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Exhibit
10.1
ALASKA AIR GROUP,
INC.
2008 PERFORMANCE INCENTIVE
PLAN
The purpose of this Alaska
Air Group, Inc. 2008 Performance Incentive Plan (this “
Plan ”) of Alaska Air Group, Inc., a Delaware
corporation (the “ Corporation ”), is to promote
the success of the Corporation and to increase stockholder value by
providing an additional means through the grant of awards to
attract, motivate, retain and reward selected employees and other
eligible persons.
The Administrator (as such
term is defined in Section 3.1) may grant awards under this
Plan only to those persons that the Administrator determines to be
Eligible Persons. An “Eligible Person ” is any
person who is either: (a) an officer (whether or not a
director) or employee of the Corporation or one of its
Subsidiaries; (b) a director of the Corporation or one of its
Subsidiaries; or (c) an individual consultant or advisor who
renders or has rendered bona fide services (other than services in
connection with the offering or sale of securities of the
Corporation or one of its Subsidiaries in a capital-raising
transaction or as a market maker or promoter of securities of the
Corporation or one of its Subsidiaries) to the Corporation or one
of its Subsidiaries and who is selected to participate in this Plan
by the Administrator; provided, however, that a person who is
otherwise an Eligible Person under clause (c) above may
participate in this Plan only if such participation would not
adversely affect either the Corporation’s eligibility to use
Form S-8 to register under the Securities Act of 1933, as amended
(the “Securities Act ” ), the offering and sale
of shares issuable under this Plan by the Corporation or the
Corporation’s compliance with any other applicable laws. An
Eligible Person who has been granted an award (a
“participant”) may, if otherwise eligible, be granted
additional awards if the Administrator shall so determine. As used
herein, “Subsidiary ” means any corporation or
other entity a majority of whose outstanding voting stock or voting
power is beneficially owned directly or indirectly by the
Corporation; and “Board ” means the Board of
Directors of the Corporation.
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3.1 |
The
Administrator . This Plan shall be administered by and all
awards under this Plan shall be authorized by the Administrator.
The “ Administrator ” means the Board or one or
more committees appointed by the Board or another committee (within
its delegated authority) to administer all or certain aspects of
this Plan. Any such committee shall be comprised solely of one or
more directors or such number of directors as may be required under
applicable law. A committee may delegate some or all of its
authority to another committee so constituted. The Board or a
committee comprised solely of directors may also delegate, to the
extent permitted by Section 157(c) of the Delaware General
Corporation Law and any other applicable law, to one or more
officers of the Corporation, its powers under this Plan (a) to
designate the officers and employees of the Corporation and its
Subsidiaries who will receive grants of awards under this Plan, and
(b) to determine the number of shares subject to, and the
other terms and conditions of,
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such awards. The Board may
delegate different levels of authority to different committees with
administrative and grant authority under this Plan. Unless
otherwise provided in the Bylaws of the Corporation or the
applicable charter of any Administrator: (a) a majority of the
members of the acting Administrator shall constitute a quorum, and
(b) the vote of a majority of the members present assuming the
presence of a quorum or the unanimous written consent of the
members of the Administrator shall constitute action by the acting
Administrator.
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With respect to awards
intended to satisfy the requirements for performance-based
compensation under Section 162(m) of the Internal Revenue Code
of 1986, as amended (the “ Code ”), this Plan
shall be administered by a committee consisting solely of two or
more outside directors (as this requirement is applied under
Section 162(m) of the Code); provided, however, that the
failure to satisfy such requirement shall not affect the validity
of the action of any committee otherwise duly authorized and acting
in the matter. Award grants, and transactions in or involving
awards, intended to be exempt under Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the “ Exchange Act
”), must be duly and timely authorized by the Board or a
committee consisting solely of two or more non-employee directors
(as this requirement is applied under Rule 16b-3 promulgated under
the Exchange Act). To the extent required by any applicable listing
agency, this Plan shall be administered by a committee composed
entirely of independent directors (within the meaning of the
applicable listing agency).
