DEF 14A of Skywest Inc
Filed Mar 26, 2024 · FY20230001558370-24-003939
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS The Board currently consists of eight directors. All directors serve a one-year term and are subject to re-election each year. Jerry C. Atkin and Andrew C. Roberts are not standing for re-election at the Meeting. The Board has nominated Derek J. Leathers to stand for election as an independent director at the Meeting. As a result, the Company proposes to elect six of the eight current directors and one new director, in each case, to hold office until the 2025 Annual Meeting of Shareholders and until their successors have been elected and have qualified. The seven nominees for election at the Meeting are listed below.
ELECTION OF DIRECTORS
| ● | Russell A. Childs |
ELECTION OF DIRECTORS
| ● | Smita Conjeevaram |
ELECTION OF DIRECTORS
| ● | Derek J. Leathers |
ELECTION OF DIRECTORS
| ● | Meredith S. Madden |
ELECTION OF DIRECTORS
| ● | Ronald J. Mittelstaedt |
ELECTION OF DIRECTORS
| ● | Keith E. Smith |
ELECTION OF DIRECTORS
| ● | James L. Welch, Incoming Chair |
ELECTION OF DIRECTORS
All of the nominees (other than Mr. Leathers) are currently serving as a director of the Company, and all of the nominees have consented to be named as a nominee. Shareholders voting in person or by proxy at the virtual Meeting may only vote for seven nominees. If, prior to the Meeting, any of the nominees becomes unable to serve as a director, the Board may designate a substitute nominee. In that event, the persons named as proxies intend to vote for the substitute nominee designated by the Board. The Board and the Nominating and Corporate Governance Committee believe that each of the following nominees possesses the experience and qualifications that directors of the Company should possess, as described in detail below, and that the experience and qualifications of each nominee compliments the experience and qualifications of the other nominees. The experience and qualifications of each nominee, including information regarding the specific experience, qualifications, attributes and skills that led the Board and its Nominating and Corporate Governance Committee to conclude that he or she should serve as a director of the Company at the present time, in light of the Company’s business and structure, are set forth on the following pages.
Russell A. Childs
Russell A. Childs
Russell A. Childs
| Age: 56 | Director Since: 2016 | Committees: None |
Russell A. Childs
Principal Occupation: Chief Executive Officer (“CEO”) and President of the Company and its subsidiaries Experience: Mr. Childs was named CEO of the Company effective January 1, 2016, and has served as President of the Company since 2014. He is responsible for the holding company’s operating entities and all commercial activities. He joined the Company in 2001 and became Vice President – Controller later that year. He served as the President and Chief Operating Officer of SkyWest Airlines, Inc. (“SkyWest Airlines”) from 2007 to 2014. Mr. Childs earned his bachelor's degree in Economics and master's degree in Accounting from Brigham Young University. Prior to joining the Company, Mr. Childs was a certified public accountant employed by a public accounting firm. The Board nominated Mr. Childs, in part, because it recognizes Mr. Childs’ critical role in delivering value to all Company stakeholders, as well as noting the importance of the Company's CEO serving on the Board, as he is the one closest to the Company's day-to-day operations and is able to communicate the Board’s expectations, advice and encouragement to the Company’s nearly 14,000 employees. Other Directorships: Mr. Childs currently serves as Deputy Chair of the Federal Reserve Bank of San Francisco, the Intermountain Health Desert Region Board Vice Chair, the Chair of the Regional Airline Association, and the Chair of the NextGen Advisory Committee of the Federal Aviation Administration (FAA).
Smita Conjeevaram
Smita Conjeevaram
Smita Conjeevaram
| Age: 63 | Director Since: 2021 | Committees: Member of the Audit Committee; Member of the Compensation Committee; Member of the Nominating & Corporate Governance Committee |
Smita Conjeevaram
Principal Occupation: Retired CFO of the Fortress Investment Group's Credit Hedge Funds Experience: Ms. Conjeevaram holds over 25 years in finance and nearly a decade of experience at two of the Big 4 worldwide accounting firms, including PricewaterhouseCoopers LLP. In her most recent operational role, Ms. Conjeevaram served as Deputy CFO of Fortress Investment Group’s Credit Funds and CFO of the Fortress Investment Group’s Credit Hedge Funds. The Board nominated Ms. Conjeevaram, in part, because of her refined global business and financial expertise, as well as her experience in growth management. Other Directorships: Ms. Conjeevaram currently serves as a director of SS&C Technologies, Inc. (SSNC), McGrath Rentcorp (MGRC), and WisdomTree Investments, Inc. (WETF). At SSNC she is the Audit Committee Chair, at MGRC she is a member of the Audit Committee and Chair of the Nominating and Governance committee and at WETF she is the Chair of the Compensation Committee and is a member of the Nominating and Governance Committee.
Derek J. Leathers
Derek J. Leathers
Derek J. Leathers
| Age: 54 | Director Since: N/A | Committees: N/A |
Derek J. Leathers
Principal Occupation: Chairman and Chief Executive Officer of Werner Enterprises, Inc. (“Werner”) Experience: Mr. Leathers has over 30 years of experience in the transportation and logistics industry, and 25 of those years have been at Werner. Throughout his tenure at Werner, Mr. Leathers has held integral executive management roles leading multiple organizational service offerings, including the establishment and development of Werner’s Mexico cross-border operations, oversight for the asset operating group and leading the launch of Werner Global Logistics, which encompassed transportation management and freight movement within intermodal, ocean, air and brokerage. Mr. Leathers holds an economics degree from Princeton University. The Board nominated Mr. Leathers, in part, due to his experience as Chairman and Chief Executive Officer of a public company and his 30 years of experience in the transportation sector, including extensive experience working with labor. Other Directorships: Mr. Leathers currently serves as the Chairman of Werner, as the Chairman of the American Transportation Research Institute, is on the Executive Committee for the American Trucking Associations, is on the Executive Board of the Omaha Chamber of Commerce, is on the Executive Committee for United Way of the Midlands and is a Board of Trustee for Creighton University. Mr. Leathers is also the Founder and National Director of PlaySmart, a non-profit organization that helps youth realize their academic and life potential through sports.
Meredith S. Madden
Meredith S. Madden
Meredith S. Madden
| Age: 50 | Director Since: 2015 | Committees: Member of the Audit Committee; Member of the Compensation Committee; Member of the Safety & Compliance Committee |
Meredith S. Madden
Principal Occupation: Chief Executive Officer Experience: Ms. Madden was appointed CEO of NORDAM in 2011. Headquartered in Tulsa, Oklahoma, NORDAM is one of the world’s premier family-owned aerospace providers of composite structures and engineered solutions, employing nearly 2,500 stakeholders across multiple facilities in North America, Europe and Asia Pacific. Ms. Madden joined NORDAM in 1999, and progressed through a series of roles in operations, sales, and strategic market planning; vice president of Global Sales and Marketing; vice president of the Repair Group; chief operating officer, overseeing all repair and manufacturing operations in the United States, Europe and Asia; and president of NORDAM. Prior to her NORDAM career, she was a senior consultant on mergers and acquisitions, corporate recovery services and financial advisory in global finance. Ms. Madden holds an MBA from the University of Chicago, and a Bachelor of Science in business administration and finance from the University of Notre Dame. The Board nominated Ms. Madden, in part, because of her expertise and strategic insights related to aircraft maintenance vendor planning. Additionally, Ms. Madden has extensive expertise working with international maintenance service providers. Other Directorships: Ms. Madden currently serves on the board of The NORDAM Group LLC, Tempur Sealy International, Inc. (NYSE: TPX) and is an Emeritus Member of the Board of the Smithsonian National Air and Space Museum.
Ronald J. Mittelstaedt
Ronald J. Mittelstaedt
Ronald J. Mittelstaedt
| Age: 60 | Director Since: 2013 | Committees: Chair of the Compensation Committee; Member of the Nominating & Corporate Governance Committee; Member of the Safety & Compliance Committee |
Ronald J. Mittelstaedt
Principal Occupation: President and Chief Executive Officer, Director, Waste Connections, Inc. (“Waste Connections”) Experience: Mr. Mittelstaedt has served as the President and Chief Executive Officer of Waste Connections since April 2023, a company he founded in 1997. From July 2019 to April 2023, he served as Executive Chairman. He previously served as its Chair and CEO from its formation in 1997 to July 2019. He has also served as a director of Waste Connections since 1997. Under Mr. Mittelstaedt’s leadership, Waste Connections has become the third largest company in the North American solid waste and recycling industry, employing more than 23,000 people nationwide, and is traded on the New York Stock Exchange and Toronto Stock Exchange. Mr. Mittelstaedt is an independent director for Pye-Barker, Inc., the largest commercial fire suppression install and maintenance company in the United States. Mr. Mittelstaedt also established the RDM Positive Impact Foundation in 2004 to improve the lives of underprivileged and at-risk children. Prior to his career in waste management, he spent three years in the air freight industry. Mr. Mittelstaedt holds a bachelor’s degree in Business Economics from the University of California – Santa Barbara. The Board nominated Mr. Mittelstaedt, in part, because of his expertise in making large capital equipment decisions, extensive experience working with diverse employee and other groups in various geographic regions and a history of developing an organizational culture of strong work ethics. Mr. Mittelstaedt also contributes to the Board his insight as an experienced CEO of a publicly traded company, which the Board has found valuable in its deliberations. Other Directorships: Mr. Mittelstaedt currently serves on the board of Waste Connections and serves as an independent director of Pye-Barker.
Keith E. Smith
Keith E. Smith
Keith E. Smith
| Age: 63 | Director Since: 2013 | Committees: Chair of the Audit Committee; Member of the Compensation Committee; Member of the Nominating & Corporate Governance Committee |
Keith E. Smith
Principal Occupation: President and CEO of Boyd Gaming Corporation (“Boyd Gaming”) Experience: Mr. Smith is President, CEO and a director of Boyd Gaming, one of the nation’s leading casino entertainment companies, with 29 operations in 11 states and more than 15,000 employees. Mr. Smith is an industry veteran with more than 35 years of gaming experience. He joined Boyd Gaming in 1990 and held various executive positions before being promoted to Chief Operating Officer in 2001. In 2005, Mr. Smith was named President and elected as a director of Boyd Gaming and in 2008 he assumed the role of CEO. The common stock of Boyd Gaming is traded on the New York Stock Exchange. Mr. Smith holds a bachelor’s degree in Accounting from Arizona State University. He served as Chair of the Los Angeles Branch of the Federal Reserve Bank of San Francisco from 2012 to 2014. He served as Chair of the American Gaming Association and the Nevada Resort Association. He served as Vice Chair of the Las Vegas Convention and Visitors Authority from 2005 to 2011. The Board nominated Mr. Smith, in part, due to his diverse experience in investing in financing, and managing capital assets and real properties in various geographic regions. Mr. Smith also has extensive experience in leading and directing a large group of diverse employees. Mr. Smith’s accounting training and experience and his service as Chair of the Los Angeles Branch of the Federal Reserve Bank of San Francisco also enable him to provide valuable service as the Chair of the Audit Committee and to the Compensation Committee and Nominating and Corporate Governance Committee. Other Directorships: Mr. Smith currently serves as a director of Boyd Gaming.
