Committee and Risk Oversight Functions section below.
Director Orientation and Continuing Education
New directors participate in one-on-one introductory meetings with executive leaders and are given presentations on the Company’s strategic plans, financial statements, safety culture and other key issues. Directors are encouraged to enroll in continuing education programs on corporate governance and other critical issues associated with their service on the Company’s board.
Code of Conduct and Ethics
The Company has adopted the Code of Conduct and Ethics, which applies to all company employees, including its CEO, CFO, principal accounting officerofficers and persons performing similar functions, and itsthe Board of Directors. The Code of Conduct and Ethics may be found on the Company’s website at www.alaskaair.com under About Alaska/Investor Relations. Information on the Company’s website, however, does not form a part of this Proxy Statement. The Company discloses on the Company’sits website any amendments (other than technical, administrative or non-substantive amendments) to, and any waivers from, a provision of the Code of Conduct and Ethics forgranted to directors or executive officers to the extent required by applicable NYSE listing standards and SEC rules.
Prohibition of Speculative Transactions in Company Securities
The Company’s insider trading policy prohibits the Company’s directors and executive officers, including the Named Executive Officers, as well as employees in the positions of managing director or above and certain other employees, from engaging in certain speculative transactions in the Company’s securities,
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including short-term trading, short sales, publicly traded options (such as puts, calls or other derivative securities), margin accounts, pledges of Company securities and certain forms of hedging or monetization transactions such as zero-cost collars and forward sale contracts.
Approach to Environmental, Social and Governance Matters (ESG)
The Company’s purpose is “creating an airline people love” and its leaders believe that the best path to creating long-term value is to deliver for the Company’s four primary stakeholders -- employees, customers, shareholders, and communities. The Company believes its success depends on the ability to provide safe and reliable air transportation, develop relationships with guestsfoster guest loyalty by providing exceptional customer service and low fares, and maintain a low-cost structure to compete effectively.effectively, and attract and retain qualified, engaged employees. Leaders strive to achieve these objectives as a socially responsible company that values not only performance but also people, communities, and the environment.
Air Group’s roots are in connecting rural Alaskan villages with essential services like food, medical supplies, and mail delivery – and those values are with us today. We recognize there is much work needed to address impactour impacts on the globe,environment, to expand opportunity equitably, and to ensure that all people are and truly feel safe, respected, and equal.
The Company’s values are to Own Safety, Do the Right Thing, Be Kind-Hearted, Deliver Performance, and Be Remarkable. These guide our daily business, operations, and governance, and stewardship of our impact on the environment, people, and communities. ESG efforts are balanced acrossWe focus on the areas of our greatest impact and the issues most important to our four primary stakeholder groups noted above. Amongst those, we serve,our highest priorities and those that will require focused on:effort are: (1) reducing greenhouse gas emissions, particularly carbon emissionsdioxide and (2) advancing racial equity and opportunity inside the Company and across communities.
The four pillars that are woven throughout
More broadly, we consider this work are the following:
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The Company was recently recognized among Barron’s 100 Most Sustainable Companies and brings an orientation of continuous learning and improvement to this work as in everything we do.make flying matter.
ESG Governance and Oversight
The Governance, Nominating and NominatingCorporate Responsibility Committee of the Board is responsible for overseeingoversees the Company’s practices, reporting, and reporting with respectprogress to voluntaryits ESG goals, and disclosure, annual reporting,including social and environmental and climate impacts. The Governance and Nominating Committee includes members with deep experience in energy and environmental impactmatters drawn from experience in multiple industries, as well asplus members with leadership experience in human capital, governance, safety, and risk.
In addition to the annual reporting cycle, the Governance, Nominating and NominatingCorporate Responsibility Committee reviews a quarterly dashboard on progress to goals, and management commentary on milestones and trends. The Board has directed that sustainability and ESG be leading parts of the Company’s strategy and has regular discussions about this work including topics specific to climate impact and diversity, equity, and inclusion.
The Safety Committee receives regular updates on environmental risk, and the Compensation and Leadership Development Committee is responsible for oversight of human capital matters, including advancing diversity, equity, and inclusion such as through recruitment, hiring, retention, development, and culture building.
At a management level, a member of our Executive Committeeexecutive committee has formal responsibility for driving progress and disclosure in Sustainabilitysustainability and ESG. And because this work is inherently cross-functional, the Company has also formalized governance and oversight of ESG at the management level. An ESG Executive Steering Committee meets monthlyquarterly for oversight of performance and work toward the goals
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and is responsible for ensuring progress. Additional Steering Committees dedicated to Reducing Carbon Emissionsprogress and Advancing Racial Equity bring explicit focus in those two areas. Finally, a group dedicated tosubject matter experts are responsible for driving and reporting progress for each of our ESG Goals and Disclosure ensures appropriate stewardship and transparency in data to the breadth of ESG matters.goals. These groups are staffed byengage senior executives across all areas of accountability for delivering on ESG – including operations, finance, human resources, legal, real estate, commercial divisions, government affairs and philanthropy.
ESG Disclosure
Alaska Air Group voluntarily reports progress annually on ESG goals. The 20192021 report, including data per the Sustainability Accounting Standards Board (SASB) framework for aviation and an appendix addressing the Task Force for Climate Related Financial Disclosure (TCFD) framework, can be found by visiting http://www.flysustainably.com/wp-content/uploads/2020/07/2019-Alaska-Air-LIFT-Report.pdf. www.alaskaair.com/esg.
The Company’s 20202022 report, to be published in the second quarter 2021,2023, will report further progress against our progress on our 2020 goals and share the new goals through 2025.2025 goals.
Our 2025 goals and commitments arewere established with input from stakeholders across the Company and externally, and will covercovers the areas of carbon, waste, water, racial equity, community involvement, labor practices, safety, crisis management, privacy and data security, and responsible political engagement. Additionally, the Company will keep financial management principles visible in this disclosure. The Company will present quarterly progress reports on these goalssubmits annual disclosure to CDP and commitments to the Board as described above, will report annually to the public, and will publicly report in accordance with leading reporting frameworks such as SASB, the Carbon Disclosure Project and Task Force on Climate Related Financial Disclosure.Dow Jones Sustainability Index.
Climate Strategy
Climate change is a threatpresents significant risks to communities across the futureglobe, and is already impacting communities including those in which we operate.extreme weather and temperature events impact our operations. The Company believes deeply in the transformational benefits of air travel to connect people with one another, help people understand one another, and enable communities to grow, thrive, create jobs and economic benefits. Air Group is committed to reducing our climate impact, with a principal focus on carbonreducing greenhouse gas emissions alongside broader focus on other climate impacts, waste, and water.ecosystem impacts.
The Company ishas committed to improve in three primary ways:short and long-term goals for reducing our climate impact. Our long-term goal is to achieve net zero carbon emissions by 2040, following a five-part strategy: (1) increasing the efficiency of our operations to avoid fuel use where we can, (2) renewing our fleet with the more fuel-efficient Boeing 737MAX aircraft, (3) increasing use of sustainable aviation fuels, and (3) transforming the(4) enabling innovative technology including future zero emissions propulsion alternatives, and infrastructure of aviation long-term. When we are unable to reduce our impact enough through increased efficiency and(5) using sustainable fuels, we consider high-quality carbon offsets and facilitate customers’ purchaseremovals where necessary to meet our targets due to insufficiently available technology to fully decarbonize. While our preference is for in-sector approaches, we recognize that there is not today enough technology or sustainable aviation fuel available to fully decarbonize aviation. The pace of such offsets.innovation and expansion of new technologies will be critical for our industry’s long-term path to net zero.
The Company began usingcurrently offtakes sustainable aviation fuel at San Francisco International Airport, has several agreements for future offtake, and announced a partnershipis working with Microsoftother producers such as SkyNRG Americas to use sustainable aviation fuel at Los Angeles International Airportenable future West Coast production of SAF. Alongside oneworld alliance partners, we have committed to
create “carbon-neutral flights” for Microsoft employees traveling from Seattle to San Francisco, San Jose an objective of utilizing 10% SAF by 2030 as long as sufficient product is available, and Los Angeles now and into the future.
The Company also announced a major investment in our fleet, transitioning many of our aircraft to the 737-9 MAX which is 22% more efficient on a seat-by-seat basis than the aircraft we will replace. Andcontinue to advocate for the first timepublic policy to enable growth in commercially available supply.
Beginning in 2021, we included a carbon emissions target isas part of the all-employeeour company’s goals-based incentive pay plan for all employees. Performance surpassed targets in both 2021 and 2022. This metric remains in our performance-based pay program underscoringto underscore a company-wide commitment to efficiency and sustainability.
Diversity, Equity, and Inclusion
The Company values the importance of diversity, equity and inclusion in the workplace and believes that our airlines should be places where everyone feels they belong – employees and guests alike. We
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believe every person should be treated with respect regardless of race, ethnicity, capability, age, gender, gender expression, or sexual orientation and that guests should always feel welcome on board our aircraft. Employees deserve to feel safe and have a sense of belonging when they come to work. This means racismRacism and discrimination have no place in our workplace or onboard our aircraft.
The Company believes
Our Board and leadership team believe that aviation can enable opportunity;enables opportunity and wehas an important role in advancing diversity and equity. We are committed to advancing diversity, equity and inclusion in all forms, with a current focus on racial equity. Building on feedback and input from employees, we haveforms. We’ve set specific2025 commitments and goals to advance racial equity through diverse leadership and employee representation, an inclusive culture, and public leadership. Ourleadership with a focus is on creating opportunities for employment, engagement and advancement for diverse employees throughout the organization. We willare driving initiatives at all levels of the company to achieve this bythese goals, including supporting education pipelines that create career pathways for diverse talent, and by focusing on attracting and retaining diverse talent through leadership development and sponsorship programs. To underscore the accountability of leaders to make progress in these areas, beginning in 2021, a DEI metric was included in the performance-based segment of executives’ long-term incentive equity compensation.
In 2022, we’ve made progress against our goals and continue to listen, learn and adjust our approach and actions as needed to ensure we deliver on those commitments. This year we also signed the Airlines for America’s commitment to improve accessibility and services for passengers with disabilities.
Community Involvement
The Company is involved in the communities where weour employees and guests live and fly through corporate philanthropy, community engagement, employee volunteerism, and grants from the Alaska Airlines Foundation. A core area of focus, and the mission of the Alaska Airlines Foundation, is to inspire, equip, and enable young people to imagine and reach career opportunities, in aviation and beyond. In the last several years, this work is done through the lens of advancing racial equity.
The Company’s corporate philanthropy includes using our core asset of flight to transport people for school, to needed medical care, to respond to crisis and urgent needs, or to make a wish come true. This makes flying matter. Additionally, through Alaska’s LIFTCare Miles program, guests can contribute their miles to organizations that are aligned with their passions.
2020 was a unique year for
In 2022, we resumed in-person volunteer events, including our community involvement, but the Company turnedsignature Aviation Day in Seattle and Portland to virtual engagement to reach kids with airport tours and “ask a pilot”, wrote letters to homebound elders, and transported medical providers and critical supplies. The Company also launched the Million Meals Challenge to combat the growing challenge of food insecurity as a result of the COVID-19 pandemic, contributing fresh and packaged food directly to food banksget young people excited about opportunities across the countryindustry, and galvanizing the giving powerour focused Week of guests and employees to amplify the impact.Care featuring coordinated employee volunteer events across our major hub communities.
Political Contributions and Engagement
Public policy affects our ability to achieve Company goals, meet customer needs and provide stockholdershareholder value. As such, the Company believes it is important to engage in public policymakingpolicy making processes at the federal, state and local levels, which includes making political contributions where appropriate and permitted by law.
The Company is committed to adhering to the highest standards of ethics in engaging in activities that seek to advocate legislative positions that support our business and operations. To ensure contributions are made in a manner consistent with the Company’s goals and stockholder’sshareholder’s interest, the Company has adopted a Policy on Political Contributions and Engagement.
In response to the lobbying disclosure proposal that received support from 52% of votes cast at the 2020 meeting, the Company enhanced the The Policy on Political Contributions and Engagement. Details of the engagement, research, policy updates and program oversight are included below:
The approach to increase transparency around political and lobbying contributions was informed by the proponent of the proposal, Proposal 4 around Political Contributions submitted in the 2020 proxy, several institutional shareholders, our proxy solicitor, and peer group companies with high marks on their political disclosures. We believe our approach is clear and transparent while balancing shareholder expectations, administrative complexity, and business demands.
Changes to the existing Policy on Political Contributions and Engagement make the content more user-friendly as it is now available as a subsite on alaskaair.comcan be found at:
https://investor.alaskaair.com/policy-political-contributions
Policy Overview
In the revised Policy on Political Contributions and Engagement, the Company describes itsour interests in advocating for policies in support of its business and industry, including through, among other things,
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participating in trade associations and making political contributions where appropriate and permitted by the law.
The policy includes detailed procedures for making political contributions and expenditures, directly and indirectly, including with respect to candidates for public office, political parties, referenda and ballot initiatives. Among other things,The policy also covers management of the Company’s policy sets forth the following:Alaska Air Group Political Action Committee (AAG PAC).
The Company’s policy describes that the Company complies with all federal, state and local laws and requirements associated with political engagement, including the Company’s lobbying activities.
The policy indicates that, consistent with federal campaign finance laws, the Company does not make corporate political contributions to federal candidates, political parties or political committees, but notes that some state and local jurisdictions permit the Company to contribute directly to state and local candidates, political parties, referenda and ballot initiatives and that political contributions may be made indirectly by the AAG Political Action Committee (AAG PAC) as permitted by applicable state and local laws and thatinitiatives.
With regard to federal contributions, may also be made indirectlythe Company has established a separate segregated fund through the AAG PAC.
PAC registered with the FEC. The policy provides detailed information regarding the AAG PAC describing that it is nonpartisannon-partisan and organized on a strictly voluntary basis with participation only by eligible employees. The policy further describes how the AAG PAC is overseen, noting that all checks drawn from the AAG PAC must be approved by two AAG PAC Board members.
The policy describes that the Company complies with all federal, state and local laws and requirements associated with political engagement, including the Company’s lobbying activities.
Dues and Contributions Disclosures
Through active links included in the Company’s Policy on Political Contributions and Engagement posted on the Company’s website (at the link referenced above), the Company discloses its direct and indirect political contributions, contributions made through lobbying activities.the AAG PAC, as well as participation in trade associations . The Company updates these disclosures semi-annually (generally, August and February of each year). Specifically, the Company discloses:
All contributions by the Company to state and local candidates, political committees, and political organizations and in regard toregarding ballot measures. This list identifies the recipient (and his/her title, if applicable), the jurisdiction the recipient represents, and the amount paid.
All contributions made by the AAG PAC. The list identifies the candidate, the state and district represented and the candidate’s office, the committee or political action committee to which the contribution was directed, the party affiliation where applicable, and the amount paid.
Payments to trade associations for which the Company paid dues or payments of more than $25,000 and who spend 10 percent or more of their revenues lobbying. The amount reported by the Company is the non-deductible portion of the payment.
The Company also provides through itsour website (at the link referenced above) links to the Company’s publicly available lobbying disclosures required to be submitted quarterly to the Secretary of the U.S. Senate and the Clerk of the U.S. House under the Lobbying Disclosure Act.Acts.
As detailed above, the Company’s Policy on Political Contributions and Engagement provides detailed information about the decision-making process for itsour political contribution and lobbying activity and the person(s) responsible. For example, as stated in the Company’s policy:
Any political contribution made by the Company must be approved by the Company’s General Counsel, Senior Vice President of Public Affairs and Sustainability, or atheir designee.
The policy describes the Company’s interest in participating in certain trade associations and provides that the Company’s Senior Vice President of Public Affairs and Sustainability and Government Affairs Department is responsible for oversight of the Company’s trade association participation.
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The budget for corporate political contributions to the AAG PAC is determined annually by the Senior Vice President of Public Affairs and Sustainability, in consultation, as appropriate, with the Company’s Chief Executive Officer and legal counsel to ensure compliance with corporate policy and applicable federal, state and local laws.
The AAG PAC is overseen by a five-person board of directors, and its members include the Senior Vice President of Public Affairs and Sustainability and the Company’s Chief Executive Officer. The Company’s Senior Vice President of Public Affairs and Sustainability and its Government Affairs Department is responsible for oversight of the Company’s participation in trade associations, and the Senior Vice President of Public Affairs and Sustainability is responsible for annually reviewing the Company’s participation in these associations and other public advocacy efforts.
The Company’s General Counsel and Senior Vice President of Public Affairs and Sustainability are responsible for oversight and implementation of the Company’s Policy on Political Contributions and Engagement and for establishing effective reporting and compliance procedures with respect to the Company’s political activities.
The Governance, Nominating and NominatingCorporate Responsibility Committee of the Board of Directors remain responsible for monitoringmonitors compliance, as well as any changes or updates to the process or policy.
The Board approved these changes on November 6, 2020 and the new Policy on Political Contributions and Engagement was published on November 13, 2020.
Shareholder Communications
Any stockholdershareholder or interested party who wishes to communicate with the Board or any specific director, including the Lead Independent DirectorBoard Chair (who presides over executive sessions of the independent directors) or with the independent directors as a group, may write to:
Board of Directors
Alaska Air Group, Inc.
PO Box 68947
Seattle, WA 98168
Depending on the subject matter, management will:
forward the communication to the director or directors to whom it is addressed or the applicable director with oversight of the topic (for example, if the communication received deals with questions, concerns or complaints regarding accounting, internal accounting controls and auditing matters, it will be forwarded by management to the chair of the Audit Committee for review); or
attempt to handle the inquiry directly (for example, where it is a request for information about the Company’s operations or it is a stock-related matter that does not appear to require direct attention by the Board or any individual director); or
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At each meeting of the Governance, Nominating and NominatingCorporate Responsibility Committee, the Corporate Secretary or Assistant Corporate Secretary presents a summary of all communications received since the last meeting of the Governance, Nominating and NominatingCorporate Responsibility Committee and will make those communications available to any director on request.
The Board has also implemented a protocol for stockholder-directorshareholder-director engagement that provides long-term holders of a significant percentage of the Company’s stock a process for communicating directly with the Board in person or by phone. Investors may request information regarding engagement with stockholdersshareholders by contacting the Assistant Corporate Secretary at (206) 392-5380 or by email to allie.wittenberger@alaskaair.com.allie.wittenberger@alaskaair.com.
Each year, the Company reaches out to stockholdersshareholders that have requested such engagement or that have demonstrated a long-term, significant investment in the Company. In the past year, the Company sought
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feedback from stockholdersshareholders representing approximately 47%50% of the Company’s common stock on relevant matters related to corporate governance and stockholder value and spoke with every stockholder who expressed an interest in engaging. In addition, the Chair, Lead Independent Director and Chair of the Governance and Nominating Committee met by telephone with three of the Company’s largest and longest-term stockholders, the only stockholders that had requested engagement pursuant to the protocol above, to discuss relevant matters directly.shareholder value. The feedback from those discussions provided a framework for certain disclosures in this Proxy Statement.
Board Responsiveness to 2022 Nonbinding Shareholder Proposal
At the 2022 annual meeting, a shareholder proposed that the Company must seek shareholder approval of any senior manager’s new or renewed pay package that provides for severance or termination payments (including the value of cash, accelerated equity, perquisites, and a range of other compensation afforded under any contract or plan in which the executive participates except for life insurance, pension, and vested deferred compensation plans) with an estimated value exceeding 2.99 times the sum of the executive’s base salary plus target short-term bonus. The proposal passed with just over 54% of votes cast at the 2022 annual meeting.
We subsequently requested meetings with our 25 largest institutional shareholders, which in aggregate, own approximately 50% of our common stock, seeking their views on the proposal and feedback on implementation approaches. The non-executive Board Chair, the Chair of the Compensation and Leadership Development Committee and the Chair of the Governance, Nominating and Corporate Responsibility Committee met with every shareholder who expressed an interest in engaging, including our 10 of our largest shareholders. Below is a summary of our engagement, the feedback we received, and the Board’s efforts to implement the proposal.
For context, the Company is not a party to any contract that promises severance or termination payments to executives outside the context of a change in control. Our change in control agreements provide for cash severance, equity acceleration, and other benefits being delivered to an executive if he or she is involuntarily terminated without cause or resigns for good reason within a defined period following a change in control.
For further context, the Company has certain arrangements that may provide benefits to executives on a termination outside a change in control. For instance, our equity awards generally require continued service to vest, but vesting may accelerate if the executive retires after meeting tenure and age requirements or leaves employment due to death or disability. We also have executive severance guidelines that, in the discretion of the Compensation & Leadership Development Committee, may result in cash compensation and travel benefits being extended to an executive who is separated from employment without cause. See the Potential Payments Upon Change in Control and Termination section for additional information about these scenarios.
During our engagement with shareholders, we pointed out several factors (described below) that, in the Board’s view, make the shareholder proposal overly restrictive on the Committee’s discretion, unnecessary in light of our historically conservative severance practices, and put the Company at a competitive disadvantage.
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The shareholders we spoke with were generally supportive of capping cash severance pay to executive officers; however, they expressed mixed views on whether the value of any accelerated equity should be counted against the cap. Around half of the shareholders felt that accelerated equity should be counted against the cap (and supporting calculating such value in accordance with Section 280G of the U.S. Internal Revenue Code). The other half expressed the view that counting accelerated equity value against the cap was overly punitive and believed that only cash compensation should be counted against the cap, so long as equity awards continued to vest in accordance with existing equity award agreements. The majority of shareholders we spoke with were comfortable, and in fact expected, severance compensation in a change in control event to be governed by separate dual-trigger change in control agreements with executives, rather than under the policy advanced by the proposing shareholder.
Notably, none of these major shareholders expressed any concerns related to the Company’s existing or historical pay practices or our current change in control agreements.
Implementation Actions based on Shareholder Engagement
Based on feedback from the shareholders owning a majority of our shares and in response to the proposal, the Compensation and Leadership Development Committee enacted a policy that requires the Company to obtain shareholder ratification of any new or renewed severance arrangement (aside from one arising from our dual-trigger change in control agreement terms, death or disability) with an executive officer if the value of cash payments, perquisites and any equity award acceleration (with the value of accelerated equity calculated in accordance with Section 280G of the U.S. Internal Revenue Code as this method provides an existing, objective framework for determining the value of acceleration of equity awards), exceeds 2.99 times the sum of the executive officer’s base salary plus the average value of earned short-term incentive pay plan bonuses measured over the prior three years. Consistent with the shareholder proposal, our policy excludes life insurance, pension, and vested deferred compensation plans from the severance package value counted against the cap.
Virtual Meeting Philosophy
The Company has held its annual meeting of stockholdersconducted our Annual Meeting as a virtual meeting via the Internet since 2016. The Company also offers stockholdersshareholders the option to ask questions via the live via telephone.chat feature. The Board believes that holding the annual meeting of stockholdersAnnual Meeting in a virtual format provides the opportunity for participation by a broader group of stockholders, while reducing the costs associatedshareholders with planning, holdingless expense and arranging logistics forfewer logistical issues than an in-person meeting proceedings.meeting. This balanceapproach also allows the meetings to remain focused on matters directly relevant to the interests of stockholdersshareholders in a way that recognizes the value to stockholdersshareholders of an efficient use of Company resources.
The Board intends that the virtual meeting format provide stockholdersshareholders a level of transparency as close as possible to the traditional in-person meeting format and takes the following steps to ensure such an experience:
providing stockholdersshareholders with the ability to submit appropriate questions in advance of the meeting to ensure thoughtful responses from management and the Board;
providing stockholdersshareholders with the ability to submit appropriate questions real-time either via the meeting website, limiting questions to one per stockholdershareholder unless time otherwise permits;
answering as many questions submitted in accordance with the meeting rules of conduct as possible in the time allotted for the meeting without discrimination;
publishing all questions submitted in accordance with the meeting rules of conduct with answers following the meeting, including those not addressed directly during the meeting; and
offering separate engagement opportunities with stockholdersshareholders on appropriate matters of governance or other relevant topics as outlined under the StockholderShareholder Communications section in this Proxy Statement.
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Proposal 1: Election of Directors to One-Year Terms
The Company’s Bylaws provide that directors shall serve a one-year term. Directors are elected to hold office until their successors are elected and qualified, or until resignation or removal in the manner provided in the Company’s Bylaws. ThirteenEleven directors are nomineeshave been nominated for election this year and each has consented to serve a one-year term ending in 2022.May 2024. There are no family relationships among the directors and our executive officers.
Patricia M. Bedient, | Qualifications: | |
Former Executive Vice President and CFO, The Weyerhaeuser Company Director of Alaska Air Group since 2004
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Public • Business Development andMergers and Acquisitions Experience Professional Highlights: Ms. Bedient was executive vice president Current Public Company Board Service: • Suncor Energy, Inc. • Park Hotels and Resorts Current Non-Public Company Board Service: • Alaska Airlines and Horizon Air (subsidiaries of Alaska Air Group) •
Oregon State University Board of Trustees • University of Washington Foster School of Business Advisory Board Education:
• BS, Oregon State University | |
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James A. Beer, 62 | Qualifications: | |
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Former CFO, Atlassian Corporation Director of Alaska Air Group since 2017 Innovation Committee (Chair) Safety Committee | • Airline/Transportation/Safety Expertise • Business Development andMergers and Acquisitions Experience •
Cybersecurity and Technology Expertise • Financial/Accounting and Investor Relations Expertise • Public Company Governance Experience Professional Highlights: Mr. Beer Current Public Company Board Service: •
DocuSign Inc. Current Non-Public Company Board Service: • Alaska Airlines and Horizon Air (subsidiaries of Alaska Air Group) Education:
• BS, Aeronautical Engineering, Imperial College, London University • MBA, Harvard Business School | |
Raymond L. Conner, 67 | Qualifications: | |
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Former Vice Chairman, The Boeing Company Director of Alaska Air Group since 2018 Compensation and Leadership Development Committee (Chair) Safety Committee | • Airline/Transportation/Safety Expertise • Business Development andMergers and Acquisitions Experience • Government/Public Affairs/Regulatory Expertise • HR/Org. Strategy/DE&I Experience • Investor Relations Expertise • Public Company Governance Experience • Public Company CEO Experience
Professional Highlights: Mr. Conner
Current Non-Public Company Board Service: • Alaska Airlines and Horizon Air (subsidiaries of Alaska Air Group) • Board of Trustees Central Washington University • Pursuit Aerospace Education:
• BS, Central Washington University • MBA, University of Puget Sound | |
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Daniel K. Elwell, 63 | Qualifications: | |
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President, Elwell & Associates, LLC Former Deputy and Acting Administrator, Federal Aviation Administration Director of Alaska Air Group since 2021 Audit Committee Innovation Committee | • Airline/Transportation/Safety Expertise • Climate/Carbon Expertise • Government/Public Affairs/Regulatory Expertise • Technology Expertise
Professional Highlights: Mr. Elwell is President of Elwell & Associates, LLC. He served as Deputy and Acting Administrator of the Federal Aviation Administration (FAA) from June 2017 to November 2020, where he was responsible for the safety and efficiency of the largest aerospace system in the world. He also had oversight of the FAA’s multibillion-dollar Next Gen air traffic control modernization program to accelerate the shift from ground-based radar to state-of-the-art satellite technology. Mr. Elwell also served as Senior Vice President for Safety, Security and Operations at Airlines for America (A4A) from 2013-2015 and was Vice President of the Aerospace Industries Association (AIA) from 2008 to 2013. He is also a former military and commercial pilot. In March 2021, Mr. Elwell was appointed to the Dedrone (airspace security) and to the Asylon (drone security) advisory boards. In addition, he serves on the board of PARSEC Acquisition (a space, transportation, and advanced space special 3 purposes acquisition company). Current Public Company Board Service: • PARSEC Acquisition Current Non-Public Company Board Service: • Alaska Airlines and Horizon Air (subsidiaries of Alaska Air Group) • Joby Aviation Advisory Board, since March 2021 • Dedrone Advisory Board • Asylon Advisory Board • AFCO/AVPorts • Aireon Advisory Board • SAAB, USA SSA Board Education:
• BS, U.S. Air Force Academy |
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Qualifications: | ||
Advisor, Certares LP Director of Alaska Air Group since 2014 Audit Committee Innovation Committee | • Brand/Marketing Expertise • Business Development andMergers and Acquisitions Experience • Cybersecurity and Technology Expertise • Government/Public Affairs/Regulatory Expertise • Financial/Accounting and Investor Relations Expertise • Public Company Governance Experience • CEO Experience
Professional Highlights:
Current Public Company Board Service: • Rackspace Technology, Inc. • Osiris Acquisition Corp. Current Non-Public Company Board Service: • Alaska Airlines and Horizon Air (subsidiaries of Alaska Air Group) | |
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Kathleen T. Hogan, 57 | Qualifications: | |
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Chief People Officer and Executive Vice President of Human Resources, Microsoft Director of Alaska Air Group since August 2019 Governance, Nominating and Corporate Responsibility Committee (Chair) Compensation and Leadership Development Committee
| • HR/Org. Strategy/DE&I Experience • Public Company Governance Experience • Technology Experience Professional Highlights: Ms. Hogan Current Non-Public Company Board Service: • Alaska Airlines and Horizon Air (subsidiaries of Alaska Air Group) • National Center for Women & Information Technology Education:
• BS, Harvard University • MBA, Stanford University Graduate School of Business |
Qualifications: | ||
Director of Alaska Air Group since
Safety Committee Innovation Committee | • Brand/Marketing Expertise • HR/Org. Strategy/DE&I Experience
Professional Highlights:
Ms. Lofton has deep cross-industry experience that includes leadership roles at Levi Strauss & Co., where she was chief Current Non-Public Company Board Service: • Alaska Airlines and Horizon Air (subsidiaries of Alaska Air Group) Education: •
BA, |
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President and CEO Alaska Air Group, Inc. and Alaska Airlines, Inc. Director of Alaska Air Group since 2020 | • Airline/Transportation/Safety Expertise • Business Development andMergers and Acquisitions Experience • Climate/Carbon Expertise • Government/Public Affairs/Regulatory Expertise • HR/Org. Strategy/DE&I Experience • Investor Relations Expertise • Public Company Governance Experience • Public Company CEO Experience Professional Highlights: Mr. Minicucci is chief executive officer of Alaska Air Group (Air Group) and Alaska Airlines (Alaska) since March 31, 2021. He has been president of Alaska Current Non-Public Company Board Service: • University of Washington Michael G. Foster School of Business, Center for Leadership and Strategic Thinking • UNCF Education:
• BS and MS, Royal Military College of Canada • Advanced Management Program, Harvard Business School |
Helvi K. Sandvik, | Qualifications: | |
President, Kidways LLC Director of Alaska Air Group since 2013 Safety Committee (Chair) Compensation and Leadership Development Committee | • Business Development andMergers and Acquisitions Experience • Government/Public Affairs/Regulatory Expertise • HR/Org. Strategy/DE&I Experience • Public Company Governance Experience • CEO Experience | |
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Professional Highlights: | ||
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Ms. Sandvik is president of Kidways LLC (business management consulting). From 1999 to 2016, Ms. Sandvik was president of NANA Development Corporation (NDC), a diversified business engaged in government contracting, oilfield and mining support, professional management services, and engineering and construction. During this time, she oversaw the growth of the NDC from an oil field support services company with revenues of $50 million into a diverse, multi-sector, global enterprise with revenues of $1.5 billion. Prior to that, Ms. Sandvik served in a variety of leadership roles within the Alaska Department of Transportation and Public Facilities, including director of statewide aviation and deputy commissioner, as well as a variety of public and non-profit leadership roles. | ||
Current Non-Public Company Board Service: | ||
• Alaska Airlines and Horizon Air (subsidiaries of Alaska Air Group) • HDR, Inc. • National Center for American Indian Enterprise Development | ||
Education: • BA, Kalamazoo College • MBA, University of Alaska Fairbanks | ||
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J. Kenneth Thompson, 71 | Qualifications: | |
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President and CEO, Pacific Star Energy LLC Director of Alaska Air Group since 1999 Compensation and Leadership Development Committee Governance, Nominating and
Corporate Responsibility | • Business • Climate/Carbon Expertise • Financial/Accounting and Investor Relations Expertise • HR/Org. Strategy/DE&I Experience • Public Company Governance Experience • Technology • CEO Experience
Professional Highlights: Since 2000, Mr. Thompson has been a co-owner and president and CEO of Pacific Star Energy LLC, a firm that is a passive owner of oil lease royalties in Alaska. He served from 2004 to 2012 as Managing Director of Alaska Venture Capital Group LLC, a private oil and gas exploration firm in which Pacific Star Energy LLC owns an interest. Had a 26 year career (1974-2000) with ARCO with his last position being EVP of ARCO's Asia Pacific region companies. In a prior position at ARCO, he served as executive head of research and technology which included oversight of engineering, operations, geoscience, environmental and IT technologies. Mr. Thompson chairs the environmental, health, safety and social responsibility committee, Current Public Company Board Service: • Pioneer Natural Resources Company (Non-Executive Chairman) • Tetra Tech, Inc. • Coeur Mining, Inc. Current Non-Public Company Board Service: • Alaska Airlines and Horizon Air (subsidiaries of Alaska Air Group) Education:
• BS, Petroleum Engineering, Missouri University of Science and Technology | |
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| Qualifications: | |
Director of Alaska Air Group |
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since 2012 Audit Committee (Chair) Governance, Nominating and
Corporate Responsibility | • Business Development andMergers and Acquisitions Experience • Financial/Accounting and Investor Relations Expertise • Public Company Governance Experience • CEO Experience
Professional Highlights: Mr. Yeaman is currently the founder and managing partner of Hoku Capital LLC, a strategic advisory services firm located in Honolulu, HI. He was president and COO of First Hawaiian Bank, a wholly owned subsidiary of First Hawaiian Inc., from June 2015 to August 2019. From 2008 to 2015, he was president and CEO of Hawaiian Telcom, a telecommunications and technology company serving the state of Hawaii. Prior to that, he was senior executive vice president and COO of Hawaiian Electric Company, Inc. (HECO). Mr. Yeaman joined Hawaiian Electric Industries, Inc. (HEI), HECO’s parent company, in 2003 as financial vice president, treasurer and CFO. Prior to joining HEI, Mr. Yeaman held the positions of chief operating and financial officer for Kamehameha Schools from 2000 to 2003. He began his career at Arthur Andersen LLP in 1989. Current Public Company Board Service: • Alexander & Baldwin, Inc. Current Non-Public Company Board Service: • Alaska Airlines and Horizon Air (subsidiaries of Alaska Air Group) • DR Fortress • Lanihau Properties, LLC • Palani Ranch Company, Inc. • Friends of Hawaii Charities, Inc. • The Harold K.L. Castle Foundation • Hawaii Asia Pacific Association Education: •
BA, University of Hawaii at Manoa | |
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF THE 1311 DIRECTOR NOMINEES NAMED ABOVE.
Structure of the BoardBoard of Directors
In accordance with the Delaware General Corporation Law and the Company’s Certificate of Incorporation and Bylaws, the Company’s business affairs are managed under the direction of the Board of Directors. Directors meet their responsibilities by, among other things, participating in meetings of the Board and board committees on which they serve, discussing matters with the chairman,Board Chair, CEO and other executives, reviewing materials provided to them, and visiting the Company’s facilities.
Pursuant to the Bylaws, the Board of Directors has established five standing committees, which are the Audit Committee, the Compensation and Leadership Development Committee, the Governance, Nominating and NominatingCorporate Responsibility Committee, the Safety Committee and the Innovation Committee. Only independent directors serve on these committees. The Board has adopted a written charter for each committee, which they review annually and update as necessary. These charters are posted on and can be accessed at www.alaskaair.com under About Alaska/Investor Relations.
The table below shows the current members and chairs of the standing board committees.
Board Committee Memberships
Name | AuditCommittee | Compensation and
| Governance, Nominating and
Corporate Responsibility Committee | Safety Committee | Innovation Committee | |||||||
Patricia M. Bedient 1 | ||||||||||||
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Jessie J. Knight, Jr. | ● | ● | ||||||||||
Susan J. Li2 | ● | ● | ||||||||||
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J. Kenneth Thompson | ● | ● | ||||||||||
Eric K. Yeaman | Chair | ● |
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1 Ms. Bedient serves as the Non-executive Board Chair.