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3.2 |
Powers of the Administrator . Subject to the
express provisions of this Plan, the Administrator is authorized
and empowered to do all things necessary or desirable in connection
with the authorization of awards and the administration of this
Plan (in the case of a committee or delegation to one or more
officers, within the authority delegated to that committee or
person(s)), including, without limitation, the authority
to: |
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(a) |
determine eligibility and, from among those persons determined
to be eligible, the particular Eligible Persons who will receive an
award under this Plan; |
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(b) |
grant awards to Eligible Persons, determine the price at which
securities will be offered or awarded and the number of securities
to be offered or awarded to any of such persons, determine the
other specific terms and conditions of such awards consistent with
the express limits of this Plan, establish the installments (if
any) in which such awards shall become exercisable or shall vest
(which may include, without limitation, performance and/or
time-based schedules), or determine that no delayed exercisability
or vesting is required, establish any applicable performance
targets, and establish the events of termination or reversion of
such awards; |
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(c) |
approve the forms of award agreements (which need not be
identical either as to type of award or among
participants); |
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(d) |
construe and interpret this Plan and any agreements defining
the rights and obligations of the Corporation, its Subsidiaries,
and participants under this Plan, further define the terms used in
this Plan, and prescribe, amend and rescind rules and regulations
relating to the administration of this Plan or the awards granted
under this Plan; |
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(e) |
cancel, modify, or waive the Corporation’s rights with
respect to, or modify, discontinue, suspend, or terminate any or
all outstanding awards, subject to any required consent under
Section 8.6.5; |
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(f) |
accelerate or extend the vesting or exercisability or extend
the term of any or all such outstanding awards (in the case of
options or stock appreciation rights, within the maximum ten-year
term of such awards) in such circumstances as the Administrator may
deem appropriate (including, without limitation, in connection with
a termination of employment or services or other events of a
personal nature) subject to any required consent under
Section 8.6.5; |
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(g) |
adjust the number of shares of Common Stock subject to any
award, adjust the price of any or all outstanding awards or
otherwise change previously imposed terms and conditions, in such
circumstances as the Administrator may deem appropriate, in each
case subject to Sections 4 and 8.6, and provided that in no case
(except due to an adjustment contemplated by Section 7 or any
repricing that may be approved by stockholders) shall such an
adjustment constitute a repricing (by amendment, substitution,
cancellation and regrant, exchange or other means) of the per share
exercise or base price of any option or stock appreciation
right; |
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(h) |
determine the date of grant of an award, which may be a
designated date after but not before the date of the
Administrator’s action (unless otherwise designated by the
Administrator, the date of grant of an award shall be the date upon
which the Administrator took the action granting an
award); |
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(i) |
determine whether, and the extent to which, adjustments are
required pursuant to Section 7 hereof and authorize the
termination, conversion, substitution or succession of awards upon
the occurrence of an event of the type described in
Section 7; |
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(j) |
acquire or settle (subject to Sections 7 and 8.6) rights under
awards in cash, stock of equivalent value, or other consideration,
provided, however, that in no case without stockholder approval
shall the Corporation effect a “repricing” of a stock
option or stock appreciation right granted under this Plan by
purchasing the option or stock appreciation right at a time when
the exercise or base price of the award is greater than the fair
market value of a share of Common Stock; and |
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(k) |
determine the fair market value of the Common Stock or awards
under this Plan from time to time and/or the manner in which such
value will be determined. |
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3.3 |
Binding Determinations . Any action taken by, or
inaction of, the Corporation, any Subsidiary, or the Administrator
relating or pursuant to this Plan and within its authority
hereunder or under applicable law shall be within the absolute
discretion of that entity or body and shall be conclusive and
binding upon all persons. Neither the Board nor any Board
committee, nor any member thereof or person acting at the direction
thereof, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with
this Plan (or any award made under this Plan), and all such persons
shall be entitled to indemnification and reimbursement by the
Corporation in respect of any claim, loss, damage or expense
(including, without limitation, attorneys’ fees) arising or
resulting therefrom to the fullest extent permitted by law and/or
under any directors and officers liability insurance coverage that
may be in effect from time to time. |
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3.4 |
Reliance on Experts . In making any determination
or in taking or not taking any action under this Plan, the
Administrator may obtain and may rely upon the advice of experts,
including employees and professional advisors to the Corporation.