James L. Welch
James L. Welch
James L. Welch
| Age: 69 | Director Since: 2007 | Committees: Lead Independent Director; Chair of the Nominating & Corporate Governance Committee; Member of the Audit Committee; Member of the Safety & Compliance Committee |
James L. Welch
Principal Occupation: Retired CEO of YRC Worldwide Inc. (“YRC Worldwide”) Experience: From July 2011 until his retirement in July 2018, Mr. Welch served as the CEO of YRC Worldwide, a provider of global, national and regional ground transportation services. From 2008 to July 2011, Mr. Welch served as the President and CEO of Dynamex, Inc., a provider of same-day transportation and logistics services in the United States and Canada. During 2007 and 2008, he served as Interim CEO of JHT Holdings, a holding company of multiple enterprises engaged in automotive transport and management services. From 2000 to 2007, Mr. Welch served as the President and CEO of Yellow Transportation, an international transportation services provider. Mr. Welch holds a Bachelor of Science degree from West Texas A&M and received the Distinguished Alumni Award in 2014. The Board nominated Mr. Welch, in part, due to his over 40 years of public company senior executive experience in the transportation sector, including extensive experience working with labor. Mr. Welch also contributes to the Board valuable practical experience in the operation of large enterprises. Other Directorships: Mr. Welch currently also serves on the Boards of Schneider National and Stericycle.
Compensation Objectives and Principles
| ● | The overall compensation package should encourage long-term focus and shareholder value creation; |
The Compensation Setting Process
The Compensation Setting Process Role of the Compensation Committee. The Compensation Committee has responsibility for establishing and monitoring the executive compensation programs and for making decisions regarding executive compensation. The Chief Executive regularly attends the Compensation Committee meetings, and the Compensation Committee also meets regularly in executive sessions. The Chief Executive is not present for deliberations by the Compensation Committee regarding his compensation. The Compensation Committee recommends the Chief Executive’s compensation to the Board, which then reviews and approves the Compensation Committee’s recommendation, unless the Compensation Committee is required to approve such compensation under applicable law. The Compensation Committee also considers the recommendations of the Chief Executive with respect to compensation of the other Named Executives, and after reviewing such recommendations, determines their compensation. The Compensation Committee also monitors, administers and approves awards under the various incentive compensation plans for all levels within the Company, including awards under the Company’s annual cash incentive plan and 2019 Long-Term Incentive Plan (the “2019 Plan”). As permitted by the 2019 Plan, the Compensation Committee has delegated its authority to the Chief Executive to approve interim awards under the 2019 Plan to non-executives on a limited basis between meetings of the Compensation Committee. Role of Consultants. During 2023, the Company and the Compensation Committee received advice from Frederic W. Cook & Co., Inc. (“F.W. Cook”) with respect to executive and non-employee director compensation. The Company and the Compensation Committee retained F.W. Cook and after conducting an evaluation using the factors established by the Securities and Exchange Commission and The Nasdaq Global Select Market, the Compensation Committee determined that F.W. Cook is independent and that there is no conflict of interest resulting from the engagement of F.W. Cook during 2023. The Compensation Committee has sole authority to retain and dismiss external compensation consultants. Industry Compensation Data. The Compensation Committee evaluates data regarding the executive compensation programs of other air carriers, as well as other transportation and logistics companies, in order to determine the competitiveness of the Company’s executive compensation programs. The Compensation Committee most recently performed such a review in August 2023 (the most recent peer group review prior to such date having occurred in November 2019, prior to the pandemic), which included a review of the executive compensation levels and practices at peer companies where SkyWest is near the median in enterprise value and market capitalization. The 2023 review was not used to set 2023 compensation levels, which are generally set in the first quarter of each year based on the prior year’s analysis. The executive compensation program for 2023 also included a supplemental one-time cycle of compensation changes and short-term and long-term performance award opportunities to allow the Named Executives the opportunity to earn additional compensation that approximates the compensation that was capped as a result of the CARES Act Limitations. The 2023 compensation review generally validated the 2023 executive compensation decisions by the Compensation Committee and was used to guide the Compensation Committee in setting 2024 executive compensation decisions. No additional supplemental awards will be granted during 2024 in recognition of compensation capped by the CARES Act Limitations. The peer group companies used in the August 2023 review for purposes of validating 2023 compensation levels and for setting 2024 executive compensation include Air Transport Services Group, Inc., Alaska Air Group, Inc., Allegiant Travel Company, ArcBest Corporation, Atlas Air Worldwide Holdings, Inc., Daseke, Inc., Forward Air Corporation, Frontier Group Holdings, Inc., Hawaiian Holdings, Inc., Hub Group, Inc., JetBlue Airways Corporation, Kirby Corporation, Knight-Swift Transportation Holdings, Inc., Landstar System, Inc., Matson, Inc., Saia, Inc., Schneider National, Inc., Spirit Airlines, Inc., Werner Enterprises, Inc. and Yellow Corporation. Compensation Determination. The Compensation Committee relies on its judgment in making compensation decisions in addition to reviewing relevant information and results. When setting total compensation for each of the Named Executives, the Compensation Committee reviews information showing the Named Executive’s current compensation, including base pay, annual cash incentive objectives, long-term, equity-based compensation objectives, and deferred compensation retirement funding. The executive compensation procedures and the Compensation Committee assessment process takes into account this individual information, as well as the industry compensation data described above, company performance, the results of the most recent say-on-pay vote, performance expected in the current and upcoming years and, for 2023, prior caps on compensation due to the CARES Act Limitations, as well as such other factors as the Compensation Committee determines are appropriate. The Compensation Committee has the sole discretion to award compensation and make adjustments to awards based on its review of relevant information and other unusual or non-recurring items. The Company does not target specific pay levels and uses the peer company market data for context. The Company’s directors rely upon their judgment in making compensation decisions, after reviewing the factors described above. Competitive compensation paid by other companies is one of the many factors that the Company considers in assessing the reasonableness of compensation and the Company does not attempt to maintain a certain target percentile within a peer group. The Committee generally stives to maintain annual total direct compensation opportunities below the median of similar positions in the peer group. However, the compensation program included one-time supplemental short-term and long-term performance cash opportunities granted in May 2023 (the “2023 Cash Performance Awards”) that were intended to allow our Named Executives to earn a portion of the compensation that had been capped while the Company was subject to the CARES Act Limitations between 2020 and 2023. As a result, while 2023 compensation for the Named Executive appears higher than 2022, the Named Executives’ compensation for 2023 without regard to these 2023 Cash Performance Awards remained below the median of the peer group as validated by the F.W. Cook compensation study in August 2023. Target total direct compensation in 2024 has also been set according to the below-median target philosophy historically maintained by the Company and is expected to be lower than 2023 total compensation as disclosed in accordance with the methodology set forth in the Summary Compensation Table. The Company strives to achieve the optimal appropriate mix of long-term equity incentive awards and cash payments to achieve its objectives. The Company’s mix of compensation elements is designed to reward recent results, align compensation with shareholder interests and fairly compensate executives through a combination of cash and equity incentive awards. Compensation Committee Consideration of Shareholder Advisory Vote. At the Company’s Annual Meeting of Shareholders held in May 2023, the Company submitted the compensation of its named executive officers to the Company’s shareholders in a non-binding vote. The Company’s executive compensation program received the support of more than 98% of votes cast. The Compensation Committee considered the results of the 2023 vote and views the outcome as evidence of positive shareholder support of its executive compensation decisions and policies.
Elements of Compensation
| ● | Annual Cash Incentive |
Elements of Compensation
| ● | Long-Term Incentive Awards |
Elements of Compensation
Annual Cash Incentive. In an effort to encourage achievement of the Company’s objectives, an annual performance-based cash incentive plan is maintained for the Named Executives. The combination of salary and annual cash incentives is intended to result in a cash compensation package for each Named Executive that, when performance objectives are met, falls within market standards as determined by the Compensation Committee. Prior to taking into consideration the 2023 Cash Performance Awards described below, the 2023 review of the peer group company data showed that the 2023 target annual cash opportunities from salary and the annual cash bonus program for Named Executives were below the median of the peers and the other regional and major air carriers in the Company’s peer group. The 2023 Cash Performance Awards were provided in May 2023 to provide the Named Executives with the opportunity to earn compensation substantially equivalent to the amounts by which the Named Executives’ compensation had been capped while the Company was subject to the CARES Act Limitations between 2020 and 2023. These 2023 Cash Performance Awards are not viewed as a regular ongoing part of the executive compensation program and new opportunities to compensate the Named Executives for the CARES Act Limitations on their compensation are not being provided in 2024. The purpose of the annual cash incentive program is to reward the Named Executives with an annual cash incentive in an amount that correlates (i) in part, to one or more financial objectives achieved for the year; and (ii) in part, to the achievement of one or more specific operational objectives during the year. The 2023 target annual cash incentive opportunity was 110% of salary for Mr. Childs, 80% of salary for Messrs. Simmons, Steel, and Wooley, and 60% of salary for Mr. Woodward, and their potential annual cash incentive opportunity was allocated by the Compensation Committee for the Named Executives between the applicable financial and operational objectives. The differing percentages for the Named Executives are due to differing entity level responsibilities. 2023 Corporate Performance Objectives. For 2023 annual incentive purposes, the Compensation Committee determined that adjusted pre-tax earnings would be the financial objective and that controllable completion and controllable on-time departures would be the operational objectives. These are viewed as value drivers for shareholders that are also in the control of the executive team through their financial and operating decisions and leadership. In the case of Messrs. Childs, Simmons, Steel, Wooley and Woodward, the applicable pre-tax earnings objective, controllable completion objective and controllable on-time departure objective were based on the pre-tax earnings and controllable completion of the entire Company.
Elements of Compensation
| ● | 2023 Operational Objectives. A portion of the Named Executives’ annual cash incentives is based on achievement of operating objectives established at the start of the year. The Compensation Committee believes the use of operating objectives allows for consideration of operating execution and achievements that may not be reflected by corporate financial performance. For 2023, the Compensation Committee determined that the operational objectives would be tied to both controllable completion and controllable on-time departures. Controllable completion is the percentage of completed scheduled flights over which SkyWest Airlines had control, excluding cancelled flights due to uncontrollable factors such as weather. Controllable on-time departures is the percentage of flights departing the gate at or before scheduled departure time over which SkyWest Airlines had control, excluding delayed flights due to uncontrollable factors such as weather. |
Elements of Compensation
The Compensation Committee established threshold, target and maximum objectives for each of the financial and operational objectives. At threshold performance achievement, the Named Executives were able to earn 50% of their target annual incentive, while the maximum performance allowed by the Named Executives to earn 200% of their target annual incentive. At year-end, the Compensation Committee reviewed the adjusted pre-tax earnings and operating performance for the year and determined the extent to which the applicable objectives were met. The actual amount of the cash incentive payment for each Named Executive is determined by the Compensation Committee based on the Company’s and/or SkyWest Airlines’ achievement of the foregoing objectives and the actual cash incentives paid for 2023 were based on the pre-established 2023 cash incentive formula. The table below includes the “threshold,” “target” and “maximum” objectives assigned by the Compensation Committee for the corporate performance measures for 2023 and the 2023 performance relative to those objectives for the Named Executives (dollars in millions).