2 Mr. Knight's and Ms. Li's service on the committee's they serve will end concurrent with the end of their board
service.
Board Committee and Risk Oversight Functions
The principal functions of the standing board committees, pursuant to their respective charters, are as follows:
Audit Committee |
o appoint them, approve their compensation and oversee their work; o review at least annually a written statement regarding their internal quality-control procedures, any material issues raised by their internal quality-control review, and all relationships between the independent accountants and the Company; o maintain ongoing discussions as to their independence; o pre-approve all auditing and non-auditing services they are to perform; o review annual audited and quarterly financial statements with management and the independent registered public accountants; |
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o receive and review communications required from the independent registered public accountants under applicable rules and standards; and o establish clear hiring policies for employees and former employees of the independent registered public accountants.
o review and approve the annual internal audit plan; o review the results of internal audit activities; o review the structure and resources of the internal audit team; and o review and approve any changes to the internal audit charter.
o review and discuss technology, information security
o discuss with management policies and practices with respect to risk assessment and risk management, including the process by which the Company undertakes risk assessment and enterprise risk management; o review with management major financial risk exposure and adequacy and effectiveness of associated internal controls; o review procedures with respect to appropriateness of significant accounting policies and the adequacy of financial controls; o discuss with management, as appropriate, earnings releases and any information provided to analysts and ratings agencies; o develop, monitor and reassess from time to time a corporate compliance program, including a code of conduct and ethics policy, decide on requested changes to or waivers of such program and code relating to officers and directors, and establish procedures for confidential treatment of complaints concerning accounting, internal controls or auditing matters; o review any changes to the corporate compliance program charter; and o obtain and review at least quarterly a statement from the CEO, CFO and disclosure committee members disclosing any significant deficiencies in internal controls and any fraud that involves management or other employees with significant roles in internal controls. • Annually review and reassess the adequacy of the Audit Committee’s charter and its performance. |
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o set, review and approve compensation of the CEO and other elected officers of the Company and its subsidiaries, taking into account CARES Act requirements and other legal considerations; and o establish the process for reviewing and approving corporate goals relevant to CEO compensation and for evaluating CEO performance in light of those goals. • Set annual goals under the broad-based Performance-Based Pay Plan and Operational Performance Rewards Plan and administer the plans. • Grant stock awards and stock options to elected officers. • Administer and review the supplementary retirement plans for elected officers and the equity-based incentive plans. • Make recommendations to the Board regarding other executive compensation issues, including modification or adoption of plans. • Fulfill ERISA fiduciary and non-fiduciary functions for tax-qualified retirement plans by monitoring management benefit committees and approving the membership of those committees, and the extension of plan participation to employees of subsidiaries. • Approve the terms of employment and severance agreements with elected officers and the form of • Ensure a framework, process and policies are in place for CEO and executive succession, including standards for assessment, and the periodic review of CEO and other management development and succession plans. • Administer and make recommendations to the Board of Directors with respect to the Company’s equity and other long-term incentive equity plans. • • Produce the report on executive compensation required for the annual proxy statement. • Oversight inclusion initiatives. • Annually review and reassess the adequacy of the Committee’s charter and its performance. |
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Governance, Nominating and | With regard to matters board and governance risk and executive ownership under the Corporate Secretary and Senior Vice President of Public Affairs and Sustainability: • Develop, monitor and reassess from time to time the Corporate Governance Guidelines. • Evaluate the size and composition of the Board. • Develop criteria for board membership. • Evaluate the independence of existing and prospective members of the Board. • Seek and evaluate qualified candidates for election to the Board. • Evaluate the nature, structure and composition of other board committees. • Take steps it deems necessary or appropriate with respect to annual assessments of the performance of the Board and each board committee, including itself. • Review and assess ESG goals, initiatives and performance. • Annually review and reassess the adequacy of the Governance and Nominating Committee’s charter and its performance. |
• Recommend for approval by the Board changes in compensation and insurance for the Company’s and its subsidiaries’ nonemployee directors; • Review the Company’s Policy on Political Contributions and Engagement and regularly monitor compliance with such policy. | |
With regard to matters pertaining to safety related risk oversight and executive ownership under the VP Safety: • Monitor management’s efforts to ensure the safety of passengers and employees of the Company and its subsidiaries. • Monitor and assist management in creating a uniform safety culture that achieves the highest possible industry performance measures. • Review management’s efforts to ensure aviation security and reduce the risk of security incidents. • Monitor Alaska’s and Horizon’s internal evaluation programs which audit safety-related risks. • Periodically review with management and outside experts all aspects of airline safety. • Evaluate the Company’s health, safety and environmental policies and practices and applicable federal and state standards. • Annually review and reassess the adequacy of the Committee’s charter and its performance. • Advise the Compensation & Leadership Development Committee on the adoption of safety goals and metrics included in the Company’s compensation programs. | |
Innovation Committee | With regard to matters pertaining to innovation risk oversight and executive ownership under the Chief Commercial Officer: • Review and advise on the Company’s strategy and approach to innovation, including how such innovation improves revenue, guest and employee experiences. • Ensure the Company applies an appropriate risk-based methodology in defining the innovation strategy and where investments are made. • Discuss and advise on the Company’s viability and change management. • Review allocation of resources – both financial and human capital – for innovation and to ensure resources are adequate to execute the strategy. |
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• Review results from the measurement and tracking systems designed to monitor progress towards achieving the innovation strategy. • Discuss and advise on methods to foster a culture of innovation across the Company in support of operational, financial and safety objectives. • Review and discuss technology trends that could significantly affect the Company and the business in which it operates including whether investments in technology partners is required to assist in delivering the Company’s strategy. • Annually review and reassess the adequacy of the Committee’s charter and its performance. |
In 2020,2022, the Board of Directors held 105 meetings. The standing board committees held the following number of meetings in 2020:2022:
Audit Committee – 4
Compensation and Leadership Development Committee – 75
Governance, Nominating and NominatingCorporate Responsibility Committee – 4
Safety Committee – 4
Innovation Committee -- 4
Each director except one attended at least 75% of all board and applicable committee meetings during 2020.2022. Each director is expected to attend the Company’s Annual Meeting of Stockholders. Last year, allMeeting. All directors attended the 2022 annual stockholders meeting.
Director IndependenceIndependence
The Board of Directors of the Company has determined that all thenon-employee directors except Mr. Tilden(Mses. Bedient, Hogan, Li, Lofton and Mr. Minicucci,Sandvik and Messrs. Beer, Conner, Elwell, Fonseca, Knight, Jr., Thompson and Yeaman), and including each member of the Audit Committee, Compensation and Leadership Development Committee, Governance, Nominating and NominatingCorporate Responsibility Committee, Safety Committee and Innovation Committee are independent under the NYSE listing standards and the Company’s independent director standards that are set forth in the Company’s Corporate Governance Guidelines. Mr. Minicucci is not independent due to his position as our CEO.
The Corporate Governance Guidelines are available on the Company’s website at www.alaskaair.comunder About Alaska/Investor Relations. In making its determination, the Board considered any transactions or relationships between the contributions made by the Company to charitabledirector, members of his or her family and organizations with which any of its directors are affiliated.that director or family members have an affiliation, on the one hand, and us, our subsidiaries and management, on the other hand. In this regard, the Board considered the value of charitable contributions made by the Company to an organization with which Ms. Bedient is affiliated in a non-fiduciary capacity as a member of its advisory board. After consideration of these matters and in accordance with the Board’s independent director criteria, the Board affirmatively determined that the matters did not represent material relationships with the Company because the amounts of the contributions were immaterial with respect to the Company’s and the outside organization’s annual revenues.
Specifically, the Board has determined that independent directors must have no material relationship with the Company, based on all material facts and circumstances. At a minimum, an independent director must meet each of the standards listed below.
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For the purposes of these standards, “Company” includes all Alaska Air Group subsidiaries and other affiliates. “Immediate family member” includes the director’s spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and anyone sharing the director’s home.
The independence standards for the members of the Audit Committee provide that, in addition to the foregoing standards, they may not receive any compensation other than director’s fees for board and audit committee service and permitted retirement pay, or be an “affiliate” of the Company apart from their capacity as a member of the Board as defined by applicable SEC rules. Each member of the Company’s Audit Committee meets the additional independence, financial literacy and experience requirements
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contained in the corporate governance listing standards of the NYSE relating to audit committees or as required by the SEC. The Board has determined that Ms. Bedient and Mr. Yeaman are audit committeeis an Audit Committee financial expertsexpert as defined in SEC rules.
The independence standards for members of the Compensation and Leadership Development Committee provide that, in addition to the foregoing standards that apply to directors generally, the Board must consider all factors specifically relevant to determining whether a director has a relationship to the Company that is material to that director’s ability to be independent from management in connection with the duties of a member of the Compensation and Leadership Development Committee, including the source of compensation of such director and whether such director is affiliated with the Company or any of its subsidiaries or affiliates. Each member of the Company’s Compensation and Leadership Development Committee meets this additional independence requirement in the corporate governance listing standards of the NYSE related to compensation committees.
Identification of Candidates
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The Governance, Nominating and NominatingCorporate Responsibility Committee (referred to in this section as the Nominating Committee) has two primary methods for identifying candidates (other than those proposed or nominated by the Company’s stockholders,shareholder, as discussed below):
On a periodic basis, by soliciting ideas for possible candidates from a number of sources including, but not limited to, members of the Board, senior-level Company executives, individuals personally known to the members of the Board, and research.
From time to time, using its authority under its charter to retain at the Company’s expense one or more search firms to identify candidates (and to approve any such firms’ fees and other retention terms). If the Nominating Committee retains one or more search firms, those firms may be asked to identify possible candidates who meet the minimum and desired qualifications established by the Nominating Committee and to undertake such other duties as the Nominating Committee may direct.
This process has routinely resulted in the identification of candidates with diverse qualifications, backgrounds, geography, ethnicity, gender and age who have been re-elected by the majority of stockholdersshareholders each year. The Nominating Committee ensures the pool of candidates includes female and BIPOC representation.
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StockholdersShareholders who meet the qualifications outlined below may nominate up to two director candidates for inclusion in the Company’s proxy statement (see Proxy Access Right of Stockholders Shareholders below). StockholdersShareholders who do not meet those qualifications or do not wish to have their director nominees included in the Company’s proxy materials may nominate director candidates and file their own proxy statement to solicit proxies for the
election of their director nominees at an annual meeting if they comply with the requirements outlined in the Company’s Bylaws and as generally described below under General Nomination Right of All StockholdersShareholders.
For more information, see How can I submit a proposal for next year’s annual meeting? in the Questions and Answers section of this Proxy Statement including the deadlines applicable to the submission of director nominations for next year’s annual meeting of stockholders. Annual Meeting.
StockholdersShareholders who wish to propose director candidates for board consideration may do so according to the process outlined in this section under Consideration of Director Candidates Recommended by StockholdersShareholders.
The Corporate Secretary will send a copy of the Company’s Bylaws to any interested stockholdershareholder upon request. The Company’s Bylaws are also available on the Company’s website at www.alaskaair.com under About Alaska/Investor Relations.
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In December 2015, the Board amended the Company’s Bylaws to provide a “proxy access” right to stockholders.shareholders. The Company’s proxy access bylaw is consistent with the prevailing market practice and satisfies the majority of stockholders.shareholders. Under this proxy access right, a stockholdershareholder or a group of up to 20 stockholdersshareholders owning at least 3% of the Company’s shares continuously for three years may nominate directors constituting up to 20% of the Board, or two nominees, whichever is greater, for election as a director of the Company at an annual meeting of stockholdersAnnual Meeting and inclusion in the Company’s proxy materials. This right is subject to certain conditions, including complying with the notice, information and consent provisions contained in Article II, Section 10 of the Company’s Bylaws. The provisions generally require that written notice of a stockholder’sshareholder’s nomination of one or more persons for election to the Board and inclusion in the Company’s proxy materials be received by the Corporate Secretary of the Company no later than the close of business on the 120th day, and no earlier than the close of business on the 150th day, prior to the first anniversary of the date the Company’s proxy statement was released to stockholdersshareholders for the previous year’s annual meeting. Other specifics regarding the foregoing proxy access right, including the required content of the notice and certain other eligibility and procedural requirements, are set forth in Article II, Section 10 of the Company’s Bylaws.
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Any stockholdershareholder of the Company may nominate one or more persons for election as a director of the Company at an annual meeting of stockholdersAnnual Meeting if the stockholdershareholder complies with the notice, information and consent provisions contained in Article II, Section 9 of the Company’s Bylaws. The provisions generally require that written notice of a stockholder’sshareholder’s intent to make a nomination for the election of directors be received by the Corporate Secretary of the Company no later than the close of business on the 90th day, and no earlier than the close of business on the 120th day, prior to the first anniversary of the prior year’s annual meeting. The written notice submitted by a stockholdershareholder must also satisfy the additional informational requirements set forth in Article II, Section 9 of the Bylaws
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The Nominating Committee will evaluate candidates recommended by a single stockholder,shareholder, or group of stockholders,shareholders, that have beneficially owned more than 5% of the Company’s outstanding common stock for at least one year and that satisfies the notice, information and consent provisions set forth below (such individual or group is referred to as the Qualified Stockholder)Shareholder).
The Nominating Committee will evaluate candidates recommended by Qualified StockholdersShareholder in accordance with the procedures described below.
Qualified StockholdersShareholders may propose a candidate for evaluation by the Nominating Committee by delivering a written notice to the Nominating Committee satisfying each of the requirements described below (the Notice). The Notice must be received by the Nominating Committee not less than 120 calendar days before the anniversary of the date that the Company’s proxy statement was released to stockholdersshareholders in connection with the previous year’s annual meeting. No such notice was received in connection with the 2021 Annual Meeting.
Any candidate recommended by a Qualified StockholderShareholders must be independent of the Qualified StockholderShareholders in all respects (i.e., free of any material relationship of a personal, professional, financial or business nature from the nominating stockholder)shareholder), as determined by the Nominating Committee or by applicable law. Any candidate submitted by a Qualified StockholderShareholder must also meet the definition of an “independent director” under applicable NYSE rules. The Notice shall also contain or be accompanied by the information or documentation described below.
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The signature of each candidate and of each shareholder submitting the Notice |
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The Notice shall be delivered in writing by registered or certified first-class mail, postage prepaid, to the following address:
Board of Directors
Alaska Air Group, Inc.
PO Box 68947
Seattle, WA 98168
The Corporate Secretary will promptly forward the Notice to the Lead Independent DirectorBoard Chair and to the Chair of the Nominating Committee.
If, based on the Committee’s initial screening of a candidate recommended by a Qualified Stockholder,Shareholder, a candidate continues to be of interest to the Nominating Committee, the Chair of the Committee will request that the CEO interview the candidate, and the candidate will be interviewed by one or more of the other Committee members. If the results of these interviews are favorable, the candidate recommended by a Qualified StockholderShareholder will be evaluated as set forth below. Except as may be required by applicable law, rule or regulation, the Nominating Committee will have no obligation to discuss the outcome of the evaluation process or the reasons for the Nominating
Committee’s recommendations with any Qualified StockholderShareholder who made a director candidate recommendation.
The Nominating Committee’s policy on the evaluation of candidates recommended by stockholdersshareholders who are not Qualified StockholdersShareholders is to evaluate such recommendations, and establish procedures for such evaluations, on a case-by-case basis. This policy allows the Nominating Committee to devote an appropriate amount of its own and the Company’s resources to each such recommendation, depending on the nature of the recommendation itself and any supporting materials provided. All candidates (whether identified internally or by a stockholder)shareholder) who, after evaluation, are then recommended by the
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Nominating Committee and approved by the Board, will be included in the Company’s recommended slate of director nominees in its proxy statement.
Evaluation of Candidates
As to each recommended candidate that the Nominating Committee believes merits consideration, the Nominating Committee will cause to be assembled information concerning the background, qualifications and appropriate references of the candidate, including information concerning the candidate required to be disclosed in the Company’s proxy statement under the rules of the SEC and any relationship between the candidate and the person or persons recommending the candidate. The Nominating Committee will then (i) determine if the candidate satisfies the qualifications set forth under Policy on Minimum Qualifications for All Directors below; (ii) conduct interviews with the candidate as it deems necessary and appropriate; and (iii) consider the contribution that the candidate can be expected to make to the overall functioning of the Board. The Nominating Committee will then meet to consider and finalize its list of recommended candidates for the Board’s consideration.
The Nominating Committee will consider incumbent candidates based on the same criteria used for candidates recommended by Qualified Stockholders,Shareholder, provided that incumbents will also be considered on the basis of the Nominating Committee’s annual evaluations of the effectiveness of the Board, its committees and their members.
Policy on Minimum Qualifications for All Directors
While there is no formal list of qualifications, the Nominating Committee considers, among other things, the prospective nominee’s relevant experience, intelligence, independence, reputation, diversity, age, commitment, ability to work with the CEO and within the Board culture, prominence, diversity, and age.culture. The Nominating Committee may also consider a nominee’s CEO experience, senior-level international experience, senior-level regulatory or legal experience, and relevant senior-level expertise in one or more of the following areas: finance, accounting, sales and marketing, safety, organizational development, information technology, digital marketing, and government and public relations. Different substantive areas may assume greater or lesser significance at particular times, in light of the Board’s present composition and the Nominating Committee’s (or the Board’s) perceptions about future issues and needs.
For a candidate to serve as an independent director, an independent and questioning mindset is critical. The Nominating Committee also considers a prospective candidate’s workload and whether he or she would be able to attend the vast majority of Board meetings, be willing and available to serve on Board committees, and be able to devote the additional time and effort necessary to keep up with Board matters and the rapidly changing environment in which the Company operates.
Board diversity is considered broadly, not merely with regard to race, gender, or national origin, but also with regard to general background, geographical location, and other factors. The consideration of diversity permeates all discussions at the Nominating Committee. In addition, on an annual basis, as part of the Board’s self-evaluation, the Board assesses whether the mix and diversity of board members is appropriate for the Company.
Policies and Procedures for Approval of Related Person Transactions
The Board of Directors has adopted a written policy for review, approval or ratification of any transaction, arrangement or relationship in which the Company was, is or will be a participant, the aggregate amount involved exceeds $120,000 in any calendar year, and a related person has or will have a direct or indirect material interest (other than solely as a result of being a director or the beneficial owner of less than 10% of another entity). For purposes of the policy, a related person is any person who is, or at any time since the beginning of the last fiscal year was, (i) one of the directors or executive officers or a nominee to become a director, or (ii) any beneficial owner of more than 5% of the Company’s common stock, or any immediate family member of any of these persons.
Under the policy, once such a transaction by a related person has been identified, the Audit Committee (or, for transactions that involve less than $1 million in the aggregate, the chair of the Audit Committee) must review the transaction for approval or ratification. Members of the Audit Committee or the chair of the Audit Committee, as applicable, will review all relevant facts regarding the transaction in determining whether to approve or ratify it, including the extent of the related person’s interest in the transaction, whether the terms are comparable to those generally available in arm’s-length transactions, and whether the transaction is consistent with the best interests of the Company. The related person involved in the transaction will not participate in the approval or ratification process except to provide additional information as requested for the review. Once initially approved or ratified, all transactions with related persons will be reviewed at least annually.
The policy does not require review or approval of the following transactions: employment by the Company of an executive officer unless he or she is an immediate family member of another related person; any compensation paid by the Company to a director; and a transaction in which a related person’s interest arises solely from the ownership of equity securities and all holders of the securities receive the same benefit on a pro-rata basis.
Certain Transactions with Related Persons
The Company and its subsidiaries have transactions in the ordinary course of business with other corporations of which the Company’s executive officers or directors or members of their immediate families are directors, executive officers, or stockholders.shareholders. The amounts involved in these transactions are below the disclosure thresholds set by the SEC, or the executive officer or director or his or her family member does not have a direct or indirect material interest, as that term is used in SEC rules, in the transaction. Since January 1, 2020,2022, the Company has not participated in, nor is there currently planned, any transactions required to be disclosed pursuant to SEC Regulation S-K Item 404(a).
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2022 Director Compensation
The following table presents information regarding the compensation paid for 20202022 to members of the Board of Directors who were not also the Company’s employees (non-employee directors). The compensation paid to Mr. Tilden and Mr. Minicucci for 20202022 is presented in the Summary Compensation Table and the related explanatory tables. Mr. Tilden andAs an executive director, Mr. Minicucci did not receive additional compensation for his service on the Board.
Our compensation policy for non-employee directors provides for the director to receive annual cash and stock retainers for their service as directors.
| Name (a) |
| Fees Earned or Paid in Cash (1) ($) |
| Stock Awards (2)(3) ($) |
| All Other Compensation (4)( ($) |
| Total ($) | ||||
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| Patricia M. Bedient |
| 70,201 |
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| 99,977 |
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| 540 |
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| 170,718 |
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| James A. Beer |
| 61,257 |
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| 99,977 |
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| 3,908 |
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| 165,142 |
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| Marion C. Blakey |
| 56,763 |
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| 99,977 |
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| 545 |
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| 157,285 |
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| Raymond L. Conner |
| 44,818 |
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| 99,977 |
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| 1,666 |
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| 146,460 |
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| Dhiren R. Fonseca |
| 44,818 |
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| 99,977 |
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| 10,356 |
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| 155,151 |
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| Kathleen T. Hogan |
| 44,818 |
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| 99,977 |
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| 2,228 |
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| 147,022 |
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| Jessie K. Knight, Jr. (5) |
| 40,713 |
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| 54,217 |
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| 545 |
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| 95,475 |
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| Susan J. Li |
| 44,818 |
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| 99,977 |
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| 4,469 |
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| 149,264 |
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| Helvi K. Sandvik |
| 53,777 |
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| 99,977 |
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| 4,781 |
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| 158,535 |
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| J. Kenneth Thompson |
| 44,818 |
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| 99,977 |
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| 4,469 |
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| 149,264 |
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| Eric K. Yeaman |
| 59,749 |
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| 99,977 |
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| 7,274 |
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| 167,000 |
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|
|
on the Board. Following a market review by the Compensation and Leadership Development Committee’s independent consultant in early 2021,2022, the Board reinstated the increasesapproved an increase in annual stock retainers to $105,000 and the annual cash retainersretainer to $80,000,$85,000 and an increase in the annual stock retainer to be$120,000, each effective May 6, 2021. In addition,5, 2022. The purpose of the increase was to remain at the median of director pay compared to the airline peer group identified in the CD&A. Other changes to compensation for non-employee directors beginning May 6, 2021 will includeincluded the followingfollowing:
annualAnnual retainer of $27,500 tofor the Lead Independent Director
|
|
|
|
Under the terms of the Company’s Stock Deferral Plan for Non-Employee Directors, each eligible director may elect in the prior year to receive his or her annual stock retainer in the form of shares that are fully vested at the time of grant or to defer payment of all or a portion of the award until his or her termination of service on the Board. If no election is made the year prior to payment, the director is issued fully vested shares.
| Name |
| Fees |
| Stock |
| All Other |
| Total |
| Patricia M. Bedient |
| 210,026 |
| 119,974 |
| 933 |
| 330,933 |
| James A. Beer |
| 105,026 |
| 119,974 |
| 1,011 |
| 226,011 |
| Raymond L. Conner |
| 110,026 |
| 119,974 |
| 1,089 |
| 231,089 |
| Daniel K. Elwell |
| 85,026 |
| 119,974 |
| 856 |
| 205,856 |
| Dhiren R. Fonseca |
| 85,026 |
| 119,974 |
| 6,143 |
| 211,143 |
| Kathleen T. Hogan |
| 105,026 |
| 119,974 |
| 3,733 |
| 228,733 |
| Jessie K. Knight, Jr. |
| 85,026 |
| 119,974 |
| 2,032 |
| 207,032 |
| Susan J. Li |
| 85,026 |
| 119,974 |
| — |
| 205,000 |
| Adrienne R. Lofton |
| 85,026 |
| 119,974 |
| 933 |
| 205,933 |
| Helvi K. Sandvik |
| 105,026 |
| 119,974 |
| 156 |
| 225,156 |
| J. Kenneth Thompson |
| 85,026 |
| 119,974 |
| 1,711 |
| 206,711 |
| Eric K. Yeaman |
| 110,026 |
| 119,974 |
| 3,344 |
| 233,344 |
37
|
|
|
Director Stock Ownership Policy
The Company expects directors to act in the Company’s best interests regardless of the number of shares they own. Each non-employee director is expected to hold shares of Company stock having a value equal to at least six times the director’s annual cash retainer, with such ownership to be achieved within six years of joining the Board. Deferred stock units held by directors, which are 100% vested atas of the grant date, will count toward the holding requirement even though they will not be issued until the director resigns fromleaves the Board. All non-employee directors met this requirement as of December 31, 2022.
38
Proposal 2: Approval (on an Advisory Basis) of the Compensation
of the Company’s Named Executive Officers
The Company is providing its stockholdersshareholders with the opportunity to cast a non-binding, advisory vote on the compensation of the Company’s Named Executive Officers (NEOs) as disclosed pursuant to the SEC’s executive compensation disclosure rules and set forth in this Proxy Statement (including the compensation tables and the narrative discussion accompanying those tables as well as in the Compensation Discussion and Analysis).
As described more fully in the Compensation Discussion and Analysis (CD&A) section of this Proxy Statement, the structure of the Company’s executive compensation program is designed to compensate executives appropriately and competitively and to drive superior performance. For the NEOs, who are primarily responsible for the overall execution of the Company’s strategy, a high percentage of total direct compensation (meaning base salary, actual short-term incentive pay plus the grant date fair value of equity awards as determined for accounting purposes) is variable and tied to the successachievement of specified performance goals and/or the value of the Company. The Company’s strategic goals are reflected inCompany’ stock. Results of our incentive-based executive compensation programs are linked to performance on the Company’s strategic goals so that theexecutives’ interests of executives are aligned with stockholdershareholder interests. Executive compensation is further structured to be internally equitable, to reward executives for responding successfully to business challenges facing the Company, and to drive high performance, and to take into consideration the Company’s size relative to the rest of the industry. its competitors.
The CD&A section of this Proxy Statement describes in more detail the Company’s executive compensation programs and the decisions made by the Compensation and Leadership Development Committee (referred to in this section as the Committee) during 2020.2022. We also discuss the impacts on compensation actions taken byas a result of the Company in responsetaking measures it determined were necessary to preserve the unprecedented impactfinancial stability of the COVID-19 pandemic on the Company its guests,for shareholders, employees and the communities we serve during the COVID-19 pandemic, including actions that caused our executives to forego compensation increases for three years in which it operates.order for the Company to qualify for government payroll support under the CARES Act.
Our 20202022 executive compensation program includes three core elements:
Base Salary
In February 2020,2022, the Committee set the annual base salary level for the CEO at or aboutMr. Minicucci below the 25th percentile of the airline peer group identified in the CD&A. The Committee set base salaries for the other NEOs at or about the 50th percentile of corresponding positions in the same peer group. In March 2020, in light of the anticipated impact of the COVID-19 pandemic on the Company’s operations and at the request of the two highest paid NEOs, the Committee rescinded these increases and, at the requestion of the two highest paid NEOs, further reduced base pay by 100% (to zero base salary) for these two NEOs. The Committee also rescinded the February 2020 increases and further reduced base pay by 30% for the other NEOs. Base pay for these executives was generally restored to 2019 levels in October 2020.
Annual Incentive Pay
The NEOs are eligible to earn annual incentive pay under our Performance Based Pay (PBP) Plan, in which all employees participate with the same performance goals shared by all eligible employees.goals. The PBP Plan is intended to motivate all participants to achieve specified Company goals. Performance goalsFor 2022, the plan focused on five key areas: returning to profitability after the COVID pandemic, managing costs, reducing carbon emissions, demonstrating our commitment to safety for 2020 were set atour employees and guests and leading the beginning of the period and prior to the COVID-19 pandemic to include financial, operational and marketing goals that were consistent with the Company’s strategic plan. Seventy percent of the target award value under the PBP Plan was based on adjusted pretax profit. Several months into the COVID-19 crisis, it became clear that participants would likely receive no payout on the adjusted pretax profit metric. industry in pre-tax margin.
In June 2020, the Committee approved a supplemental incentive pay program for all employees, the COVID-19 Business Recovery Incentive Pay (CBRP) Plan, to support and encourage key elements of the Company’s recovery. The CBRP Plan is a one-time performance plan tied to business recovery goals measured over the
last six-months of 2020. The goal of the CBRP Plan is to retain and motivate employees at all levels and to ensure that experienced talent remained in place to help the Company emerge from the impacts of COVID-19. Refer to the CD&A for more detailed information on the structure and payout of the PBP and CBRP Plans.PBP.
Long-term Incentive Pay
Equity-based incentive awards that link executive pay to stockholdershareholder value generation are an important element of the Company’s executive compensation program and comprise the largest portion of pay for
39
our NEOs. Long-term equity incentives that vest over three- or four-year periods are awarded annually, including performance stock units (PSUs), stock options and restricted stock units (RSUs). Consistent with the equity mix granted in prior years, the NEOs’ 20202022 equity grant was allocated approximately 50% to PSUs, and approximately 25% to each of stock options and 25% RSUs (based on the grant date fair value of the awards). The Committee typically grants equity awards annually which results in overlapping vesting periods that discourage short-term risk taking and align NEOsNEOs’ long-term interests with those of stockholdersshareholders while helping the Company attract and retain top-performing executives who fit a team-oriented and performance-driven culture.
In November 2020,general, the Committee approved special, service-contingentsets target annual incentive pay and annual equity grants at levels intended to retain and motivateprovide executives an opportunity to achieve total direct compensation at the Company’s leaders, including the NEOs, as it became evident that PSUs awarded in 2018, 2019 and 2020 would have little or no value due to the impacts50thpercentile of the COVID-19 pandemic,target total direct compensation (which we define as base salary, target short-term incentive pay, and that their realizable total compensation had dropped significantly below target in light of a 45% decrease in the grant date fair value of equity awards as determined for accounting purposes) for comparable positions with the Company’s stock sincepeer companies if annual and long-term incentive targets are reached, and to surpass the beginning of the year (compared to a 4% rise in the S&P 500). The CD&A provides more detail on these special retention grants.50th percentile if those targets are exceeded.
Annual Advisory Say-on-Pay Proposal
In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, the Board of Directors will request your advisory vote on the following resolution at the 2021 Annual Meeting:
RESOLVED, that the compensation paid to the Named Executive Officers, as disclosed in this Proxy Statement pursuant to the SEC’s executive compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the compensation tables and the narrative discussion that accompanies the compensation tables), is hereby approved.
This proposal regarding the compensation paid to the NEOs is advisory only and will not be binding on the Company, the Board or the Board,Committee, nor will it be construed as overruling a decision by the Company, the Board or the BoardCommittee or as creating or implying any additional fiduciary duty for the Company, the Board or the Board.Committee. However, the Committee, which is responsible for designing and administering the Company’s executive compensation program, values the opinions expressed by stockholdersshareholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for the Named Executive Officers. Consistent
The Board’s current policy is to provide shareholders with an opportunity to vote on the resultscompensation of an advisory votethe NEOs each year at the Company’s 2017 annual meeting concerningAnnual Meeting. The Company has included in this Proxy Statement Proposal 3 to approve the frequency of thefuture advisory vote regardingvotes on the compensation paid toof the NEOs stockholders are given an opportunity to cast anand the Board recommends that the current policy of holding such a vote each year be continued. Accordingly, if shareholders approve every one year as the preferred frequency option in Proposal 3, the Company expects the next advisory vote on the compensation of the NEOs annually, withwill occur at the next opportunity expected to be in connection with the Company’s annual meeting in 2022.2024 Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVAL (ON AN ADVISORY BASIS) OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT PURSUANT TO THE SEC’S EXECUTIVE COMPENSATION DISCLOSURE RULES.
Compensation DiscussionDiscussion and Analysis
This CD&A contains a discussion of the material elements of compensation earned during 2020 by, itsor awarded to our named executive officers (NEOs): during 2022:
Bradley D. TildenBen Minicucci, chairman,president and chief executive officer (CEO) and president of Alaska Air Group;Group and Alaska Airlines;
Shane R. Tackett, executive vice president finance and chief financial officer (CFO) of Alaska Air Group since March 3, 2020; previously executive vice president planning and strategy of Alaska Airlines;
Benito Minicucci, president of Alaska Airlines;
Andrew R. Harrison, executive vice president and chief commercial officer (CCO) of Alaska Airlines;
Gary L. BeckConstance E. von Muehlen, executive vice president and chief operating officer (COO) of Alaska Airlines; and
Brandon S. Pedersen, retired asAndrea L. Schneider, senior vice president of people of Alaska Airlines
Consideration of Say-on-Pay Advisory Vote
Shareholders have an opportunity annually to cast an advisory vote in connection with our executive compensation program. At the 2022 annual meeting, 96% of the votes were cast in favor of the advisory say-on-pay proposal in connection with the Company’s 2021 executive vice president financecompensation. The Committee believes that this voting result indicates that shareholders generally approve of the structure of executive compensation at Alaska Air Group.
Overview: the CARES Act Has Limited Committee’s Ability to Reward and Retain Talent for Three Years
At the outset, the Committee wishes to explain to shareholders how the CARES Act restrictions impacted the Board’s ability to recognize high-performing executives who earned promotions just before and during the pandemic, and who then navigated the Company through these challenges to achieve the highest adjusted pre-tax profit among its peers and top-of-industry operational performance in 2022.
As a condition of receiving funds under the CARES Act, executive compensation for most of our leaders was capped at 2019 levels for three years, from March 2020 until April 2023. The CARES Act prohibited the Company from fully rewarding executives for out-performing our peers in 2022, for executing successfully on many of the Company’s strategic goals since 2020, and for earning promotions and increased job scope before or during the pandemic.
Four of our five NEOs, including our CEO, CFO and COO, received significant promotions before the outset of COVID yet their total compensation remained frozen at their 2019 levels through April 2023. The Board strongly encouraged the Committee and the CEO to retain these and other high-performing executives for the duration of the CARES Act restrictions despite intense competition for talent in the airline industry and in other sectors not subject to compensation caps.
CARES Act Background and Requirements
The pandemic disproportionately affected the airline industry, and, while federal government relief in the form of payroll support grants and loans was a critical and appreciated source of support, the CARES Act restrictions have prevented the Company from offering increased compensation to reward the executives charged with leading the Company through an unprecedented crisis and returning it to profitability and long-term success. To comply with the CARES Act restrictions, the Company has clawed back equity awards from most executives in 2020, 2021 and/or 2022 because the grant date value of these awards, together with the executive’s other compensation, exceeded the executives' 2019 compensation cap.
Our Executives are Paid at 2019 Levels despite Receiving Promotions and Delivering Industry-
41
Leading Financial Performance
By strictly capping executive compensation at 2019 levels for three years, the CARES Act has prevented the Committee from rewarding the heightened responsibilities of the named executive officers who were promoted during or just before the pandemic emerged. Since 2020, all but one of the named executive officers have been entrusted with larger, more complex roles, but at compensation levels associated with their prior roles. For example:
2020 Overview
Tackett since 2020.
For illustrative purposes, a reconciliation of the Total Compensation for the NEOs from the Summary Compensation Table to the value received after the clawback of equity granted is presented below.