Elements of Compensation
| | 2023 Annual Cash Incentive Objectives | | | | Interpolated | | Weighted | | | Threshold | Target | Maximum | Achieved | Payout | Weight | Payout | | SkyWest, Inc. | | | | | | | | | Adjusted Pre-Tax Earnings ($ millions) (1) | $— | $52 | $122 | $282.8 | 200.0% | 65.0% | 130.0% | | Operating Objective – Controllable Completion (2) | 99.5% | 99.7% | 99.8% | 99.9% | 200.0% | 20.0% | 40.0% | | Operating Objective – Controllable On-time Departures (3) | 82.0% | 85.0% | 88.0% | 89.4% | 200.0% | 5.0% | 10.0% | | ESG Initiatives (4) | Qualitative Assessment by the Board | | | (4) | 150.0% | 10.0% | 15.0% | | Total Annual Cash Incentive Results (% of Target) | | | | | | | 195.0% |
Elements of Compensation
| (1) The Company achieved GAAP pre-tax earnings of $40 million in 2023. For purposes of the 2023 annual incentive plan payouts, the Company’s GAAP pre-tax earnings for 2023 were adjusted for revenue deferred during 2023 and a decrease in unbilled revenue during 2023. See Appendix A to this proxy statement on page 90 for a reconciliation of the Company’s adjusted pre-tax earnings to the most directly comparable financial measure prepared in accordance with GAAP. |
Elements of Compensation
If the achieved results relative to a performance objective were between two achievement levels, “threshold,” “target” and “maximum”, the earned achievement was determined by linear interpolation between the applicable achievement levels. The corresponding annual cash incentive payments earned for each Named Executive based on performance during the year ended December 31, 2023, are set forth below, and were based on the Named Executive’s salary as of December 31, 2023.
Elements of Compensation
| | Target Annual Cash Incentive (% of Salary) | Target Annual Cash Incentive ($) | Total Annual Cash Incentive Results (% of Target) | Total Annual Cash Incentive (Based on Results) ($) | | Russell A. Childs | 110.0% | $632,500 | 195.0% | $1,233,375 | | Robert J. Simmons | 80.0% | $320,000 | 195.0% | $624,000 | | Wade J. Steel | 80.0% | $320,000 | 195.0% | $624,000 | | Greg S. Wooley | 80.0% | $200,000 | 195.0% | $390,000 | | Eric J. Woodward | 60.0% | $150,000 | 195.0% | $292,500 |
Elements of Compensation
Amount of 2023 Performance-Based Annual Cash Incentives. The total annual performance-based cash incentive amounts earned by the Named Executives for 2022 are included in the amounts shown in the Summary Compensation Table below under the caption heading “Non-Equity Incentive Plan Compensation.” Long-Term Incentive Awards. The Company generally grants long-term incentive awards, in the form of restricted stock units and/or performance shares, to the Named Executives annually. The Named Executives were granted performance shares in 2023, 2022 and 2021 and were not granted restricted stock units. Long-term incentive awards are made to encourage the Named Executives to continue their engagement with the Company throughout the vesting periods of the awards and to align management and shareholder interests. In making awards to the Named Executives, the grant size and the appropriate mix of equity-based awards are considered. The Compensation Committee generally grants long-term incentive awards at its first meeting of each year. Long-term incentive awards generally vest only if the Named Executive remains employed by the Company for three years from the date of grant. The three-year cliff-vesting schedule is to assist with retaining Named Executives and to encourage the Named Executives to focus on the Company’s long-term performance. Equity incentive awards granted during 2023 accelerate vesting under certain circumstances, as described in the section Potential Payments upon Termination or Change in Control. 2023 Performance Share Awards. Equity awards are designed to ensure that a material portion of each Named Executive’s compensation is based on continuing long-term service and correlated to the creation of shareholder value. Each Named Executive’s 2023 long-term incentive award was in the form of performance shares and the Company did not grant any time-vested equity compensation awards. The purpose of the 2023 performance share awards is to reward achievement of the Company’s annual financial plan, which the Company believes will also support shareholder value achievement. For 2023, the total annual targeted long-term incentive grant value was $2,300,000 for Mr. Childs, $800,000 for Mr. Simmons, $800,000 for Mr. Steel, $473,000 for Mr. Wooley and $275,000 for Mr. Woodward. This target long-term incentive value was granted exclusively in the form of performance shares. The target values of 2023 performance share awards were set so that they were equal to 2022 target long-term incentive award values due to the CARES Act Limitations and these levels were validated as being below the median of the peer data reviewed by the Compensation Committee for all Named Executive positions in August 2023. The 2023 performance share awards were made pursuant to the Company’s 2019 Plan, as shown in greater detail below and in the table labeled “Grants of Plan Based Awards.” The following table summarizes the 2023 performance share awards granted to the Named Executives.
Elements of Compensation
| | Performance Share Awards | | | “Target” Performance Shares (1)(2) | | Russell A. Childs | 123,324 | | Robert J. Simmons | 42,895 | | Wade J. Steel | 42,895 | | Greg S. Wooley | 25,362 | | Eric J. Woodward | 14,745 |
Elements of Compensation
| (1) Number of performance shares if 100% of target is achieved, although the threshold earnout is 50% of target and the maximum earnout is 250% of target. |
Elements of Compensation
| (2) The “target” value at grant was converted into a "target" number of performance shares based on the share price on the grant date of $18.65. Please see the Summary Compensation Table below for the aggregate grant-date fair value of these awards, computed in accordance with ASC Topic 718. |
Elements of Compensation
Performance Share Awards Granted in 2021. For purposes of the performance share awards granted in 2021, which were eligible to vest based on corporate performance during 2021 and 2022 and continued employment through December 31, 2023, the Compensation Committee set performance share objectives based on adjusted EBITDA per share, return on invested capital, and average controllable completion for each of the performance years. For purposes of the 2021 performance share awards, return on invested capital for any calendar year was defined as the Company's adjusted operating income for such year divided by the Company's average invested capital for such calendar year. The performance shares vest and are settled in shares of Common Stock upon completion of the three-year period (subject to the Named Executive’s continued employment through the last day of the period), based on the level of adjusted EBITDA per share, adjusted return on invested capital and controllable completion actually attained in aggregate over the 2021 and 2022 calendar years. For the 2021 performance share awards, the Compensation Committee established threshold, target and maximum performance levels for each of the three corporate performance objectives, with the actual number of performance shares that will vest to be adjusted in proportion to the extent to which the combined actual results varied from the target levels of performance. The performance shares were allocated 50% to each of the 2021 and 2022 years, and then for each years’ performance, 40% to the adjusted EBITDA per share objective, 40% to the average return on invested capital objective and 20% to the average controllable completion in determining the actual awarded performance shares payable in Common Stock. Specifically, a number of performance shares attributable to each objective according to the weightings was assigned by the Compensation Committee and could be earned ranging from 50% (for threshold performance) to 100% (for target performance) to 250% (for maximum performance), with performance in between such levels determined by linear interpolation. If performance is below the threshold level for one or more of the objectives, no performance shares will be earned with respect to such objective(s). The 2021 performance share awards were earned at 150% of target at the end of 2023 based on the original formula and goals. In February 2024, the Compensation Committee determined the Company’s achievement relative to the objectives previously established for the 2021 performance share awards as follows (see Appendix A to this proxy statement on page 90 for a reconciliation of certain 2022 and 2021 non-GAAP financial measures used to calculate the achievement levels described below for the most directly comparable financial measures prepared in accordance with GAAP):
Elements of Compensation
As a result of the foregoing, in February 2024, the Named Executives vested in 150% of the target number of performance shares relative to the 2021 performance share awards as follows: Mr. Childs, 76,889 shares; Mr. Simmons, 26,744 shares; Mr. Steel, 26,744 shares; Mr. Wooley, 15,813 shares; and Mr. Woodward, 9,194 shares. Performance Share Awards Granted in 2022. For purposes of the performance share awards granted in 2022, which are eligible to vest based on corporate performance during 2022, 2023 and 2024 and continued employment through December 31, 2024, the Compensation Committee set performance share objectives based on adjusted EBITDA, controllable completion, and controllable on-time departures for each of the performance years. For the 2022 performance share awards, the Compensation Committee established threshold, target and maximum performance levels for each of the three corporate performance objectives, with the actual number of performance shares that will vest to be adjusted in proportion to the extent to which the combined actual results varied from the target levels of performance. The performance shares are allocated 33.3% to each year, and then for each years’ performance, 34% to the adjusted EBITDA objective, 33% to the controllable completion objective and 33% to the controllable on-time departures objective in determining the actual awarded performance shares payable in Common Stock. Specifically, a number of performance shares attributable to each objective according to the weightings assigned by the Compensation Committee will be earned ranging from 50% (for threshold performance) to 100% (for target performance) to 250% (for maximum performance), with performance in between such levels determined by a weighted interpolation. If performance is below the threshold level for one or more of the objectives, no performance shares will be earned with respect to such objective(s). As a result of 2022 and 2023 performance relative to the objectives, in February 2024, the Compensation Committee determined that the overall achievement percentage for the 2022 and 2023 performance period of the 2022 performance shares was 250%, which percentage achievement will be included in the final determination of the vesting of these performance share awards following the end of the three-year performance period:
Elements of Compensation
Long-Term Incentive Awards for 2024. For 2024, the Compensation Committee determined to allocate the grant of the long-term incentive awards to the Named Executives in the form of restricted stock units and performance shares. The long-term incentive performance metrics applicable to the performance shares granted in 2024 will be based on a free cash flow metric, an adjusted EBITDA metric, controllable completion rate and a controllable on-time departure rate and will be based on three one-year measurement periods. Under the 2024 awards, the Company’s performance against these performance metrics will be measured against objectives established for each 2024, 2025, and 2026, with the resulting number of “earned” shares eligible to vest on December 31, 2026, subject to continued employment through that date. The 2024 long-term incentive awards will be eligible for accelerated vesting on terms substantially similar to the 2023 performance share awards, as described above. No one-time supplemental awards of performance cash or equity awards have been granted to the Named Executives in 2024. 2023 One-Time Supplemental Cash Performance Awards. Following the lapse of the CARES Act Limitations on April 1, 2023, the Board granted one-time supplemental performance-based cash awards to the Named Executives to provide additional operational improvement incentives focused on the execution of a short-term and long-term plan based on a recovery in block hours flown (the “2023 Cash Performance Awards”) intended to allow our Named Executives to earn a portion of the compensation that had been capped while the Company was subject to the CARES Act Limitations between 2020 and 2023. SkyWest and the airline industry generally experienced pilot attrition in 2022 and 2023, with pilot availability constraining SkyWest’s ability to return to pre-COVID scheduled flight levels. The 2023 Cash Performance Awards underscore the Board’s objective for the Named Executives to restore scheduled block hour production in a manner that provides short-term and long-term value for SkyWest shareholders. The 2023 Cash Performance Awards included (i) a short-term performance cash incentive, subject to the completion of certain production recovery metrics and share repurchase objectives, and (ii) a long-term performance cash incentive, subject to achievement of performance goals aligned with the Company’s 2023 long-term incentive awards. The 2023 Cash Performance Awards were made pursuant to the Company’s 2019 Plan. Short-Term Cash Performance Incentive. In May 2023, a one-time, supplemental short-term performance cash incentive (the “2023 Short-Term Cash Performance Award”) was awarded to the Named Executives, subject to the achievement of three performance goals to be completed during 2023 following the approval date: (i) a net increase in captains for one calendar month (number of captain upgrades less captain attrition), (ii) operation of the first revenue flight for SWC, and (iii) a minimum of $30 million of share repurchases. The 2023 Short-Term Cash Performance Award was generally designed to allow Named Executives the opportunity to earn approximately one-half of the compensation that would otherwise have been paid to them during the period that the CARES Act Limitations were in effect had their compensation not been capped under such limitations. By tying the 2023 Short-Term Cash Performance Award to new performance objectives critical to the Company’s 2023 performance, these amounts were subject to the Named Executive’s achievement of further operating and stock price performance. Upon achievement of all three goals, the 2023 Short-Term Cash Performance Award would be paid immediately to each of the Named Executives other than the CEO. For the CEO, in order to encourage additional stock price achievement and to create an additional retention incentive, upon achievement of all three goals, 33% of the 2023 Short-Term Cash Performance Award would be paid out immediately, 33% would be paid out during the fourth quarter of 2023, subject to achievement of a minimum SkyWest closing stock price target of $30.00 per share during the fourth quarter of 2023, and the final 33% will be paid in May 2024, subject to the CEO’s continued employment with the Company through the payment date. By December 31, 2023, all three goals, including the minimum stock price goal for the CEO, had been achieved. The following table summarizes the 2023 Short-Term Cash Performance Award amounts earned by the Named Executives based on 2023 performance and the amounts paid to the Named Executives during 2023. The Company will pay the CEO the final tranche of his 2023 Short-Term Cash Award of $500,000 in May 2024, subject to his continued employment with the Company through the payment date.
Elements of Compensation
| | 2023 Short-Term Cash Performance Award Target | 2023 Short-Term Cash Performance Award Achieved | 2023 Short-Term Cash Performance Award Paid in 2023 | Amount to be Paid in May 2024 (Subject to Continued Employment) | | Russell A. Childs | $1,500,000 | $1,500,000 | $1,000,000 | $500,000 | | Robert J. Simmons | $500,000 | $500,000 | $500,000 | $— | | Wade J. Steel | $500,000 | $500,000 | $500,000 | $— | | Greg S. Wooley | $250,000 | $250,000 | $250,000 | $— | | Eric J. Woodward | $250,000 | $250,000 | $250,000 | $— |
Elements of Compensation
Long-Term Cash Performance Incentive. In May 2023, an additional one-time, supplemental long-term performance cash incentive (the “2023 Long-Term Cash Performance Award”) was awarded to the Named Executives in order to incentivize the Named Executives to execute the block hour production recovery plan and align the Named Executives with shareholder interests over multiple years. Under the terms of the Long-Term Cash Performance Awards, the Company’s performance towards established performance metrics will be measured against the same objectives established for each of 2023, 2024 and 2025 used in the 2023 performance share awards to the Named Executives, as described above under the heading Long-Term Incentive Awards. The Long-Term Cash Performance Awards provide the Named Executives with the opportunity to earn the other one-half of the compensation that would otherwise have been paid to them during the period that the CARES Act Limitations were in effect had their compensation not been capped under such limitations. By tying the 2023 Long-Term Cash Performance Awards to new performance objectives critical to the Company’s three-year performance, these amounts are subject to the Named Executive’s achievement of further operating and financial performance. One-third of the Long-Term Cash Performance Award is eligible to be earned based on performance relative to the 2023 goals, one-third of the Long-Term Cash Performance Award target is eligible to be earned based on performance relative to the 2024 goals and one-third of the Long-Term Cash Performance Award target is eligible to be earned based on performance relative to the 2025 goals. The Long-Term Cash Performance Awards vest and become payable as to one-third of the award annually over the three-year period as the performance for each year is determined by the Compensation Committee, subject to continued employment through the anniversary of the grant date following completion of the applicable annual performance period. The annual payment structure of the Long-Term Cash Performance Awards, which differs than the three-year cliff vesting of the 2023 performance share awards, was determined to be appropriate given the Long-Term Cash Performance Awards are intended to provide the Named Executive Officers with a performance-based opportunity to earn compensation that would otherwise have been paid to them during the period that the CARES Act Limitations were in effect had their compensation not been capped under such limitations. If performance is below the threshold level for one or more of the objectives, no cash amount will be earned with respect to such objective(s). The following table summarizes the 2023 Long-Term Cash Performance Awards granted to the Named Executives during the year ended December 31, 2023.
Elements of Compensation
| | 2023 Long-Term Cash Award at Target (1) | | Russell A. Childs | $1,500,000 | | Robert J. Simmons | $500,000 | | Wade J. Steel | $500,000 | | Greg S. Wooley | $250,000 | | Eric J. Woodward | $250,000 |
Elements of Compensation
| (1) Represents the total target value of the 2023 Long-Term Cash Performance Award if 100% of target is achieved in each of 2023, 2024 and 2025, although the threshold earnout is 50% of target and the maximum earnout is 250% of target. One-third of the award is eligible to be earned for each calendar year. |
No Employment and Severance Agreements
No Employment and Severance Agreements The Named Executives do not have employment, severance or change-in-control agreements, although the vesting of long-term equity incentive awards may accelerate under certain circumstances, as described below under “Elements of Compensation – Long-Term Incentive Awards.” The Named Executives serve at the will of the Board, which enables the Board to terminate the employment of any Named Executive with discretion as to the terms of any severance. This is consistent with the Company’s performance-based employment and compensation philosophy. Acceleration of Long-Term Incentive Awards. With respect to long-term incentive awards granted to the Named Executives, such awards will vest on an accelerated basis under certain circumstances. Specifically, restricted stock unit awards granted to the Named Executives will vest on an accelerated basis (i) in the event of the Named Executive’s involuntary termination without cause or resignation for good reason, or (ii) in the event of the Named Executive’s death. Performance share awards granted to the Named Executives will vest on an accelerated basis upon certain terminations of employment. In the event of the Named Executive’s death prior to a change in control, the Named Executive will vest in a number of performance shares determined as follows: (i) for any annual performance period that has ended prior to the date of death, the number of performance shares earned for such performance period will vest on the date of death (or, if later the applicable certification date of performance for such performance period); plus (ii) for any annual performance period that has not yet commenced or is incomplete as of the date of death, 33% of the “target” number of performance shares subject to the award will vest on the date of death; plus (iii) for any annual performance period that has not yet commenced or is incomplete as of the date of death, the Named Executive’s estate will remain eligible to vest in any in such number of additional performance shares as ultimately vest based on the Company’s actual performance relative to the corporate performance objectives under such award at the end of the applicable annual performance period (or, if earlier, a change in control of the Company), which vesting will occur on the applicable certification date of performance for such performance period. In the event of the Named Executive’s involuntary termination without cause or resignation for good reason, in each case prior to a change in control, the Named Executive will vest or remain eligible to vest in such number of performance shares as ultimately vest based on the Company’s actual performance relative to the corporate performance objectives under such award at the end of each applicable annual performance period (or, if earlier, a change in control of the Company), which vesting will occur on the later of the date of termination and the applicable certification date for such performance period, and be prorated for the portion of the three-year period covered by such awards that has elapsed prior to the date of termination. For purposes of the performance shares, in the event of a change in control of the Company, the performance shares will be converted into a number of “vesting eligible shares” determined as follows: (i) for any annual performance period that has commenced but has not ended as of the date of the change in control, the greater of (a) 33% of the “target” number of performance shares subject to the award, or (b) the number of performance shares that would vest if performance had been measured against the corporate performance objectives as of the date of the change in control; plus (ii) for any annual performance period that has ended prior to the date of the change in control, the vesting eligible shares as determined for such completed annual performance period; plus (iii) for any annual performance period that has not yet commenced as of the date of the change in control, 33% of the “target” number of performance shares subject to the award. Such vesting eligible shares will vest on the last day of the third calendar year in the three-year performance period applicable to such award, subject to the Named Executive’s continued employment or service through such date; provided that, in the event of the Named Executive’s death, involuntary termination without cause or resignation for good reason, in each case following a change in control, any vesting eligible shares will vest upon the date of such termination. Acceleration of 2023 Long-Term Cash Performance Awards. The 2023 Long-Term Cash Performance Awards granted to the Named Executives will vest on an accelerated basis upon certain terminations of employment. In the event of the Named Executive’s death prior to a change in control, the Named Executive will be eligible to be paid such portion of the award determined as follows: (i) for any annual performance period that has ended prior to the date of death for which a payment has not yet been made to the Named Executive, the cash amount earned for such performance period will be paid on the date of death (or, if later the applicable certification date of performance for such performance period); plus (ii) for any annual performance period that has not yet commenced or is incomplete as of the date of death, 33% of the “target” cash award eligible to vest during such annual performance period will be paid upon the Named Executive’s death; plus (iii) for any annual performance period that has not yet commenced or is incomplete as of the date of death, the Named Executive’s estate will remain eligible to vest in any additional portion of the cash award that is ultimately earned based on the Company’s actual performance relative to the corporate performance objectives under such award at the end of the applicable annual performance period (or, if earlier, a change in control of the Company), which payment will occur on the applicable certification date of performance for such performance period. In the event of the Named Executive’s involuntary termination without cause or resignation for good reason, in each case prior to a change in control, the Named Executive will vest or remain eligible to vest in such portion of the award as is ultimately earned based on the Company’s actual performance relative to the corporate performance objectives under such award at the end of each applicable annual performance period (or, if earlier, a change in control of the Company), which vesting will occur on the later of the date of termination and the applicable certification date for such performance period, and be prorated for the portion of the three-year period covered by such awards that has elapsed prior to the date of termination.
No Employment and Severance Agreements
For purposes of the 2023 Long-Term Cash Performance Awards, in the event of a change in control of the Company, the award will be converted into a fixed cash award (the “vesting eligible cash”) determined as follows: (i) for any annual performance period that has commenced but has not ended as of the date of the change in control, the greater of (a) 33% of the “target” cash award eligible to vest during such annual performance period, or (b) the amount of cash that would have been earned if performance had been measured against the corporate performance objectives as of the date of the change in control; plus (ii) for any annual performance period that has ended prior to the date of the change in control for which payment has not yet been made to the Named Executive, the cash award earned for such completed annual performance period; plus (iii) for any annual performance period that has not yet commenced as of the date of the change in control, 33% of the “target” cash award eligible to vest during such annual performance period. Such vesting eligible cash will vest in substantially equal installments on the remaining anniversaries of the grant date through and including May 2026, subject to the Named Executive’s continued employment or service through such date; provided that, in the event of the Named Executive’s death, involuntary termination without cause or resignation for good reason, in each case following a change in control, any vesting eligible cash will be paid upon the date of such termination.