42
| Named Executive Officer |
| Grant Award Year |
| Total Compensation from Summary Compensation Table |
| Value of Stock Awards Clawed Back |
| Total Compensation After Reduction for Equity Clawback |
| No. of Shares Subject to Stock Awards Clawed Back (1) |
|
| Ben Minicucci |
| 2022 |
| 6,487,981 |
| (3,349,450) |
| 3,138,531 |
| 48,665 |
|
|
|
| 2021 |
| 5,130,162 |
| (1,918,360) |
| 3,211,802 |
| 25,930 |
|
|
|
| 2020 |
| 5,285,135 |
| — |
| 5,285,135 |
| — |
|
|
|
| Total |
|
|
| (5,267,810) |
|
|
| 74,595 |
|
| Shane Tackett |
| 2022 |
| 3,610,895 |
| (1,715,020) |
| 1,895,875 |
| 26,075 |
|
|
|
| 2021 |
| 3,043,701 |
| (1,054,579) |
| 1,989,122 |
| 14,205 |
|
|
|
| 2020 |
| 2,941,393 |
| — |
| 2,941,393 |
| — |
|
|
|
| Total |
|
|
| (2,769,599) |
|
|
| 40,280 |
|
| Andrew Harrison |
| 2022 |
| 3,572,916 |
| (1,105,807) |
| 2,467,109 |
| 16,720 |
|
|
|
| 2021 |
| 3,004,088 |
| (469,197) |
| 2,534,891 |
| 6,320 |
|
|
|
| 2020 |
| 2,830,772 |
| — |
| 2,830,772 |
| — |
|
|
|
| Total |
|
|
| (1,575,004) |
|
|
| 23,040 |
|
| Constance von Muehlen (2) |
| 2022 |
| 2,794,212 |
| (1,775,005) |
| 1,019,207 |
| 42,361 |
|
|
|
| 2021 |
| 2,016,913 |
| (1,050,958) |
| 965,955 |
| 14,622 |
|
|
|
| 2020 |
| N/A |
| N/A |
| N/A |
| — |
|
|
|
| Total |
|
|
| (2,825,963) |
|
|
| 56,983 |
|
| Andrea Schneider (2) |
| 2022 |
| 2,025,025 |
| (869,834) |
| 1,155,191 |
| 13,331 |
|
|
|
| 2021 |
| 1,705,881 |
| (368,899) |
| 1,336,982 |
| 4,969 |
|
|
|
| 2020 |
| N/A |
| N/A |
| N/A |
| — |
|
|
|
| Total |
|
|
| (1,238,733) |
|
|
| 18,300 |
|
In an intensely competitive market for top talent, the Committee is closely focused on keeping executives engaged with the Company for the duration of the CARES Act restrictions and beyond. The Committee likewise aims to assure high-performing, resilient executives who received promotions since 2019 to be confident that their contributions will be recognized appropriately when the restrictions end.
The Committee has recognized that the leadership team continues to demonstrate strength and resilience as the industry recovers from the pandemic, which ultimately translates to shareholder value creation. In consultation with its employees, guests,independent advisors, the Committee has made it a priority to determine the best method to address executives’ lost compensation when the CARES Act restrictions are lifted. We have engaged with shareholders representing a significant amount of our ownership to discuss this goal and the communities in whichreasons for advancing it operates. Travel restrictions, event cancellations, social distancing guidelines,at the permissible time.
Philosophy and other public health measures that undermined confidence in air travel drove unprecedented declines in demand and revenues. The airline industry was particularly hard hit by the pandemic. The West Coast, where Alaska Airlines and Horizon Air predominantly operate, was disproportionately impacted by local quarantine restrictions. Despite these challenges,Objectives of the Company’s Board of Directors and executive leaders took decisive action to mobilize employees around safety measures, cost reduction and liquidity. The Company’s executive compensation actions occurred in an environment of uncertainty, urgency and strong commitment to the Company’s future. As in prior years, the Company’s philosophy was to be conservative in setting compensation levels and fundamentally focused on aligning executives’ interests with those of our stockholders. Executive Compensation Program
Financial Results and Liquidity Highlights
Reported net loss for the full year 2020 of $1.3 billion, or a loss of $10.72 per diluted share. These results compare to net income of $769 million, or a gain of $6.19 per diluted share in 2019.
Accessed approximately $5 billion in new liquidity, including $1.2 billion raised in the capital markets approximately $600 million in bank funding, $1 billion in government grants under Coronavirus Aid, Relief, and Economic Security (CARES) Act and $1.9 billion in government loans under the CARES Act.
Reported adjusted net debt of $1.7 billion in December 2020, flat from December 2019 in spite of a 59% decline in operating revenues for the year.
Reported a debt-to-capitalization ratio, including certain short-term borrowings, of 61%.
Reported an adjusted net debt to net invested capital ratio of 36% at December 31, 2020, compared to 28% at December 31, 2019.
Held $3.3 billion in unrestricted cash and marketable securities as of December 31, 2020.
Operational and Guest Safety Highlights
Eliminated change fees and extended the flexible travel policy for tickets purchased through March 31, 2021.
Introduced Next-Level Care, involving nearly 100 measures designed to create a safe experience for guests and employees, and broadcast the Alaska Airlines Safety Dance commercial.
Named the safest U.S. Airline in www.airlineratings.com’s 2021 Top 20 Safest Airlines report.
Partnered with healthcare providers to offer rapid and standardized COVID-19 pre-departure testing for guests, as well as a pre-clearance program for guests traveling to Hawaii.
Received diamond level certification from the Airline Passenger Experience Association for traveler health and safety standards.
Announced a partnership with Microsoft to use sustainable aviation fuel to offset the environmental impact of certain air travel.
Executive Transitions
On November 5, 2020, the Company announced Mr. Tilden will retire as CEO of the Company and Alaska Airlines effective March 31, 2021 and remain as Board Chair as part of a long-planned succession process.
The Company also announced that Mr. Minicucci, currently the president of Alaska Airlines, will assume the CEO role at the Company and Alaska Airlines effective March 31, 2021. Mr. Minicucci, has served as president of Alaska Airlines since May 2016. He served as Alaska Airlines’ chief operating officer from December 2008 until November 2019.
In keeping with actions taken during the Company’s last CEO succession in 2012, the Committee approved a special equity award to Mr. Minicucci in November 2020. The purpose of the grant was to recognize his heightened responsibilities as the next CEO, to acknowledge his instrumental leadership role during the COVID-19 crisis, to sustain his engagement, and to align his long-term compensation with the Company’s long-term performance as it emerges from the pandemic. Refer to the Special Equity Awards section below for the terms of this special grant.
On February 25, 2021, the Committee approved the compensation arrangements for Mr. Minicucci when he assumes the CEO role on March 31, 2021. See the CEO Transition Grant section below for a summary of Mr. Minicucci’s compensation.
On March 22, 2021, the Company announced the Mr. Beck will retire as executive vice president and COO of Alaska Airlines effective April 3, 2021, and remain as Special Advisor to the CEO under an employment agreement which expires on February 12, 2022. Mr. Beck will be succeeded as COO by Ms. Constance von Muehlen, currently senior vice president maintenance and engineering at Alaska Airlines. See the Employment Agreement with Mr. Beck section below for a summary of his employment terms.
As previously disclosed in the 2020 proxy statement, Mr. Tackett assumed the role of executive vice president finance and chief financial officer effective upon Mr. Pedersen’s retirement on March 3, 2020.
Compensation Philosophy and Actions pre-dating COVID-19
The Committee began the annual cycle of reviewing and setting executive compensation in January 2020. The philosophy of the Company’s executive compensation program in 2022 was consistent with that of prior years: to be conservative stewards of stockholdershareholder resources while compensating executives appropriately and competitively (within the bounds of CARES Act limits) and driving superior performance relative to other airlines in North America. Because the NEOs are primarily responsible for the overall execution of the Company’s strategy, a high percentage of their total target direct compensation, approximately 86% for the CEO and 79% for the other NEOs, is variable and tied to Company performance or stock price, thereby providing incentives to achieve goals to help create value for stockholders.shareholders.
The fundamental objectives of the executive compensation program are:
Environment, Social and Governance (ESG) initiatives continue to play a prominent role in our compensation programs. Our PBP Plan includes carbon emission reduction goals, and our performance stock unit awards include a diversity, equity and inclusion metric that incentivizes executives to advance these goals.
2022 Business Highlights
2022 was a year of significant recovery and accomplishment for Alaska Airlines. Despite many challenges during the year, we reported industry leading profit margins, ran one of the best operations, signed five new labor deals, and executed the majority of our single fleet transition. Below are some of the business highlights from 2022:
44
2022 Executive Transitions and Compensation Actions:
To implement the executive compensation program for 2022, the Committee took the following steps in February 2020:2022:
Approved target total direct compensation for Mr. TildenMinicucci that is approximately 86% performance-based, meaning that it is contingent on operational, financial and/or has potential long-term value tied to the Company’s stock price.price performance. For the other NEOs, the Committee approved target total direct compensation that is, on average, approximately 79% performance-based and/or has potential long-term value tied toperformance-based. (See the Company’s stock price.Target Total Direct Compensation section below.) Both our short-term and long-term incentive programs contain performance-based goals that we believe would contribute to the long-term success of the Company.
Established 20202022 performance goals and participation rates for the PBP Plan. The goals under this plan include metrics around profitability, safety, cost management, carbon emissions reduction, and relative industry financial performance. All employees of Alaska Airlines and Horizon Air participate in this annual incentive pay plan.the PBP plan and work towards the same goals. The NEOs have target participation rates ranging from 85%75% to 140%150% of the NEO’stheir base salary.
Approved annual long-term incentive equity awards to NEOs. TheEach NEO's grant consisted of a combination of stock options, service-based RSU awards, and PSU awards that vest only if specified performance levels of relative total shareholder return (TSR) and return on invested capital (ROIC)diversity, equity and inclusion metrics are achieved.
Compensation Setting Philosophy
Compensation Actions related to COVID-19; CARES Act Impacts
At the outset of the COVID-19 pandemic,In 2022, the Committee took immediate steps to aid the Company’s cash preservation goals, approving:
NEO Base Salary Reductions. The Committee rescinded executive salary increases that had been approved in February to take effect in April. Mr. Tilden and Mr. Minicucci took a reduced compensation package that included no base salary from March 6 through October 3, 2020. The other NEOs took a 30% base pay reduction from April 4 through October 3, 2020.
Director Retainer Reductions. The board of directors rescinded cash and equity retainer increases that had been approved in November 2019 to take effect in May 2020. Directors waived the portion of their cash retainers correlated to service from May 7, 2020 to October 1, 2020.
In April 2020, Alaska Airlines and Horizon Air received the first round of government aid under the payroll support program (PSP) of the U.S. Coronavirus Aid, Recovery and Economic Support (CARES) Act. A second round of PSP support would be authorized in December 2020 and funded the following month. In September 2020, the Company received the right to draw up to $1.9 billion in secured loans under the loan program of the CARES Act. The CARES Act imposes limits or caps on the compensation that may be paid to a recipient’s executives in a prescribed period. Consistent with these requirements, the Company agreed to cap total compensation for Mr. Tilden and Mr. Minicucci at $3 million plus one half of their 2019 total compensation exceeding $3 million, and to cap total compensation for other executives (including the NEOs other than Mr. Tilden and Mr. Minicucci) at 2019 levels, through at least October 2022 and as long as May 2027. The Act also imposes caps on executive severance payable to NEOs and other executives for the same duration, Therefore, it is possible that our NEOs and other executives may not realize the full value of their intended compensation packages as long as these restrictions remain in place.
As the pandemic continued into the summer months, and as a thriving Seattle technology market drove attrition of Company personnel, the Committee began to consider the implementation of a supplemental bonus plan to reengage and motivate employees and retain leaders critical to navigating the Company through the impact of the COVID-19 pandemic. As it became clear that participants would likely receive no payout under the largest component of the annual bonus plan, with the input of its independent compensation consultant, the Committee adopted the COVID-19 Business Recovery Incentive Pay (CBRP) Program in June 2020.
|
Based on encouraging signs of recovery and progress on cash preservation goals, the Committee took further action in the summer of 2020 to engage and retain key executives whose compensation had been reduced when the COVID-19 pandemic began.
Restored NEO Base Salaries. In August 2020, the Committee restored NEO base salaries (other than Mr. Tackett) to their 2019 levels, effective in October 2020.
In the fall of 2020, with the Company’s revenues, enplanements and share price at depressed levels, the Committee observed that NEOs’ realized total target compensation was significantly lower than the target levels intended when these arrangements were approved at the beginning of the year, a gap driven largely by a 45% decrease in the value of the Company’s shares since the beginning of the year (compared to a 4% rise in the S&P 500) combined with a highly competitive Seattle job market. Furthermore, unvested PSU awards granted in 2018, 2019 and 2020 that were based on achievement of certain return-on-invested-capital (ROIC) targets were deemed unlikely to vest and, therefore, given the substantial loss in 2020 as a result of the COVID-19 pandemic on demand for air travel, we have reduced their value to $0 in accordance with generally accepted accounting principles (GAAP). The Committee therefore approved special equity awards to help ensure experienced talent remained in place to guide the business through the challenges presented by the COVID-19 crisis, a CEO succession and beyond, and to recognize leaders for the work they did throughout the year to position the Company for recovery. These special grants marked a rare but, in the Committee’s view, appropriate departure from the Company’s history of maintaining a share burn rate that is lower than the ISS industry benchmark of 2% and the three-year .99% median burn rate of peer transportation companies. The Company’s share burn rate was .86% in 2019 and 1.83% in 2020 (including these special grants).
Special Grant: In November 2020, the Committee approved one-time, service-vesting equity awards to NEOs and other Company executives. Refer to the Special Equity Awards section for terms of these special grants.
Consideration of Say-on-Pay Advisory Vote
Stockholders have an opportunity annually to cast an advisory vote in connection with our executive compensation program. At the 2020 annual meeting, 97.35% of the votes were cast in favor of the advisory say-on-pay proposal in connection with the Company’s 2019 compensation. The Committee believes that voting results indicate that stockholders approve of the structure of executive compensation at Alaska Air Group.
As described above, the Committee deemed that the best interests of the Company and its shareholders were served by executive compensation adjustments (including the temporary reductions in NEO base salaries, implementation of a supplemental bonus plan for the second half of 2020, and the special equity grants awarded in November 2020) made during this unprecedented year.
Objectives of the Company’s Executive Compensation Program
The fundamental objectives of the executive compensation program have remained in place despite the uncertainties of the year and are as follows:
to attract and retain highly qualified executives who share the Company’s values and are committed to its strategic plan by designing the total compensation package to be competitive with an appropriate peer group;
to motivate executives to provide excellent leadership and achieve Company goals by linking incentive pay to the achievement of specific targets set in the PBP Plan, the CBRP Plan and the Company’s strategic plan;
|
to provide executives with reasonable security to motivate them to continue employment with the Company and achieve goals that will help the Company remain competitive and thrive for the long term.
Compensation Philosophy
The Committee has historically followed a conservative compensation philosophy, generally targetingtargeted the CEO’s base salary at or aboutbelow the 25thpercentile of the CEOs of the Company’s airline peer group identified below. The Committee may decide to set the CEO’s salary above or below the 25ththat percentile after considering other relevant factors. The CEO’s compensation arrangements are generally structured so that he or she has the opportunity to earn total direct compensation up to approximately the 50th percentile of the target total direct compensation of peer companies’ chief executive officers if the applicable annual and long-term incentive targets are reached, and to surpass the 50th percentile if those targets are exceeded.
For the other NEOs, the Committee generally targets base salary at or about the 50th percentile of base salaries for comparable positions with the airline peers and provides these executives an opportunity to achieve total direct compensation at the 50th percentile of the target total direct compensation for comparable positions with the peer companies if annual and long-term incentive targets are reached, and to surpass the 50th percentile if those targets are exceeded.
TheWhile the Committee does not target a specific percentile but rather uses market data as one reference point when makinggenerally sets executive pay decisions. Otherat the levels indicated above, it may also consider other factors, such as Company performance, individual performance, tenure, retention goals, succession considerations, and internal equity, influencein determining the Committee’s executive compensation-setting philosophy and practicecompensation levels for executives from year to year.year as appropriate.
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How Executive Compensation is Determined
The Committee’s Role. The Committee determines and approves the compensation of the NEOs, takingwith the assistance of its independent compensation consultant. The Committee also takes into account the CEO’s recommendations for all NEOs excluding himself. The Committee determines the CEO’s compensation with the assistance of its independent compensation consultant.
Independent Consultants. The Committee againhas retained Meridian Compensation Partners, LLC (Meridian) to assist the Committee with its responsibilities related to the Company’s executive and board of directors’director compensation programs. The Committee considered the following facts in assessing Meridian’s independence as an advisor:
Meridian does not provide other services to Alaska Air Group or its subsidiaries. Meridian’s services are limited to providing the Committee with advice and information solely on executive and director compensation and related corporate governance matters.
The amount of fees paid by the Company during the 12-month period ended December 31, 20202022 represents less than one percent of Meridian’s total annual revenues for the 20202022 calendar year.
Meridian maintains policies designed to prevent conflicts of interest, which policies were detailed to the Committee.
No Meridian partner, consultant or employee who serves the Committee has any business or personal relationship with any member of the Committee.
No Meridian partner, consultant or employee who serves the Committee, or any of their immediate family, owns any shares of stock of the Company.
No Meridian partner, consultant or employee who serves the Committee, or any of their immediate family, has any business or personal relationship with any executive officer of the Company.
Based on its review, the Committee has determined that no conflicts of interest exist between the Company and Meridian (or any individuals working on the Company’s account on Meridian’s behalf). and that Meridian is independent.
How the Elements of the Company’s Executive Compensation Program Were Selected
The Committee conducts periodic reviews of the Company’s executive compensation program to assess its alignment with the Committee’s objectives. The Committee considers how each component of compensation motivates executives to help the Company achieve its performance goals and execute its strategic plan and how it promotes retention of executives who share the Company’s values. The compensation structure is designed to promote initiative, resourcefulness, sustainability, diversity, equity and inclusion and teamwork by key employees whose performance and responsibilities directly affect the performance of the business. The Committee uses both fixed compensation (i.e. base salary) and variable performance-based compensation to achieve a program that we believe is balanced, competitive and provides appropriate incentives. Base salaries, benefits, perquisites, retirement benefits, and change-in-control benefits are intended to attract and retain highly qualified executives and, in the case of salary and benefits, are generally paid out on a short-term or current basis. Annual incentives and long-term equity-based incentives are intended to motivate executives to achieve specific performance objectives.
The Committee believes that this mix of short-term and long-term compensation allows it to achieve dual goals of attracting and retaining highly qualified executives and providing meaningful performance incentives for those executives.
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Deterrents to Excessive Risk-Taking
The Committee believes it has designed the overall compensation program in such a way as to deter excessive risk-taking, to encourage executives to focus on the long-term success of the Company and to align the interests of executives with those of stockholdersshareholders by:
using several different financial, ESG and operational metrics that are directly tied to the Company’s strategy;
setting financial, ESG and operational goals that are reviewed and approved by the Committee, all members of which arethe Board has determined to be independent;
overlapping the performance periods of awards;
incorporating short-term and long-term performance periods of varying lengths;
maintaining and monitoring compliance with executive stock ownership requirements;
capping the payout of short-term cash incentives and PSUs;
allowing the Committee discretion to reduce amounts otherwise payable under certain awards;
referencingmonitoring market compensation practices of the airline industry;
maintaining a recoupment policy that allows the Committee to recover compensation in certain situations;
considering internal equity among Company executives; and
reflecting the current business challenges and opportunities facing the Company.
The Company does not believe that its compensation programs encourage unnecessary risk-taking that could have a material adverse effect on the Company as a whole.
Executive Pay Mix and the Emphasis on Variable Pay
The Committee believes that emphasis on variable, performance-based compensation for the NEOs is a key element in achieving a pay-for-performance culture and in aligning management’s interests with those of the Company’s stockholders.shareholders. At the same time, the Committee believes that the executive compensation program provides meaningful incentives for executives while balancing risk and reward.
TotalTarget total direct compensation for the Company’s NEOs is tailored to place a substantial emphasis on variable pay, that is, pay linked to the achievement of specific, measurable performance objectives and subject to variation
depending on the degree to which such objectives are achieved. For 2020,2022, the Committee approved pre-pandemic target-leveltarget total direct compensation for Mr. TildenMinicucci that is 86% variableperformance-based and/or tied to stockholdershareholder value creation. With respect to the other NEOs, the Committee approved target
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total direct compensation that is on average 79% variableperformance-based upon the achievement of operational and tied to stockholder value creation.financial performance measures.
Target Total Direct Compensation
The Use of Benchmarking Against a Peer Group Compensation Data
The Committee reviews and analyzes target total direct compensation for the NEOs annually against the compensation provided by a peer group of airline companies to executives in similar positions. In analyzing the information for 2020,2022, the Committee reviewed the target total direct compensation for executives of a peer group of airlines as identified below.
The following companies represent the airline peer group selected by the Committee as a comparator for determining appropriate compensation levels for 20202022 (the same peer group as used to evaluate 2019 compensation except for WestJet Airlines which became a private company in 2019)2021 compensation):
Air Canada
American Airlines Group
Delta Air Lines
Hawaiian Holdings
JetBlue Airways Corporation
SkyWest
Southwest Airlines
Spirit Airlines
United ContinentalAirlines Holdings
WestJet Airlines48
The Committee chose to include the companies named above in its peer group for the following reasons:
they represent a group of sufficient size to present a reasonable indicator of executive compensation levels;
they are in the airline industry and their businesses are similar to the Company’s business;
the median annual revenue of this group approximates the Company’s historical annual revenue;revenue with ranges for airlines and
the Company competes with these peer companies for talent to fill certain key, industry-related executive positions.
In the aggregate, 20202022 target total cash compensation and target total paydirect compensation for theexecutive vice president NEOs other than the CEO fell betweenwas at approximately the 2550th and 75th percentiles percentile for comparable positions at companies in the airline peer group. Mr. Minicucci and Ms. Schneider were below these levels in 2022, however. For our CEO, target total cash compensation was set below the 25th percentile and target total direct compensation was set at approximately the 5040th percentile for chief executive officers within the airline peer group. The varying range of company revenues was considered when reviewing market data results fromMs. Schneider’s target total cash compensation and target total direct compensation were at approximately the airline40th percentile compared to comparable positions within a general peer group.set.
In setting 20202022 executive compensation, the Committee also reviewed data for 2119 companies in the broader transportation industry having median annual revenue similar to the Company’s annual revenues as an additional reference point to assess the Company’s executive compensation program. The companies in this transportation industry peer group include: Air Canada, AMERCO, Atlas Air, Avis Budget Group, CH Robinson Worldwide Inc., Expedia Group, Inc., Expeditors International of Washington, Inc., Hertz Global Holdings, Inc., Hub Group, Inc., Hilton Worldwide Holdings, Inc., JB Hunt Transport Services, Inc., JetBlue Airways Corporation, Landstar System, Inc., Marriott International, Inc., Norfolk Southern Corporation, Norwegian Cruise Line Holdings Ltd., Royal Caribbean Cruises Ltd., Ryder System, Inc., Knight-Swift Transportation Holdings, Inc., Union Pacific Corporation, Wyndham Destinations, Inc., and XPO Logistics, Inc. The peer group listed above is consistent with the 2021 transportation peer group used for this purpose, with the exception of removing CH Robinson Worldwide Inc. due to an increase in their revenue and market capitalization and adding Atlas Air given their industry and size.
In the aggregate, target total cash compensation for the NEOs fell below the median for comparable positions at companies in the transportation industry peer group, and target total direct compensation was between approximately the 25th and 50th percentiles. For our CEO, target total cash compensation and target total direct compensation fell below the 25th percentile for chief executive officers within the transportation industry peer group.
In general, the Committee uses this peer group and transportation industry data as background information for its compensation decisions and does not “benchmark” compensation at any particular level relative to the peer companies. Except as otherwise noted in this CD&A, decisions by the Committee are qualitative and the result of the Committee’s business judgment, which is informed by the analysis of the members of the Committee as well as input from, and market data provided by, its independent compensation consultant. The Committee believes that the compensation opportunities provided to the NEOs are appropriate in light of competitive considerations.
The Application of Internal Equity Considerations
In addition to benchmarking againstreviewing compensation data for airline and transportation industry peer groups, the Committee believes it is appropriate to consider other principles of compensation, and not accept benchmarkingrely on market data as the sole basis for setting compensation. Thus, while the Committee has considered peer group data as described above, it has also applied other compensation principles, including internal equity, when determining executive compensation. By also considering internal equity, the Committee can structure executive compensation in a way that ensureshelps ensure appropriate compensation in light of atypical internal or external pressures or compensation considerations.
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The Use of Tally Sheets
Annually, the Committee reviews tally sheets that show each element of compensation for the NEOs. Base salaries, incentive plan payments, equity awards, option exercises, perquisites, and health and retirement benefits are included on tally sheets, which are prepared by the Company’s corporate affairs and people departments. The Committee uses the compensation tally sheets to help verify that executive compensation is internally equitable and proportioned according to the Committee’s expectations.
Current Executive Pay Elements
Base Pay
TheIn determining executives’ base salary levels, the Committee assesses considers market compensation data as described above, as well as each executive’s duties and scope of responsibilities, past performance and expected future contributions to the Company, the market demand for the individual’s skills, the individual’s influence on long-term Company strategies and success, the individual’s leadership performance, and internal equity considerations.
In February 2020,2022, the Committee approved a base salary of $590,000$610,000 for Mr. Tilden,Minicucci effective April 16, 2022, which was at or aboutbelow the 25thpercentile of salaries for CEOs in the airline peer group and flat withan increase of about 5% over his 2019 base pay. The chart below depicts CEO base salaries at airline peer group companies in 2019.2021 salary level.
Mr. Tilden accepted a 100% reduction of his base salary from March 6 through September 2020 in light of the COVID-19 crisis. In October 2020, his base salary was restored to $590,000.
CEO Base Salary Comparisons(1)
(Airline Peer Group)
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In February 2020,2022, the Committee also approved base salaries for the other NEOs as follows: Mr. Tackett -- $490,000; Mr. Minicucci -- $570,000;$535,500; Mr. Harrison -- $490,000;$515,000 Ms. Schneider -- $425,100; and Mr. BeckMs. von Muehlen -- $440,000. In anticipation$425,200 effective as of Mr. Pedersen’s announced retirement in March 2020, the Committee did not adjust his base pay from its 2019 level ($475,000). April 16, 2022.
Similar to Mr. Tilden, Mr. Minicucci accepted a 100% reduction of his base salary from March 6 through October 2, 2020 due to the COVID-19 crisis. In addition, the Committee rescinded the above referenced salary increases approved in February 2020 and reduced other NEOs’ base pay by 30%.
The Committee restored these NEOs’ base salaries at the following rates effective October 3, 2020: Mr. Tackett -- $490,000; Mr. Minicucci -- $550,000; Mr. Harrison -- $475,000; and Mr. Beck -- $425,000. (Mr. Tackett’s salary was increased in March 2020 in connection with his promotion to CFO.)
Performance-Based Pay (PBP)PBP Short-Term Incentive Pay Plan
The Company’s NEOs are eligible to earn annual incentive pay under the PBP Plan, in which all eligible company employees participated in 2020.2022. The PBP Plan is intended to motivate executives and other employees to achieve specific company goals. The Committee aligns executive compensation with the Company’s strategic plan by choosing a target performance level for each operational, ESG or financial
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goal (outlined in the 2020022 Performance-Based Pay Metrics table below) that is consistent with the Company’s strategic plan goals.
Target payout opportunities are established for each NEO as a percentage of base salary. These percentages are approved by the Committee after considering market data, performance, tenure, and internal pay parity, among other factors as it deems appropriate.
For the NEOs, the 20202022 target participation levels were as follows:
20202022 Performance-Based Pay Plan Participation Rates
Name | Target Participation
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Ben Minicucci | 150% | |||||
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Incentive award payments under the PBP Plan range from 0% to 200% of the NEO’s target based on the achievement of performance goals set by the Committee at the beginning of each year. year plus a margin modifier that can increase the PBP payout based on pre-tax margin industry placement. However, PBP payout percentage plus the modifier is capped at 200% for executive employees.
For each performance metric, performance at the target level will generally result in a 100% payout of the target amount for that metric, while the payout percentage would be 200% for performance at or above the maximum level and 25% for performance at the threshold level. The payout percentages are interpolated for performance between the levels identified below, but if performance for a particular metric is below the threshold level, no payment will be made as to that metric. The Committee retains discretion to adjust bonus amounts that would otherwise be paid. paid though no such discretion was applied for 2022.
The long-term success of the Company is highly dependent on running a profitable, safe, sustainable and reliable operation meeting or exceedingand outperforming the expectations of guests, keeping unit costs in check, enhancing brand strength and generating financial returns well above our cost of capital.industry. Each of these key strategic objectives is reflected in the goals of the PBP Plan.
For 2020,2022, the PBP Plan metrics for Alaska Airlines employees were set as follows:
20202022 Performance-Based Pay Metrics
| Goal |
| Weight |
| Threshold |
| Target |
| Maximum |
| Profitability (1) |
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| Based on the Adjusted Pretax Profit percentage of Alaska Air Group, Inc. |
| 70% |
| 0% |
| 5% |
| 10% |
| Safety |
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| Employee Safety |
| 5% |
| 70% |
| 75% |
| 85% |
| Based on quarterly average results of employee surveys. |
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| Guest Safety |
| 5% |
| 88% |
| 92% |
| 95% |
| Based on the annual average of Alaska Listens survey responses of good, very good and excellent for 2022. |
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| Environmental, Social and Governance (ESG) |
| 10% |
| 2.81 lbs/RTM |
| 2.76 lbs/RTM |
| 2.74 lbs/RTM |
| Based on Alaska and Horizon Air combined passenger and cargo aircraft carbon dioxide emissions in pounds per revenue ton mile (RTM). |
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| Cost per Available Seat Mile excluding Fuel (CASM ex. Fuel) (2) |
| 10% |
| 8.30 |
| 8.20 |
| 8.10 |
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| Target |
| Maximum |
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| Operational Performance |
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| Safety (1) |
| 10% |
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| The number of safety goals met. |
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| 1 of 3 |
| 2 of 3 |
| 3 of 3 |
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| Brand Strength |
| 10% |
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| Average score of guests' preferences of Alaska over other airlines as well as their rating of Alaska's overall performance. |
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| 74% or higher |
| 75% or higher |
| 76% or higher |
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| 10% |
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| Cost per available seat mile excluding fuel and special items (Alaska) |
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| 8.25¢ |
| 8.15¢ |
| 8.05¢ |
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| Alaska Air Group Profitability |
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| Pre-Tax Profit Margin Percentage of Alaska Air Group, Inc. (2) |
| 70% |
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| 10% |
| 15% |
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| Profit Margin Modifier |
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| Ranking in Industry |
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| Third |
| Second |
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| 1 pt |
| 2 pts |
| 3 pts |
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In addition to the metrics identified above, the PBP plan contained a relative Margin Modifier based on adjusted pre-tax profit compared to results for corresponding metrics reported by six competitors (Delta, United, American, Southwest, JetBlue, and Hawaiian) that can increase the award by up to 60 percentage points. We believe profitable growth creates value for all our stakeholders. Implementing a profit modifier builds on our baseline profitability threshold, allowing us to create further alignment with our long-term financial goals of industry outperformance and to recognize our employees for contributing to that success. Ultimately, stronger outperformance allows greater reinvestment in our business to fuel more growth, fosters our culture, and provides the foundation for attractive shareholder returns, further solidifying our strong position in the marketplace.
As noted above, annualthe PBP target performance measures reflect financial, operational and marketingsustainability goals that are generally consistent with the strategic plan that is approved by the Board. Maximum goals correlate to superior performance, while threshold goals generally correlate to what the Committee believes is an acceptable, but minimal, level of performance as compared to the prior year.
The Committee believes the use of a safety metric in the PBP reflects the Company’s unwavering commitment to safety and reinforces its message that every employee ‘owns safety’.
The safety goals areCommittee also included a carbon dioxide emission per revenue ton mile as a PBP metric for 2022 to drive operational enhancements focused on the highest risk areas that could negatively impact our operations, our employees and our guests. The Safety Committee has authorityreducing carbon emissions to recommend changes to the goals and overall payout rate on the safety metric each year.
The brand strength measure was set at a level the Committee believed would build loyalty and increase revenue over time. The CASM (cost per available seat mile excluding fuel and special items) metric was similarly chosen to supportassist in achieving the Company’s achievement of its strategic plan.short and long term sustainability goals.
The Committee believes that using adjusted non-GAAP measures, as defined in the footnotes to the 2022 Performance-Based Pay Metrics table above, such as CASM and adjusted pre-tax profit and CASM ex. Fuel, rather than GAAP measures, more closely ties results to elements of performance that can be controlled by the decisions and actions of employees, thereby providing a more direct link between performance and reward. In addition, by removing the short-term impact of certain business decisions (such as the gain or loss on
disposition of capital assets), we believe the use of adjusted measures encourages executives to make decisions that are in the best interest of the Company over the long term.
2020 COVID-19 Business Recovery Incentive Pay (CBRP) Plan
Several months intoThe table below presents the COVID-19 crisis, it became clear that participants would likely receive noactual performance results and payout onpercentages for the adjusted pretax profit metric of the2022 PBP Plan. In June 2020, the Committee approved a supplemental incentive pay program, the CBRP Plan. The CBRP Plan is a one-time performance plan tied to business recovery goals measured over the last six months of 2020. The goal of the CBRP Plan is to retain and motivate employees at all levels and to ensure that experienced talent remained in place to help the Company emerge from the impacts of COVID-19. The plan was developed specifically to incentivize participants to achieve performance-based goals tied to the Company’s response to unanticipated and unpredictable impacts of the COVID-19 pandemic. All eligible employees (including each of the NEOs then employed with us) participated in the CBRP Plan.
We believe the financial recovery of the Company depends on the ability to reduce cash burn and instill confidence in employees and guests by taking steps to adequately address personal health safety concerns in workspaces and on planes. Accordingly, the CBRP Plan allocated 50% weight to a cash preservation goal and 50% weight to employee and guest safety goals.
The CBRP Plan target participation rates for NEOs are the same as those in the2022 PBP Plan. However, payout under the CBRP Plan ranges from 0% to 60% (subject to the maximum cap described below) and is contingent on the achievement of performance goals set by the Committee in June 2020. For each performance metric, performance at the target level generally results in 100% payment of the weighted value of that metric (for example, performance at target of the cash preservation goals results in a 30% payout), while thePay Calculation
| PBP Metrics |
| Actual |
| % of Target | Weight | Payout % | |||||||
| Profit |
| 8.3 | % |
| 166.3 | % |
| 70.0 | % |
| 116.4 | % |
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| Employee Safety |
| 76.3 | % |
| 113.3 | % |
| 5.0 | % |
| 5.6 | % |
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| Guest Safety |
| 94.1 | % |
| 170.0 | % |
| 5.0 | % |
| 8.5 | % |
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| Sustainability - Carbon Emissions |
| 2.64 |
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| 200.0 | % |
| 10.0 | % |
| 20.0 | % |
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| CASM ex. Fuel (in cents) |
| 9.45 |
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| — | % |
| 10.0 | % |
| — | % |
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| 150.5 | % |
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| 1st |
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| 60.0 | % |
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(1) PBP payout percentage plus the modifier is 25% of the weighted valuecapped at 200% for achievement of threshold performance and 200% of the weighted value for achievement at or above maximum performance. The payout percentages are interpolated for performance between these levels, but if performance for a particular metric is below the threshold level, no payment is made as to that metric. The maximum combined payout any employee may receive under the CBRP Plan when combined with the PBP Plan results or payout is 100% of target. executive employees.
Following is a summary of actual combined results of the 2020 PBP and CBRP performance goals and an example of the calculation of the payout for one of the NEOs (assuming an 85% participation rate):
2020 PBP and CBRP Pay Calculation (1)
| PBP Metrics |
| Actual |
| % of Target Achieved | Weight | Payout % | |||||||
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| Safety |
| 3 of 3 |
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| 200.0 | % |
| 10.0 | % |
| 20.0 | % |
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| Brand Strength |
| 76.1 |
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| 200.0 | % |
| 10.0 | % |
| 20.0 | % |
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| CASM (2) |
| 11.57¢ |
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| — | % |
| 10.0 | % |
| — | % |
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| Alaska Air Group Profitability (3) |
| (45.5%) |
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| — | % |
| 70.0 | % |
| — | % |
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| Total PBP Payout % |
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| 40.0 | % |
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| CBRP Metrics |
| Actual |
| % of Target Achieved | Weight | Payout % | |||||||
| Cash Preservation |
| $600,000 |
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| 98.6 | % |
| 30.0 | % |
| 29.6 | % |
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| Guest Safety |
| Met |
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| 100.0 | % |
| 15.0 | % |
| 15.0 | % |
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| Employee Safety |
| Met |
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| 100.0 | % |
| 15.0 | % |
| 15.0 | % |
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| 59.6 | % |
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| Combined PBP and CBRP Payout % |
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| 99.6 | % |
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| x |
| 85.0 | % |
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| 84.7 | % |
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In addition, all the Company’s employees, including the NEOs, participate in a separate annual incentive plan called the Operational Performance Reward (OPR) Plan, which pays a monthly incentive of up to $150 to all employees when certain operational performance targets are met. Awards are based on the achievement of specific safety metrics, on-time performance and guest satisfaction goals, and the maximum annual payout for each employee is $1,800. In 2020,2022, each Alaska Airlines employee, includingof the NEOs received $1,650earned $712.50 under the OPR Plan.