Retirement and Other Benefits
Retirement and Other Benefits The Company and SkyWest Airlines sponsor a 401(k) retirement plan for their eligible employees, including the Named Executives. The 401(k) retirement plan is a broad based, tax-qualified retirement plan under which eligible employees, including the Named Executives, may make annual pre-tax salary reduction contributions subject to the various limits imposed under the Internal Revenue Code of 1986, as amended (the “Code”). The sponsoring employer makes matching contributions under the plan on behalf of eligible participants; however, the right of Named Executives and other officers to such matching contributions is limited. The Compensation Committee believes that maintaining the 401(k) retirement plan and providing a means to save for retirement is an essential part of a competitive compensation package necessary to attract and retain talented executives. The Company also maintains the SkyWest, Inc. 2002 Deferred Compensation Plan, a non-qualified deferred compensation plan for the benefit of officers and other highly compensated employees (the “Deferred Compensation Plan”). All of the Named Executives participate in the Deferred Compensation Plan. Under the Deferred Compensation Plan, the employer credits each Named Executive’s account with a discretionary employer contribution equal to 15% of salary and annual cash incentive. These amounts are included in the Summary Compensation Table under the column “All Other Compensation”. Additional information on the Deferred Compensation Plan is found in the section “Non-Qualified Deferred Compensation for 2023” below. The purpose of the Deferred Compensation Plan is to attract and retain executive talent by assisting with building retirement assets over the course of their career with the Company. The Deferred Compensation Plan also permits eligible executives, including the Named Executives, to elect in advance of each calendar year to defer up to 100% of their cash salary and annual cash incentive compensation for the year. Only Mr. Simmons elected to defer any portion of his salary or annual cash incentive for 2023. The Company and its subsidiaries do not maintain any defined benefit pension plans for the Named Executives.
Effect of Compensation on Risk
| ● | The Company’s compensation policies and practices are designed to include a significant level of long-term compensation, which discourages short-term risk taking; |
Effect of Compensation on Risk
| ● | The base salaries and target cash incentive opportunities the Company provides to its employees are generally consistent with salaries paid for comparable positions in the Company’s industry, and provide the Company’s employees with steady income while reducing the incentive for employees to take risks in pursuit of short-term benefits; |
Effect of Compensation on Risk
| ● | The Company’s cash incentive and performance equity incentive compensation is capped at levels established by the Compensation Committee, consistent with peer data, and at which the Compensation Committee believes reduces the incentive for excessive risk-taking; |
Summary Compensation Table
Summary Compensation Table The table below summarizes the total compensation paid to or earned by each of the Named Executives for the years indicated.
Summary Compensation Table
| | | | | Stock Awards | | | | | | | Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Restricted Stock Units ($)(2) | Performance Shares ($)(2) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | | Russell A. Childs | 2023 | $546,875 | $— | $— | $2,300,000 | $— | $2,233,375 | $467,213(5) | $5,547,463 | | CEO & President | 2022 | $500,000 | $— | $— | $2,300,000 | $— | $340,000 | $153,971 | $3,293,971 | | | 2021 | $500,000 | $— | $— | $2,300,000 | $— | $285,000 | $173,862 | $3,258,862 | | Robert J. Simmons | 2023 | $379,375 | $— | $— | $800,000 | $— | $1,124,000 | $275,199(6) | $2,578,574 | | Chief Financial Officer | 2022 | $345,000 | $— | $— | $800,000 | $— | $310,000 | $133,482 | $1,588,482 | | | 2021 | $345,000 | $— | $— | $800,000 | $— | $320,000 | $133,362 | $1,598,362 | | Wade J. Steel | 2023 | $375,625 | $— | $— | $800,000 | $— | $1,124,000 | $251,095(7) | $2,550,720 | | Chief Commercial Officer | 2022 | $335,000 | $— | $— | $800,000 | $— | $300,000 | $129,352 | $1,564,352 | | | 2022 | $335,000 | $— | $— | $800,000 | $— | $312,000 | $123,922 | $1,570,922 | | Greg S. Wooley | 2023 | $235,000 | $— | $— | $473,000 | $— | $640,000 | $139,581(8) | $1,487,581 | | Executive Vice President Operations | 2022 | $210,000 | $— | $— | $473,000 | $— | $195,000 | $79,858 | $957,858 | | | 2021 | $210,000 | $— | $— | $473,000 | $— | $195,000 | $68,398 | $946,398 | | Eric J. Woodward | 2023 | $235,375 | $— | $— | $275,000 | $— | $542,500 | $137,639(9) | $1,190,514 | | Chief Accounting Officer | 2022 | $211,000 | $— | $— | $275,000 | $— | $126,600 | $78,068 | $690,668 | | | 2021 | $211,000 | $— | $— | $275,000 | $— | $126,600 | $69,701 | $682,301 |
Summary Compensation Table
| (1) No discretionary bonuses were awarded to the Named Executives in 2021, 2022 or 2023. |
Summary Compensation Table
| (2) These columns show the grant date fair value of stock awards granted during the applicable fiscal year as computed under ASC Topic 718 (excluding estimates for forfeitures in case of awards with service-based vesting). With respect to the performance share awards, the grant date fair value is reported based on the probable outcome of the performance conditions as of the grant date. The maximum potential value of the performance share awards, assuming the highest level of performance achievement, is as follows: Mr. Childs, $5,750,000 (2021), 5,750,000 (2022), $5,750,000 (2023); Mr. Simmons, $2,000,000 (2021), 2,000,000 (2022), $2,000,000 (2023); Mr. Steel, $2,000,000 (2021), 2,000,000 (2022), $2,000,000 (2023); Mr. Wooley, $1,182,500 (2021), $1,182,500 (2022) $1,182,500 (2023); and Mr. Woodward, $687,500 (2021), $687,500 (2022), $687,500 (2023). These amounts do not reflect the extent to which the Named Executive realized or will realize an actual financial benefit from the awards. Assumptions and methodologies used in the calculation of these amounts are included in footnotes to the Company’s audited financial statements for the year ended December 31, 2023, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. |
Summary Compensation Table
| (3) The amounts in this column reflect the annual cash incentive amounts earned in the year indicated based on performance in that year and paid in the subsequent year, and the 2023 Short-Term Cash Performance Award amounts paid in the year indicated. As described in the section entitled “Compensation Discussion and Analysis” above, these performance cash incentives payable to the Named Executives are calculated based upon the financial and operational performance of the Company or its subsidiaries. The threshold, target and maximum amount of each Named Executive’s annual performance cash incentive opportunities for 2023 and the target amount of each Named Executive’s 2023 Short-Term Cash Performance Award is reported in the “Grants of Plan-Based Awards for 2023” |
Summary Compensation Table
| table below. The annual cash incentive earned in 2023 and paid in 2024 to each Named Executive and reflected in the table above are as follows: Mr. Childs, $1,233,375; Mr. Simmons, $624,000; Mr. Steel, $624,000; Mr. Wooley, $390,000; and Mr. Woodward, $292,500. Additionally, the 2023 Short-Term Cash Performance Award amounts paid to the Named Executives during 2023 and reflected in the table above are as follows: Mr. Childs, $1,000,000; Mr. Simmons, $500,000; Mr. Steel, $500,000; Mr. Wooley, $250,000; and Mr. Woodward, $250,000. |
Summary Compensation Table
| (4) All other compensation for each Named Executive (as described in footnotes 5 through 9 below) increased in 2023 as compared to previous years due to the lapse of the CARES Act Limitations on April 1, 2023. As a result of the lapse of the CARES Act Limitations, (i) deferred compensation contributions made by the Company, which are calculated based on the applicable Named Executive’s Non-Equity Incentive Plan Compensation, increased in 2023 due to the Named Executives’ increased Non-Equity Incentive Plan Compensation following such lapse; and (ii) the Company was permitted to distribute excess user time hours, a paid-time off benefit, to its employees, including the Named Executives upon request from the employees. These higher amounts are not expected to continue in 2024. |
Summary Compensation Table
| (5) All other compensation for Mr. Childs for 2023 included $303,875 of employer credits under the SkyWest Deferred Compensation Plan attributable to compensation earned for 2023 and $128,269 payout of excess user time. The remaining other compensation relates to employer-paid health insurance premiums, a personal vehicle lease and personal use of the Company’s recreational equipment. |
Summary Compensation Table
| (6) All other compensation for Mr. Simmons for 2023 included $187,995 of employer credits under the SkyWest Deferred Compensation Plan attributable to compensation earned for 2023 and $53,271 payout of excess user time. The remaining other compensation relates to employer-paid health insurance premiums, a personal vehicle lease and personal use of the Company’s recreational equipment. |
Summary Compensation Table
| (7) All other compensation for Mr. Steel for 2023 included $177,918 of employer credits under the SkyWest Deferred Compensation Plan attributable to compensation earned for 2023 and $40,769 payout of excess user time. The remaining other compensation relates to employer-paid health insurance premiums, a personal vehicle lease and personal use of the Company’s recreational equipment. |
Summary Compensation Table
| (8) All other compensation for Mr. Wooley for 2023 included $105,918 of employer credits under the SkyWest Deferred Compensation Plan attributable to compensation earned for 2023 and $15,625 payout of excess user time. The remaining other compensation relates to employer-paid health insurance premiums and personal use of the Company’s recreational equipment. |
Summary Compensation Table
| (9) All other compensation for Mr. Woodward for 2023 included $96,639 of employer credits under the SkyWest Deferred Compensation Plan attributable to compensation earned for 2023 and $21,635 payout of excess user time. The remaining other compensation relates to employer-paid health insurance premiums and personal use of the Company’s recreational equipment. |
Grants of Plan-Based Awards For 2023
Grants of Plan-Based Awards For 2023 The following table provides information about non-equity based and equity-based plan awards granted to the Named Executives for the year ended December 31, 2023:
Grants of Plan-Based Awards For 2023
| | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Possible Payouts Under Equity Incentive Plan Awards(4) | | | All Other Stock Awards Number | All Other Stock Awards Number | Exercise Price of Option | Grant Date Fair Value of Stock and Option | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | of Units (#) | of Options (#) | Awards ($/Share) | Awards ($)(5) | | Russell A. Childs | 7-Feb-2023(1) | $316,250 | $632,500 | $1,265,000 | | | | | | | | | | 2-May-2023(2) | $— | $1,500,000 | $1,500,000 | | | | | | | | | | 2-May-2023(3) | $750,000 | $1,500,000 | $3,750,000 | | | | | | | | | | 7-Feb-2023(4) | | | | 61,662 | 123,324 | 308,310 | | | | $2,300,000 | | Robert J. Simmons | 7-Feb-2023(1) | $160,000 | $320,000 | $640,000 | | | | | | | | | | 2-May-2023(2) | $— | $500,000 | $500,000 | | | | | | | | | | 2-May-2023(3) | $250,000 | $500,000 | $1,250,000 | | | | | | | | | | 7-Feb-2023(4) | | | | 21,448 | 42,895 | 107,238 | | | | $800,000 | | Wade J. Steel | 7-Feb-2023(1) | $160,000 | $320,000 | $640,000 | | | | | | | | | | 2-May-2023(2) | $— | $500,000 | $500,000 | | | | | | | | | | 2-May-2023(3) | $250,000 | $500,000 | $1,250,000 | | | | | | | | | | 7-Feb-2023(4) | | | | 21,448 | 42,895 | 107,238 | | | | $800,000 | | Greg S. Wooley | 7-Feb-2023(1) | $100,000 | $200,000 | $400,000 | | | | | | | | | | 2-May-2023(2) | $— | $250,000 | $250,000 | | | | | | | | | | 2-May-2023(3) | $125,000 | $250,000 | $625,000 | | | | | | | | | | 7-Feb-2023(4) | | | | 12,681 | 25,362 | 63,405 | | | | $473,000 | | Eric J. Woodward | 7-Feb-2023(1) | $75,000 | $150,000 | $300,000 | | | | | | | | | | 2-May-2023(2) | $— | $250,000 | $250,000 | | | | | | | | | | 2-May-2023(3) | $125,000 | $250,000 | $625,000 | | | | | | | | | | 7-Feb-2023(4) | | | | 7,373 | 14,745 | 36,863 | | | | $275,000 |