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Long-Term Equity-Based Incentive Compensation
Long-term equity incentive awards that link executive pay to stockholdershareholder value are an important element of the Company’s executive compensation program. Long-term equity incentives that vest over three- or four-year periods are awarded annually, resulting in overlapping vesting periods. TheAs the value of the awards is dependent on our stock price, the awards are designed to further align NEOs’ interests with those of stockholders.shareholders. In addition, equity awards help attract and retain top-performing executives who fit a team-oriented and performance-driven culture. The Company’s 20202022 equity grant structure is described below (with the percentage of the total award allocated to options, RSUs and PSUs based on the grant date fair value of the award as determined for accounting purposes).below.
Stock Options. The Committee grants 25% of each NEO’s annual long-term incentive award value in the form of stock options with an exercise price that is equal to the fair market value of the Company’s common stock on the grant date. The NEOs will realize value from their stock options only to the degree that Alaska Air Group’s stockholdersshareholders realize value after the grant date of the option, provided the stockholdershareholder had purchased shares and held them for the same period as the option remains outstanding. The stock options also function as a retention incentive for executives, as they generally vest ratably over a four-year period on each anniversary of the grant date and have a ten-year term that may be shortened if the executive’s employment terminates.
Restricted Stock Units. The Committee also grants 25% of each NEO’s annual long-term incentive awardsaward value to the NEOs in the form of RSUs. Subject to the executive’s continued employment with the Company, the RSUs generally vest on the third anniversary of the date they are granted and, upon vesting, are paid in shares of Alaska Air Group common stock. The RSUs provide a long-term retention incentive through the vesting period that requires continued service to the Company. The RSUs are also designed to further link executives’ interests with those of Alaska Air Group’s stockholders,shareholders, as the value of the RSUs is based on the value of Alaska Air Group common stock. The Company does not issue dividend equivalents on unvested RSUs.
Performance Stock Units. The Committee also grants 50% of each NEO’s annual long-term incentive award value in the form of PSUs. The PSUs vest only if the Company achieves performance goals established by the Committee for the three-year performance period covered by the award. PSUs also provide a retention incentive as vesting is generally also contingent on continued employment through the performance period (although all or a portion of the award may remain eligible to vest if the executive’s employment terminates in certain circumstances). Like RSUs, the PSUs help align the executives’ interests with those of stockholdersshareholders as their value depends on the value of Alaska Air Group common stock. The Company does not issue dividend equivalents on unvested PSUs.
PSUs Granted in 2020.2022. For the PSU awards granted to the NEOs in February 20202022 with a January 1, 20202022 through December 31, 20222024 performance period, the vesting of 25%80% of the target number of stock units subject to the award will be determined in accordance with the chart below based on the Company’s TSR rank versus the following peer group of airlines: Air Canada, American Airlines, Delta Air Lines, UnitedHawaiian Airlines, American Airlines,JetBlue Airways, SkyWest, Inc., Southwest Airlines, JetBlueSpirit Airlines, Inc., and HawaiianUnited Airlines. The vesting of 75%20% of the target number of stock units subject to the award will be determined based on achieving racial equity goals at the Company’s return on invested capital (ROIC) performance for the three-year period as measured against goals set by the Committee.leadership level.
The Committee believes that measuring the Company’s performance relative to other major airlines and the use of appropriate ROIC goals encourages executives to manage the Company in such a way as to maintain sustainable growth and to attract a broader range of investors. Therefore, the Committee set ROIC as the primary performance measure (with 75% weight versus 50% weight in 2018 and 2019) for the PSU awards
granted in 2020 to provide additional incentive for executives to support and drive long-term stockholder value. Given the nature of the airline business and the importance of out-performing our peers, the Committee retained relative TSR as a performance metric for the 2020 PSU awards. The Committee believes measuring TSR on a relative basis rather than on an absolute basis provides a more relevant reflection of the Company’s performance by mitigating the impact of various macro-economic factors such asand rising fuel costs, that tend to affect the entire industry. The Committee believes that advancing racial equity is critical to the long-term success of the Company and therefore introduced the achievement of racial equity goals at the leadership level (i.e., among executives and lower level employees who supervise others) into the long-term executive compensation plan (which we refer to as “D&I Metric” in the table below) in 2021.
The percentage of the PSUs that vest range from 0% to 200% of the target number of units subject to the award, depending on the results of the Company’s goals for the performance period. The payout percentages are interpolated for performance results falling between the levels identified below. The Committee retains discretion to reduce vesting percentages below the level that would otherwise be paid.The Company does not issue dividend equivalents on unvested PSUs.
202054
2022 Performance Stock Unit Award Metrics (2020-2022(2022-2024 Performance Period)
| Airline Peer Group |
| D&I Metric (1) |
| ||||
| TSR Rank Among the |
| Percentage of Peer |
| BIPOC Representation Metrics on 12/23/2024 |
| Percentage of D&I Stock Units that Vest |
|
| 1st or 2nd |
| 200% |
| 25% and above |
| 200% |
|
| 3rd |
| 170% |
| 23% |
| 100% |
|
| 4th |
| 140% |
| 21% |
| 50% |
|
| 5th |
| 120% |
| Below 21% |
| 0% |
|
| 6th |
| 90% |
|
|
|
|
|
| 7th |
| 65% |
|
|
|
|
|
| 8th |
| 45% |
|
|
|
|
|
| 9th |
| 20% |
|
|
|
|
|
| 10th |
| 0% |
|
|
|
|
|
| Airline Peer Group |
| Alaska Air Group ROIC (1) |
| ||||
| TSR Rank Among the Airline Peer Group |
| Percentage of Peer Group Stock Units that Vest |
| Average ROIC |
| Percentage of ROIC Stock Units that Vest |
|
|
|
|
|
|
|
|
|
|
| 1st or 2nd |
| 200% |
| 15% and above |
| 200% |
|
| 3rd |
| 170% |
| 11% |
| 100% |
|
| 4th |
| 140% |
| Below 8% |
| 0% |
|
| 5th |
| 120% |
|
|
|
|
|
| 6th |
| 90% |
|
|
|
|
|
| 7th |
| 65% |
|
|
|
|
|
| 8th |
| 45% |
|
|
|
|
|
| 9th |
| 20% |
|
|
|
|
|
| 10th, 11th or 12th |
| 0% |
|
|
|
|
|
|
|
PSUs Granted Before 20202022. In February 2017,2019, the Committee approved grants of PSUs to the NEOs for the January 1, 20172019 through December 31, 20192021 performance period. In February 2020,2022, the Committee approved a payout of these PSUs at a rate of 79.0%30%. Such performance stock awards were based 50%25% on the Company’s TSR performance relative to the following airline peer group (excluding certain companies that ceased being publicly traded during the performance period):group: Air Canada, Allegiant Travel Co., American Airlines Group, Delta Air Lines, Hawaiian Holdings, JetBlue Airways, Republic Airways Holdings, SkyWest, Southwest Airlines, Spirit Airlines, and United Continental Holdings.Holdings (WestJet Airlines Ltd. was removed from the group due to its acquisition in 2019). The Company’s TSR performance ranked 8th5th among these 119 peers, resulting in a 60%120% payout for that metric. The PSU awards granted in 20172019 were also based 50%75% on achievement of the Company’s ROIC goals set by the Committee (maximum payout if ROIC was 20%15% or above, target payout for ROIC of 13%11%, and threshold payout for ROIC of 10% or below)8%). The Company’s average ROIC during the 2017-20192019-2021 performance period was 11.4%, resultingseverally impacted by the results of the COVID-19 pandemic which resulted in a 128%0% payout for that metric.metric.
The Committee also made grants of PSUs in 20182020 and 20192021 with three-year performance periods beginning in January of each respective year.
For the PSU awards granted in February 2018 to NEOs with a January 1, 2018 through December 31, 2020 performance period, the vesting of 25% of the stock units subject to the award is determined based on the Company’s TSR rank versus the same airline peer group as that used for the 2017 awards, except that Republic Airways Holdings was excluded as it ceased being a publicly traded company during the performance period. The vesting of 25% of the stock units subject to the award is determined based on the Company’s TSR rank relative to S&P 500 companies. The vesting of 50% of the stock units subject to the award is determined based on the Company’s ROIC performance for the three-year period as measured against goals set by the Committee. In early 2021, the Committee determined that the ROIC portion of these awards would not vest
given the substantial loss in 2020 as a result of the COVID-19 pandemic on demand for air travel and approved payouts of 22.5% of target for these PSU awards based solely on relative TSR performance for the three-year period.
The PSU awards granted in 20192020 are scheduled to vest at the end of the January 1, 20192020 through December 31, 20212022 performance period and are based 25% on the Company’s TSR performance relative to the same airline peer group as that was used for the 2018 awards. The PSU2019 awards granted in 2019 were also based 25% on the Company’s TSR performance relative to S&P 500 companies and 50%75% on the Company’s ROIC goals set by the Committee. As noted previously,with 2019 PSU awards, we expect the portion of these awards allocated to the ROIC metric will not vest at 0% given the substantial loss in 2020 as a result of the COVID-19 pandemic on demand for air travel and have reduced the ROIC portion of their value to $0 for accounting purposes in accordance with GAAP.
The PSU awards granted in 2021 are scheduled to vest at the end of the January 1, 2021 through December 31, 2023 performance period and are based 80% on the Company’s TSR performance relative to the same airline peer group that was used for the 2020 awards and 20% on the Company’s progress towards advancing BIPOC representation at the senior leadership level.
Equity Award Guidelines. The Committee considers and generally follows equity grant guidelines that are based on the target total direct compensation levels and pay mix for each NEO described above. Target equity grant date values, when combined with the base salary and annual target incentive opportunity described above, are designed to achieve target total direct compensation for the NEOs at or about the 50th percentile of the peer group data for executives in comparable positions. The Committee may adjust target equity grantsgrant date values to the NEOs based on the Committee’s general assessment of:
the individual’s contribution to the success of the Company’s financial performance;
55
internal pay equity;
the individual’s performance of job responsibilities; and
the accounting impact to the Company and potential dilution effects of the grant.
The Committee believes that stock options, RSUs and PSUs each provide incentives that are important to the Company’s executive compensation program as a whole. Therefore, the Committee generally awards a mix of these instruments to the NEOs when approving annual equity awards.
20202022 Annual Equity Awards. For 2020,2022, the target equity grant date value and mix of the long-term incentive awards granted to the NEOs are shown in the table below:below. While the total target equity grant value increased versus 2021, these awards were subject to clawback pursuant to CARES Act.
Annual Equity Award Value and Mix
| Name |
| Total Equity Value |
| Stock Options |
| Restricted Stock Units |
| Performance Stock Units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Bradley D. Tilden |
| $3.2 Million |
| 25% |
| 25% |
| 50% |
|
| Shane R. Tackett |
| $1.4 Million |
| 25% |
| 25% |
| 50% |
|
| Benito Minicucci |
| $2.0 Million |
| 25% |
| 25% |
| 50% |
|
| Andrew R. Harrison |
| $1.4 Million |
| 25% |
| 25% |
| 50% |
|
| Gary L. Beck |
| $1.3 Million |
| 25% |
| 25% |
| 50% |
|
| Brandon S. Pedersen (1) |
| N/A |
| N/A |
| N/A |
| N/A |
|
| Name |
| Total Target Equity Value |
| Stock |
| Restricted |
| Performance |
|
| Ben Minicucci |
| $3.25 Million |
| 25% |
| 25% |
| 50% |
|
| Shane Tackett |
| $1.6 Million |
| 25% |
| 25% |
| 50% |
|
| Andrew Harrison |
| $1.6 Million |
| 25% |
| 25% |
| 50% |
|
| Constance von Muehlen |
| $1.25 Million |
| 25% |
| 25% |
| 50% |
|
| Andrea Schneider |
| $700,000 |
| 25% |
| 25% |
| 50% |
|
|
|
2022 Annual Equity Award Target Values. The values in the table below representrepresents the target dollar value of annual stock option, PSU and RSU awards granted in February 2020. Actual2022 identified in the table above. The company converts the target value allocated to each type of award into a number of shares to be subject to the award, in the case of RSUs and PSUs, by dividing the dollar value by an average 30-day trailing closing stock price, or, in the case of options, by dividing the dollar value by the per-share value of the option using the Black-Scholes pricing model. The actual grant date fair value usedas determined for accounting purposes (which are disclosed in the executive compensation tables below) will vary from our target
award values due to required accounting methodologies. For more information on these awards, see the 20202022 Grants of Plan-Based Awards table.table below.
56
Annual Equity Target Values
| Name |
| OPTs (25% of Total Grant) |
|
| RSUs (25% of Total Grant) |
|
| PSUs (2) (50% of Total Grant) |
|
| Total Equity Value |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Bradley D. Tilden |
| $ | 800,000 |
|
| $ | 800,000 |
|
| $ | 1,600,000 |
|
| $ | 3,200,000 |
|
| Shane R. Tackett |
| $ | 350,000 |
|
| $ | 350,000 |
|
| $ | 700,000 |
|
| $ | 1,400,000 |
|
| Benito Minicucci |
| $ | 500,000 |
|
| $ | 500,000 |
|
| $ | 1,000,000 |
|
| $ | 2,000,000 |
|
| Andrew R. Harrison |
| $ | 350,000 |
|
| $ | 350,000 |
|
| $ | 700,000 |
|
| $ | 1,400,000 |
|
| Gary L. Beck |
| $ | 325,000 |
|
| $ | 325,000 |
|
| $ | 650,000 |
|
| $ | 1,300,000 |
|
| Brandon S. Pedersen (1) |
| - |
|
| - |
|
| - |
|
| - |
|
| Name |
| Options |
| RSUs |
| PSUs |
| Total Target Equity Value |
| Ben Minicucci |
| $812,500 |
| $812,500 |
| $1,625,000 |
| $3,250,000 |
| Shane Tackett |
| $400,000 |
| $400,000 |
| $800,000 |
| $1,600,000 |
| Andrew Harrison |
| $400,000 |
| $400,000 |
| $800,000 |
| $1,600,000 |
| Constance von Muehlen |
| $312,500 |
| $312,500 |
| $625,000 |
| $1,250,000 |
| Andrea Schneider |
| $175,000 |
| $175,000 |
| $350,000 |
| $700,000 |
|
|
|
|
In addition to the annual equity grant program described above, the Committee occasionally makes off-cycle equity awards at such times and on such terms as it considers appropriate to help achieve the goals of the Company’s executive compensation program.
CEO Transition Grant. On November 5, 2020,
Perquisites and Personal Benefits
In 2022, we provided our NEOs with limited perquisites as described in note (6) to the Company announced that Mr. Tilden will retire as CEO of the Company on March 31, 2021. The Company also announced that Mr. Minicucci will succeed Mr. Tilden as CEO of the Company effective March 31, 2021.
In anticipation of Mr. Minicucci’s March 31, 2021 promotion, the Committee approved a special awardSummary Compensation Table below, including travel privileges unique to him in November 2020 under the Company’s 2016 Performance Incentive Plan of time-vested RSUs with a grant date value of $750,000 and non-qualified stock options with a grant date value of $750,000, in each case as determined for accounting purposes. These awards will each vest ratably over a five-year period based on continued service (without acceleration due to retirement eligibility), with the first vesting scheduled to occur on November 5, 2021.
The Committee, in consultation with its independent advisor, determined that the special award to Mr. Minicucci was appropriate to recognize his heightened responsibilities as the Company’s next CEO, to acknowledge his instrumental role as President through the COVID-19 crisis that has disproportionately affected the airline industry,industry. By providing positive-space travel to sustain Mr. Minicucci’s engagement, andthe NEOs, we are able to align his long-term compensationdeliver a highly valued benefit at a low cost to the Company. In addition, we believe that this benefit provides the opportunity for the NEOs to connect with the Company’s long-term performance as it emerges from the crisis.front-line employees
It is possible that Mr. Minicucci will not realize the full value of this special grant in light of CARES Act compensation restrictions that will remain in place at least through October 2022.
Executive Retention Grants. On November 5, 2020, the Committee also approved special awards of time-vested RSUs and non-qualified stock options (the “Executive Retention Grants”) to the Company’s NEOs and other executives.
In consultation with its independent advisor, the Committee determined that these special grants were warranted to meet the Company’s objectives of retaining key team members who had been stewards of the Company through a pandemic that disproportionately affected the airline industry, sustaining their engagement with the Company, and aligning the executive team with the Company’s long-term performance as it emerges from the crisis.
When determining the value of Executive Retention Grants, the Committee observed that executives had their realizable total compensation drop significantly below target, a gap driven largely by a 45% decrease in the
value of the Company’s shares since the beginning of the year (compared to a 4% rise in the S&P 500). Further, due to this decline, the performance against TSR and ROIC goals for the 2018-2020 performance period of the 2018 PSU grants, the Committee approved payouts of 22.5% of target in 2021. and it is projected that outstanding PSU awards linked to three-year average ROIC performance of 2019 and 2020 PSU grants will have little value at the end of each cycle. The Committee also considered the potential impact of CARES Act executive compensation limits on the NEOs. Such limitations will remain in place through at least October 2022 and as long as May 2027.
The Executive Retention Grant to Mr. Tilden consisted of RSUs with a grant date value of $750,000 and options with a grant date value of $250,000.
The Executive Retention Grant to Mr. Minicucci consisted of RSUs with a grant date value of $562,500 and options with a grant date value of $187,500.
The Executive Retention Grant to Mr. Tackett consisted of RSUs with a grant date value of $375,000 and options with a grant date value of $125,000.
The Executive Retention Grant to Mr. Harrison consisted of RSUs with a grant date value of $375,000 and options with a grant date value of $125,000.
The Executive Retention Grant to Mr. Beck consisted of RSUs with a grant date value of $375,000 and options with a grant date value of $125,000.
RSUs and options issued pursuant to the Executive Retention Grants will vest ratably over a three-year term based on continued service (without acceleration due to retirement eligibility), with the first vesting scheduled to occur on November 5, 2021. It is possible that the NEOs will not realize the full value of the Retention Grants in light of CARES Act compensation restrictions that remain in place at least through October 2022.
Perquisites and Personal Benefits
In 2020, an amount equal to 1% of base salary was paid to NEOs as an allowance for financial planning services.
Retirement Benefits/Deferred Compensation
The Company provides retirement benefits to the NEOs under the terms of qualified and non-qualified defined-benefit and defined-contribution retirement plans. All eligible employees, including the NEOs, participate in the Company’s 401(k) plan. TheCertain NEOs participate in the Retirement Plan for Salaried Employees (the Salaried Retirement Plan) The Salaried Retirement Plan, a tax-qualified defined benefit plan which was frozen on January 1, 2014 at its then-current benefit levels. Due to maximum limitations imposed by the Internal Revenue Code on the annual amount of a pension that may be paid under a qualified defined-benefit plan, theThe benefits that would otherwise be provided to these executivesparticipants under the Salaried Retirement Plan are required to be limited. An unfunded defined-benefit plan in which Mr. Tilden also participates,limited under the 1995 Elected Officers Supplementary Retirement Plan (the Supplementary Retirement Plan), provides make-up benefits plus supplemental retirement benefits.Internal Revenue Code.
In light of the freeze on the Company’s Salaried Retirement Plan effective January 1, 2014, all NEOs participate in the Company’s Defined Contribution Officers Supplementary Retirement Plan (DC Supplementary Retirement Plan), which is a nonqualified defined contribution plan.
The NEOs are also permitted to elect to defer up to 100% of their annual Performance-Based Pay payments under the Company’s Nonqualified Deferred Compensation Plan. The Company believes that providing deferred compensation opportunities is a cost-effective way to permit executives to receive the tax benefits associated with delaying the income tax event on the compensation deferred. The interest earned on this deferred compensation is similar to what an ordinary investor could earn in the market.
Please see the tables under Pension and Other Retirement Plans and 20202022 Nonqualified Deferred Compensation and the information following the tables for a description of these plans.
Stock Ownership Policy
The Committee believes that requiring significant stock ownership by executives further aligns their interests with those of long-term stockholders.shareholders. Within five years of election or promotion to a position with a greater holding requirement, each executive officer mustis expected to beneficially own a number of shares of the Company’s common stock with a fair market value equal to or in excess of a specified multiple of the individual’s base salary as follows:
five times base salary for the CEO;
four times base salary for the president; and
three times base salary for the executive vice presidents;
57
Executives are required to retain 50% of any shares of common stock acquired in connection with the vesting of RSUs and PSUs until the holding requirement is reached. Unexercised stock options, unvested RSUs and unvested PSUs do not count toward satisfaction of the ownership requirements. The Committee reviews compliance with this requirement annually and supported a more lenient approach to policy enforcement in the wake of the COVID-19 pandemic.pandemic and the on-going CARES Act limitations on executive compensation.
Recoupment of Certain Compensation Payments
With respect to elected officers, the Committee may, in its discretion, direct the Company to seek recovery of payments or awards, or to effect forfeiture of unpaid or unvested payments or awards issued under such plans on or after August 7, 2019, if one or more of the following events occurs within three years of the payment or award:
|
|
|
|
|
|
For equity awards and other compensation for 2020 and later years, the Company has and may alsocontinue to recoup certain payments and awards to the extent necessary to comply with the Company’s obligations under the CARES Act.
Agreements Regarding Change in Control and Termination
The Company has change-in-control agreements with the NEOs that provide for severance benefits if the executive’s employment terminates under certain circumstances in connection with a change in control.
The Company has entered into change-in-control agreements with these executives because it believes that the occurrence, or potential occurrence, of a change-in-control transaction would create uncertainty and disruption during a critical time for the Company. The payment of cash severance benefits under the agreements is triggered if two conditions are met: (1) actual or constructive termination of employment and (2) the consummation of a change-in-control transaction. The Committee believes that the NEOs should be entitled to receive cash severance benefits only if both conditions are met. Once the change-in-control event occurs, the NEO’s severance and other benefits payable under the contract begin to diminish with time so long as the executive’s employment continues, until ultimate expiration of the agreement 36 months later.later for Mr. Minicucci and the executive vice presidents and 24 months later for Ms. Schneider. None of the Company’s change-in-control agreements provide for reimbursement of excise taxes.
Employment Agreement with Mr. Beck
Executive Officer Severance Policy
In November 2019, Mr. Beck and Alaska Airlines entered into an employment agreement providing that Mr. Beck would serve as the airline’s executive vice president and chief operating officer through February 12, 2022, at an annual base salary of $425,000 andresponse to a PBP target participation rate of 85%. The agreement specifiedshareholder proposal seeking a requirement that the Company obtain shareholder ratification of termination pay arrangement that passed with just over 54% of votes cast at the 2022 Annual Meeting, the Committee would determineimplemented a policy effective February 13, 2023, requiring the Company to obtain shareholder ratification of any new or renewed severance arrangement (aside from one arising from our dual-trigger change in control agreement terms) with an executive officer if the value of cash payments, perquisites and any equity awards grantedacceleration (calculated pursuant to Mr. Beck during his employment as COO. The agreement also entitles Mr. Beck to participate inSection 280G of the retirement, health, welfare and fringe benefit plans available to similarly situated executives.
In March 2021, Mr. Beck and Alaska Airlines entered into a new employment agreement (supersedingU.S. Internal Revenue Code), exceeds 2.99 times the 2019 agreement) based on his stated intention to retire from his position as Alaska Airlinessum of the executive vice president and chief operating officer effective April 3, 2021, The agreement provides that Mr. Beck will remain employed by Alaska Airlines asofficer’s base salary plus the Special Advisor to the CEO through February 12, 2022, in order to support succession plans and other Company objectives. Mr. Beck will continue to draw an annual salaryaverage value of $425,000 and receive health, welfare and fringe benefits. He will not participate inearned short-term or long-term incentive pay plans after April 3, 2021. Mr. Beck agreedplan bonuses measured over the prior three years. Refer to observe non-competitionBoard Responsiveness to 2022 Nonbinding Shareholder Proposal section above for more detail on our engagement with shareholders on the shareholder proposal and non-solicitation covenants in favorthe implementation of the Company for 18 months following the expiration of his employment term.this policy.
58
Policy with Respect to Section 162(m)
Federal income tax law generally prohibits a publicly-heldpublicly held company from deducting compensation paid to a current or former named executive officer that exceeds $1 million during the tax year. Certain awards granted before November 2, 2017, that were based upon attaining pre-established performance measures that were set by a company’s compensation committee under a plan approved by the company’s stockholders,shareholders, as well as amounts payable to former executives pursuant to a written binding contract that was in effect on November 2, 2017, may qualify for an exception to the $1 million deductibility limit. As one of the factors in its consideration of compensation matters, the Committee notes this deductibility limitation. However, the Committee has the flexibility to take any compensation-related actions that it determines are in the best interests of the Company and its stockholders,shareholders, including awarding compensation that may not be deductible for tax purposes. There can be no assurance that any compensation will in fact be deductible.
Compensation and LeadershipLeadership Development Committee Report
The Committee has certain duties and powers as described in its charter. The Committee is currently composed of five non-employee directors who are named at the end of this report, each of whom the Board has determined is independent as defined by NYSE listing standards.
The Committee has reviewed and discussed with management the disclosures contained in the Compensation Discussion and Analysis section of this Proxy Statement. Based upon this review and discussion, the Committee recommended to the Board of Directors that this Compensation Discussion and Analysis section be incorporated by reference in the Company’s 20202022 Annual Report on Form 10-K filed with the SEC and the Company’s 20212023 Proxy Statement. (1)
Compensation and Leadership Development Committee of the Board of Directors
Marion C. Blakey, Chair
Raymond L. Conner, MemberChair
Kathleen T. Hogan, Member
Jessie J. Knight, Jr., Member (since November 2020)
Helvi Sandvik, Member
J. Kenneth Thompson, Member
|
|
Compensation and Leadership Development Committee Interlocks
and Insider Participation
Ms. Blakey, Mr. Conner, Ms. Hogan, Mr. Knight, Jr., Ms. Sandvik and Mr. Thompson were members of the Compensation and Leadership Development Committee during all of 2020. Mr. Knight has been a member of the Committee since November 2020.2022. No director who served on the Committee for all or part of 2020during 2022 is or has been an executive officer or employee of the Company or has had any relationships requiring disclosure by the Company under the SEC’s rules requiring disclosure of certain relationships and related-party transactions. During 2020,2022, none of the Company’s executive officers served as a director or a member of a compensation committee (or other committee serving an equivalent function) of any other entity where the entity’s executive officers also served as a director or member of the Company’s Compensation and Leadership Development Committee.
2022 Summary CompensationCompensation Table
The following table presents information regarding compensation for services rendered during 20202022 for the CEO, the CFO, the former CFO, and the three other most highly compensated executive officers. These individuals are referred to as the NEOs in this Proxy Statement. As described in the CD&A summary above, in order to comply with CARES Act restrictions on executive compensation, the Company clawed back equity awards previously granted to the NEOs and other impacted executives.
The total compensation in the table includes the grant date fair value of equity awards that were subsequently clawed back to comply with the CARES Act. As discussed in the COVID-19 and CARES Act Impacts section above, a significant portion of the equity awards granted to these executives as part of the annual compensation setting process was clawed back to keep these executives from exceeding their 2019 compensation levels as required by the CARES Act, even though four of them have been promoted to roles with greater responsibilities since 2019.
| Name and Principal Position |
| Year |
| Salary (1) ($) |
|
| Stock Awards (2)(3) ($) |
|
| Option Awards (2) ($) |
|
| Non- Equity Incentive Plan Compen- sation (4) ($) |
|
| Change in Pension Value and Nonqualified Deferred Compensation Earnings (5) ($) |
|
| All Other Compen- sation (6) ($) |
|
| Total ($) |
|
| |||||||
|
|
|
|
| 272308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Bradley D. Tilden |
| 2020 |
|
| 272,308 |
|
|
| 3,137,788 |
|
|
| 960,516 |
|
|
| 846,048 |
|
|
| 656,859 |
|
|
| 204,438 |
|
|
| 6,077,957 |
|
|
| CEO |
| 2019 |
|
| 583,846 |
|
|
| 2,212,188 |
|
|
| 712,749 |
|
|
| 994,431 |
|
|
| 809,872 |
|
|
| 215,230 |
|
|
| 5,528,316 |
|
|
| Alaska |
| 2018 |
|
| 563,846 |
|
|
| 1,961,616 |
|
|
| 640,666 |
|
|
| 981,504 |
|
|
| — |
|
|
| 227,213 |
|
|
| 4,374,845 |
|
|
| Shane R. Tackett |
| 2020 |
|
| 421,346 |
|
|
| 1,421,400 |
|
|
| 436,269 |
|
|
| 416,028 |
|
|
| 120,892 |
|
|
| 125,458 |
|
|
| 2,941,393 |
|
|
| EVP Finance & CFO |
| 2019 |
|
| 399,038 |
|
|
| 799,506 |
|
|
| 257,854 |
|
|
| 418,773 |
|
|
| 101,155 |
|
|
| 148,351 |
|
|
| 2,124,677 |
|
|
| Alaska |
| 2018 |
|
| 353,462 |
|
|
| 476,806 |
|
|
| 203,761 |
|
|
| 369,729 |
|
|
| — |
|
|
| 101,052 |
|
|
| 1,504,810 |
|
|
| Benito Minicucci |
| 2020 |
|
| 253,846 |
|
|
| 2,830,505 |
|
|
| 1,405,245 |
|
|
| 626,506 |
|
|
| — |
|
|
| 169,033 |
|
|
| 5,285,135 |
|
|
| President |
| 2019 |
|
| 542,308 |
|
|
| 1,510,939 |
|
|
| 487,340 |
|
|
| 781,769 |
|
|
| — |
|
|
| 188,180 |
|
|
| 3,510,536 |
|
|
| Alaska |
| 2018 |
|
| 500,385 |
|
|
| 1,284,576 |
|
|
| 428,994 |
|
|
| 671,294 |
|
|
| — |
|
|
| 186,613 |
|
|
| 3,071,862 |
|
|
| Andrew R. Harrison |
| 2020 |
|
| 422,019 |
|
|
| 1,421,400 |
|
|
| 436,269 |
|
|
| 418,352 |
|
|
| — |
|
|
| 132,732 |
|
|
| 2,830,772 |
|
|
| EVP & CCO |
| 2019 |
|
| 467,308 |
|
|
| 1,067,117 |
|
|
| 344,484 |
|
|
| 520,850 |
|
|
| — |
|
|
| 180,732 |
|
|
| 2,580,491 |
|
|
| Alaska |
| 2018 |
|
| 442,308 |
|
|
| 927,831 |
|
|
| 303,736 |
|
|
| 503,787 |
|
|
| — |
|
|
| 151,800 |
|
|
| 2,329,462 |
|
|
| Gary L. Beck (7) |
| 2020 |
|
| 377,596 |
|
|
| 1,347,236 |
|
|
| 414,375 |
|
|
| 375,294 |
|
|
| — |
|
|
| 112,475 |
|
|
| 2,626,976 |
|
|
| EVP & COO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Alaska |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Brandon S. Pedersen (8) |
| 2020 |
|
| 102,308 |
|
|
| — |
|
|
| — |
|
|
| 35,085 |
|
|
| — |
|
|
| 20,112 |
|
|
| 158,225 |
|
|
| Former CFO |
| 2019 |
|
| 467,308 |
|
|
| 1,067,117 |
|
|
| 344,484 |
|
|
| 520,850 |
|
|
| — |
|
|
| 157,981 |
|
|
| 2,557,740 |
|
|
| Alaska |
| 2018 |
|
| 442,308 |
|
|
| 927,831 |
|
|
| 303,736 |
|
|
| 503,787 |
|
|
| — |
|
|
| 146,399 |
|
|
| 2,324,061 |
|
|
In each case, the values of the clawed-back equity awards above are as of the grant date. For a table showing the impact these clawbacks had on the NEOs’ compensation, see page 46-47.
| Name and Principal Position |
| Year |
| Salary (1) |
|
| Stock |
|
| Option |
|
| Non- |
|
| Change in |
|
| All Other |
|
| Total |
|
| |||||||
| Ben Minicucci |
| 2022 |
|
| 600,769 |
|
|
| 3,044,242 |
|
|
| 842,151 |
|
|
| 1,803,021 |
|
|
| — |
|
|
| 197,798 |
|
|
| 6,487,981 |
|
|
| CEO |
| 2021 |
|
| 572,269 |
|
|
| 2,685,881 |
|
|
| 832,659 |
|
|
| 892,090 |
|
|
| — |
|
|
| 147,263 |
|
|
| 5,130,162 |
|
|
| Alaska Air Group |
| 2020 |
|
| 253,846 |
|
|
| 2,830,505 |
|
|
| 1,405,245 |
|
|
| 626,506 |
|
|
| — |
|
|
| 169,033 |
|
|
| 5,285,135 |
|
|
| Shane Tackett |
| 2022 |
|
| 527,654 |
|
|
| 1,498,951 |
|
|
| 414,608 |
|
|
| 1,003,255 |
|
|
| — |
|
|
| 166,427 |
|
|
| 3,610,895 |
|
|
| EVP Finance & CFO |
| 2021 |
|
| 503,846 |
|
|
| 1,475,412 |
|
|
| 406,195 |
|
|
| 534,358 |
|
|
| — |
|
|
| 123,890 |
|
|
| 3,043,701 |
|
|
| Alaska Air Group |
| 2020 |
|
| 421,346 |
|
|
| 1,421,400 |
|
|
| 436,269 |
|
|
| 416,028 |
|
|
| 120,892 |
|
|
| 125,458 |
|
|
| 2,941,393 |
|
|
| Andrew Harrison |
| 2022 |
|
| 507,308 |
|
|
| 1,498,951 |
|
|
| 414,608 |
|
|
| 964,598 |
|
|
| — |
|
|
| 187,451 |
|
|
| 3,572,916 |
|
|
| EVP & CCO |
| 2021 |
|
| 485,385 |
|
|
| 1,475,412 |
|
|
| 406,195 |
|
|
| 514,821 |
|
|
| — |
|
|
| 122,275 |
|
|
| 3,004,088 |
|
|
| Alaska Airlines |
| 2020 |
|
| 422,019 |
|
|
| 1,421,400 |
|
|
| 436,269 |
|
|
| 418,352 |
|
|
| — |
|
|
| 132,732 |
|
|
| 2,830,772 |
|
|
| Constance von Muehlen (7) |
| 2022 |
|
| 417,446 |
|
|
| 1,170,553 |
|
|
| 323,832 |
|
|
| 793,861 |
|
|
| — |
|
|
| 88,520 |
|
|
| 2,794,212 |
|
|
| EVP & COO |
| 2021 |
|
| 373,077 |
|
|
| 892,914 |
|
|
| 288,146 |
|
|
| 375,860 |
|
|
| 34,943 |
|
|
| 51,973 |
|
|
| 2,016,913 |
|
|
| Alaska Airlines |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
| Andrea Schneider (7) |
| 2022 |
|
| 417,685 |
|
|
| 655,515 |
|
|
| 181,318 |
|
|
| 627,240 |
|
|
| — |
|
|
| 143,267 |
|
|
| 2,025,025 |
|
|
| SVP People |
| 2021 |
|
| 396,077 |
|
|
| 589,944 |
|
|
| 162,478 |
|
|
| 321,688 |
|
|
| 125,387 |
|
|
| 110,307 |
|
|
| 1,705,881 |
|
|
| Alaska Airlines |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) In 2020, due |
|
|
Due to the impact of the COVID-19 pandemic on the Company, Mr. Minicucci agreed to a reduction of his base pay to $0 from March 7, 2020 until October 3, 2020. Base pay for Messrs. Tackett and Harrison, and for Mses. von Muehlen and Schneider, was reduced by 30% from April 4, 2020 until October 3, 2020.