Grants of Plan-Based Awards For 2023
| (1) Amounts reflect the threshold, target and maximum amount of each Named Executive’s annual cash incentive opportunity for 2023. As described in the section entitled “Compensation Discussion and Analysis” above, the annual cash incentives payable to the Named Executives are calculated based upon the financial, operational, and ESG performance of the Company or its subsidiaries. |
Grants of Plan-Based Awards For 2023
| (2) Amounts reflect the target amount of each Named Executive’s the 2023 Short-Term Cash Performance Award. As described in the section entitled “Compensation Discussion and Analysis” above, the 2023 Short-Term Cash Performance Awards were earned based upon the financial and operational performance of the Company or its subsidiaries during 2023 and, other than with respect to one-third of the award payable to our Chief Executive Officer, were paid during 2023 and are reflected in the Summary Compensation Table. The remaining one-third of the award to our Chief Executive Officer will be paid in May 2024, subject to his continued employment through the date of payment. |
Grants of Plan-Based Awards For 2023
| (3) Amounts reflect the threshold, target and maximum amount of each Named Executive’s 2023 Long-Term Cash Performance Award. As described in the section entitled “Compensation Discussion and Analysis” above and footnote (5) below, the 2023 Long-Term Cash Performance Awards are payable to the Named Executives are calculated based upon the same financial and operational performance of the Company or its subsidiaries as are applicable under the 2023 performance share awards. |
Grants of Plan-Based Awards For 2023
| (4) Represents the 2023 performance share awards. Under the 2023 performance share awards, the Company’s performance against established performance metrics will be measured against objectives established for each of 2023, 2024 and 2025, with the resulting number of “earned” shares eligible to vest on December 31, 2025, subject to continued employment through that date. The Compensation Committee determined that the corporate objectives for purposes of such awards would be free cash flow, adjusted EBITDA, controllable completion, and controllable on-time departures for each of the performance years. For the 2023 performance share awards, the Compensation Committee established threshold, target and maximum performance levels for each of the four corporate performance objectives, with the actual number of performance shares that will vest to be adjusted in proportion to the extent to which the actual results varied from the target levels of performance. The performance shares are allocated 33.3% to each performance measurement year (2023, 2024 and 2025), and then for each years’ performance, 40% to free cash flow, 30% to the adjusted EBITDA objective, 20% to the controllable completion objective and 10% to the controllable on-time departures objective in determining the actual awarded performance shares payable in Common Stock. Specifically, a number of performance shares attributable to each objective according to the weightings assigned by the Compensation Committee will be earned ranging from 50% (for threshold performance) to 100% (for target performance) to 250% (for maximum performance), with performance in between such levels determined by linear interpolation. If performance is below the threshold level for one or more of the objectives, no performance shares will be earned with respect to such objective(s). Until the vesting date, the shares underlying the performance shares are not issued and outstanding. Accordingly, the Named Executive is not entitled to vote or receive dividends on the shares underlying his performance shares unless and until those performance shares vest. |
Grants of Plan-Based Awards For 2023
| (5) This column shows the grant date fair value of the stock awards granted as computed under ASC Topic 718 (excluding estimates for forfeitures in case of awards with service-based vesting). With respect to the performance share awards, the grant date fair value is reported based on the probable outcome of the performance conditions as of the grant date. These amounts do not reflect the extent to which the Named Executive realized or will realize an actual financial benefit from the awards. Assumptions and methodologies used in the calculation of these amounts are included in footnotes to the Company’s audited financial statements for the year ended December 31, 2023 which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. |
Outstanding Equity Awards at Year-End
Outstanding Equity Awards at Year-End The following table provides information on the holdings of restricted stock units and performance shares by the Named Executives as of December 31, 2023. The Named Executives did not hold stock options as of December 31, 2023.
Outstanding Equity Awards at Year-End
| | Stock Awards | | | | | Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested (6)($) | Equity Incentive Plan Awards: Number of Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Shares, Units or Other Rights That Have Not Vested (6)($) | | Russell A. Childs | 76,889(1) | $4,013,606 | | | | | 117,015(2) | 6,108,183 | 23,402(2) | $1,221,584 | | | 102,770(3) | 5,364,594 | 82,216(3) | $4,291,675 | | Robert J. Simmons | 26,744(1) | $1,396,037 | | | | | 40,700(2) | 2,124,540 | 8,140(2) | $424,908 | | | 35,745(3) | 1,865,889 | 28,597(3) | $1,492,763 | | Wade J. Steel | 26,744(1) | $1,396,037 | | | | | 40,700(2) | 2,124,540 | 8,140(2) | $424,908 | | | 35,745(3) | 1,865,889 | 28,597(3) | $1,492,763 | | Greg S. Wooley | 15,813(1) | $825,439 | | | | | 24,065(2) | 1,256,193 | 4,812(2) | $251,186 | | | 21,135(3) | 1,103,247 | 16,908(3) | $882,598 | | Eric J. Woodward | 9,194(1) | $479,927 | | | | | 13,990(2) | 730,278 | 2,798(2) | $146,056 | | | 12,288(3) | 641,434 | 9,830(3) | $513,126 |
Outstanding Equity Awards at Year-End
| (1) Represents the 2021 performance share awards. Under the 2021 performance share awards, the Company’s performance against established performance metrics was measured against objectives established for each of 2021 and 2022, with the resulting number of “earned” shares eligible to vest on December 31, 2023, subject to continued employment through that date. The corporate objectives for purposes of such awards were adjusted EBITDA per share, return on invested capital and controllable completion measured over two one-year performance periods. For the 2021 performance share awards, the Compensation Committee established threshold, target and maximum performance levels for each of the three corporate performance objectives, with the actual number of performance shares that will vest to be adjusted in proportion to the extent to which the combined actual results varied from the target levels of performance. The performance shares were allocated 50% to each performance measurement year, and then for each years’ performance, 40% to the adjusted EBITDA per share objective, 40% to the average return on invested capital objective and 20% to the average controllable completion in determining the actual awarded performance shares payable in Common Stock. Specifically, a number of performance shares attributable to each objective according to the weightings assigned by the Compensation Committee was eligible to be earned ranging from 50% (for threshold performance) to 100% (for target performance) to 250% (for maximum performance), with performance in between such levels determined by linear interpolation. If performance was below the threshold level for one or more of the objectives, no performance shares will be eligible to be earned with respect to such objective(s). The actual number of shares of our common stock issued to our Named Executives following the conclusion of a performance period was based on our performance relative to the corporate performance objectives for that performance period. In February 2024, the Compensation Committee determined that the Company had achieved a 150% performance level for these awards, and such awards vested at 150% of target levels on February 10, 2024. In addition, these awards are reported in the “Number of Shares or Units of Stock” column because, as of December 31, 2023, the applicable performance objectives had been met and the vesting of the awards was subject only to the Compensation Committee’s certification of such results. |
Outstanding Equity Awards at Year-End
| (2) Represents the 2022 performance share awards. Under the 2022 performance share awards, the Company’s performance against established performance metrics will be measured against objectives established for each of 2022, 2023 and 2024, with the resulting number of “earned” shares eligible to vest on December 31, 2024, subject |
Outstanding Equity Awards at Year-End
| to continued employment through that date. The Compensation Committee determined that the corporate objectives for purposes of such awards would be adjusted EBITDA, controllable completion, and controllable on-time departures for each of the performance years. For the 2022 performance share awards, the Compensation Committee established threshold, target and maximum performance levels for each of the three corporate performance objectives, with the actual number of performance shares that will vest to be adjusted in proportion to the extent to which the actual results varied from the target levels of performance. The performance shares are allocated 33.3% to each performance measurement year, and then for each years’ performance, 34% to the adjusted EBITDA objective, 33% to the controllable completion objective and 33% to the controllable on-time departures objective in determining the actual awarded performance shares payable in Common Stock. Specifically, a number of performance shares attributable to each objective according to the weightings assigned by the Compensation Committee will be earned ranging from 50% (for threshold performance) to 100% (for target performance) to 250% (for maximum performance), with performance in between such levels determined by linear interpolation. If performance is below the threshold level for one or more of the objectives, no performance shares will be earned with respect to such objective(s). Until the vesting date, the shares underlying the performance shares are not issued and outstanding. Accordingly, the Named Executive is not entitled to vote or receive dividends on the shares underlying his performance shares unless and until those performance shares vest. |
Outstanding Equity Awards at Year-End
In February 2024, the Compensation Committee determined that the Company had achieved a 250% performance level for the portion of these awards eligible to vest based on 2022 performance and a 250% performance level for the portion of these awards eligible to vest based on 2023 performance, which awards remain subject to vesting based on the Named Executives’ continued employment through December 31, 2024. The portion of these awards that was earned based on 2022 and 2023 performance is reported in the “Number of Shares or Units of Stock” column because, as of December 31, 2023, the applicable performance objectives had been met for such portion of the award and the vesting of the awards remained subject only to the Compensation Committee’s certification of such results and continued employment through December 31, 2024. For the portion of these awards tied to 2024 performance, the Company has reported the number and market value of the performance shares subject to these portions of the awards based on target performance in the “Equity Incentive Plan Awards: Number of Shares, Units or Other Rights That Have Not Vested” column.