61
|
|
| 2020 Performance Awards |
| 2021 Performance Awards |
| 2022 Performance Awards |
| ||||||
|
|
| Aggregate Grant |
| Aggregate Grant |
| Aggregate Grant |
| Aggregate Grant |
| Aggregate Grant |
| Aggregate Grant |
|
| Name |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) |
|
| Ben Minicucci |
| 994,024 |
| 1,939,082 |
| 1,861,136 |
| 3,722,272 |
| 2,207,752 |
| 4,415,504 |
|
| Shane Tackett |
| 695,552 |
| 1,356,841 |
| 1,071,854 |
| 2,143,708 |
| 1,087,073 |
| 2,174,146 |
|
| Andrew Harrison |
| 695,552 |
| 1,356,841 |
| 1,071,854 |
| 2,143,708 |
| 1,087,073 |
| 2,174,146 |
|
| Constance von Muehlen (7) |
|
|
|
|
| 607,310 |
| 1,214,620 |
| 848,911 |
| 1,697,822 |
|
| Andrea Schneider (7) |
|
|
|
|
| 428,298 |
| 856,596 |
| 475,595 |
| 951,190 |
|
In November 2020, the Committee awarded one-time Executive Retention grants of RSUs and stock options to the NEOs (excluding Mr. Pedersen). See the discussion of these awards in the CEO Transition Grants and Executive Retention Grants sections above.
|
|
|
| 2018 Performance Awards |
| 2019 Performance Awards |
| 2020 Performance Awards |
| ||||||
|
|
| Aggregate Grant Date Fair Value (Based on Probable Outcome) |
| Aggregate Grant Date Fair Value (Based on Maximum Performance) |
| Aggregate Grant Date Fair Value (Based on Probable Outcome) |
| Aggregate Grant Date Fair Value (Based on Maximum Performance) |
| Aggregate Grant Date Fair Value (Based on Probable Outcome) |
| Aggregate Grant Date Fair Value (Based on Maximum Performance) |
|
| Name |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Bradley D. Tilden |
| 1,319,472 |
| 2,581,954 |
| 1,479,918 |
| 2,915,766 |
| 1,590,305 |
| 3,102,273 |
|
| Shane R. Tackett |
| 273,513 |
| 535,120 |
| 535,889 |
| 1,055,800 |
| 695,552 |
| 1,356,841 |
|
| Benito Minicucci |
| 854,587 |
| 1,672,250 |
| 1,012,330 |
| 1,994,437 |
| 994,024 |
| 1,939,082 |
|
| Andrew R. Harrison |
| 622,813 |
| 1,218,736 |
| 714,962 |
| 1,408,621 |
| 695,552 |
| 1,356,841 |
|
| Gary L. Beck (7) |
|
|
|
|
|
|
|
|
| 645,917 |
| 1,260,016 |
|
| Brandon S. Pedersen (8) |
| 622,813 |
| 1,218,736 |
| 714,962 |
| 1,408,621 |
| — |
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Personal Travel |
|
|
|
|
| ||
| Name |
| Company Contribution to 401(k) Account ($) |
| Company Contribution to DC-OSRP Account ($) |
| Life Insurance Premium Over $50K ($) |
| Company Match on Charitable Contributions ($) |
| State Business Travel Tax Reimbursement ($) |
| Personal Travel ($) |
| Taxes Paid on Personal Travel ($) |
| Other* ($) |
| Total “All Other Compensation” ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Bradley D. Tilden |
| 32,677 |
| 155,824 |
| 9,504 |
| 1,000 |
| — |
| 2,164 |
| 1,648 |
| 1,621 |
| 204,438 |
|
| Shane R. Tackett |
| 34,200 |
| 66,506 |
| 1,272 |
| 1,000 |
| 3,144 |
| 10,485 |
| 7,108 |
| 1,743 |
| 125,458 |
|
| Benito Minicucci |
| 15,231 |
| 115,987 |
| 3,312 |
| 1,000 |
| 23,264 |
| 4,992 |
| 3,524 |
| 1,723 |
| 169,033 |
|
| Andrew R. Harrison |
| 17,100 |
| 77,097 |
| 3,018 |
| — |
| 6,519 |
| 15,643 |
| 10,479 |
| 2,876 |
| 132,732 |
|
| Gary L. Beck |
| 17,100 |
| 59,959 |
| 12,352 |
| 1,000 |
| — |
| 12,482 |
| 8,282 |
| 1,300 |
| 112,475 |
|
| Brandon S. Pedersen (8) |
| — |
| — |
| 764 |
| 1,000 |
| 8,882 |
| 4,660 |
| 3,106 |
| 1,700 |
| 20,112 |
|
|
|
|
|
|
|
| Life Insurance |
|
|
| Personal Travel |
|
|
|
|
|
|
| ||||
| Name |
| Company |
| Company |
| Additional 'Life Insurance Premium |
| Taxes Paid on Additional Life Insurance Premium |
| Life Insurance Premium Over $50K |
| Personal |
| Reimbursement of Taxes |
| Financial Planning |
| Other* |
| Total “All Other |
|
| Ben Minicucci |
| 18,300 |
| 130,870 |
| 189 |
| 123 |
| 6,192 |
| 7,471 |
| 4,847 |
| — |
| 29,805 |
| 197,797 |
|
| Shane Tackett |
| 36,600 |
| 90,702 |
| 341 |
| 164 |
| 1,440 |
| 14,943 |
| 9,695 |
| — |
| 12,543 |
| 166,428 |
|
| Andrew Harrison |
| 18,300 |
| 83,797 |
| 1,149 |
| 175 |
| 3,312 |
| 37,904 |
| 24,592 |
| 450 |
| 17,772 |
| 187,451 |
|
| Constance von Muehlen |
| 18,300 |
| 29,229 |
| 269 |
| 221 |
| 6,103 |
| 8,929 |
| 5,793 |
| — |
| 19,675 |
| 88,519 |
|
| Andrea Schneider |
| 18,300 |
| 70,285 |
| 1,258 |
| 221 |
| 6,108 |
| 21,321 |
| 13,833 |
| — |
| 11,941 |
| 143,267 |
|
*Includes the Company’s incremental cost of providing a flight benefit, annual physical, life insurance premium,Company lounge membership and the above-market amountabove market-amount paid for accidental death and dismemberment insurance premiums.premiums, and any company match on charitable contributions, reimbursement for state tax on business travel, 90th anniversary incentive card and travel miles and an annual physical, if applicable.
62
|
Ms. von Muehlen and Ms. Schneider were not NEOs prior to 2021; therefore, only 2021 and 2022 compensation information is included. |
|
|
2020 2022 Grants of Plan-BasedPlan-Based Awards
The following table presents information regarding the incentive awards granted to the NEOs in 2020.2022. Please see the Performance-Based AnnualPBP Short-Term Incentive Pay Plan section in the CD&A for a description of the material terms of the non-equity incentive plan awards reported and the Long-Term Equity-Based PayIncentive Compensation section in the CD&A for a description of the material terms of the equity-based awards reported. Each of the equity-based awards reported below was granted under the Company’s 2016 Performance Incentive Plan (2016 Plan).
|
|
|
|
| Estimated Further Payouts Under |
| Estimated Future Payouts |
| All Other |
| All Other |
|
|
|
|
| ||||||||
| Name |
| Grant |
| Threshold |
| Target |
| Maximum |
| Threshold |
| Target |
| Maximum |
| Number of |
| Number of |
| Exercise |
| Grant Date |
|
| Ben Minicucci |
| ||||||||||||||||||||||
| Stock Options |
| 2/7/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 35,810 |
| 55.36 |
| 842,151 |
|
| RSUs |
| 2/7/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
| 15,110 |
|
|
|
|
| 836,490 |
|
| PSUs |
| 2/7/2022 |
|
|
|
|
|
|
| 8,008 |
| 30,220 |
| 60,440 |
|
|
|
|
|
|
| 2,207,752 |
|
| PBP Plan |
|
|
| 450,577 |
| 901,154 |
| 1,802,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shane Tackett |
| ||||||||||||||||||||||
| Stock Options |
| 2/7/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 17,630 |
| 55.36 |
| 414,608 |
|
| RSUs |
| 2/7/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
| 7,440 |
|
|
|
|
| 411,878 |
|
| PSUs |
| 2/7/2022 |
|
|
|
|
|
|
| 3,943 |
| 14,880 |
| 29,760 |
|
|
|
|
|
|
| 1,087,073 |
|
| PBP Plan |
|
|
| 250,636 |
| 501,271 |
| 1,002,542 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Andrew Harrison |
| ||||||||||||||||||||||
| Stock Options |
| 2/7/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 17,630 |
| 55.36 |
| 414,608 |
|
| RSUs |
| 2/7/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
| 7,440 |
|
|
|
|
| 411,878 |
|
| PSUs |
| 2/7/2022 |
|
|
|
|
|
|
| 3,943 |
| 14,880 |
| 29,760 |
|
|
|
|
|
|
| 1,087,073 |
|
| PBP Plan |
|
|
| 240,972 |
| 481,943 |
| 963,886 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Constance von Muehlen |
| ||||||||||||||||||||||
| Stock Options |
| 2/7/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 13,770 |
| 55.36 |
| 323,832 |
|
| RSUs |
| 2/7/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
| 5,810 |
|
|
|
|
| 321,642 |
|
| PSUs |
| 2/7/2022 |
|
|
|
|
|
|
| 3,079 |
| 11,620 |
| 23,240 |
|
|
|
|
|
|
| 848,911 |
|
| PBP Plan |
|
|
| 198,287 |
| 396,574 |
| 793,148 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Andrea Schneider |
| ||||||||||||||||||||||
| Stock Options |
| 2/7/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 7,710 |
| 55.36 |
| 181,318 |
|
| RSUs |
| 2/7/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
| 3,250 |
|
|
|
|
| 179,920 |
|
| PSUs |
| 2/7/2022 |
|
|
|
|
|
|
| 1,725 |
| 6,510 |
| 13,020 |
|
|
|
|
|
|
| 475,595 |
|
| PBP Plan |
|
|
| 156,632 |
| 313,264 |
| 626,528 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key: RSUs – Restricted Stock Units; PSUs – Performance Stock Units; PBP – Performance-Based Pay Plan
|
|
|
|
| Estimated Further Payouts Under Non-Equity Incentive Plan Awards (1) |
|
| Estimated Future Payouts Under Equity Incentive Plan Awards |
|
| All Other Stock |
|
| All Other Option Awards: |
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
| Name |
| Grant Date |
| Threshold ($) |
|
| Target ($) |
|
| Maximum ($) |
|
| Threshold (#) |
|
| Target (#) |
|
| Maximum (#) |
|
| Awards: Number of Shares of Stock or Units (#) |
|
| Number of Securities Under- lying Options (#) |
|
| Exercise or Base Price of Option Awards ($/Sh) |
|
| Grant Date Fair Value of Stock and Option Awards (2) ($) |
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Bradley D. Tilden |
|
| |||||||||||||||||||||||||||||||||||||||||
| Stock Options |
| 2/11/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 52,010 |
|
|
| 64.55 |
|
|
| 702,884 |
|
|
| RSUs |
| 2/11/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 12,010 |
|
|
|
|
|
|
|
|
|
|
| 775,246 |
|
|
| PSUs |
| 2/11/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 6,008 |
|
|
| 24,030 |
|
|
| 48,060 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,590,305 |
|
|
| Stock Options |
| 11/5/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 16,940 |
|
|
| 39.18 |
|
|
| 257,632 |
|
|
| RSUs |
| 11/5/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 19,710 |
|
|
|
|
|
|
|
|
|
|
| 772,238 |
|
|
| PBP Plan |
|
|
|
| 214,442 |
|
|
| 857,769 |
|
|
| 1,715,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CBRP Plan |
|
|
|
| 0 |
|
|
| 257,331 |
|
|
| 514,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shane R. Tackett |
|
| |||||||||||||||||||||||||||||||||||||||||
| Stock Options |
| 2/11/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 22,750 |
|
|
| 64.55 |
|
|
| 307,453 |
|
|
| RSUs |
| 2/11/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5,260 |
|
|
|
|
|
|
|
|
|
|
| 339,533 |
|
|
| PSUs |
| 2/11/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,628 |
|
|
| 10,510 |
|
|
| 21,020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 695,552 |
|
|
| Stock Options |
| 11/5/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 8,470 |
|
|
| 39.18 |
|
|
| 128,816 |
|
|
| RSUs |
| 11/5/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 9,860 |
|
|
|
|
|
|
|
|
|
|
| 386,315 |
|
|
| PBP Plan |
|
|
|
| 105,155 |
|
|
| 420,619 |
|
|
| 841,239 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CBRP Plan |
|
|
|
| 0 |
|
|
| 126,186 |
|
|
| 252,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Benito Minicucci |
|
| |||||||||||||||||||||||||||||||||||||||||
| Stock Options |
| 2/11/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 32,510 |
|
|
| 64.55 |
|
|
| 439,353 |
|
|
| RSUs |
| 2/11/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 7,510 |
|
|
|
|
|
|
|
|
|
|
| 484,771 |
|
|
| PSUs |
| 2/11/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,755 |
|
|
| 15,020 |
|
|
| 30,040 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 994,024 |
|
|
| Stock Options |
| 11/5/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 63,510 |
|
|
| 39.18 |
|
|
| 965,892 |
|
|
| RSUs |
| 11/5/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 34,500 |
|
|
|
|
|
|
|
|
|
|
| 1,351,710 |
|
|
| PBP Plan |
|
|
|
| 157,067 |
|
|
| 628,269 |
|
|
| 1,256,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CBRP Plan |
|
|
|
| 0 |
|
|
| 188,481 |
|
|
| 376,962 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Andrew R. Harrison |
|
| |||||||||||||||||||||||||||||||||||||||||
| Stock Options |
| 2/11/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 22,750 |
|
|
| 64.55 |
|
|
| 307,453 |
|
|
| RSUs |
| 2/11/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5,260 |
|
|
|
|
|
|
|
|
|
|
| 339,533 |
|
|
| PSUs |
| 2/11/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,628 |
|
|
| 10,510 |
|
|
| 21,020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 695,552 |
|
|
| Stock Options |
| 11/5/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 8,470 |
|
|
| 39.18 |
|
|
| 128,816 |
|
|
| RSUs |
| 11/5/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 9,860 |
|
|
|
|
|
|
|
|
|
|
| 386,315 |
|
|
| PBP Plan |
|
|
|
| 104,820 |
|
|
| 419,279 |
|
|
| 838,558 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CBRP Plan |
|
|
|
| 0 |
|
|
| 125,784 |
|
|
| 251,567 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gary L. Beck |
|
| |||||||||||||||||||||||||||||||||||||||||
| Stock Options |
| 2/11/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 21,130 |
|
|
| 64.55 |
|
|
| 285,559 |
|
|
| RSUs |
| 2/11/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,880 |
|
|
|
|
|
|
|
|
|
|
| 315,004 |
|
|
| PSUs |
| 2/11/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,440 |
|
|
| 9,760 |
|
|
| 19,520 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 645,917 |
|
|
| Stock Options |
| 11/5/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 8,470 |
|
|
| 39.18 |
|
|
| 128,816 |
|
|
| RSUs |
| 11/5/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 9,860 |
|
|
|
|
|
|
|
|
|
|
| 386,315 |
|
|
| PBP Plan |
|
|
|
| 93,786 |
|
|
| 375,144 |
|
|
| 750,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CBRP Plan |
|
|
|
| 0 |
|
|
| 112,543 |
|
|
| 225,087 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Brandon S. Pedersen (3) |
|
| |||||||||||||||||||||||||||||||||||||||||
| Stock Options |
| N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| RSUs |
| N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| PSUs |
| N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| PBP Plan |
| N/A |
|
| 21,740 |
|
|
| 86,962 |
|
|
| 173,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The amounts |
PSU awards with ROIC targets are initially recorded and reported at target fair value but adjusted in accordance with GAAP based on expected and ultimate results. All 2018,2019 and 2020 ROIC-based PSU awards have been written to $0 value in accordance with GAAP asthis column reflect the ROIC threshold goals for each award are not likely to be met due to the impact of the COVID-19 pandemic on the Company. As a result, any previously recognized compensation expense for these awards was reversed in the Company’s 2020 financial statements as that was the time it was determined the portion of the awards with the ROIC component would have no value. The grant date fair value of these awards is included inon the table above, howevergrant date as determined under the principles used to calculate the value of the ROIC componentequity awards for purposes of the PSUs willCompany’s financial statements and may or may not be representative of the value eventually realized by the participants. Asexecutive. For a result, the following reductions to compensation expense were made for eachdiscussion of the assumptions and methodologies used to value the awards reported in this column, please see the discussion of stock awards and option awards contained in Note 12 (Stock-Based Compensation Plans) to the Company’s Consolidated Financial Statements, included as part of the Company’s 2022 Annual Report filed on Form 10-K with the SEC and incorporated herein by reference.
|
|
Outstanding Equity Awards at 20202022 Fiscal Year End
The following table presents information regarding the outstanding equity awards held by each of the NEOs as of December 31, 2019,2022, including the vesting dates for the portions of these awards that had not vested as of that date. This table does not include the equity awards granted but clawed back prior to December 31, 2022 to maintain compliance with CARES Act restrictions.
|
|
| Stock Options |
| Stock Awards |
| |||||||||||||||||
| Name |
| Award |
| Number of |
| Number of |
| Option |
| Option |
| Number |
| Market |
| Equity |
| Equity |
| |||
| Ben Minicucci |
| |||||||||||||||||||||
|
|
| 5/12/2014 |
| 2,230 |
| 0 |
|
| 48.945 |
| 5/12/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/10/2015 |
| 9,861 |
| 0 |
|
| 65.370 |
| 2/10/2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/9/2016 |
| 12,000 |
| 0 |
|
| 65.630 |
| 2/9/2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/14/2017 |
| 10,130 |
| 0 |
|
| 96.300 |
| 2/14/2027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/13/2018 |
| 24,230 |
| 0 |
|
| 66.890 |
| 2/13/2028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 10/2/2018 |
| 680 |
| 0 |
|
| 66.260 |
| 10/2/2028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/14/2019 |
| 21,517 |
| 7,173 | (2) |
| 66.570 |
| 2/14/2029 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/11/2020 |
| 16,255 |
| 16,255 | (3) |
| 64.550 |
| 2/11/2030 |
| 7,510 | (3) |
| 322,479 |
| 15,020 | (11) |
| 644,959 |
|
|
|
| 11/5/2020 |
| 8,466 |
| 4,234 | (4) |
| 39.180 |
| 11/5/2030 |
| 4,930 | (4) |
| 211,694 |
|
|
|
|
|
|
|
|
| 11/5/2020 |
| 20,324 |
| 30,486 | (5) |
| 39.180 |
| 11/5/2030 |
| 11,826 | (5) |
| 507,808 |
|
|
|
|
|
|
|
|
| 2/25/2021 |
| 7,785 |
| 23,355 | (6) |
| 65.560 |
| 2/25/2031 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/7/2022 |
| 0 |
| 35,810 | (7) |
| 55.360 |
| 2/7/2032 |
| 8,475 | (7) |
| 363,917 |
|
|
|
|
|
|
| Shane Tackett |
| |||||||||||||||||||||
|
|
| 2/10/2015 |
| 925 |
| 0 |
|
| 65.370 |
| 2/10/2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/9/2016 |
| 1,750 |
| 0 |
|
| 65.630 |
| 2/9/2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/14/2017 |
| 1,860 |
| 0 |
|
| 96.300 |
| 2/14/2027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 8/3/2017 |
| 780 |
| 0 |
|
| 84.990 |
| 8/3/2027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/13/2018 |
| 7,740 |
| 0 |
|
| 66.890 |
| 2/13/2028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 9/10/2018 |
| 3,770 |
| 0 |
|
| 68.150 |
| 9/10/2028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/14/2019 |
| 11,385 |
| 3,795 | (2) |
| 66.570 |
| 2/14/2029 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/11/2020 |
| 11,375 |
| 11,375 | (3) |
| 64.550 |
| 2/11/2030 |
| 5,260 | (3) |
| 225,864 |
| 10,510 | (11) |
| 451,299 |
|
|
|
| 11/5/2020 |
| 5,646 |
| 2,824 | (4) |
| 39.180 |
| 11/5/2030 |
| 3,287 | (4) |
| 141,144 |
|
|
|
|
|
|
|
|
| 2/9/2021 |
| 4,537 |
| 13,613 | (8) |
| 55.740 |
| 2/9/2031 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/7/2022 |
| 0 |
| 17,630 | (7) |
| 55.360 |
| 2/7/2032 |
| 3,770 | (7) |
| 161,884 |
|
|
|
|
|
|
64
|
|
| Stock Options |
| Stock Awards |
| |||||||||||||||||
| Name |
| Award |
| Number of |
| Number of |
| Option |
| Option |
| Number |
| Market |
| Equity |
| Equity |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Andrew Harrison |
| |||||||||||||||||||||
|
|
| 2/11/2014 |
| 840 |
| 0 |
|
| 38.755 |
| 2/11/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5/12/2014 |
| 1,500 |
| 0 |
|
| 48.945 |
| 5/12/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/10/2015 |
| 3,145 |
| 0 |
|
| 65.370 |
| 2/10/2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/9/2016 |
| 5,483 |
| 0 |
|
| 65.630 |
| 2/9/2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/14/2017 |
| 7,410 |
| 0 |
|
| 96.300 |
| 2/14/2027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/13/2018 |
| 17,660 |
| 0 |
|
| 66.890 |
| 2/13/2028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/14/2019 |
| 15,210 |
| 5,070 | (2) |
| 66.570 |
| 2/14/2029 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/11/2020 |
| 11,375 |
| 11,375 | (3) |
| 64.550 |
| 2/11/2030 |
| 5,260 | (3) |
| 225,864 |
| 10,510 | (11) |
| 451,299 |
|
|
|
| 11/5/2020 |
| 5,646 |
| 2,824 | (4) |
| 39.180 |
| 11/5/2030 |
| 3,287 | (4) |
| 141,144 |
|
|
|
|
|
|
|
|
| 2/9/2021 |
| 4,537 |
| 13,613 | (8) |
| 55.740 |
| 2/9/2031 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/7/2022 |
| 0 |
| 17,630 | (7) |
| 55.360 |
| 2/7/2032 |
| 7,440 | (7) |
| 319,474 |
| 13,570 | (11) |
| 582,696 |
|
| Constance von Muehlen |
| |||||||||||||||||||||
|
|
| 2/13/2018 |
| 3,930 |
| 0 |
|
| 66.890 |
| 2/13/2028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1/21/2019 |
| 67 |
| 23 | (9) |
| 64.860 |
| 1/21/2029 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/14/2019 |
| 4,267 |
| 1,423 | (2) |
| 66.570 |
| 2/14/2029 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/11/2020 |
| 2,585 |
| 0 |
|
| 64.550 |
| 2/11/2030 |
|
|
|
|
|
| 1,278 | (11) |
| 54,877 |
|
|
|
| 11/5/2020 |
| 1,693 |
| 847 | (4) |
| 39.180 |
| 11/5/2030 |
| 987 | (4) |
| 42,382 |
|
|
|
|
|
|
|
|
| 4/3/2021 |
| 1,484 |
| 0 |
|
| 69.490 |
| 4/3/2031 |
|
|
|
|
|
|
|
|
|
|
|
| Andrea Schneider |
| |||||||||||||||||||||
|
|
| 2/11/2013 |
| 1,596 |
| 0 |
|
| 24.400 |
| 2/11/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/11/2014 |
| 1,540 |
| 0 |
|
| 38.755 |
| 2/11/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/10/2015 |
| 1,830 |
| 0 |
|
| 65.370 |
| 2/10/2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/9/2016 |
| 2,180 |
| 0 |
|
| 65.630 |
| 2/9/2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/14/2017 |
| 1,780 |
| 0 |
|
| 96.300 |
| 2/14/2027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/13/2018 |
| 4,390 |
| 0 |
|
| 66.890 |
| 2/13/2028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/14/2019 |
| 3,735 |
| 1,245 | (2) |
| 66.570 |
| 2/14/2029 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 6/3/2019 |
| 2,137 |
| 713 | (10) |
| 59.070 |
| 6/3/2029 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/11/2020 |
| 4,265 |
| 4,265 | (3) |
| 64.550 |
| 2/11/2030 |
| 1,970 | (3) |
| 84,592 |
| 3,940 | (11) |
| 169,184 |
|
|
|
| 11/5/2020 |
| 1,693 |
| 847 | (4) |
| 39.180 |
| 11/5/2030 |
| 987 | (4) |
| 42,382 |
|
|
|
|
|
|
|
|
| 2/9/2021 |
| 1,815 |
| 5,445 | (8) |
| 55.740 |
| 2/9/2031 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/7/2022 |
| 0 |
| 7,710 | (7) |
| 55.360 |
| 2/7/2032 |
| 150 | (7) |
| 6,441 |
|
|
|
|
|
|
|
|
| Stock Options |
| Stock Awards |
|
| ||||||||||||||||||||||||||||||
| Name |
| Award Date |
| Number of Securities Underlying Unexer- cised Options Exercisable (#) |
|
| Number of Securities Underlying Unexercised Options Unexercisable (#) |
| Option Exercise Price ($) |
|
| Option Expir- ation Date |
| Number of Shares or Units of Stock That Have Not Vested (#) |
| Market Value of Shares or Units of Stock That Have Not Vested (1) ($) |
|
| Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#) |
| Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested (1) ($) |
|
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Bradley D. Tilden |
|
| ||||||||||||||||||||||||||||||||||
|
|
| 2/14/12 |
|
| 23,360 |
|
|
| — |
|
|
|
| 19.000 |
|
| 2/14/22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/11/13 |
|
| 33,796 |
|
|
| — |
|
|
|
| 24.40 |
|
| 2/11/23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/11/14 |
|
| 19,220 |
|
|
| — |
|
|
|
| 38.755 |
|
| 2/11/24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/10/15 |
|
| 13,600 |
|
|
| — |
|
|
|
| 65.370 |
|
| 2/10/25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/9/16 |
|
| 15,200 |
|
|
| — |
|
|
|
| 65.630 |
|
| 2/9/26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/14/17 |
|
| 12,000 |
|
|
| 4,000 |
| (2) |
|
| 96.30 |
|
| 2/14/27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/13/18 |
|
| 18,625 |
|
|
| 18,625 |
| (4) |
|
| 66.89 |
|
| 2/13/28 |
|
| 9,600 |
| (4) |
|
| 499,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/14/19 |
|
| 10,490 |
|
|
| 31,470 |
| (7) |
|
| 66.57 |
|
| 2/14/29 |
|
| 11,000 |
| (7) |
|
| 572,000 |
|
|
| 21,900 |
| (12) |
|
| 1,138,800 |
|
|
|
|
| 2/11/20 |
|
| — |
|
|
| 52,010 |
| (9) |
|
| 64.55 |
|
| 2/11/30 |
|
| 12,010 |
| (9) |
|
| 624,520 |
|
|
| 24,030 |
| (12) |
|
| 1,249,560 |
|
|
|
|
| 11/5/20 |
|
| — |
|
|
| 16,940 |
| (10) |
|
| 39.18 |
|
| 11/5/30 |
|
| 19,710 |
| (10) |
|
| 1,024,920 |
|
|
|
|
|
|
|
|
|
|
|
| Shane R. Tackett |
|
| ||||||||||||||||||||||||||||||||||
|
|
| 2/10/15 |
|
| 925 |
|
|
| — |
|
|
|
| 65.370 |
|
| 2/10/25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/9/16 |
|
| 1,750 |
|
|
| - |
|
|
|
| 65.630 |
|
| 2/9/26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/14/17 |
|
| 1,395 |
|
|
| 465 |
| (2) |
|
| 96.300 |
|
| 2/14/27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 8/3/17 |
|
| 585 |
|
|
| 195 |
| (3) |
|
| 84.99 |
|
| 8/3/27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/13/18 |
|
| 3,870 |
|
|
| 3,870 |
| (4) |
|
| 66.89 |
|
| 2/13/28 |
|
| 2,000 |
| (4) |
|
| 104,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 9/10/18 |
|
| 1,885 |
|
|
| 1,885 |
| (5) |
|
| 68.15 |
|
| 9/10/28 |
|
| 1,020 |
| (5) |
|
| 53,040 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/14/19 |
|
| 3,795 |
|
|
| 11,385 |
| (7) |
|
| 66.57 |
|
| 2/14/29 |
|
| 3,960 |
| (7) |
|
| 205,920 |
|
|
| 7,930 |
| (12) |
|
| 412,360 |
|
|
|
|
| 2/11/20 |
|
| — |
|
|
| 22,750 |
| (9) |
|
| 64.55 |
|
| 2/11/30 |
|
| 5,260 |
| (9) |
|
| 273,520 |
|
|
| 10,510 |
| (12) |
|
| 546,520 |
|
|
|
|
| 11/5/20 |
|
| — |
|
|
| 8,470 |
| (10) |
|
| 39.18 |
|
| 11/5/30 |
|
| 9,860 |
| (10) |
|
| 512,720 |
|
|
|
|
|
|
|
|
|
|
|
| Benito Minicucci |
|
| ||||||||||||||||||||||||||||||||||
|
|
| 2/11/13 |
|
| 882 |
|
|
| — |
|
|
|
| 24.400 |
|
| 2/11/23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/11/14 |
|
| 3,520 |
|
|
| — |
|
|
|
| 38.755 |
|
| 2/11/24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5/12/14 |
|
| 2,230 |
|
|
| — |
|
|
|
| 48.945 |
|
| 5/12/24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/10/15 |
|
| 9,861 |
|
|
| — |
|
|
|
| 65.370 |
|
| 2/10/25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/9/16 |
|
| 12,000 |
|
|
| - |
|
|
|
| 65.630 |
|
| 2/9/26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/14/17 |
|
| 7,597 |
|
|
| 2,533 |
| (2) |
|
| 96.30 |
|
| 2/14/27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/13/18 |
|
| 12,115 |
|
|
| 12,115 |
| (4) |
|
| 66.89 |
|
| 2/13/28 |
|
| 6,250 |
| (4) |
|
| 325,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 10/2/18 |
|
| 340 |
|
|
| 340 |
| (6) |
|
| 66.26 |
|
| 10/2/28 |
|
| 180 |
| (6) |
|
| 9,360 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/14/19 |
|
| 7,172 |
|
|
| 21,518 |
| (7) |
|
| 66.57 |
|
| 2/14/29 |
|
| 7,490 |
| (7) |
|
| 389,480 |
|
|
| 14,980 |
| (12) |
|
| 778,960 |
|
|
|
|
| 2/11/20 |
|
| — |
|
|
| 32,510 |
| (9) |
|
| 64.55 |
|
| 2/11/30 |
|
| 7,510 |
| (9) |
|
| 390,520 |
|
|
| 15,020 |
| (12) |
|
| 781,040 |
|
|
|
|
| 11/5/20 |
|
| — |
|
|
| 12,700 |
| (10) |
|
| 39.18 |
|
| 11/5/30 |
|
| 14,790 |
| (10) |
|
| 769,080 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 11/5/20 |
|
| — |
|
|
| 50,810 |
| (11) |
|
| 39.18 |
|
| 11/5/30 |
|
| 19,710 |
| (11) |
|
| 1,024,920 |
|
|
|
|
|
|
|
|
|
|
|
65
|
|
| Stock Options |
| Stock Awards |
|
| ||||||||||||||||||||||||||||||
| Name |
| Award Date |
| Number of Securities Underlying Unexer- cised Options Exercisable (#) |
|
| Number of Securities Underlying Unexercised Options Unexercisable (#) |
| Option Exercise Price ($) |
|
| Option Expir- ation Date |
| Number of Shares or Units of Stock That Have Not Vested (#) |
| Market Value of Shares or Units of Stock That Have Not Vested (1) ($) |
|
| Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#) |
| Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested (1) ($) |
|
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Andrew R. Harrison |
|
| ||||||||||||||||||||||||||||||||||
|
|
| 2/11/14 |
|
| 840 |
|
|
| — |
|
|
|
| 38.755 |
|
| 2/11/24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5/12/14 |
|
| 1,500 |
|
|
| — |
|
|
|
| 48.945 |
|
| 5/12/24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/10/15 |
|
| 3,145 |
|
|
| — |
|
|
|
| 65.370 |
|
| 2/10/25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/9/16 |
|
| 5,483 |
|
|
| — |
|
|
|
| 65.630 |
|
| 2/9/26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/14/17 |
|
| 5,557 |
|
|
| 1,853 |
| (2) |
|
| 96.30 |
|
| 2/14/27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/13/18 |
|
| 8,830 |
|
|
| 8,830 |
| (4) |
|
| 66.89 |
|
| 2/13/28 |
|
| 4,560 |
| (4) |
|
| 237,120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/14/19 |
|
| 5,070 |
|
|
| 15,210 |
| (7) |
|
| 66.57 |
|
| 2/14/29 |
|
| 5,290 |
| (7) |
|
| 275,080 |
|
|
| 10,580 |
| (12) |
|
| 550,160 |
|
|
|
|
| 2/11/20 |
|
| — |
|
|
| 22,750 |
| (9) |
|
| 64.55 |
|
| 2/11/30 |
|
| 5,260 |
| (9) |
|
| 273,520 |
|
|
| 10,510 |
| (12) |
|
| 546,520 |
|
|
|
|
| 11/5/20 |
|
| — |
|
|
| 8,470 |
| (10) |
|
| 39.18 |
|
| 11/5/30 |
|
| 9,860 |
| (10) |
|
| 512,720 |
|
|
|
|
|
|
|
|
|
|
|
| Gary L. Beck |
|
| ||||||||||||||||||||||||||||||||||
|
|
| 2/13/18 |
|
| 3,050 |
|
|
| 3,050 |
| (4) |
|
| 66.890 |
|
| 2/13/28 |
|
| 1,580 |
| (4) |
|
| 82,160 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/14/19 |
|
| 2,195 |
|
|
| 6,585 |
| (7) |
|
| 66.570 |
|
| 2/14/29 |
|
| 2,290 |
| (7) |
|
| 119,080 |
|
|
| 4,580 |
| (12) |
|
| 238,160 |
|
|
|
|
| 11/7/19 |
|
| 585 |
|
|
| 1,755 |
| (8) |
|
| 70.930 |
|
| 11/7/29 |
|
| 560 |
| (8) |
|
| 29,120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/11/20 |
|
| — |
|
|
| 21,130 |
| (9) |
|
| 64.550 |
|
| 2/11/30 |
|
| 4,880 |
| (9) |
|
| 253,760 |
|
|
| 9,760 |
| (12) |
|
| 507,520 |
|
|
|
|
| 11/5/20 |
|
| — |
|
|
| 8,470 |
| (10) |
|
| 39.180 |
|
| 11/5/30 |
|
| 9,860 |
| (10) |
|
| 512,720 |
|
|
|
|
|
|
|
|
|
|
|
| Brandon S. Pedersen |
|
| ||||||||||||||||||||||||||||||||||
|
|
| 2/10/15 |
|
| 4,215 |
|
|
| — |
|
|
|
| 65.370 |
|
| 3/2/23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/9/16 |
|
| 5,483 |
|
|
| — |
|
|
|
| 65.630 |
|
| 3/2/23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/14/17 |
|
| 5,557 |
|
|
| 1,853 |
| (2) |
|
| 96.30 |
|
| 3/2/23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/13/18 |
|
| 8,830 |
|
|
| 8,830 |
| (4) |
|
| 66.89 |
|
| 3/2/23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/14/19 |
|
| 5,070 |
|
|
| 15,210 |
| (7) |
|
| 66.57 |
|
| 3/2/23 |
|
|
|
|
|
|
|
|
|
|
| 4,126 |
| (12) |
|
| 214,552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 2022 Option ExercisesExercises and Stock Vested
The following table presents information regarding the exercise of stock options by the NEOs during 20202022 and the vesting during 20202022 of other stock awards previously granted to the NEOs.
|
|
| Option Awards |
|
| Stock Awards |
|
| ||||||||||
|
|
| Number of Shares |
|
| Value Realized |
|
| Number of Shares |
|
| Value Realized |
|
| ||||
| Ben Minicucci |
|
| — |
|
|
| — |
|
|
| 20,856 |
|
|
| 1,073,791 |
|
|
| Shane Tackett |
|
| — |
|
|
| — |
|
|
| 9,626 |
|
|
| 504,916 |
|
|
| Andrew Harrison |
|
| — |
|
|
| — |
|
|
| 11,751 |
|
|
| 624,750 |
|
|
| Constance von Muehlen |
|
| — |
|
|
| — |
|
|
| 3,391 |
|
|
| 179,754 |
|
|
| Andrea Schneider |
|
| — |
|
|
| — |
|
|
| 3,767 |
|
|
| 195,787 |
|
|
|
|
| Option Awards |
|
| Stock Awards |
|
| ||||||||||
|
|
| Number of Shares Acquired on Exercise (#) |
|
| Value Realized on Exercise (1) ($) |
|
| Number of Shares Acquired on Vesting (#) |
|
| Value Realized on Vesting (1) ($) |
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Bradley D. Tilden |
|
| 47,484 |
|
|
| 1,544,141 |
|
|
| 17,981 |
|
|
| 1,171,594 |
|
|
| Shane R. Tackett |
|
| — |
|
|
| — |
|
|
| 4,100 |
|
|
| 245,065 |
|
|
| Benito Minicucci |
|
| — |
|
|
| — |
|
|
| 12,395 |
|
|
| 806,961 |
|
|
| Andrew R. Harrison |
|
| — |
|
|
| — |
|
|
| 9,620 |
|
|
| 626,010 |
|
|
| Gary L. Beck |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| Brandon S. Pedersen (2) |
|
| — |
|
|
| — |
|
|
| 19,470 |
|
|
| 1,023,851 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66
Pension and Other Retirement Plans
The Company maintains two primary defined-benefit plans coveringIn light of their tenure, Mr. TildenTackett and Mr. Tackett. TheMs. Schneider participate in the Alaska Air Group, Inc. Retirement Plan for Salaried Employees (the Salaried Retirement Plan) which is a qualified defined-benefit employee retirement pension plan, and Mr. Tilden and Mr. Tackett participate in this plan on the same general terms as other eligible employees. The Alaska Air Group, Inc. 1995 Elected Officers Supplementary Retirement Plan (the Supplementary Retirement Plan) is a nonqualified defined benefit plan, in which Mr. Tilden and Mr. Tackett also participate. Mr. Pedersen, Mr. Minicucci, and Mr. Harrison participate in the defined-contribution plans (as described below) in lieu of these defined-benefit plans.
plan. The following table presents information regarding the present value of accumulated benefits that may become payable to the NEOs under the qualified and nonqualified defined-benefit plans.this plan.
| Name |
| Plan Name |
| Number of Years |
| Present Value of |
| Payments During |
|
| Ben Minicucci |
| Salaried Retirement Plan |
| N/A |
| N/A |
| N/A |
|
| Shane Tackett |
| Salaried Retirement Plan |
| 13.058 |
| 210,094 |
| N/A |
|
| Andrew Harrison |
| Salaried Retirement Plan |
| N/A |
| N/A |
| N/A |
|
| Constance von Muehlen |
| Salaried Retirement Plan |
| N/A |
| N/A |
| N/A |
|
| Andrea Schneider |
| Salaried Retirement Plan |
| 16.581 |
| 400,547 |
| N/A |
|
| Name |
| Plan Name |
| Number of Years Credited Service (1) (#) |
| Present Value of Accumulated Benefit (1) ($) |
| Payments During Last Fiscal Year ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Bradley D. Tilden |
| Salaried Retirement Plan |
| 22.844 |
| 1,973,368 |
| N/A |
|
|
|
| Supplementary Retirement Plan |
| 14.919 |
| 3,380,285 |
| N/A |
|
| Shane R. Tackett |
| Salaried Retirement Plan |
| 13.058 |
| 455,752 |
| N/A |
|
|
|
| Supplementary Retirement Plan |
| N/A |
| N/A |
| N/A |
|
| Benito Minicucci (2) |
| Salaried Retirement Plan |
| N/A |
| N/A |
| N/A |
|
|
|
| Supplementary Retirement Plan |
| N/A |
| N/A |
| N/A |
|
| Andrew R. Harrison (2) |
| Salaried Retirement Plan |
| N/A |
| N/A |
| N/A |
|
|
|
| Supplementary Retirement Plan |
| N/A |
| N/A |
| N/A |
|
| Gary L. Beck (2) |
| Salaried Retirement Plan |
| N/A |
| N/A |
| N/A |
|
|
|
| Supplementary Retirement Plan |
| N/A |
| N/A |
| N/A |
|
| Brandon S. Pedersen (2) |
| Salaried Retirement Plan |
| N/A |
| N/A |
| N/A |
|
|
|
| Supplementary Retirement Plan |
| N/A |
| N/A |
| N/A |
|
| The years of credited service through December 31, 2013, when the |
|
|
Salaried Retirement Plan was frozen, and the present value of accumulated benefits as of December 31, 2022 assume that each NEO retires at normal retirement age and that benefits are paid out in accordance with the terms of the Salaried Retirement Plan below. For a description of the material assumptions used to calculate the present value of accumulated benefits shown above, please see Note 9 (Employee Benefits Plans) to the Company’s Consolidated Financial Statements, included as part of the Company’s 2022 Annual Report filed on Form 10-K with the SEC and incorporated herein by reference.
Salaried Retirement Plan
The Salaried Retirement Plan is a tax-qualified, defined-benefit retirement pension plan for certain salaried Alaska Airlines employees hired prior to April 1, 2003. Mr. TildenTackett and Mr. TackettMs. Schneider are fully vested in their accrued benefits under the Salaried Retirement Plan. Benefits payable under the Salaried Retirement Plan are generally based on years of credited service with the Company and its affiliates and final average base salaryearnings for the five highest complete and consecutive calendar years of an employee’s last ten complete calendar years of service. The annual retirement benefit at age 62 (normal retirement age under the Salaried Retirement Plan) is equal to 2% of the employee’s final average base salaryearnings times years of credited service (limited to 40 years). Annual benefits are computed on a straight-life annuity basis beginning at normal retirement age. Benefits under the Salaried Retirement Plan are not subject to offset for Social Security benefits.
On June 20, 2011, the Board amended the Salaried Retirement Plan to provide that effective January 1, 2014, the plan would be frozen so that participants in the plans would not accrue any benefits with respect to services performed or compensation earned on or after that date.
The tax lawInternal Revenue Code limits the annual benefits that may be paid from a tax-qualified retirement plan. For 2020,2022, this limit on annual benefits was $230,000.$245,000, and in 2023 it is $265,000.
Supplementary Retirement Plans
In addition
67
2022 Nonqualified Deferred Compensation
The following table presents information regarding the contributions to the benefits described above, Mr. Tilden is eligible to receive retirement benefits under the Supplementary Retirement Plan. This plan is a non-qualified, unfunded, defined-benefit plan. Normal retirement benefits are payable once the officer reaches age 60. Benefits are calculated as a monthly amount on a straight-life annuity basis. In general, the monthly benefit is determined as a percentage (50% to 75% of a participant’s final average monthly base salary) basedand earnings on the officer’s length of service with the Company and length of service as an elected officer.
This benefit amount is subject to offset by the amount of the officer’s Social Security benefits and the amount of benefits paid under the Salaried Retirement Plan to the extent such benefits were accrued after the officer became a participant in the Supplementary Retirement Plan. (There is no offset for any Salaried Retirement Plan benefits accrued for service before the officer became a participant in the Supplementary Retirement Plan.)
Participants in the Supplementary Retirement Plan become fully vested in their benefits under the plan upon attaining age 50 and completing 10 years of service as an elected officer. Plan benefits will also become fully vested upon a change in control of the Company or upon termination of the participant’s employment due to death or disability.
On June 20, 2011, the Board of Directors amended the Supplementary Retirement Plan to provide that, effective January 1, 2014, the plan would be frozen so that participants in the plan would not accrue any benefits with respect to services performed or compensation earned on or after that date. The Board also amended the Supplementary Retirement Plan so that, effective January 1, 2014, officers who previously participated in the Supplementary Retirement Plan, and are then employed by the Company, will be eligible to participate in the DC Supplementary Retirement Plan. Under the DC Supplementary Retirement Plan, the Company contributes up to 12% of Mr. Tilden’s eligible wages.
In lieu of the Supplementary Retirement Plan, the other NEOs participate in the Company’s DC Supplementary Retirement Plan. This plan is a defined-contribution plan. Under this plan, the Company contributes 10% of the eligible wages of Mr. Tackett, Mr. Minicucci, Mr. Harrison, and Mr. Beck, as defined in plan documents, minus the maximum legal Company contribution that the Company made, or could have made,NEOs’ balances under the Company’s qualified defined-contribution plan (the 401(k) plan).nonqualified deferred compensation plans during 2022, and also shows the total deferred amounts for the NEOs as of December 31, 2022.
2020 Nonqualified Deferred Compensation
Under theThe Alaska Air Group, Inc. Nonqualified Deferred Compensation Plan (NDCP) provides the NEOs and other key employees maywith an opportunity to elect to receivedefer a portion of some or all of their annual Performance-Based Pay awards on a deferred basis.payments. The Horizon Air Supplemental Savings Plan (SSP) provides Horizon Air eligible executives with an opportunity to elect to defer up to 50% of their base compensation. Participants under the nonqualified deferred compensation plan have the opportunity to elect among several investment funds, which generally mirror the funds offered under the Company’srelevant Company 401(k) plan (“401(k) Plan”)and the Horizon Air Savings Investment Plan, for purposes of determining the return of their plan assets. In addition, the plan also offers an interest-bearing option with a rate equal to the yield on a Moody’s index of Ba2-rated industrial bonds as of November of the preceding year, rounded to the nearest one-quarter of one percent, for certain prior deferred amounts. Subject to applicable tax laws, amounts deferred under the plannonqualified plans are generally distributed on termination of the participant’s employment, although participants may elect an earlier distribution date and may elect payment in a lump sum or installments.
The following table presents information regarding Deferrals under the contributions to and earningsplans are also reflected on the NEOs’ balancestable below.
Supplementary Retirement Plans
The NEOs participate in the Defined Contribution OSRP Plan (DC OSRP), which is supplemental retirement plan portion of the NDCP. Under the DC OSRP, the Company contributes a percentage of the eligible compensation of Mr. Minicucci, Mr. Tackett, Mr. Harrison, Ms. von Muehlen and Ms. Schneider, as defined in DC OSRP documents, minus the maximum legal Company contribution that the Company made, or could have made, under the Company’s nonqualified deferred401(k) Plan. Under the SSP, Horizon Air eligible executives are also eligible to receive a supplemental retirement benefit in the form of a supplemental matching contribution that is equal to the matching contributions that would have been made on behalf of the employee under the Horizon Air Savings Investment Plan, minus the amount of matching contributions that would have been made under the Horizon Air Savings Investment Plan had the employee contributed the maximum amount of employee contributions that were eligible for a matching contribution.
| Name | Plan Name | Executive |
| Registrant |
| Aggregate |
| Aggregate |
| Aggregate |
|
| Ben Minicucci | Nonqualified Deferred Compensation Plan | — |
| 102,403 |
| (151,249) |
| — |
| 985,957 |
|
|
| Horizon Air Supplemental Savings Plan | N/A |
| N/A |
| N/A |
| N/A |
| N/A |
|
| Shane Tackett | Nonqualified Deferred Compensation Plan | — |
| 75,387 |
| (128,785) |
| — |
| 559,474 |
|
|
| Horizon Air Supplemental Savings Plan | N/A |
| N/A |
| N/A |
| N/A |
| N/A |
|
| Andrew Harrison | Nonqualified Deferred Compensation Plan | — |
| 72,899 |
| (177,471) |
| — |
| 913,232 |
|
|
| Horizon Air Supplemental Savings Plan | N/A |
| N/A |
| N/A |
| N/A |
| N/A |
|
| Constance von Muehlen | Nonqualified Deferred Compensation Plan | — |
| 17,086 |
| (53,864) |
| — |
| 241,753 |
|
|
| Horizon Air Supplemental Savings Plan | N/A |
| N/A |
| N/A |
| N/A |
| N/A |
|
| Andrea Schneider | Nonqualified Deferred Compensation Plan | — |
| 61,189 |
| (272,234) |
| (240,413) |
| 1,268,729 |
|
|
| Horizon Air Supplemental Savings Plan | — |
| — |
| (34,132) |
| — |
| 154,299 |
|
68
|
| Executive Contributions in Last FY ($) |
| Registrant Contributions in Last FY (1) ($) |
| Aggregate Earnings in Last FY ($) |
| Aggregate Withdrawals/ Distributions ($) |
| Aggregate Balance at Last FYE ($) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Bradley D. Tilden |
| — |
|
|
| 154,152 |
|
|
| 80,450 |
|
|
| — |
|
|
| 1,226,048 |
|
| Shane R. Tackett |
| — |
|
|
| 58,562 |
|
|
| 79,014 |
|
|
| — |
|
|
| 463,360 |
|
| Benito Minicucci |
| — |
|
|
| 104,485 |
|
|
| 70,715 |
|
|
| — |
|
|
| 932,319 |
|
| Andrew R. Harrison |
| — |
|
|
| 80,234 |
|
|
| 102,840 |
|
|
| — |
|
|
| 836,326 |
|
| Gary L. Beck |
| — |
|
|
| 52,828 |
|
|
| 6,837 |
|
|
| — |
|
|
| 77,552 |
|
| Brandon S. Pedersen (2) |
| — |
|
|
| 136,322 |
|
|
| (50,725) |
|
|
| (855,760) |
|
|
| — |
|
|
|
|
|
Potential Payments Upon ChangeChange in Control and Termination
The Company has entered into change-in-control“double-trigger” change in control agreements with Messrs. Tilden,Minicucci, Tackett, Minicucci, Harrison, and Beck.Mses. von Muehlen and Schneider. Under these agreements, if a change ofin control occurs, an “employment period”a guaranteed employment period of three years would go into effect.effect for the CEO and executive vice presidents and two years for Ms. Schneider. During the employment period, these five executives would be entitled to:to receive:
receive the highest monthly salary the executive received at any time during the 12-month period preceding the change in control;
receive an annual incentive payment equal to the higher of the executive’s target Performance-Based Pay Plan incentive or the average of the executive’s annual incentive payments for the three years preceding the year in which the change in control occurs;
continue to accrue age and service credit under our qualified and non-qualified defined benefit retirement plans; and
participate in fringe benefit programsbenefits that are at least as favorable as those in which the executive was participating prior to the change in control.
If the executive’s employment is terminated by the Company or its successor without cause or by the executive for “good reason”good reason during the employment period (or, in certain circumstances, if such a termination occurs prior to and in connection with a change in control), the executive would be entitled to receive a lump-sum paymentreceive:
The amount an executive would be entitled to receive upon a qualifying termination within the employment period after the change in control would be reduced on a pro-rata basis for any time the executive workedwas employed by the successor during the employment period. (The terms “cause,” “good reason” and “change in control” are each defined in the change-in-control agreements.) In the event that
If change in control benefits under these theagreements exceed the threshold amount that would trigger an excise tax under Section 280G of the Internal Revenue Code, the executive would receive the larger of the following amounts:
|
|
|
|
In addition, if the executive’s employment is terminated by the Company or its successor without cause or by the executive for good reason in connection with a change in control, the executive’s outstanding and unvested stock options, restricted stock units and the target number of performance stock units held by the NEOs maywould become vested upon certain terminations of employment under the terms of our awards granted under the 2016 Plan. Under the 2016 Plan, awards will not vest in connection with a change in control unless a termination of employment without cause or for good reason also occurs or an acquirer does not assume outstanding awards. Finally, the executive’s unvested benefits under the Supplementary Retirement Plan would vest on a change in control whether or not the executive’s employment was terminated. The outstanding equity plans. awards held by the executives as of December 31, 2022, are described above under the Outstanding Equity Awards
69
at Fiscal Year End section of this Proxy Statement and each executive’s accrued benefits under our retirement plans are described above under “Pension and Other Retirement Plans.”
In the event the executive’s employment terminates by reason of death, disability or retirement (as defined in our equity award agreements), whether or not subsequent to a change in control, (i) restricted stock units would become fully vested;vested under the terms of our equity plans; (ii) a prorated portion of the performance stock units would vest at the conclusion of the performance period based on the Company’s actual performance during the performance period and the portion of the performance period in which the executive was employed; and (iii) stock options would become fully vested upon death or disability and vested to the extent they would have vested in the next three years upon retirement. Stock options would remain exercisable for three years following termination of employment due to death, disability or retirement or until their expiration date, whichever comes first.
If a change in control occurs and the executive’s employment is terminated by the Company without cause or by the executive for good reason (in either case within six months before or 24 months after the change in control), the executive’s restricted stock units and stock options would fully vest, and the executive’s performance stock units would vest at the target level. Under the 2016 Performance Incentive Plan, awards will not vest solely because a change in control occurs. However, the awards will vest on a change in control if they are not assumed by the acquirer. Finally, the executive’s unvested benefits under the Supplementary Retirement Plan would vest on a change in control whether or not the executive’s employment was terminated.Calculations
Estimated Benefits
In the tables below, we have estimated the potential cost to the Company of providing the benefits shown to each of our Named Executive Officers as if the executive’s employment had terminated due to retirement, death or disability, change in control, or other termination not in relation to change in control on December 31, 2020.2022. The value of accelerated vesting shown in the "Equity Acceleration" column below assumes any performance share units pay at target. As described above, except for the equity acceleration value, the
amount an executive would be entitled to receive under the change-in-control agreements would be reduced on a pro-rata basis for any time the executive worked during the employment period.
These calculations are estimates for proxy disclosure purposes only. Actual payments may differ based on factors such as transaction price, timing of employment termination and payments, methodology for valuing stock options, changes in compensation, and other factors.
Termination Without Cause
In certain not-for-cause termination scenarios the NEOs may be eligible to receive cash compensation and travel benefits based on a compensation multiple (2x for CEO, 1.5x for other NEOs) and historical earnings under the Executive Severance Guidelines. If the value of the severance arrangements exceeds a certain level, the Company will seek shareholder ratification of such arrangements.
Retirement
| Name |
| Cash |
| Enhanced |
| Benefit |
| Air Travel |
| Equity |
| Total |
|
| Ben Minicucci |
| 0 |
| 0 |
| 0 |
| 5,444 |
| 1,536,446 |
| 1,541,890 |
|
| Shane Tackett |
| 0 |
| 0 |
| 0 |
| 11,732 |
| 0 |
| 11,732 |
|
| Andrew Harrison |
| 0 |
| 0 |
| 0 |
| 23,706 |
| 0 |
| 23,706 |
|
| Constance von Muehlen |
| 0 |
| 0 |
| 0 |
| 6,487 |
| 45,567 |
| 52,054 |
|
| Andrea Schneider |
| 0 |
| 0 |
| 0 |
| 15,462 |
| 136,599 |
| 152,061 |
|
Death or Disability
| Name |
| Cash |
| Enhanced |
| Benefit |
| Air Travel |
| Equity |
| Total |
|
| Ben Minicucci |
| 0 |
| 0 |
| 0 |
| 5,444 |
| 1,536,446 |
| 1,541,890 |
|
| Shane Tackett |
| 0 |
| 0 |
| 0 |
| 11,732 |
| 539,510 |
| 551,242 |
|
| Andrew Harrison |
| 0 |
| 0 |
| 0 |
| 23,706 |
| 697,100 |
| 720,806 |
|
| Constance von Muehlen |
| 0 |
| 0 |
| 0 |
| 6,487 |
| 45,567 |
| 52,054 |
|
| Andrea Schneider |
| 0 |
| 0 |
| 0 |
| 15,462 |
| 136,599 |
| 152,061 |
|
70
Change in Control Termination (Double-Trigger)
| Name |
| Cash |
| Enhanced |
| Benefit |
| Air Travel Benefit (1) |
| Equity |
| Excise |
| Cutback |
| Total |
|
| Ben Minicucci |
| 4,350,000 |
| 249,774 |
| 34,272 |
| 5,444 |
| 1,536,446 |
| 0 |
| 0 |
| 6,175,936 |
|
| Shane Tackett |
| 2,983,501 |
| 246,696 |
| 34,496 |
| 11,732 |
| 539,510 |
| 0 |
| 0 |
| 3,815,935 |
|
| Andrew Harrison |
| 2,921,210 |
| 198,630 |
| 41,820 |
| 23,706 |
| 1,279,796 |
| 0 |
| 0 |
| 4,465,162 |
|
| Constance von Muehlen |
| 2,340,001 |
| 84,435 |
| 21,993 |
| 6,487 |
| 45,567 |
| (377,413) |
| 0 |
| 2,121,070 |
|
| Andrea Schneider |
| 1,403,500 |
| 121,806 |
| 32,071 |
| 15,462 |
| 136,599 |
| 0 |
| 0 |
| 1,709,438 |
|
Termination Without Cause (Outside of Change in Control)
| Name |
| Cash |
| Enhanced |
| Benefit |
| Air Travel Benefit (1) |
| Outplacement (9) |
| Equity |
| Total |
|
| Ben Minicucci |
| 2,691,701 |
| 0 |
| 13,566 |
| 5,444 |
| 25,000 |
| 1,536,446 |
| 4,272,157 |
|
| Shane Tackett |
| 1,447,723 |
| 0 |
| 10,175 |
| 11,732 |
| 25,000 |
| 0 |
| 1,494,630 |
|
| Andrew Harrison |
| 1,460,605 |
| 0 |
| 10,175 |
| 23,706 |
| 25,000 |
| 0 |
| 1,519,486 |
|
| Constance von Muehlen |
| 1,014,556 |
| 0 |
| 10,730 |
| 6,487 |
| 25,000 |
| 45,567 |
| 1,102,340 |
|
| Andrea Schneider |
| 1,046,133 |
| 0 |
| 10,175 |
| 15,462 |
| 25,000 |
| 136,599 |
| 1,233,369 |
|
Retirement
|
|
| Cash Severance ($) |
| Enhanced Retirement Benefit ($) |
| Benefit Continuation ($) |
| Lifetime Airfare Benefit (1) ($) |
| Equity Acceleration (2) ($) |
| Total ($) |
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Bradley D. Tilden |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 5,442 |
|
|
| 4,512,724 |
|
|
| 4,518,166 |
|
|
| Shane R. Tackett |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 26,555 |
|
|
| 1,671,563 |
|
|
| 1,698,118 |
|
|
| Benito Minicucci |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 9,943 |
|
|
| 4,501,040 |
|
|
| 4,510,983 |
|
|
| Andrew R. Harrison |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 36,693 |
|
|
| 2,155,501 |
|
|
| 2,192,194 |
|
|
| Gary L. Beck |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 10,807 |
|
|
| 1,105,425 |
|
|
| 1,116,232 |
|
|
| Brandon S. Pedersen* |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 20,034 |
|
|
| 1,154,766 |
|
|
| 1,174,800 |
|
|
Death or Disability
|
|
| Cash Severance ($) |
| Enhanced Retirement Benefit ($) |
| Benefit Continuation ($) |
| Lifetime Airfare Benefit (1) ($) |
| Equity Acceleration (2) ($) |
| Total ($) |
| ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Bradley D. Tilden |
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 5,442 |
|
|
|
|
| 4,512,724 |
|
|
|
|
| 4,518,166 |
|
|
|
| Shane R. Tackett |
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 26,555 |
|
|
|
|
| 1,671,563 |
|
|
|
|
| 1,698,118 |
|
|
|
| Benito Minicucci |
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 9,943 |
|
|
|
|
| 4,761,594 |
|
|
|
|
| 4,771,537 |
|
|
|
| Andrew R. Harrison |
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 36,693 |
|
|
|
|
| 2,155,501 |
|
|
|
|
| 2,192,194 |
|
|
|
| Gary L. Beck |
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 10,807 |
|
|
|
|
| 1,105,425 |
|
|
|
|
| 1,116,232 |
|
|
|
ChangeInternal Revenue Code. The amounts in Control
|
|
| Cash Severance(3) ($) |
| Enhanced Retirement Benefit(4) ($) |
| Benefit Contin- uation(5) ($) |
| Lifetime Airfare Benefit(4) ($) |
| Equity Acceleration(6)($) |
| Excise Tax ($) |
| Cutback Due to Modified Cap ($) |
| Total ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Bradley D. Tilden |
| 4,704,958 |
| 560,487 |
| 21,625 |
| 5,442 |
| 8,040,571 |
| 0 |
| 0 |
| 13,333,083 |
|
| Shane R. Tackett |
| 2,719,501 |
| 278,286 |
| 27,739 |
| 26,555 |
| 3,042,945 |
| 0 |
| (388,610) |
| 5,706,416 |
|
| Benito Minicucci |
| 3,658,563 |
| 359,148 |
| 17,774 |
| 9,943 |
| 7,100,998 |
| 0 |
| 0 |
| 11,146,426 |
|
| Andrew R. Harrison |
| 2,977,925 |
| 292,003 |
| 31,998 |
| 36,693 |
| 3,802,665 |
| 0 |
| 0 |
| 7,141,284 |
|
| Gary L. Beck |
| 2,374,433 |
| 209,782 |
| 21,143 |
| 10,807 |
| 2,014,905 |
| 0 |
| 0 |
| 4,631,070 |
|
Termination Not in Relation to Change in Control
(Other than Death, Disability or Retirement)
| Name |
| Cash Severance ($) |
| Enhanced Retirement Benefit ($) |
| Benefit Contin- uation ($) |
| Lifetime Airfare Benefit ($) |
| Equity Acceleration ($) |
|
| Total (6) ($) |
|
|
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Bradley D. Tilden |
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
| Shane R. Tackett |
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
| Benito Minicucci |
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
| Andrew R. Harrison |
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
| Gary L. Beck |
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
|
| 0 |
|
|
|
*Mr. Pedersen retired from the Company on March 2, 2020 and is therefore only included in the Retirement Termination table. The table above showsthis column represent the value of the benefits Mr. Pedersen actually receivedthat would have been reduced upon such a termination of the NEO’s employment.
|
|
|
|
|
|
|
|
|
|
CEO Pay Ratio
We are providing the following information about the relationship of the median annual total compensation of the Company’s employees and the annual total compensation of Mr. Tilden,Minicucci, the Company’s CEO, pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K.
For 2020,2022, the Company’s last completed fiscal year:
the median of the annual total compensation of all employees of the Company (other than the CEO) was $61,404;$67,269; and
the annual total compensation of the CEO was $6,092,052.
Based on this information, for 20202022 the ratio of the annual total compensation of the CEO to the median of the annual total compensation of all employees was 99.2196.65 to 1. The Company believes this ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.
To identify the median of the annual total compensation of all company employees, we used the following
methodology, assumptions and estimates:
Selection of Determination Date. SEC rules require the Company to select a date within the last three months of the fiscal year. We selected December 31, 20202022 as the date upon which the “median employee”median employee would be identified.identified.
Determination of Adjusted Employee Population.We determined that, as of December 31, 2020,2022, the
employee population for purposes of this disclosure, after taking into consideration certain adjustments
permitted by SEC rules (as described below), consisted of 21,68424,961 individuals. This population includes all employees, whether employed on a full-time, part-time, temporary or seasonal basis. However, as permitted under SEC rules, we excluded non-U.S. employees as they make up less than 5% of the Company’s total employee population. As of December 31, 2020,2022, the Company’s subsidiaries employed 5648 employees in Canada, one (1) employee2 employees in Costa Rica and 91Belize, and 109 employees in Mexico, as compared to a total global employee population of 21,83225,120 (i.e., 21,68424,961 U.S., 148159 non-U.S.). The Company did not employ any other non-U.S. employees as of December 31, 2020.2022.
Identification of Median Employee.To identify the median employee from the Company’s adjusted employee population outlined above, after excluding the CEO, we compared the amount of gross earnings of these employees as reflected in payroll records. We identified the median employee using this compensation measure, which was consistently applied to all employees included in the calculation. We then identified the employee whose wages fell at the midpoint of the distribution.
Calculation of Annual Total Compensation. Once the median employee was identified, all of the elements of such employee’s compensation for 20202022 were combined in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K (i.e., the same rules used to determine the CEO’sCEO.s total compensation for 20202022 as reported in the Summary Compensation Table), resulting in annual total compensation of $61,404,$67,269, including the estimated value of such employee’s non-discriminatory benefits (estimated for the employee and such employee’s eligible dependents at $8,382)$7,653).
With respect
As described in the Compensation Impacts related to COVID-19; CARES Act Impacts section above, The CARES Act imposed limitsor caps on the compensation that may be paid to the Company’s executives until April 1, 2023regardless of circumstances. As a result, the Company recouped $3,349,450 of unvested equity from Mr. Minicucci during 2022. So, while the summary compensation table reflects the equity awards that were granted in the year, a significant portion of that award value was recouped in the form of unvested equity returned to the annual total compensation of the CEO, we used the amount reported in the “Total” column of the 2020 Summary Compensation Table included in this Proxy Statement plus the estimated value of the CEO’s non-discriminatory benefits for a total amount of $6,092,052.Company.
The Company believes the methodology, assumptions and estimates described above to be reasonable given the specific employee population. Companies are permitted under SEC rules to exercise significant flexibility and discretion in determining the methodology used to comply with the requirements of this disclosure. As acknowledged by the SEC, this flexibility could reduce the comparability of disclosed pay ratios across companies. Therefore, the pay ratio may not necessarily be be representative of or comparable to pay ratios disclosed by other companies in theairline industry or otherwise.
72
Pay vs. Performance
Pay vs. Performance Table Discussion and Analysis
In accordance with Item 402(v) of Regulation S-K, we are providing the following information regarding the relationship between the total compensation of our principal executive officer (PEO) and our other named executive officers (referred to as Non-PEO NEOs) and our financial performance for the fiscal years shown in the table. For further information on our pay-for-performance philosophy and how our executive compensation aligns with the Company’s performance, refer to the Compensation Discussion and Analysis section of this proxy statement.
Pay vs. Performance Table
| Value of Initial Fixed $100 Investment Based On: |
|
| |||||||
Year | Summary Compensation Table Total for PEO #1(1&2) | Summary Compensation Table Total for PEO #2(1&2) | Compensation Actually Paid to PEO #1(1&3) | Compensation Actually Paid to PEO #2(1&3) | Average Summary Compensation Table Total for Non-PEO NEOs(4) | Average Compensation Actually Paid to Non-PEO NEOs(5) | Total Shareholder Return(6) | Peer Group Total Shareholder Return(7) | Net Income (millions)(8) | Company Selected Measure (Adjusted Pre-Tax Margin)(9) |
2022 | N/A | $6,487,981 | $0 | $3,004,559 | $3,000,762 | $1,834,114 | $63.74 | $53.09 | $58 | 7.60% |
2021 | $873,333 | $5,130,162 | $1,027,753 | $2,381,082 | $2,442,646 | $1,254,528 | $77.34 | $67.94 | $478 | -5.60% |
2020 | $6,077,957 | N/A | $1,571,752 | $0 | $2,768,356 | $1,278,102 | $77.19 | $69.23 | ($1,324) | -49.10% |
PEO #1 | PEO #2 | Non-PEO NEOs | |
2022 | Mr. Minicucci | Mr. Tackett, Mr. Harrison, Ms. Schneider, Ms. von Muehlen | |
2021 | Mr. Tilden | Mr. Minicucci | Mr. Tackett, Mr. Harrison, Ms. Schneider, Ms. von Muehlen |
2020 | Mr. Tilden | Mr. Minicucci, Mr. Tackett, Mr. Pedersen, Mr. Harrison, Mr. Beck |
The following table details the total equity award adjustments for each applicable year, including the amounts added (or subtracted, as applicable) for each PEO and non-PEO NEOs, as computed in
73
accordance with Item 402(v). In general, the adjustments for equity awards provided in Item 402(v) are as follows:
In making each of these adjustments, the “value” of an option or stock award is the fair value of the award on the applicable date determined in accordance with FASB ASC Topic 718 using the valuation assumptions we then used to calculate the fair value of our equity awards. For more information on the valuation of our equity awards, please see the notes to our financial statements that appear in our Annual Report on Form 10-K each fiscal year and the footnotes to the Summary Compensation Table that appears in our annual Proxy Statement.
|
| PEO 2: Mr. Minicucci |
| PEO 1: Mr. Tilden |
| NEO Average | ||||
|
| 2022 | 2021 |
| 2021 | 2020 |
| 2022 | 2021 | 2020 |
Summary Compensation Table Total |
| $6,487,981 | $5,130,162 |
| $873,333 | $6,077,957 |
| $3,000,762 | $2,442,646 | $2,768,356 |
Less: Reported Fair Value of Equity Awards |
| $3,886,393 | $3,518,540 |
| $119,975 | $4,098,304 |
| $1,539,584 | $1,424,174 | $1,942,540 |
Add: Year-End Fair Value of Equity Awards Granted in the Year (10) |
| $943,089 | $541,300 |
| $95,343 | $3,394,837 |
| $471,845 | $222,921 | $1,853,380 |
Add: Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year |
| ($21,200) | $201,271 |
| $159,037 | ($30,708) |
| $21,053 | $46,010 | ($53,893) |
Add: Change in Fair Value of Outstanding and Unvested Equity Awards |
| ($518,918) | $26,889 |
| $20,015 | ($3,115,171) |
| ($119,961) | $7,208 | ($1,030,503) |
Less: Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year |
| $0 | $0 |
| $0 | $0 |
| $0 | $0 | $292,520 |
Less: Reported Change in the Actuarial Present Value of Pension Benefits (11) |
| $0 | $0 |
| $0 | $656,859 |
| $0 | $40,083 | $24,178 |
Add: Service Cost and Prior Service Cost for Pension Benefits (12) |
| $0 | $0 |
| $0 | $0 |
| $0 | $0.00 | $0 |
Compensation Actually Paid |
| $3,004,559 | $2,381,082 |
| $1,027,753 | $1,571,752 |
| $1,834,114 | $1,254,528 | $1,278,102 |
74
Most Important Company Performance Measures for Determining Executive Compensation
In accordance with Item 402(v) requirements, we are providing the following unranked list of the financial performance measures used by Alaska Air Group we consider most important to link the compensation actually paid to the NEOs to company performance during fiscal year 2022:
Pay vs. Performance Table Discussion and Analysis
In accordance with Item 402(v) requirements, we are providing the following charts to describe the relationships between information presented in the Pay vs. Performance table. The following charts show the relationship between the compensation actually paid to our NEOs and the Company's financial performance, in each case presented in the tables below: 1) TSR of both Alaska Air Group and the Dow Jones U.S. Airlines Index; 2) Alaska Air Group’s Net Income; and 3) Alaska Air Group’s Adjusted Pre-Tax Margin.
CAP vs. TSR
CAP vs. Net Income
CAP vs. Adjusted Pretax Margin
CAP vs. TSR
CAP vs. Adjusted Pretax Margin
CAP vs. TSR $77 $77 $64 $69 $68 $53 $1.6M $1.3M $1.0M $2.4M $1.3M $3.0 $1.8M 2020 2021 2022 Compensation Actually Paid (Mr. Tilden) Compensation Actually Paid (Mr. Minicucci) Avg. Compensation Actually Paid (Non-CEO NEO) Company TSR Peer Group TSR CAP vs. Net Income -$1,324.M $478.M $58.M $1.6M $1.3M $1.0M $2.4M $1.3M $3.0M $1.8M 2020 2021 2022 Compensation Actually Paid (Mr. Tilden) Compensation Actually Paid (Mr. Minicucci) Avg. Compensation Actually Paid (Non-CEO NEO) Net Income(millions) CAP vs. Adjusted Pretax Margin -49.10% -5.60% 7.60% $1.6M $1.3M $1.0M $2.4M $1.3M $3.0M $1.8M 2020 2021 2022 Compensation Actually Paid (Mr. Tilden) Compensation Actually Paid (Mr. Minicucci) Avg. Compensation Actually Paid (Non-CEO NEO) Adjusted Pretax Margin
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Proposal 3:Advisory Vote on Frequency of Future Advisory Vote on Named Executive Officer Compensation
As described in Proposal 2 above, the Company’s shareholders are being provided the opportunity to cast an advisory vote on the compensation of the Company’s named executive officers.