Outstanding Equity Awards at Year-End
| (3) Represents the 2023 performance share awards. Under the 2023 performance share awards, the Company’s performance against established performance metrics will be measured against objectives established for each of 2023, 2024 and 2025, with the resulting number of “earned” shares eligible to vest on December 31, 2025, subject to continued employment through that date. The Compensation Committee determined that the corporate objectives for purposes of such awards would be free cash flow, adjusted EBITDA, controllable completion, and controllable on-time departures for each of the performance years. For the 2023 performance share awards, the Compensation Committee established threshold, target and maximum performance levels for each of the four corporate performance objectives, with the actual number of performance shares that will vest to be adjusted in proportion to the extent to which the actual results varied from the target levels of performance. The performance shares are allocated 33.3% to each performance measurement year, and then for each years’ performance, 40% to the free cash flow objective, 30% to the adjusted EBITDA objective, 20% to the controllable completion objective and 10% to the controllable on-time departures objective in determining the actual awarded performance shares payable in Common Stock. Specifically, a number of performance shares attributable to each objective according to the weightings assigned by the Compensation Committee will be earned ranging from 50% (for threshold performance) to 100% (for target performance) to 250% (for maximum performance), with performance in between such levels determined by linear interpolation. If performance is below the threshold level for one or more of the objectives, no performance shares will be earned with respect to such objective(s). Until the vesting date, the shares underlying the performance shares are not issued and outstanding. Accordingly, the Named Executive is not entitled to vote or receive dividends on the shares underlying his performance shares unless and until those performance shares vest. |
Outstanding Equity Awards at Year-End
In February 2024, the Compensation Committee determined that the Company had achieved a 250% performance level for the portion of these awards eligible to vest based on 2023 performance, which awards remain subject to vesting based on the Named Executives’ continued employment through December 31, 2025. The portion of these awards that was earned based on 2023 performance is reported in the “Number of Shares or Units of Stock” column because, as of December 31, 2023, the applicable performance objectives had been met for such portion of the award and the vesting of the awards remained subject only to the Compensation Committee’s certification of such results and continued employment through December 31, 2025. For the portion of these awards tied to 2024 and 2025 performance, the Company has reported the number and market value of the performance shares subject to these portions of the awards based on target performance in the “Equity Incentive Plan Awards: Number of Shares, Units or Other Rights That Have Not Vested” column.
Outstanding Equity Awards at Year-End
| (4) Based on market closing price per share of our common stock of $52.20 on December 29, 2023, the last trading day of 2023. |
Option Exercises and Stock Vested
Option Exercises and Stock Vested Stock options exercised, restricted stock units and performance shares that vested for the Named Executives during the year ended December 31, 2023 are outlined below.
Option Exercises and Stock Vested
| | Options Awards | | Stock Awards (1) | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Russell A. Childs | — | $— | 23,954 | $444,945 | | Robert J. Simmons | — | $— | 8,331 | $154,748 | | Wade J. Steel | — | $— | 8,331 | $154,748 | | Greg S. Wooley | — | $— | 2,291 | $42,555 | | Eric J. Woodward | — | $— | 3,020 | $56,096 |
Option Exercises and Stock Vested
| (1) Includes both restricted stock units and performance shares that vested during the year ended December 31, 2023. |
Non-Qualified Deferred Compensation for 2023
Non-Qualified Deferred Compensation for 2023 Pursuant to the SkyWest Deferred Compensation Plan, covered Named Executives may elect prior to the beginning of each calendar year to defer the receipt of base salary and annual performance cash incentives earned for the ensuing calendar year. Amounts deferred are credited to an unfunded liability account maintained by the Company on behalf of the applicable Named Executive, which account is deemed invested in and earns a rate of return based upon certain notational, self-directed investment options offered under the applicable plan. Each Named Executive’s account under the SkyWest Deferred Compensation Plan is also credited with a discretionary employer contribution monthly, whether or not the Named Executive contributes. For 2023 that discretionary employer contribution was 15% of the Named Executive’s salary, annual cash incentive and short-term performance cash incentive. Participant account balances under the SkyWest Deferred Compensation Plan are fully vested and will be paid by the Company to each Named Executive upon retirement or separation from employment, or on other specified dates, in a lump sum form or in installments according to a schedule elected in advance by the Named Executive. The following table provides information regarding the SkyWest Deferred Compensation Plan for the year ended December 31, 2023:
Non-Qualified Deferred Compensation for 2023
| Name | Executive Contributions in Last Year ($)(1) | Registrant Contributions in Last Year ($)(2) | Aggregate Earnings in Last Year ($)(3) | Aggregate Withdrawals/ Distributions in Last Year ($) | Aggregate Balance at Last Year End ($)(4) | | Russell A. Childs | $— | $303,875 | $323,629 | $— | $3,348,978 | | Robert J. Simmons | $3,937 | $187,995 | $109,178 | $— | $1,470,982 | | Wade J. Steel | $— | $177,918 | $195,820 | $— | $1,835,987 | | Greg S. Wooley | $— | $105,918 | $10,681 | $— | $272,125 | | Eric J. Woodward | $— | $96,639 | $106,230 | $— | $1,158,975 |
Non-Qualified Deferred Compensation for 2023
| (1) The amount in this column represents deferral of base salary for 2023 and annual performance cash incentives earned for the ensuing calendar year, which deferred amounts are reported in the Summary Compensation Table above. |
Non-Qualified Deferred Compensation for 2023
| (2) The amounts in this column reflect the amounts of employer contributions credited under the applicable deferred compensation plan for 2023 at the rate of 15% of each Executive’s 2023 base salary, annual cash incentive and short-term performance cash incentive which was paid in 2023. The amounts reported in this column are also included in the amounts reported in the “Other Compensation” column of the Summary Compensation Table appearing above. |
Non-Qualified Deferred Compensation for 2023
| (3) The amounts in this column reflect the notational earnings during 2023 credited to each Executive’s account under the SkyWest Deferred Compensation Plan. These amounts are not reported in the Summary Compensation Table because they are based on market rates determined by reference to mutual funds that are available to participants in the SkyWest 401(k) Plan or otherwise broadly available. |
Non-Qualified Deferred Compensation for 2023
| (4) All Named Executive and Company contributions in prior years to the SkyWest Deferred Compensation Plan have been reported in the Summary Compensation Tables in the company’s previously filed proxy statements, to the extent that an executive was a named executive officer in that fiscal year. These amounts are as follows: Mr. Childs, $303,875 (2023), $119,309 (2022), and $138,548 (2021); Mr. Simmons, $187,995 (2023), $101,309 (2022), and $158,335 (2021); Mr. Steel, $177,918 (2023), $98,585 (2022), and $92,654 (2021); Mr. Wooley, $105,918 (2023), $62,285 (2022), and $50,508 (2021); and Mr. Woodward, $96,639 (2023), $53,112 (2022), and $50,468 (2021). |
Non-Qualified Deferred Compensation for 2023
At the election of the executive, deferred amounts are invested in a selection of third-party investment funds and each executive receives the rates of return under those funds on such deferred amounts.
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control The information below describes and quantifies certain payments or benefits that would be payable under the existing plans and programs of the Company and its subsidiaries if a Named Executive’s employment had terminated on December 31, 2023, or the Company had undergone a change in control on December 31, 2023. These benefits are in addition to benefits generally available to all salaried employees of the Company in connection with a termination of employment, such as distributions from the 401(k) plan and accrued vacation pay. Except as noted below, the Named Executives do not have any other severance benefits, severance agreements or change in control agreements. As discussed above in the Compensation Discussion and Analysis under “Long-Term Incentive Awards” and “One-Time Supplemental 2023 Long-Term Cash Awards,” each of these awards vest on an accelerated basis under certain circumstances, but there is no single trigger accelerated vesting of such awards upon a change in control. The following table shows for each Named Executive the intrinsic value of his unvested performance shares and his unvested 2023 Cash Performance Award, as of December 31, 2023, the vesting or settlement of which would have been accelerated had a change in control of the Company occurred on that date and/or a termination under one of the circumstances identified below had occurred on that date, calculated in the case of performance shares, by multiplying the number of underlying shares by the closing price of the Common Stock on December 29, 2023, the last trading day of 2023 ($52.20 per share).
Potential Payments upon Termination or Change in Control
| Name | Change in Control | Involuntary Termination Following a Change in Control or Death | Involuntary Termination Prior to a Change in Control | | Russell A. Childs | | | | | Performance Share Acceleration (1) | $4,013,606 | $20,999,642 | $15,486,383 | | 2023 Cash Performance Award Acceleration (2) | $— | $2,250,000 | $1,250,000 | | Robert J. Simmons | | | | | Performance Share Acceleration (1) | $1,396,037 | $7,304,137 | $5,386,466 | | 2023 Cash Performance Award Acceleration (2) | $— | $750,000 | $416,667 | | Wade J. Steel | | | | | Performance Share Acceleration (1) | $1,396,037 | $7,304,137 | $5,386,466 | | 2023 Cash Performance Award Acceleration (2) | $— | $750,000 | $416,667 | | Greg S. Wooley | | | | | Performance Share Acceleration (1) | $825,439 | $4,318,663 | $3,184,879 | | 2023 Cash Performance Award Acceleration (2) | $— | $375,000 | $208,333 | | Eric J. Woodward | | | | | Performance Share Acceleration (1) | $479,927 | $2,510,820 | $1,851,638 | | 2023 Cash Performance Award Acceleration (2) | $— | $375,000 | $208,333 |
Potential Payments upon Termination or Change in Control
| (1) Reflects the value of the portion of the performance shares granted in 2022 and 2023 that would vest in each of the three enumerated scenarios (with the values reflected based on actual performance achievement for any completed annual performance periods and at “target” performance levels for any annual performance period that had not yet commenced at December 31, 2023). While 2021 performance shares were no longer subject to performance or service conditions at December 31, 2023, they are included in this table as the settlement of such performance shares would have accelerated (as compared to the regular settlement date in February 2024 upon Compensation Committee certification of final performance results) upon the occurrence of a change in control. The value of these 2021 performance shares are reflected in the other two columns, but no acceleration of the settlement of such awards would occur under a termination under those circumstances (and such awards would vest in February 2024 upon Compensation Committee certification of final performance results). |
Potential Payments upon Termination or Change in Control
| (2) Reflects the portion of the 2023 Long-Term Cash Performance Awards granted in 2023 that would be earned and paid in each of the three enumerated scenarios (with the values reflected based on actual performance achievement for any completed annual performance periods and at “target” performance levels for any annual performance period that had not yet commenced at December 31, 2023). |
Potential Payments upon Termination or Change in Control
Deferred Compensation. If the employment of a Named Executive were terminated on December 31, 2023, the Named Executive would have become entitled to receive the balance in his account under the applicable deferred compensation plan. Distribution would be made in the form of a lump sum or in installments, and in accordance with the distributions schedule elected by the Named Executive under the applicable plan. The 2023 year-end account balances under those plans are shown in the applicable Non-Qualified Deferred Compensation Tables included herein. A Named Executive’s account balance would continue to be credited with notational investment earnings or losses through the date of actual distribution.