This Proposal 3 affords shareholder the opportunity to cast an advisory vote on how often the Company should include an advisory vote on executive compensation in its proxy materials for future annual shareholder meetings (or special shareholder meeting for which the Company must include executive compensation information in the proxy statement for that meeting). Under this Proposal 3, shareholders may vote to have the advisory vote on executive compensation held every one year, every two years or every three years.
After careful consideration, our Board of Directors believes that advisory votes on executive compensation should be conducted every year so that shareholders may annually express their views on the Company’s executive compensation program. The Compensation and Leadership Development Committee, which administers the Company’s executive compensation program, values the opinions expressed by shareholders in these votes and will consider the outcome of these votes when making future compensation decisions for our named executive officers.
This proposal on the frequency of future advisory votes on executive compensation is advisory only and will not be binding on the Company or our Board. In voting on this proposal, you will be able to indicate your preference regarding the frequency of future advisory votes on executive compensation by specifying a choice of one year, two years or three years. If you do not have a preference regarding the frequency of future advisory votes on executive compensation, you should abstain from voting on the proposal. Shareholders are not voting to approve or disapprove the Board’s recommendation. Although non-binding, the Board and the Compensation and Leadership Development Committee will carefully review the voting results. Notwithstanding the Board’s recommendation and the outcome of the shareholder vote, the Board may in the future decide to conduct advisory votes on executive compensation on a more or less frequent basis and may vary practice based on factors such as discussions with shareholders and the adoption of material changes to the Company’s executive compensation program.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE TO HOLD FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION EVERY ONE YEAR (AS OPPOSED TO EVERY TWO YEARS OR EVERY THREE YEARS).
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AUDIT COMMITTEE MATTERS |
Proposal 4: Ratification of the AppointmentAppointment of the Company’s Independent Registered Public Accountants
The Audit Committee has selected KPMG LLP (KPMG) as the Company’s independent registered public accountants (the independent accountants) for fiscal year 2021,2023, and the Board is asking stockholdersshareholders to ratify that selection. Although current law, rules, and regulations, as well as the charter of the Audit Committee, require the Audit Committee to engage, retain, and supervise the independent accountants, the Board considers the selection of the independent accountants to be an important matter of stockholdershareholder concern and is submitting the selection of KPMG for ratification by stockholdersshareholders as a matter of good corporate practice.
The affirmative vote of holders of a majority of the shares of common stock represented at the Annual Meeting, in person and by proxy, and entitled to vote on the matter is required to ratify the selection of KPMG as the Company’s independent accountants for the current fiscal year.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS.
Independent Registered Public Accountants
Selection of Independent Accountants for the Current Fiscal Year
The Audit Committee has selected, and is recommending that stockholdersshareholders ratify, KPMG LLP (KPMG) as the Company’s independent accountants for the 20212023 fiscal year. KPMG also served as the Company’s independent accountants for fiscal year 2019 and 2020.since 2004. Representatives of KPMG are expected to attend the Company’s annual meeting of stockholdersAnnual Meeting to respond to questions from stockholdersshareholders and will have the opportunity to make a statement if they wish to do so.
Fees Paid to Independent Accountants
During fiscal years 20202022 and 2019,2021, the Company retained KPMG as its independent accountants. Below are the fees paid for the services described during each of the two years:
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Audit Fees for the Company’s Annual Financial Statements and Quarterly Reviews (1) | $ | |||
Audit-Related Fees (2) | $ | |||
Tax Fees | $0 | |||
All Other Fees | $0 | |||
Total Fees for | $ | |||
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Audit Fees for the Company’s Annual Financial Statements and Quarterly Reviews (1) | $ | |||
Audit-Related Fees (2) | $ | |||
Tax Fees | $0 | |||
All Other Fees | $0 | |||
Total Fees for | $ | |||
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Independent AccountantAccountant Engagement Policy
The Audit Committee has established and annually reviews an Independent Accountant Engagement Policy designed to ensure that the Company’s independent accountants perform services independently and with the highest integrity and professionalism. In addition to certain specific prohibited services, the Audit Committee considers whether any service provided by the independent accountants may impair the firm’s independence in fact or appearance.
The policy provides that any engagement of the Company’s outside accountant must be consistent with principles determined by the SEC, namely, whether the independent accountants are capable of exercising impartial judgment on all issues encompassed within the accountants’ engagement.
Permitted services under the policy include audit services, audit-related services, certain tax services and certain other services not prohibited by SEC rules or other federal regulations. Before retaining its independent accountants for non-audit services, the Audit Committee considers factors such as whether the services might compromise the accountants’ independence, whether the accountants are the best provider for the services, and whether the proportion of audit to non-audit services is appropriate.
All services must be pre-approved by the Audit Committee except for certain services other than audit, review, or attestation services that meet the “de minimis exception” under Regulation S-X Rule 2-01 of the rules of the SEC, namely:
the aggregate amount of fees paid for all such services is not more than 5% of the total fees paid by the Company to its accountants during the fiscal year in which the services are provided;
such services were not recognized by the Company at the time of the engagement to be non-audit services; and
such services are promptly brought to the attention of the Audit Committee and approved prior to the completion of the audit.
During fiscal years 20202022 and 2019,2021, there were no such services that were performed pursuant to the “de minimis exception.”
Audit CommitteeCommittee Report
The following report of the Audit Committee shall not be deemed to be soliciting material or to be filed with the SEC under the Exchange Act or incorporated by reference in any document so filed.
Review of the Company’s Audited Financial Statements
The Audit Committee has reviewed and discussed with management and KPMG, the Company’s independent accountants, the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020. The Committee believes that management maintains an effective system of internal controls that results in fairly presented financial statements.2022.
The Audit Committee has discussed with KPMG the matters required to be discussed by Public Company Accounting Oversight Board (PCAOB) Auditing Standard 1301 (Communications with Audit Committees), as amended, as adopted by the PCAOB.PCAOB and the SEC.
The Audit Committee has also received and reviewed the written disclosures and the KPMG letter required by PCAOB Rule 3526, Communicating with Audit Committees Concerning Independence, and has discussed with KPMG their independence.
Based on the review and discussions described above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in Alaska Air Group’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.2022.
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Audit Committee Charter
The Audit Committee has adopted a written charter, which is posted on the Company’s website at www.alaskaair.com under About Alaska/Investor Relations. It describes the roles of the Audit Committee and the independent accountants (for which the Audit Committee approves the appointment and compensation and whom the Committee oversees). In addition, it describes the Audit Committee’s relationship to internal audit and the Committee’s responsibilities with regard to assessing the Company’s internal controls and enterprise risk.
Audit Committee Independence and Financial Expertise
All members of the Audit Committee meet the independence, financial literacy and experience requirements of the NYSE and of the SEC. The SEC requires that at least one member qualify as a “financial expert” as defined pursuant to the Sarbanes-Oxley Act.
Mr. Yeaman’s prior experience as a chief financial officer of a public company and Ms. Bedient’s prior experience as a public company chief financial officer and former partner of a global accounting firm qualifies each of themhim as a financial expert.
Audit Committee of the Board of Directors
Eric K. Yeaman, Chair
Patricia M. Bedient, Member
Daniel K. Elwell, Member (since January 2021)
Dhiren R. Fonseca, Member
Susan J. Li, Member, until she steps down as a board member on May 4, 2023
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Proposal 4: Approval of the Alaska Air Group, Inc.
Amended and Restated 2016 Performance Incentive Plan
Amended and Restated 2016 Performance Incentive Plan Highlights
The Company maintains the Alaska Air Group, Inc. 2016 Performance Incentive Plan (the “2016 Plan”) for the purpose of promoting its success through the issuance of equity- and cash-based awards that are designed to attract, motivate, retain and reward employees. The Board is seeking stockholder approval of the amendments to the 2016 Plan described below. The Board approved these amendments to the 2016 Plan on March 18, 2021 (the “Amendment Effective Date”).
As of March 18, 2021, 2,634,923 shares of the Company’s common stock remained available for new award grants under the 2016 Plan (or 1,154,714 shares if the fungible-share ratio for “full-value awards” (as defined below) currently in effect for the 2016 Plan is applied. The Board believes that increasing the number of shares of the Company’s common stock available for grant under the 2016 Plan by an additional 2,700,000 million shares will allow the Company to continue to grant awards under the 2016 Plan that are payable in shares of common stock for an additional five (5) years. Please see the disclosure under “Specific Benefits Under the 2016 Plan” below.
The amended and restated 2016 Plan reflects the following amendments that are subject to stockholder approval of this proposal:
Increase in Aggregate Share Limit. The 2016 Plan currently limits the aggregate number of shares of the Company’s common stock that may be delivered pursuant to all awards granted under the 2016 Plan to 5,756,807 shares, plus the number of shares subject to awards granted under the Company’s 2008 Performance Incentive Plan (the “2008 Plan”) and outstanding as of May 12, 2016 which expire, or for any reason are cancelled or terminated, after May 12, 2016 without being exercised. As of March 18, 2021, a total of 2,398,667 shares of common stock were subject to outstanding awards granted under the 2016 Plan and, as noted above, only 2,634,923 shares of common stock were then available for new award grants under the 2016 Plan (or 1,154,714 shares applying the fungible-share ratio for full-value awards currently in effect under the plan). The proposed amendment and restatement would increase the number of shares of the Company’s common stock that may be delivered pursuant to awards granted under the 2016 Plan by an additional 2.7 million shares.
Extension of Plan Term. The 2016 Plan is currently scheduled to expire on February 9, 2026. The proposed amendment and restatement would extend the Company’s ability to grant new awards under the 2016 Plan through March 17, 2031.
Changes in Certain Share Counting Rules. The 2016 Plan currently provides that “full-value awards” will be counted against the plan’s share limit as 1.7 shares for every one share actually issued in connection with such award. In order to simplify the administration of the 2016 Plan, the proposed amendment and restatement would remove this provision and provides that all types of awards will count on a one-for-one basis against the share limit.
Removal of Limit on Certain Types of Awards; Section 162(m) of the Internal Revenue Code. The Tax Cut and Jobs Act of 2017 removed the performance-based compensation deductibility exception under Section 162(m) of the Internal Revenue Code. Given this change in the tax code, the proposed amendment and restatement would remove certain limits from the plan on the maximum number of options, stock appreciation rights, and performance-based awards that may be granted in any fiscal year to any one participant since those limits had previously been included to satisfy the requirements of Section 162(m). Furthermore, provisions of the 2016 Plan that provided flexibility to grant performance-based compensation intended to satisfy the compensation deductibility exception under Section 162(m) of the Code have been removed from the plan since that deductibility exception is no longer applicable to any new award grant. The Company may continue to grant performance-based awards under the 2016 Plan; only the provisions related to the performance-based compensation exception of Section 162(m) have been removed since that exception no longer applies to new award grants.
Except as noted above, the key terms of the amended and restated 2016 Plan are substantially the same as those initially approved by stockholders for the 2016 Plan.
The 2016 Plan is administered by a committee of independent directors.
The 2016 Plan does not allow the repricing of stock options without stockholder approval.
The 2016 Plan does not allow for reload options.
The Company does not pay tax gross-ups related to plan awards.
The term of the 2016 Plan is 10 years (measured from the date of Board approval of the amended and restated plan on March 18, 2021).
Accelerated vesting in connection with a change in control requires a double trigger: 1) the consummation of a merger or acquisition and 2) actual or constructive termination of the holder’s employment (or a termination of the award on the transaction as described below under “Assumption or Termination of Awards”).
In addition, the Company has adopted the following practices and policies:
The Company has a track record of using its incentive plan responsibly, as evidenced by its low 3-year average burn rate of 0.6%.
The administrative committee’s long-standing practice has been to vest equity performance units upon completion of a three-year performance period and to vest stock options over a four-year period.
The Board has adopted many strong governance practices, including a clawback policy that covers equity awards.
General
At the Annual Meeting, stockholders will be asked to approve the amendments described above to the 2016 Plan. The amended and restated 2016 Plan was adopted, subject to stockholder approval, by the Board of Directors on March 18, 2021.
The Company believes that stock-based awards incentivize employees to create stockholder value and promote the success of the Company, and that incentive compensation plans like the amended and restated 2016 Plan are an important attraction, retention and motivation tool for participants.
If stockholders do not approve this 2016 Plan proposal, the current share limits of the 2016 Plan will remain in effect, the plan term will not be extended, and the other amendments described above will not be effective.
Summary Description of the 2016 Performance Incentive Plan
The principal terms of the 2016 Plan are summarized below. The following summary is qualified in its entirety by the full text of the 2016 Plan, which appears as Exhibit A to this Proxy Statement. Capitalized terms are as defined in Exhibit A.
Purpose. The purpose of the 2016 Plan is to promote the success of the Company by providing an additional means for us to attract, motivate, retain and reward selected employees and other eligible persons through the grant of awards and to enhance the alignment of the interests of the selected participants with the interests of the Company’s stockholders.
Administration. The Board or one or more committees appointed by the Board will administer the 2016 Plan. The Board has delegated general administrative authority for the 2016 Plan to the Compensation and Leadership Development Committee. The Board or another committee (within its delegated authority) may delegate some or all of its authority with respect to the 2016 Plan to another committee of directors, and certain limited authority to grant awards to employees may be delegated to one or more officers of the Company. (The appropriate acting body, be it the board of directors, a committee within its delegated authority, or an officer within his or her delegated authority, is referred to in this proposal as the “Administrator”).
The Administrator has broad authority under the 2016 Plan, including, without limitation, the authority:
to select eligible participants and determine the type(s) of award(s) that they are to receive;
to determine any applicable vesting and exercise conditions for awards (including any applicable performance-based and/or time-based vesting or exercisability conditions) and the extent to which such conditions have been satisfied, or determine that no delayed vesting or exercise is required, to determine the circumstances in which any performance-based goals (or the applicable measure of performance) will be adjusted and the nature and impact of any such adjustment, to establish the events (if any) on which exercisability or vesting may accelerate (including specified terminations of employment or service or other circumstances), and to accelerate or extend the vesting or exercisability or extend the term of any or all outstanding awards (subject in the case of options and stock appreciation rights to the maximum term of the award);
to cancel, modify, or waive the Company’s rights with respect to, or modify, discontinue, suspend, or terminate any or all outstanding awards, subject to any required consents;
subject to the other provisions of the 2016 Plan, to make certain adjustments to an outstanding award and to authorize the conversion, succession or substitution of an award;
to determine the method of payment of any purchase price for an award or shares of the Company’s common stock delivered under the 2016 Plan, as well as any tax-related items with respect to an award, which may be in the form of cash, check, or electronic funds transfer, by the delivery of already-owned shares of the Company’s common stock or by a reduction of the number of shares deliverable pursuant to the award, by services rendered by the recipient of the award, by notice and third party payment or cashless exercise on such terms as the Administrator may authorize, or any other form permitted by law;
to modify the terms and conditions of any award, establish sub-plans and agreements and determine different terms and conditions that the Administrator deems necessary or advisable to comply with laws in the countries where the Company or one of its subsidiaries operates or where one or more eligible participants reside or provide services;
to approve the form of any award agreements used under the 2016 Plan; and
to construe and interpret the 2016 Plan, make rules for the administration of the 2016 Plan, and make all other determinations for the administration of the 2016 Plan.
No Repricing. In no case (except due to an adjustment to reflect a stock split or other event referred to under “Adjustments” below, or any repricing that may be approved by stockholders) will the Administrator (1) amend an outstanding stock option or stock appreciation right to reduce the exercise price or base price of the award, (2) cancel, exchange, or surrender an outstanding stock option or stock appreciation right in exchange for cash or other awards for the purpose of repricing the award, or (3) cancel, exchange, or surrender an outstanding stock option or stock appreciation right in exchange for an option or stock appreciation right with an exercise or base price that is less than the exercise or base price of the original award.
Eligibility. Persons eligible to receive awards under the 2016 Plan include officers or employees of the Company or any of its subsidiaries, directors of the Company, and certain consultants and advisors to the Company or any of its subsidiaries. As of March 12, 2021, approximately 21,000 officers and employees of the Company and its subsidiaries (including all of the Company’s named executive officers), and each of the Company’s 12 non-employee directors, are considered eligible under the 2016 Plan.
Authorized Shares; Limits on Awards. Currently, the maximum number of shares of the Company’s common stock that may be issued or transferred pursuant to all awards under the 2016 Plan (including awards that have previously been granted and settled under the 2016 Plan) equals the sum of: (1) 5,756,807 shares, plus (2) the number of any shares subject to stock options granted under the 2008 Plan and outstanding as of May 12, 2016 which expire, or for any reason are cancelled or terminated, after May 12, 2016 without being exercised, plus (3) the number of any shares subject to restricted stock and restricted stock unit awards granted under the 2008 Plan that are outstanding and unvested as May 12, 2016 which are forfeited, terminated, cancelled, or otherwise reacquired after May 12, 2016 without having become vested (with any
shares taken into account based on the premium share-counting rule discussed below for full-value awards as then in effect).
If stockholders approve this 2016 Plan proposal, the maximum number of shares of the Company’s common stock that may be issued or transferred on or after the Amendment Effective Date pursuant to awards (including awards outstanding on the Amendment Effective Date, but exclusive of awards granted and settled prior to the Amendment Effective Date) granted under the 2016 Plan will be the sum of (1) 6,253,381 shares (which represents the sum of 2,700,000 shares, plus 1,154,714 shares (i.e. the number of shares available for new grants of full-value awards under the 2016 Plan on the Amendment Effective Date, giving effect to the fungible-share ratio applicable to such awards in effect immediately prior to the Amendment Effective Date), plus 2,398,667 shares (i.e. the number of shares subject to outstanding 2016 Plan awards on the Amendment Effective Date), plus (2) the number of any shares subject to stock options granted under the 2008 Plan and outstanding on the Amendment Effective Date, which expire, or for any reason are cancelled or terminate after the Amendment Effective Date without being exercised. As of March 12, 2021, 234,398 shares were subject to options then outstanding under the 2008 Plan.
Shares issued in respect of any “full-value award” granted under the 2016 Plan are currently counted against the plan’s overall share limit as 1.7 shares for every one share actually issued in connection with the award. For example, if the Company granted a bonus of 100 shares of its common stock under the 2016 Plan, 170 shares would be counted against the share limit with respect to that award. For this purpose, a “full-value award” generally means any award granted under the 2016 Plan other than a stock option or stock appreciation right. If stockholders approve this 2016 Plan proposal, all awards granted under the 2016 Plan will be counted against the plan’s share limit as one share for every one share actually issued in connection with the award.
The following other limits are also contained in the 2016 Plan. These limits are in addition to, and not in lieu of, the share limit for the plan described above and, in the case of share-based limits, are applied on a one-for-one basis:
The maximum number of shares that may be delivered pursuant to options qualified as incentive stock options granted under the plan is 6,000,000shares.
Currently, the maximum number of shares subject to those options and stock appreciation rights that are granted under the plan during any one calendar year to any one individual is 1,200,000 shares. If stockholders approve this 2016 Plan proposal, this limit will be removed since the limit had previously been included to satisfy the requirements of Section 162(m).
The maximum grant date fair value for awards granted to a Non-Employee Director under the 2016 Plan during any one calendar year is $300,000. For purposes of this limit, the "grant date fair value" of an award means the value of the award on the date of grant of the award determined using the equity award valuation principles applied in the Company’s financial reporting. This limit does not apply to, and will be determined without taking into account, any award granted to an individual who, on the grant date of the award, is an officer or employee of the Company or one of its subsidiaries. This limit applies on an individual basis and not on an aggregate basis to all non-employee directors as a group.
Shares that are subject to or underlie awards which expire or for any reason are cancelled or terminated, are forfeited, fail to vest, or for any other reason are not paid or delivered under the 2016 Plan will not be counted against the plan’s share limit and will again be available for subsequent awards under the 2016 Plan. Except as described below, to the extent that shares are delivered pursuant to the exercise of a stock appreciation right or stock option granted under the 2016 Plan, the number of underlying shares as to which the exercise related shall be counted against the share limit. (For purposes of clarity, if a stock appreciation right relates to 100,000 shares and is exercised at a time when the payment due to the participant is 15,000 shares, 100,000 shares shall be charged against the share limit with respect to such exercise.) Shares that are exchanged by a participant or withheld by the Company as full or partial payment in connection with any award under the 2016 Plan, as well as any shares exchanged or withheld to satisfy the tax withholding obligations related to any award, will be counted against the plan’s share limit and will not be available for subsequent awards under the 2016 Plan. To the extent that an award is settled in cash or a form other than shares, the shares that would have been delivered had there been no such cash or other settlement will not be counted against the plan’s hare limit and will again be available for subsequent awards under the 2016 Plan. In the
event that shares are delivered in respect of a dividend equivalent right, the actual number of shares delivered with respect to the award shall be counted against the share limit. (For purposes of clarity, if 1,000 dividend equivalent rights are granted and outstanding when the Company pays a dividend, and 50 shares are delivered in payment of those rights with respect to that dividend, 50 shares shall be counted against the share limit.) Except as otherwise provided by the Administrator, shares delivered in respect of dividend equivalent rights shall not count against any individual award limit under the 2016 Plan other than the aggregate share limit. In addition, the 2016 Plan generally provides that shares issued in connection with awards that are granted by or become obligations of the Company through the assumption of awards (or in substitution for awards) in connection with an acquisition of another company will not count against the shares available for issuance under the 2016 Plan. The Company may not increase the applicable share limits of the 2016 Plan by repurchasing shares of common stock on the market (by using cash received through the exercise of stock options or otherwise).
Types of Awards. The 2016 Plan authorizes stock options, stock appreciation rights, and other forms of awards granted or denominated in the Company’s common stock or units of the Company’s common stock, as well as cash bonus awards. The 2016 Plan retains flexibility to offer competitive incentives and to tailor benefits to specific needs and circumstances. Any award may be structured to be paid or settled in cash.
A stock option is the right to purchase shares of the Company’s common stock at a future date at a specified price per share (the “exercise price”). The per share exercise price of an option generally may not be less than the fair market value of a share of the Company’s common stock on the date of grant. The maximum term of an option is ten years from the date of grant. An option may either be an incentive stock option or a nonqualified stock option. Incentive stock option benefits are taxed differently from nonqualified stock options, as described under “Federal Income Tax Consequences of Awards Under the 2016 Plan” below. Incentive stock options are also subject to more restrictive terms and are limited in amount by the U.S. Internal Revenue Code and the 2016 Plan. Incentive stock options may only be granted to employees of the Company or a subsidiary.
A stock appreciation right is the right to receive payment of an amount equal to the excess of the fair market value of share of the Company’s common stock on the date of exercise of the stock appreciation right over the base price of the stock appreciation right. The base price will be established by the Administrator at the time of grant of the stock appreciation right and generally may not be less than the fair market value of a share of the Company’s common stock on the date of grant. Stock appreciation rights may be granted in connection with other awards or independently. The maximum term of a stock appreciation right is ten years from the date of grant.
The other types of awards that may be granted under the 2016 Plan include, without limitation, stock bonuses, restricted stock, performance stock, stock units, restricted stock units, deferred shares or phantom stock (which are contractual rights to receive shares of stock, or cash based on the fair market value of a share of stock), dividend equivalents which represent the right to receive a payment based on the dividends paid on a share of stock over a stated period of time, or similar rights to purchase or acquire shares, and cash awards.
Any awards under the 2016 Plan (including awards of stock options and stock appreciation rights) may be fully-vested at grant or may be subject to time- and/or performance-based vesting requirements.
Dividend Equivalents; Deferrals. The Administrator may provide for the deferred payment of awards, and may determine the other terms applicable to deferrals. The Administrator may provide that awards under the 2016 Plan (other than options or stock appreciation rights), and/or deferrals, earn dividends or dividend equivalents based on the amount of dividends paid on outstanding shares of Common Stock, provided that any dividends and/or dividend equivalents as to the portion of an award that is subject to unsatisfied vesting requirements will be subject to termination and forfeiture to the same extent as the corresponding portion of the award to which they relate in the event the applicable vesting requirements are not satisfied (or, in the case of a restricted stock or similar award where the dividend must be paid as a matter of law, the dividend payment will be subject to forfeiture or repayment, as the case may be, if the related vesting conditions are not satisfied).
Assumption and Termination of Awards. If an event occurs in which the Company does not survive (or does not survive as a public company in respect of its common stock), including, without limitation, a dissolution, merger, combination, consolidation, conversion, exchange of securities, or other reorganization, or a sale of all or substantially all of the business, stock or assets of the Company, awards then-outstanding under the 2016 Plan will not automatically become fully vested pursuant to the provisions of the 2016 Plan so long as such
awards are assumed, substituted for or otherwise continued. However, if awards then-outstanding under the 2016 Plan are to be terminated in such circumstances (without being assumed or substituted for), such awards would generally become fully vested (with any performance goals applicable to the award deemed met at the “target” performance level), subject to any exceptions that the Administrator may provide for in an applicable award agreement. The Administrator also has the discretion to establish other change in control provisions with respect to awards granted under the 2016 Plan. For example, the Administrator could provide for the acceleration of vesting or payment of an award in connection with a corporate event or in connection with a termination of the award holder’s employment. For the treatment of outstanding equity awards held by the Named Executive Officers in connection with a termination of employment and/or a change in control of the Company, please see “Potential Payments Upon Change in Control and Termination” above in this Proxy Statement.
Transfer Restrictions. Subject to certain exceptions contained in Section 5.6 of the 2016 Plan, awards under the 2016 Plan generally are not transferable by the recipient other than by will or the laws of descent and distribution and are generally exercisable, during the recipient’s lifetime, only by the recipient. Any amounts payable or shares issuable pursuant to an award generally will be paid only to the recipient or the recipient’s beneficiary or representative. The Administrator has discretion, however, to establish written conditions and procedures for the transfer of awards to other persons or entities, provided that such transfers comply with applicable federal and state securities laws and are not made for value (other than nominal consideration, settlement of marital property rights, or for interests in an entity in which more than 50% of the voting securities are held by the award recipient or by the recipient’s family members).
Adjustments. As is customary in incentive plans of this nature, each share limit and the number and kind of shares available under the 2016 Plan and any outstanding awards, as well as the exercise or purchase prices of awards, and performance targets under certain types of performance-based awards, are subject to adjustment in the event of certain reorganizations, mergers, combinations, recapitalizations, stock splits, stock dividends, or other similar events that change the number or kind of shares outstanding, and extraordinary dividends or distributions of property to the stockholders.
No Limit on Other Authority. The 2016 Plan does not limit the authority of the Board of Directors or any committee to grant awards or authorize any other compensation, with or without reference to the Company’s common stock, under any other plan or authority.
Termination of or Changes to the 2016 Plan. The Board of Directors may amend or terminate the 2016 Plan at any time and in any manner. Stockholder approval for an amendment will be required only to the extent then required by applicable law or deemed necessary or advisable by the Board of Directors. Unless terminated earlier by the Board of Directors and subject to any extension that may be approved by stockholders, the authority to grant new awards under the 2016 Plan is currently scheduled to terminate on February 10, 2026. If stockholders approve this 2016 Plan proposal, the authority to grant new awards under the 2016 Plan will terminate on March 17, 2031. Outstanding awards, as well as the Administrator’s authority with respect thereto, generally will continue following the expiration or termination of the plan. Generally speaking, outstanding awards may be amended by the Administrator (except for a repricing), but the consent of the award holder is required if the amendment (or any plan amendment) materially and adversely affects the holder.
U.S. Federal Income Tax Consequences of Awards under the 2016 Plan
The U.S. federal income tax consequences of the 2016 Plan under current federal law, which is subject to change, are summarized in the following discussion of the general tax principles applicable to the 2016 Plan. This summary is not intended to be exhaustive and, among other considerations, does not describe the deferred compensation provisions of Section 409A of the U.S. Internal Revenue Code to the extent an award is subject to and does not satisfy those rules, nor does it describe state, local, or international tax consequences.
With respect to nonqualified stock options, the company is generally entitled to deduct and the participant recognizes taxable income in an amount equal to the difference between the option exercise price and the fair market value of the shares at the time of exercise. With respect to incentive stock options, the company is generally not entitled to a deduction nor does the participant recognize income at the time of exercise, although the participant may be subject to the U.S. federal alternative minimum tax.
The current federal income tax consequences of other awards authorized under the 2016 Plan generally follow certain basic patterns: (1) nontransferable restricted stock subject to a substantial risk of forfeiture results in income recognition equal to the excess of the fair market value over the price paid (if any) only at the time the restrictions lapse (unless the recipient elects to accelerate recognition as of the date of grant); (2) bonuses, stock appreciation rights, cash and stock-based performance awards, dividend equivalents, stock units, and other types of awards are generally subject to tax at the time of payment; and (3) compensation otherwise effectively deferred is taxed when paid. In each of the foregoing cases, the Company will generally have a corresponding deduction at the time the participant recognizes income.
If an award is accelerated under the 2016 Plan in connection with a “change in control” (as this term is used under the U.S. Internal Revenue Code), the Company may not be permitted to deduct the portion of the compensation attributable to the acceleration (“parachute payments”) if it exceeds certain threshold limits under the U.S. Internal Revenue Code (and certain related excise taxes may be triggered). Furthermore, under Section 162(m) of the Code, the aggregate compensation in excess of $1,000,000 payable to current or former named executive officers (including amounts attributable to equity-based and other incentive awards) may not be deductible by the Company in certain circumstances.
Specific Benefits under the 2016 Performance Incentive Plan
The Company has not approved any awards that are conditioned upon stockholder approval of the 2016 Plan. The Company is not currently considering any other specific award grants under the 2016 Plan, other than the annual grants of shares to non-employee directors described in the following paragraph. If the amended and restated 2016 Plan had been in existence in fiscal 2020, the Company expects that its award grants for fiscal 2020 would not have been substantially different from those actually made in that year under the current version of the 2016 Plan. For information regarding stock-based awards granted to the Company’s named executive officers during fiscal 2020, see the material under the heading “Executive Compensation.”
As described under “2020 Director Compensation” in this Proxy Statement, the Company’s current compensation policy for non-employee directors provides for each director to receive an annual award of shares of the Company’s common stock (or deferred stock units payable in shares), with the number of shares subject to each award to be determined by dividing $105,000 by the closing price of the Company’s common stock on the grant date (or the immediately preceding trading day if the grant date is not a trading day) as described above. Assuming, for illustrative purposes only, that the price of the common stock used for the conversion of the dollar amount set forth above into shares is $68.02 (the closing price of the Company’s stock on March 12, 2021), the number of shares that would be allocated to the Company’s twelve non-employee directors as a group pursuant to the annual grant formula is approximately 185,160. This figure represents the aggregate number of shares that would be subject to the annual grants under the director equity grant program for calendar years 2022 through 2031 (the ten remaining years in the term of the 2016 Plan, assuming this 2016 Plan proposal is approved) based on that assumed stock price. This calculation also assumes that there are no new eligible directors, there continue to be twelve eligible directors seated and there are no changes to the awards granted under the director equity grant program.
The following paragraphs include additional information to help you assess the potential dilutive impact of the Company’s equity awards and the 2016 Plan. The 2016 Plan and the 2008 Plan are the Company’s only equity compensation plans (other than the Company’s Employee Stock Purchase Plan (the “ESPP”)). The Company may not grant any new awards under the 2008 Plan. The Company does not have equity awards outstanding under any other plans. The ESPP generally provides for broad-based participation by employees of the Company (and certain of its subsidiaries) and affords employees who elect to participate an opportunity to purchase shares of the Company’s common stock at a discount. Certain information regarding the number of shares of Company common stock available for issuance under the ESPP is included under the heading “Equity Compensation Plan Information” below. The discussion that follows in this “Specific Benefits” section does not include any shares that have been purchased under, may be purchased in the current purchase period under, or that remain available for issuance or delivery under the ESPP.
“Overhang” refers to the number of shares of the Company’s common stock that are subject to outstanding awards or remain available for new award grants. The following table shows the total number of shares of the Company’s common stock that were subject to outstanding restricted stock unit awards granted under the 2016 Plan, that were subject to outstanding stock options granted under the 2016 Plan, and that were available for new award grants under the 2016 Plan as of December 31, 2020 and as of March 12, 2021. In
this 2016 Plan proposal, the number of shares of the Company’s common stock subject to restricted stock unit awards granted during any particular period or outstanding on any particular date is presented in this proposal based on the actual number of shares of the Company’s common stock covered by those awards and without applying the current provision of the 2016 Plan for counting these awards against the plan’s share limit as 1.7 shares for every share actually issued pursuant to the award. For awards subject to performance-based vesting requirements, the number of shares presented is based on the target level of performance, although the Company’s performance awards generally may vest up to 200% of the target level if the maximum performance goals are achieved. As to the number of shares of the Company’s common stock subject to restricted stock unit awards outstanding on a particular date, the information is presented including the crediting of dividend equivalents on the award through that date, to the extent dividend equivalents are payable in shares of common stock.
|
|
| As of |
| As of | ||||||||
|
|
| December 31, 2020 |
| March 12, 2021 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares subject to outstanding restricted stock unit awards (including vested but deferred RSUs and excluding performance-based vesting awards) |
|
|
| 901,834 |
|
|
|
|
| 997,398 |
|
|
| Shares subject to outstanding performance-based vesting restricted stock unit awards |
|
|
| 310,860 |
|
|
|
|
| 363,728 |
|
|
| Shares subject to outstanding stock options |
|
|
| 1,104,794 |
|
|
|
|
| 1,048,894 |
|
|
| Shares available for new award grants (1) |
|
|
| 1,610,024 |
|
|
|
|
| 1,152,652 |
|
|
(1) These figures give effect to the fungible-share ratio for full-value awards in effect under the 2016 Plan.
The weighted-average number of shares of the Company’s common stock issued and outstanding in each of the last three fiscal years was 123,229,644 shares issued and outstanding in 2018; 123,278,145 shares issued and outstanding in 2019; and 123,449,715 shares issued and outstanding in 2020. The number of shares of the Company’s common stock issued and outstanding as of December 31, 2020 and March 12, 2021 was 133,567,534 and 133,738,559 shares, respectively.
“Burn rate” refers to the number of shares that are subject to awards that we grant over a particular period of time. The total number of shares of the Company’s common stock subject to awards that the Company granted under the 2016 Plan in each of the last three fiscal years, and to date (as of March 12, 2021) for 2021, are as follows:
241,996 shares in 2018 (which was 0.2% of the weighted-average number of shares of the Company’s common stock issued and outstanding in 2018), of which 54,926 shares were subject to restricted stock unit awards (excluding performance-based vesting awards), 830 shares were subject to performance-based vesting restricted stock unit awards, and 186,240 shares were subject to stock options;
531,314 shares in 2019 (which was 0.5% of the weighted-average number of shares of the Company’s common stock issued and outstanding in 2019), of which 177,346 shares were subject to restricted stock unit awards (excluding performance-based vesting awards), 108,243 shares were subject to performance-based vesting restricted stock unit awards, and 245,725 shares were subject to stock options;
1,155,539 shares in 2020 (which was 1.3% of the weighted-average number of shares of the Company’s common stock issued and outstanding in 2020), of which 639,555 shares were subject to restricted stock unit awards (excluding performance-based vesting awards), 121,525 shares were subject to performance-based vesting restricted stock unit awards, and 394,459 shares were subject to stock options; and
382,447 shares in 2021 through March 12, 2021 (which was 0.5% of the number of shares of the Company’s common stock issued and outstanding on March 12, 2021), of which 124,557 shares were subject to restricted stock unit awards (excluding performance-based vesting awards), 133,130 shares were subject to performance-based vesting restricted stock unit awards, and 149,920 shares were subject to stock options.
Thus, the total number of shares of the Company’s common stock subject to awards granted under the 2016 Plan per year over the last three fiscal years (2018, 2019 and 2020) has been, on average, 0.6% of the weighted-average number of shares of the Company’s common stock issued and outstanding for the corresponding year, and this percentage is generally consistent with the Company’s 2021 awards under the 2016 Plan through March 12, 2021 (which, as noted above, cover 0.5% of the number of shares of the Company’s common stock issued and outstanding shares on March 12, 2021). Performance-based vesting awards have been included above in the year in which the award was granted.
The total number of shares of our common stock that were subject to awards granted under the 2016 Plan that terminated or expired, and thus became available for new award grants under the 2016 Plan, in each of the last three fiscal years, and to date (as of March 12, 2021) in 2021, are as follows: 93,705 in 2018, 74,457 in 2019, 139,334 in 2020, and 77,358 in 2021.
The number of shares credited as dividend equivalents under the 2016 Plan with respect to then-outstanding stock unit awards, to the extent the dividend equivalents are credited on such awards and payable in shares of the Company’s common stock, in each of the last three fiscal years, and to date (as of March 12, 2021) in 2021, are as follows: 0 in 2018, 0 in 2019, 9,574 in 2020, and 0 in 2021.
The Compensation and Leadership Development Committee anticipates that the 2.7 million additional shares requested for the 2016 Plan in this 2016 Plan proposal (together with the shares currently available for new award grants under the 2016 Plan on the Annual Meeting date and assuming usual levels of shares becoming available for new awards as a result of forfeitures of outstanding awards) will provide the Company with flexibility to continue to grant equity awards under the 2016 Plan for approximately five (5) years, depending on the factors described below (reserving sufficient shares to cover potential payment of performance-based awards at maximum payment levels and covering dividend equivalents that may be credited with respect to the awards based on the Company’s recent dividend payments). However, this is only an estimate, in the Company’s judgment, based on current circumstances. The total number of shares that are subject to the Company’s award grants in any one year or from year-to-year may change based on a number of variables, including, without limitation, the value of the Company’s common stock (since higher stock prices generally require that fewer shares be issued to produce awards of the same grant date fair value), changes in competitors’ compensation practices or changes in compensation practices in the market generally, changes in the number of employees, changes in the number of directors and officers, whether and the extent to which vesting conditions applicable to equity-based awards are satisfied, acquisition activity and the need to grant awards to new employees in connection with acquisitions, the need to attract, retain and incentivize key talent, the number of dividend equivalent rights outstanding, the extent to which they provide for settlement in stock and the amount and frequency of the Company’s dividend payments, the type of awards the Company grants, and how the Company chooses to balance total compensation between cash and equity-based awards.
The closing market price for a share of the Company’s common stock as of March 12, 2021 was $68.02 per share.
Aggregate Past Grants Under the 2016 Plan
As of March 12, 2021, awards covering 3,512,784 shares of the Company’s common stock have been granted under the 2016 Plan. (This number of shares includes shares subject to awards that expired or terminated without having been exercised and paid and became available for new award grants under the 2016 Plan.) The following table shows information regarding the distribution of all awards among the persons and groups identified below, option exercises and restricted stock units vesting prior to that date, and option and unvested restricted stock unit holdings as of that date, with performance-based restricted stock unit awards included at the “target” level of performance. The number of shares subject to past option grants includes all options that were awarded, including those that may have expired prior to exercise.
|
|
| Options |
|
| Stock Awards |
| ||||||||||||||||||||||
|
|
| Number of Shares Subject |
|
| Number of Shares |
|
| Number of Shares Underlying Options as of March 12, 2021 |
|
| Number of Shares |
|
| Number of Shares Vested |
|
| Number of Shares Outstanding |
| ||||||||||
|
|
| to Past Option Grants |
|
| Acquired on Exercise |
|
| Exercisable |
|
| Unexercisable |
|
| Subject to Past Awards |
|
| as of March 12, 2021 |
|
| and Unvested as of March 12, 2021 |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Bradley D. Tilden |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CEO and Director |
|
| 164,160 |
|
| 0 |
|
|
| 77,919 |
|
|
| 86,241 |
|
|
| 142,226 |
|
|
| 31,924 |
|
|
| 90,480 |
| |
| Shane R. Tackett |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| EVP and CFO |
|
| 78,700 |
|
| 0 |
|
|
| 23,412 |
|
|
| 55,288 |
|
|
| 74,279 |
|
|
| 10,339 |
|
|
| 60,270 |
| |
| Benito Minicucci |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| President and Director |
|
| 190,890 |
|
| 0 |
|
|
| 51,114 |
|
|
| 139,776 |
|
|
| 153,714 |
|
|
| 23,524 |
|
|
| 117,420 |
| |
| Andrew R. Harrison |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| EVP and CCO |
|
| 94,720 |
|
| 0 |
|
|
| 36,482 |
|
|
| 58,238 |
|
|
| 91,363 |
|
|
| 18,816 |
|
|
| 63,230 |
| |
| Gary L. Beck |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| EVP and COO |
|
| 46,820 |
|
| 0 |
|
|
| 14,832 |
|
|
| 31,988 |
|
|
| 36,660 |
|
|
| 2,289 |
|
|
| 31,930 |
| |
| Brandon R. Pedersen |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Former EVP and CFO |
|
| 45,350 |
|
| 0 |
|
|
| 30,795 |
|
|
| 14,555 |
|
|
| 44,003 |
|
|
| 23,539 |
|
|
| 4,126 |
| |
| Total for All Current Named Executive Officers as a Group (5 persons): |
|
| 575,290 |
|
| 0 |
|
|
| 203,759 |
|
|
| 371,531 |
|
|
| 498,242 |
|
| 86,92 |
|
|
| 363,330 |
| ||
| Patricia M. Bedient |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
|
| 10,425 |
|
|
| 10,425 |
|
| 0 |
| |||||
| James A. Beer |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
|
| 9,286 |
|
|
| 9,286 |
|
| 0 |
| |||||
| Marion C. Blakey |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
|
| 9,003 |
|
|
| 9,003 |
|
| 0 |
| |||||
| Raymond L. Conner |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
|
| 5,619 |
|
|
| 5,619 |
|
| 0 |
| |||||
| Daniel K, Elwell |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
|
| 525 |
|
|
| 525 |
|
| 0 |
| |||||
| Dhiren R. Fonseca |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
|
| 7,800 |
|
|
| 7,800 |
|
| 0 |
| |||||
| Kathleen T. Hogan |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
|
| 4,732 |
|
|
| 4,732 |
|
| 0 |
| |||||
| Jessie J. Knight, Jr. |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
|
| 1,366 |
|
|
| 1,366 |
|
| 0 |
| |||||
| Susan J. Li |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
|
| 6,786 |
|
|
| 6,786 |
|
| 0 |
| |||||
| Helvi K. Sandvik |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
|
| 8,246 |
|
|
| 8,246 |
|
| 0 |
| |||||
| J. Kenneth Thompson |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
|
| 10,245 |
|
|
| 10,245 |
|
| 0 |
| |||||
| Eric K. Yeaman |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
|
| 6,660 |
|
|
| 6,660 |
|
| 0 |
| |||||
| Total for all Current Non-Executive Directors as a Group (12 persons): |
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
|
|
| 71,630 |
|
|
| 71,630 |
|
| 0 |
| |||||
| Each other person who has received 5% or more of the options, warrants or rights under the Plan |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
| |||||||
| All employees, including all current officers who are not executive officers or directors, as a group |
|
| 473,540 |
|
|
| 3,560 |
|
|
| 149,308 |
|
|
| 278,946 |
|
|
| 1,921,218 |
|
|
| 659,115 |
|
|
| 961,543 |
|
The non-executive directors (other than Ms. Blakey) listed in the table above and Messrs. Tilden and Minicucci are each nominees for re-election as a director at the Annual Meeting.
Equity Compensation Plan Information
The Company currently maintains three equity compensation plans: the 2016 Plan, the 2008 Plan and the ESPP. No new awards may be granted under the 2008 Plan.
The following table sets forth, for each of the Company’s equity compensation plans, the number of shares of common stock subject to outstanding awards, the weighted-average exercise price of outstanding options, and the number of shares remaining available for future award grants as of December 31, 2020.
| Plan category |
| Number of shares of Common Stock to be issued upon exercise of outstanding options, warrants and rights |
|
|
| Weighted-average exercise price of outstanding options, warrants and rights |
|
|
| Number of shares of Common Stock remaining available for future issuance under equity compensation plans (excluding shares reflected in the first column) |
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Equity compensation plans approved by security holders |
|
| 2,590,514 |
| (1) |
| $ | 60.54 |
| (2) |
|
| 5,822,058 |
| (3) |
| Equity compensation plans not approved by security holders |
| N/A |
|
|
| N/A |
|
|
| N/A |
|
| |||
| Total |
|
| 2,590,514 |
|
|
| $ | 60.54 |
|
|
|
| 5,822,058 |
|
|
|
|
|
|
|
|
Vote Required for Approval of the Amended and Restated 2016 Performance Incentive Plan
The Board of Directors believes that the adoption of the amended and restated 2016 Plan will promote the interests of the Company and its stockholders and will help the Company and its subsidiaries continue to be able to attract, retain and reward persons important to our success.
All members of the Board of Directors and all of the Company’s executive officers are eligible for awards under the 2016 Plan and thus have a personal interest in the approval of the amended and restated 2016 Plan.
Approval of the amended and restated 2016 Plan requires the affirmative vote of a majority of the common stock present, or represented, and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE AMENDED AND RESTATED 2016 PERFORMANCE INCENTIVE PLAN AS DESCRIBED ABOVE AND SET FORTH IN EXHIBIT A HERETO.
Securities Ownership of Certain Beneficial Owners and Management
Securities Ownership of Management
This table below shows how much Alaska Air Group common stock is owned as of March 12, 2021,10, 2023, by each director and nominee, each of the Company’s Named Executive Officers, and all Company directors and executive officers as a group. Except as otherwise indicated and subject to applicable community property laws, the persons named in the table below have sole voting and investment power with respect to all shares of common stock beneficially owned.
| Name | Number of Shares |
| Options |
| Total |
| Percent of |
|
| Patricia M. Bedient | 53,687 |
|
|
| 53,687 |
| * |
|
| James A. Beer | 11,609 |
|
|
| 11,609 |
| * |
|
| Raymond L. Conner | 11,120 |
|
|
| 11,120 |
| * |
|
| Daniel K. Elwell | 4,437 |
|
|
| 4,437 |
| * |
|
| Dhiren R. Fonseca | 12,447 |
|
|
| 12,447 |
| * |
|
| Kathleen T. Hogan | 8,644 |
|
|
| 8,644 |
| * |
|
| Jessie J. Knight, Jr. | 7,333 |
|
|
| 7,333 |
| * |
|
| Susan J. Li | 10,698 |
|
|
| 10,698 |
| * |
|
| Adrienne Lofton | 3,371 |
|
|
| 3,371 |
| * |
|
| Helvi K. Sandvik | 16,874 |
|
|
| 16,874 |
| * |
|
| J. Kenneth Thompson | 29,907 |
|
|
| 29,907 |
| * |
|
| Eric K. Yeaman | 18,791 |
|
|
| 18,791 |
| * |
|
| Ben Minicucci | 119,506 |
| 165,515 |
| 285,021 |
| * |
|
| Shane R. Tackett | 21,283 |
| 68,195 |
| 89,478 |
| * |
|
| Andrew R. Harrison | 19,247 |
| 92,508 |
| 111,755 |
| * |
|
| Constance E. von Muehlen | 7,600 |
| 15,472 |
| 23,072 |
| * |
|
| Andrea L. Schneider | 18,788 |
| 32,484 |
| 51,272 |
| * |
|
| All Company directors and executive officers | 415,989 |
| 439,874 |
| 855,863 |
| * |
|
* Less than 1%
| Name |
| Number of Shares of Common Stock Owned (1) |
| Options Exercisable within 60 Days |
| Total Shares Beneficially Owned (2) |
| Percent of Outstanding Shares (3) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Patricia M. Bedient |
|
|
| 49,775 |
|
|
|
|
|
|
|
|
|
|
| 49,775 |
|
|
|
| * |
|
| James A. Beer |
|
|
| 7,697 |
|
|
|
|
|
|
|
|
|
|
| 7,697 |
|
|
|
| * |
|
| Marion C. Blakey |
|
|
| 21,221 |
|
|
|
|
|
|
|
|
|
|
| 21,221 |
|
|
|
| * |
|
| Raymond L. Conner |
|
|
| 7,208 |
|
|
|
|
|
|
|
|
|
|
| 7,208 |
|
|
|
| * |
|
| Daniel K. Elwell |
|
|
| 525 |
|
|
|
|
|
|
|
|
|
|
| 525 |
|
|
|
| * |
|
| Dhiren R. Fonseca |
|
|
| 8,535 |
|
|
|
|
|
|
|
|
|
|
| 8,535 |
|
|
|
| * |
|
| Kathleen T. Hogan |
|
|
| 4,732 |
|
|
|
|
|
|
|
|
|
|
| 4,732 |
|
|
|
| * |
|
| Jessie J. Knight, Jr. |
|
|
| 2,221 |
|
|
|
|
|
|
|
|
|
|
| 2,221 |
|
|
|
|
|
|
| Susan J. Li |
|
|
| 6,786 |
|
|
|
|
|
|
|
|
|
|
| 6,786 |
|
|
|
| * |
|
| Helvi K. Sandvik |
|
|
| 12,962 |
|
|
|
|
|
|
|
|
|
|
| 12,962 |
|
|
|
| * |
|
| J. Kenneth Thompson |
|
|
| 34,995 |
|
|
|
|
|
|
|
|
|
|
| 34,995 |
|
|
|
| * |
|
| Eric K. Yeaman |
|
|
| 14,879 |
|
|
|
|
|
|
|
|
|
|
| 14,879 |
|
|
|
| * |
|
| Bradley D. Tilden |
|
|
| 173,266 |
|
|
|
|
| 159,735 |
|
|
|
|
| 333,001 |
|
|
|
| * |
|
| Shane R. Tackett |
|
|
| 10,669 |
|
|
|
|
| 26,087 |
|
|
|
|
| 36,756 |
|
|
|
| * |
|
| Benito Minicucci |
|
|
| 101,909 |
|
|
|
|
| 79,607 |
|
|
|
|
| 181,516 |
|
|
|
| * |
|
| Andrew R. Harrison |
|
|
| 18,799 |
|
|
|
|
| 47,450 |
|
|
|
|
| 66,249 |
|
|
|
| * |
|
| Gary L. Beck |
|
|
| 3,558 |
|
|
|
|
| 14,832 |
|
|
|
|
| 18,390 |
|
|
|
| * |
|
| All Company directors and executive officers as a group (22 persons) |
|
|
| 529,652 |
|
|
|
|
| 376,756 |
|
|
|
|
| 906,408 |
|
|
|
| * |
|
|
|
|
|
The number of shares of common stock owned and total shares beneficially owned reported for non-employee directors include underlying common shares to be issued upon the director’s resignation from the Board in connection with deferred stock units (DSUs) granted as part of their annual compensation. The aggregate number of DSUs granted to date: Ms. Bedient, 25,539; Mr. Beer, 6,903; Ms. Blakey, 12,049;10,815; Mr. Elwell, 2,346; Ms. Hogan, 3,539;7,451; Mr. Knight, 9,912; Ms. Li, 3,539;7,451; Ms. Sandvik, 5,568;7,134; Mr. Thompson, 24,803;23,789; and Mr. Yeaman, 2,983.
In May 2020, upon recognition that DSUs issued from 2008 through 2019 had not been properly credited dividend equivalents
|
|
More Than 5% Beneficial Owners
The table below identifies those persons known by us to have beneficial ownership of more than 5% of the Company’s outstanding common stock, as of March 12, 2021.10, 2023.
Beneficial Owner |
| Number of |
|
| Percent of | |||||
The Vanguard Group (2) |
|
| 14,571,902 |
|
|
|
| 11.43 |
| % |
100 Vanguard Blvd. |
|
|
|
|
|
|
|
| ||
Malvern, Pennsylvania 19355 |
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
| ||
BlackRock, Inc. (3) |
|
| 7,283,093 |
|
|
|
| 6.14 |
| % |
55 East 52nd Street |
|
|
|
|
|
|
|
| ||
New York, New York 10055 |
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
| ||
Victory Capital Management Inc. (4) |
|
| 6,955,712 |
|
|
| 5.46 |
| % | |
4900 Tiedeman Rd. 4th Floor |
|
|
|
|
|
|
|
| ||
Brooklyn, OH 44144 |
|
|
|
|
|
|
|
|
| Beneficial Owner Name and Address |
| Number of Shares Owned |
| Percent of Outstanding Shares (1) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The Vanguard Group (2) |
|
|
| 12,641,851 |
|
|
|
| 10.16 | % |
| 100 Vanguard Blvd. |
|
|
|
|
|
|
|
|
|
|
| Malvern, Pennsylvania 19355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| BlackRock, Inc. (3) |
|
|
| 9,247,416 |
|
|
|
| 7.43 | % |
| 55 East 52nd Street |
|
|
|
|
|
|
|
|
|
|
| New York, New York 10055 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| T. Rowe Price Associates, Inc. (4) |
|
|
| 9,163,490 |
|
|
|
| 7.35 | % |
| 100 E. Pratt Street |
|
|
|
|
|
|
|
|
|
|
| Baltimore, Maryland 21202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires the Company’s directors and certain of its officers to send reports of their ownership of Company common stock and changes in such ownership to the SEC and the NYSE. The Company assists its directors and officers by preparing forms for filing. SEC regulations also require the Company to identify in this Proxy Statement any person subject to this requirement who failed to file a report on a timely basis. Based on a review of copies of reports furnished to the Company and written representations that no other reports were required, the Company believes that everyone subject to Section 16(a) filed the required reports on a timely basis during accept that Ms. Helvi Sandvik did not timely file a Form 4 to reportbasis.
82
EQUITY COMPENSATION PLAN INFORMATION
The Company currently maintains three equity compensation plans: the acquisition2016 Plan, the 2008 Plan and the Employee Stock Purchase Plan. No new awards may be granted under the 2008 Plan.
The following table sets forth, for each of the Company's equity compensation plans, the number of shares on March 23, 2020 until March 27, 2020of common stock subject to outstanding awards, the weighted-average exercise price of outstanding options, and Mr. Jessie J. Knight, Jr. did not timely file a Form 4 to report the acquisitionnumber of shares remaining available for future award grants as of December 31, 2022.
Plan category | Number of shares |
| Weighted-average |
| Number of shares |
|
Equity compensation plans approved by | 1,969,447 | (1) | $61.45 | (2) | 12,076,777 | (3) |
Equity compensation plans not approved | N/A |
| N/A |
| N/A |
|
Total | 1,969,447 |
| $61.45 |
| 12,076,777 |
|
(1) Of these shares, 117,963 and 1,112,794 were subject to options then outstanding under the 2008 Plan and
2016 Plan respectively, 51,056 were subject to outstanding deferred stock unit awards granted under the 2008 Plan and 687,634 were subject to outstanding restricted, performance and deferred stock unit awards granted under the 2016 Plan. Outstanding performance awards are reflected in the table assuming that the target level of performance will be achieved. This table does not reflect participants' rights to purchase shares under the ESPP during the offering period that was in progress on November 20, 2020 until November 30, 2020. December 31, 2022.
(2) This number does not reflect the 738,690 shares that were subject to outstanding stock unit awards
granted under the 2008 and 2016 Plans.
(3) Of the aggregate number of shares that remained available for future issuance, 5,266,117 shares were
available under the 2016 Plan and 6,810,660 shares were available under the ESPP. Subject to certain
express limits of the 2016 Plan, shares available for award purposes under the 2016 Plan generally may be
used for any type of award authorized under that plan including options, stock appreciation rights, and other
forms of awards granted or denominated in shares of our common stock including, without limitation, stock
bonuses, restricted stock, restricted stock units and performance shares. As noted above, no new award
grants may be made under the 2008 Plan
83
QUESTIONS AND ANSWERS
Questions and Answers about the Meeting | ||
Why am I receiving the Annual Meeting Materials? | You are receiving the Annual Meeting Materials from us because you owned Alaska Air Group common stock as of March You may own shares of Alaska Air Group common stock in several different ways. If your stock is represented by one or more stock certificates registered in your name or if you have a Direct Registration Service (DRS) advice evidencing shares held in book entry form, then you have a | |
What other business may be properly brought before the meeting, and what discretionary authority is granted? | Under the Company’s Bylaws, as amended December 9, 2015, a The Company has not received valid notice that any business other than that described or referenced in this Proxy Statement will be brought before the Annual Meeting. | |
Can I attend the Annual Meeting, and what do I need for access? | Participation in the Annual Meeting is limited to Air Group To be admitted access to the Annual Meeting, please use the Each |
84
85
received at the Company’s corporate offices no later than November If you intend to nominate candidates for election as directors or present a proposal at the meeting without including it in the Company’s If you intend to nominate candidates for election as directors to be included in the Company’s Corporate Secretary Alaska Air Group, Inc. P.O. Box 68947 Seattle, WA 98168 Further, any shareholders who intends to solicit proxies in support of director nominees other than the Board’s nominees at our 2024 Annual Meeting must provide written notice setting forth the information required by Rule 14a-19 under the Exchange Act no later than March 5, 2024. The notice requirement under Rule 14a-19 is in addition to the applicable notice requirements under our Bylaws as described above. |
86
What am I voting on and what does the Board of Directors recommend? | You are being asked to vote on the following: 1. Election of the THE BOARD RECOMMENDS A VOTE ‘FOR’ PROPOSAL 1. 2. Approval (on an advisory basis) of the compensation of the Company’s Named Executive Officers; THE BOARD RECOMMENDS A VOTE ‘FOR’ PROPOSAL 2. 3. Approval (on an advisory basis) on Frequency of Future Advisory Vote on Named Executive Officer Compensation; 4. Ratification of the appointment of KPMG LLP as the Company’s independent accountants for fiscal year
THE BOARD RECOMMENDS A VOTE OF '1 YEAR' FOR. When you sign and mail the proxy card or submit your proxy by phone or the Internet, you appoint each of Mr. | |
How many votes must the | The Company’s Bylaws (as amended December 9, 2015) require that each director be elected annually by a majority of votes cast with respect to that director. This means that the number of votes “for” a director must exceed the number of votes “against” that director. In the event that a nominee who already serves as a director receives more “against” votes for his or her election than “for” votes, the Board must consider such director’s resignation following a recommendation by the Board’s Governance and Nominating Committee. The majority voting standard does not apply, however, in the event that the number of nominees for director exceeds the number of directors to be elected. In such circumstances, directors will instead be elected by a plurality of the votes cast, meaning that the persons receiving the highest number of “for” votes, up to the total number of directors to be elected at the Annual Meeting, will be elected. With regard to the election of directors, the Board intends to nominate the “Abstain” votes and broker non-votes are not treated as votes cast with respect to a director and therefore will not be counted in determining the outcome of the election of directors. | |
87
What happens if a director candidate nominated by the Board of Directors is unable to stand for election? |
| |
88
Beneficial owners whose stock is held in trustunder an arrangement that provides the beneficial owner with the power to vote or to direct the voting of the shares can vote in accordance with the provisions of such arrangement. Beneficial owners whose stock is held in trust in one of the Company’s 401(k) retirement planscan vote by telephone or via the Internet, or by mailing the voting instruction form provided by the trustee as described below.
|
Vote by Internet Prior to the Annual Meeting – Voting via the Internet is permitted regardless of whether During the Annual Meeting – Voting by Internet is fast and convenient, and your vote is immediately confirmed and tabulated. By using the Internet to vote, you help Alaska Air Group conserve natural resources and reduce postage and proxy tabulation costs. | ||
Vote by phone Prior to the Annual Meeting – Voting by phone is fast and convenient and your vote is immediately confirmed and tabulated. By using the phone to vote, you help Alaska Air Group conserve natural resources and reduce postage and proxy tabulation costs. | ||
89
Vote by mail Prior to the Annual Meeting – If you received the Annual Meeting Materials by mail, simply sign and date the enclosed proxy card or voting instruction form and mail it in the enclosed prepaid and addressed envelope. If you mark your choices on the card or voting instruction form, your shares will be voted as you instruct. | ||
What if I change my mind after I submit my proxy? |
|
90
• voting by phone or the Internet before 11:59 p.m. Eastern Time on Wednesday, May • voting during the Annual Meeting via the Internet. Meeting, in and of itself, without voting during the Annual Meeting, will not cause your previously granted proxy to be revoked.) | ||
Persons beneficially owning shares in one of the Company’s 401(k) retirement plans cannot vote in person at the Annual Meeting and must vote in accordance with instructions from the trustees. Subject to these qualifications, such holders have the same rights as other record and beneficial owners to change their votes by phone or the Internet, however, in all cases your vote must be submitted by 11:59 p.m. Eastern Time on
If you sign and date the proxy card or voting instruction form and submit it in accordance with the accompanying instructions and in a timely manner, any earlier proxy card or voting instruction form will be revoked and your new choices will be voted. | ||
How are shares voted that are held in the Company’s 401(k) plan? | On the record date, To allow sufficient time for voting by the trustee, please provide voting instructions no later than 11:59 p.m. Eastern Time on Monday, May | |
91
Where can I find the voting results of the Annual Meeting? | We will publish the voting results in a current report on Form 8-K to be filed on or before May | |
What does it mean if I receive more than one proxy card, voting instruction form or email notification from the Company? | It means that you hold Alaska Air Group stock in more than one account. Please complete and submit all proxies to ensure that all your shares are voted or vote by Internet or phone using each of the identification numbers. | |
92
APPENDIX A
Reconciliation of Non-GAAP Financial Measures
The following table reconciles the Company's reported GAAP adjusted pre tax margin for the twelve months ended December 2022.
| Year Ended December 31, 2022 | ||||||||||||
| Mainline |
| Regional |
| Horizon |
| Consolidating & Other(a) |
| Air Group Adjusted(b) |
| Special Items(c) |
| Consolidated |
Operating Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger revenue | 7,454 |
| 1,354 |
| - |
| - |
| 8,808 |
| - |
| 8,808 |
CPA revenue | - |
| - |
| 359 |
| (359) |
| - |
| - |
| - |
Mileage Plan other revenue | 538 |
| 52 |
| - |
| - |
| 590 |
| - |
| 590 |
Cargo and other revenue | 244 |
| - |
| - |
| 4 |
| 248 |
| - |
| 248 |
Total Operating Revenue | 8,236 |
| 1,406 |
| 359 |
| (355) |
| 9,646 |
| - |
| 9,646 |
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses, excluding fuel | 5,216 |
| 1,085 |
| 383 |
| (356) |
| 6,328 |
| 580 |
| 6,908 |
Fuel expense | 2,195 |
| 397 |
| - |
| - |
| 2,592 |
| 76 |
| 2,668 |
Total Operating Expenses | 7,411 |
| 1,482 |
| 383 |
| (356) |
| 8,920 |
| 656 |
| 9,576 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating Income (Expense) | 30 |
| - |
| (22) |
| 1 |
| 9 |
| - |
| 9 |
Income (Loss) Before Income Tax | 855 |
| (76) |
| (46) |
| 2 |
| 735 |
| (656) |
| 79 |
Pretax Margin |
|
|
|
|
|
|
|
| 7.6% |
|
|
| 0.8% |
(a) Includes consolidating entries, Air Group parent company, McGee Air Services, and other immaterial business units.
(b) The Air Group Adjusted column represents the financial information that is reviewed by management to assess performance of
operations and determine capital allocations and excludes certain charges.
(c) Includes special items, mark-to-market fuel-hedge accounting adjustments, and Payroll Support Program grant wage offsets.
A-1
SCAN TO VIEW MATERIALS & VOTE ALASKA AIR GROUP, INC.
2016 PERFORMANCE INCENTIVE PLAN
(as amended and restated effective March 18, 2021)
|
|
PO BOX 68947SEATTLE, WA 98168 ALASKA AIR GROUP, INC. The purpose of this Alaska Air Group, Inc. 2016 Performance Incentive Plan (this “Plan”) of Alaska Air Group, Inc., a Delaware corporation (the “Corporation”), is to promote the success of the Corporation by providing an additional means through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons and to enhance the alignment of the interests of the selected participants with the interests of the Corporation’s stockholders.
The Administrator (as such term is defined in Section 3.1) may grant awards under this Plan only to those persons that the Administrator determines to be Eligible Persons. An “Eligible Person” is any person who is either: (a) an officer (whether or not a director) or employee of the Corporation or one of its Subsidiaries; (b) a director of the Corporation or one of its Subsidiaries; or (c) an individual consultant or advisor who renders or has rendered bona fide services (other than services in connection with the offering or sale of securities of the Corporation or one of its Subsidiaries in a capital-raising transaction or as a market maker or promoter of securities of the Corporation or one of its Subsidiaries) to the Corporation or one of its Subsidiaries and who is selected to participate in this Plan by the Administrator; provided, however, that a person who is otherwise an Eligible Person under clause (c) above may participate in this Plan only if such participation would not adversely affect either the Corporation’s eligibility to use Form S-8 to register under the Securities Act of 1933, as amended (the “Securities Act”), the offering and sale of shares issuable under this Plan by the Corporation or the Corporation’s compliance with any other applicable laws. An Eligible Person who has been granted an award (a “participant”) may, if otherwise eligible, be granted additional awards if the Administrator shall so determine. As used herein, “Subsidiary” means any corporation or other entity a majority of whose outstanding voting stock or voting power is beneficially owned directly or indirectly by the Corporation; and “Board” means the Board of Directors recommends a vote FOR all the nominees listed and a vote FOR Proposals 2 and 4 and1 YEAR on Proposal 3. 1.Election of the Corporation.
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The following limits also apply with respectDirectors to awards granted under this Plan:
|
|
|
Each of the foregoing numerical limits is subject to adjustment as contemplated by Section 4.3, Section 7.1, and Section 8.10.
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In no event shall any shares newly-issued by the Corporation be issued for less than the minimum lawful consideration for such shares or for consideration other than consideration permitted by applicable state law. The Corporation will not be obligated to deliver any shares unless and until it receives full payment of the exercise or purchase price therefor and any related withholding obligations under Section 8.5 and any other conditions to exercise or purchase have been satisfied. Unless otherwise expressly provided in the applicable award agreement, the Administrator may at any time eliminate or limit a participant’s ability to pay any purchase or exercise price of any award or shares by any method other than cash payment to the Corporation.
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Without limiting the generality of Section 3.4, any good faith determination by the Administrator as to whether an adjustment is required in the circumstances pursuant to this Section 7.1, and the extent and nature of any such adjustment, shall be conclusive and binding on all persons.
Without limiting the preceding paragraph, in connection with any event referred to in the preceding paragraph or any change in control event defined in any applicable award agreement, the Administrator may, in its discretion, provide for the accelerated vesting of any award or awards as and to the extent determined by the Administrator in the circumstances.
One-Year Terms Nominees: 1a.Patricia M. Bedient1b.James A. Beer1c.Raymond L. Conner 1d.Daniel K. Elwell1e.Dhiren R. Fonseca1f.Kathleen T. Hogan 1g.Adrienne R. Lofton 1h.Benito Minicucci1i.Helvi K. Sandvik1j.J. Kenneth Thompson1k.Eric K. Yeaman For purposes of this Section 7.2, an award shall be deemed to have been “assumed” if (without limiting other circumstances in which an award is assumed) the award continues after an event referred to above in this Section 7.2, and/or is assumed and continued by the surviving entity following such event (including, without limitation, an entity that, as a result of such event, owns the Corporation or all or substantially all of the Corporation’s assets directly or through one or more subsidiaries (a “Parent”)), and confers the right to purchase or receive, as applicable and subject to vesting and the other terms and conditions of the award, for each share of Common Stock subject to the award immediately prior to the event, the consideration (whether cash, shares, or other securities or property) received in the event by the stockholders of the Corporation for each share of Common Stock sold or exchanged in
such event (or the consideration received by a majority of the stockholders participating in such event if the stockholders were offered a choice of consideration); provided, however, that if the consideration offered for a share of Common Stock in the event is not solely the ordinary common stock of a successor corporation or a Parent, the Administrator may provide for the consideration to be received upon exercise or payment of the award, for each share subject to the award, to be solely ordinary common stock of the successor corporation or a Parent equal in fair market value to the per share consideration received by the stockholders participating in the event.
The Administrator may adopt such valuation methodologies for outstanding awards as it deems reasonable in the event of a cash or property settlement and, in the case of options, SARs or similar rights, but without limitation on other methodologies, may base such settlement solely upon the excess if any of the per share amount payable upon or in respect of such event over the exercise or base price of the award. In the case of an option, SAR or similar right as to which the per share amount payable upon or in respect of such event is less than or equal to the exercise or base price of the award, the Administrator may terminate such award in connection with an event referred to in this Section 7.2 without any payment in respect of such award.
In any of the events referred to in this Section 7.2, the Administrator may take such action contemplated by this Section 7.2 prior to such event (as opposed to on the occurrence of such event) to the extent that the Administrator deems the action necessary to permit the participant to realize the benefits intended to be conveyed with respect to the underlying shares. Without limiting the generality of the foregoing, the Administrator may deem an acceleration and/or termination to occur immediately prior to the applicable event and, in such circumstances, will reinstate the original terms of the award if an event giving rise to an acceleration and/or termination does not occur.
Without limiting the generality of Section 3.4, any good faith determination by the Administrator pursuant to its authority under this Section 7.2 shall be conclusive and binding on all persons.
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Unless the Board shall determine otherwise, a Change of Control shall not be deemed to have occurred by reason of any corporate reorganization, merger, consolidation, transfer of assets, liquidating distribution or other transaction entered into solely by and between the Corporation and any affiliate thereof, provided such transaction has been approved by at least two-thirds (2/3) of the Incumbent Directors (as defined above) then in office and voting.
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! ! ! ! ! ! ! ! ! ! ! Against ! ! ! ! ! ! ! ! ! ! ! Abstain ! ! ! ! ! ! ! ! ! ! ! VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time or on May 6, 20203, 2023 (11:59 P.M. Eastern Time on May 4, 20201, 2023 for the Employee Plans). Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/alk2020alk2023 You may attend the Meeting via the Internet and vote during the Meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on May 6, 20203, 2023 (11:59 P.M. Eastern Time or on May 4, 20201, 2023 for the Employee Plans). Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. V02705-P83264 For Against 2.Approve (on an advisory basis) the compensation of the !! Company's Named Executive Officers. 1 Year2 Years3 Years 3.Advisory vote to approve the frequency of the !!! advisory vote to approve the compensation of the Company's Named Executive Officers. For Against 4.Ratify the appointment of KPMG LLP as the Company's independent registered public accountants for the fiscal !! year 2023. Abstain ! Abstain ! Abstain ! Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Proxy Statement and Form 10-K are available at www.proxyvote.com. V02706-P83264 ALASKA AIR GROUP, INC. ANNUAL MEETING OF STOCKHOLDERS MAY 4, 2023, 11:00 A.M. PACIFIC TIME THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The stockholder hereby appoints Benito Minicucci and Kyle B. Levine, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this card, all of the shares of Common Stock of Alaska Air Group, Inc. that the stockholder is entitled to vote at the Annual Meeting of Stockholders. If applicable, the undersigned has the right to give voting instructions to Vanguard Fiduciary Trust Company, Trustee of Alaska Air Group, Inc. Alaskasaver Plan, the Alaska Airlines, Inc. COPS, MRP and Dispatch 401(k) Plan, and the Horizon Air Industries, Inc. Savings Investment Plan, and/or Fidelity Management Trust Company, as Trustee of the Alaska Airlines, Inc. Pilots Investment and Savings Plan, at the Annual Meeting of Stockholders. This form, when properly executed, will be voted as directed. If voting instructions are not received by the proxy tabulator by 11:59 p.m., Eastern Time, May 1, 2023, these shares will not be voted by the Trustees. The Annual Meeting of Stockholders is to be held online at www.virtualshareholdermeeting.com/alk2023 at 11:00 a.m. Pacific Time on Thursday, May 7, 20204, 2023 and at any adjournment or postponement thereof. When this proxy is properly executed, the shares to which the proxy relates will be voted as directed. If no such directions are made, this proxy will be voted FOR all the nominees listed and FOR Proposals 2, and 3, and AGAINST Proposals 4 and 5.1 YEAR on Proposal 3. Please mark, sign, date and return this proxy card promptly using the enclosed reply envelope or by voting over the Internet or by telephone. Continued and to be signed on reverse side.
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