Pay Ratio Disclosure
Pay Ratio Disclosure As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information regarding the relationship of the annual total compensation of our employees and the annual total compensation of Russell A. Childs, our CEO. The pay ratio included in this information is a reasonable estimate calculated in a manner that is intended to be consistent with Item 402(u) of Regulation S-K. For 2023, our last completed fiscal year:
Pay Ratio Disclosure
| ● | the median of the annual total compensation of all employees of the Company (other than the CEO) was $47,860; and |
Pay Ratio Disclosure
| ● | the annual total compensation of the CEO, as reported in the Summary Compensation Table included elsewhere in this Proxy Statement, was $5,547,463. |
Pay Ratio Disclosure
Based on this information, for 2023, the ratio of the annual total compensation of Mr. Childs, the CEO, to the median of the total compensation of all employees of the Company, was 116 to 1. Determining the Median Employee. The Company determined that, as of December 31, 2023, the employee population consisted of approximately 13,000 individuals. The employee workforce consists of full and part time employees. For purposes of measuring the compensation of the employees, the Company selected total annual cash compensation for 2023 as the most appropriate measure of compensation, which was consistently applied to all the employees included in the calculation. With respect to the total annual compensation of the “median employee,” the Company identified and calculated the elements of such employee’s compensation for 2023 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in the annual total compensation reflected above.
Pay Versus Performance
Pay Versus Performance Pay Versus Performance Table The table below summarizes the total compensation, compensation actually paid, and other metrics used to evaluate the Named Executives’ compensation to the Company’s performance.
Pay Versus Performance
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year | Summary Compensation Table Total for CEO ($) | Compensation Actually Paid to (Lost by) CEO ($) | Average Summary Compensation Table Total for Non-CEO NEOs ($) | Average Compensation Actually Paid to Non-CEO NEOs ($) | Total Shareholder Return ($) | Peer Group Total Shareholder Return ($) | Net Income (Loss) ($) | Adjusted EBITDA ($) | | 2023 | $5,547,463 | $20,110,631 | $1,951,847 | $5,667,806 | $81.05 | $168.12 | $34,342 | $731,965 | | 2022 | $3,293,971 | $(917,779) | $1,200,340 | $150,606 | $25.63 | $140.02 | $72,953 | $656,419 | | 2021 | $3,258,862 | $5,158,789 | $1,199,495 | $1,698,313 | $61.02 | $165.47 | $111,910 | $785,421 | | 2020 | $3,353,359 | $(204,845) | $1,074,101 | $219,131 | $62.59 | $130.86 | $(8,515) | $694,489 |
Pay Versus Performance
| (b) The amounts in this column represents the total compensation of our chief executive officer (“CEO”), Russell A. Childs, for each of the fiscal years ended December 31, 2020, 2021, 2022 and 2023, as reported in the Summary Compensation Table included in the Executive Compensation section of this Proxy Statement. Mr. Childs was our principal executive officer for each of these years. |
Pay Versus Performance
| (c) The amounts in this column represents the total compensation actually paid to (lost by) the CEO for the years indicated, adjusting the total compensation from column (b) by the amounts in the “Adjustments” table below. |
Pay Versus Performance
| (d) The amounts in this column represents the average total compensation of our Named Executives, excluding the CEO (the “Non-CEO NEOs”), Robert J. Simmons, Wade J. Steel, Greg S. Wooley and Eric J. Woodward, for each of the fiscal years ended December 31, 2020, 2021, 2022 and 2023, as reported in the Summary Compensation Table of the proxy statement filed in the applicable year. |
Pay Versus Performance
| (e) The amounts in this column represents the average total compensation actually paid to the Non-CEO NEOs for the years indicated, adjusting the total compensation from column (d) by the amounts in the “Adjustments” table below. |
Pay Versus Performance
| (f) The total shareholder return shows the cumulative total shareholder return on our common stock through the last day of each fiscal year reflected in the table above, assuming an initial investment of $100.00 on December 31, 2019, with dividends reinvested. |
Pay Versus Performance
| (g) The peer group total shareholder return shows the cumulative total shareholder return of the Nasdaq Stock Market Transportation Index through the last day of each fiscal year reflected in the table above, assuming an initial investment of $100.00 on December 31, 2019, with dividends reinvested. |
Pay Versus Performance
| (h) The amounts in this column represent the Company’s net income (loss) for the indicated years as reported in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. |
Pay Versus Performance
| (i) Although we use numerous financial performance measures for the purpose of evaluating Company performance for the compensation of the Named Executives, we have determined that adjusted EBITDA is the financial performance measure that, in our assessment, represents the most important financial performance measure (that is not otherwise |
Pay Versus Performance
| required to be disclosed in the table) used to link Company performance and Named Executive compensation for the most recently completed fiscal year. The amounts in this column represent the Company’s adjusted EBITDA for the indicated years. (Adjusted EBTIDA is a non-GAAP measure. See Appendix A to this proxy statement on page 90 for a reconciliation of adjusted EBITDA for each of the fiscal years ending December 31, 2020, 2021, 2022 and 2023 to the most directly comparable financial measure for each such year prepared in accordance with GAAP.) |
Pay Versus Performance
Relationship between Compensation Actually Paid and Performance The graphs below compare the compensation actually paid to our CEO and the average of the compensation actually paid to our Non-CEO NEOs, with (i) our cumulative total shareholder return, (ii) our peer group total shareholder return, (iii) our net income, and (iv) our adjusted EBITDA, in each case, for the fiscal years ended December 31, 2020, 2021, 2022 and 2023. Relationship between Compensation Actually Paid and Total Shareholder Return Relationship between Compensation Actually Paid and Net Income Relationship between Compensation Actually Paid and Adjusted EBITDA Adjustments from Total Compensation to Compensation Actually Paid The amounts reported in the “Compensation Actually Paid to CEO” and “Average Compensation Actually Paid to Non-CEO NEOs” columns do not reflect the actual compensation paid to or realized by our CEO or our Non-CEO NEOs during each applicable year. The calculation of compensation actually paid for purposes of this table includes point-in-time fair values of stock awards and these values will fluctuate based on our stock price, various accounting valuation assumptions and projected performance related to our performance awards. See the Summary Compensation Table for certain other compensation of our CEO and our Non-CEO NEOs for each applicable fiscal year and the Option Exercises and Stock Vested table for the value realized by each of them upon the vesting of stock awards during 2023. The table below summarizes the adjustments made to the total compensation as reported in the Summary Compensation Table included in the Executive Compensation section of this Proxy Statement to determine the total actual compensation paid to the CEO and average Non-CEO NEOs for the years indicated as reported in the table above.
Pay Versus Performance
| | 2023 | | | Adjustments To Total Compensation | CEO | Average Non-CEO NEOs | | Deduction for amounts reported under the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for year indicated | $(2,300,000) | $(587,000) | | Increase based on ASC 718 Fair Value of awards granted during year indicated that remain unvested as of the end of the indicated year (1) | 9,656,269 | 2,464,434 | | Increase for awards granted during prior year(s) that were outstanding and unvested as of end of the indicated year, determined based on change in ASC 718 Fair Value from the end of the prior year to the end of the indicated year (1) | 4,431,880 | 1,131,074 | | Increase for awards granted during a prior year that vested during the indicated year, determined based on change in ASC 718 Fair Value from the end of the prior year to the vesting date (2) | 2,775,019 | 707,451 | | Total adjustments | $14,563,168 | $3,715,959 |
Pay Versus Performance
| (1) The fair value of the unvested performance share awards at the end of each fiscal year reflected in the table above is determined using the Company’s estimated achievement of the performance objectives at the end of the indicated year. The Company’s assumption for the each of the performance share grants in the year indicated is shown in the table below. |
Pay Versus Performance
| | Performance Period | | | | | Performance Share Performance Assumptions | 2022 | 2023 | 2024 | 2025 | | 2023 Performance Share Grant | — | 250% | 100% | 100% | | 2022 Performance Share Grant | 250% | 250% | 100% | — |
Pay Versus Performance
| (2) The fair value of the vested awards is determined by multiplying the number of shares vested by the share price on the date of vesting. |
Pay Versus Performance
Financial Performance Measures The Company considers the financial performance measures in the table below to be the most important financial performance measures used to link compensation actually paid to the Named Executives to company performance during for 2023.
Pay Versus Performance
| Financial Performance Measures | | Adjusted EBITDA | | Free Cash Flow | | Adjusted Pre-Tax Earnings |
Pay Versus Performance
Each of these financial performance measures is a non-GAAP measure. Adjusted EBITDA is the Company's operating income under GAAP, excluding: depreciation expense, the impact of the recognition or reversal of deferred revenue and unbilled revenue, non-cash impairment charges, early lease termination charges and other special, non-recurring items. Free cash flow is defined as adjusted EBIDTA less non-aircraft capital expenditures. Adjusted pre-tax earnings (loss) is GAAP pre-tax earnings excluding the impact of the recognition or reversal of deferred revenue and unbilled revenue, non-cash impairment charges and other unusual non-recurring items. See Appendix A to this proxy statement on page 90 for a reconciliation of the Company’s adjusted EBITDA, adjusted pre-tax earnings and free cash flow to the most directly comparable financial measure prepared in accordance with GAAP. For additional details regarding our most important financial performance measures, please see the sections titled “Annual Cash Incentive” and “Long-Term Incentive Awards” in our Compensation Discussion and Analysis elsewhere in this Proxy Statement.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION The Company uses a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve as directors. In setting director compensation, the Company considers the significant amount of time that directors expend in fulfilling their duties to the Company, as well as the skill level required by the Company of its directors.
DIRECTOR COMPENSATION TABLE
DIRECTOR COMPENSATION TABLE The table below summarizes the compensation paid by the Company to its non-employee directors for the year ended December 31, 2023.
DIRECTOR COMPENSATION TABLE
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | | | | | | Change in | | | | | | | | Pension Value | | | | | | | | and Deferred | | | | | Fees Earned or | | | Compensation | All Other | | | | Paid in Cash | Stock Awards | Option Awards | Earnings | Compensation | Total | | Name (1) | ($) | ($)(2) | ($) | ($) | ($) | ($) | | Jerry C. Atkin | $200,000 | $100,000 | — | — | — | $300,000 | | Smita Conjeevaram | $104,000 | $100,000 | — | — | — | $204,000 | | Meredith S. Madden | $104,000 | $100,000 | — | — | — | $204,000 | | Ronald J. Mittelstaedt | $115,000 | $100,000 | — | — | — | $215,000 | | Andrew C. Roberts | $114,000 | $100,000 | — | — | — | $214,000 | | Keith E. Smith | $120,000 | $100,000 | — | — | — | $220,000 | | James L. Welch | $134,000 | $100,000 | — | — | — | $234,000 |
DIRECTOR COMPENSATION TABLE
| (1) Russell A. Childs, the CEO, President and a director of the Company, is not included in the foregoing table as he was an employee of the Company during 2023 and received no financial remuneration for his service as a director. |
DIRECTOR COMPENSATION TABLE
| (2) Represents the aggregate grant date fair market values of awards as computed under ASC Topic 718. Assumptions and methodologies used in the calculation of these amounts are included in footnotes to the Company’s audited financial statements for the year ended December 31, 2023, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. All such shares of our common stock are fully vested and none of our non-employee directors holds, or as of December 31, 2023 held any unvested shares or other equity awards. |