No director, officer or agent of the Corporation or any of its
Subsidiaries shall be liable for any such action or determination
taken or made or omitted in good faith. |
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3.5 |
Delegati on . The
Administrator may delegate ministerial, non-discretionary functions
to individuals who are officers or employees of the Corporation or
any of its Subsidiaries or to third parties. |
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SHARES OF COMMON STOCK SUBJECT TO THE PLAN; SHARE
LIMITS |
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4.1 |
Shares Available . Subject to the provisions of
Section 7.1, the capital stock that may be delivered under
this Plan shall be shares of the Corporation’s authorized but
unissued Common Stock and any shares of its Common Stock held as
treasury shares. For purposes of this Plan, “ Common
Stock ” shall mean the common stock of the Corporation
and such other securities or property as may become the subject of
awards under this Plan, or may become subject to such awards,
pursuant to an adjustment made under Section 7.1. |
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4.2 |
Share Limits . The maximum number of
shares of Common Stock that may be delivered pursuant to awards
granted to Eligible Persons under this Plan (the “ Share
Limit ”) is equal to the sum of the
following: |
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(1) |
[ 2,100,000 ] shares of Common Stock,
plus |
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(2) |
the number of shares of Common Stock available for additional
award grant purposes under the Corporation’s 2004 Long-Term
Incentive Plan (the “ 2004 Plan ”) as of the
date of stockholder approval of this Plan (the “
Stockholder Approval Date ”) and determined
immediately prior to the termination of the authority to grant new
awards under the 2004 Plan as of the Stockholder Approval Date,
plus |
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(3) |
the number of any shares subject to stock options granted under
the 2004 Plan and outstanding on the Stockholder Approval Date
which expire, or for any reason are cancelled or terminated, after
the Stockholder Approval Date without being exercised (including
any shares subject to stock options granted under the
Corporation’s 1999 Long-Term Equity Incentive Plan (the
“ 1999 Plan ”) outstanding on the Stockholder
Approval Date which expire, or for any reason are cancelled or
terminated, after the Stockholder Approval Date and would otherwise
become eligible for award grant purposes under the 2004 Plan in
accordance with the provisions of that plan); |
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(4) |
the number of any shares subject to restricted stock and
restricted stock unit awards granted under the 2004 Plan that are
outstanding and unvested on the Stockholder Approval Date that are
forfeited, terminated, cancelled or otherwise reacquired by the
Corporation without having become vested. |
provided that in no event
shall the Share Limit exceed [
] shares (which is the sum of the [ 2,100,000 ]
shares set forth above, plus the number of shares available under
the 2004 Plan for additional award grant purposes as of the
Effective Date (as such term is defined in Section 8.6.1),
plus the aggregate number of shares subject to awards previously
granted and outstanding under the 2004 Plan and the 1999 Plan as of
the Effective Date).
Shares issued in respect of
any “Full-Value Award” granted under this Plan shall be
counted against the foregoing Share Limit as [1.7] shares for every
one share actually issued in connection with such award. (For
example, if a stock bonus of 100 shares of Common Stock is granted
under this Plan, [170] shares shall be charged against the Share
Limit in connection with that award.) For this purpose, a “
Full-Value Award ” means any award under this Plan
that is not a stock option grant or a stock appreciation
right grant.
The following limits also
apply with respect to awards granted under this Plan:
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(a) |
The maximum number of shares of Common Stock that may be
delivered pursuant to options qualified as incentive stock options
granted under this Plan is [ 2,100,000 ]
shares. |
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(b) |
The maximum number of shares of Common Stock subject to those
options and stock appreciation rights that are granted during any
calendar year to any individual under this Plan is 300,000
shares. |
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(c) |
Additional limits with respect to Performance-Based Awards are
set forth in Section 5.2.3. |
Each of the foregoing
numerical limits is subject to adjustment as contemplated by
Section 4.3, Section 7.1, and
Section 8.10.
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4.3 |
Awards Settled in Cash, Reissue of Awards and
Shares. To the extent that an award granted under this Plan
is settled in cash or a form other than shares of Common Stock, the
shares that would have been delivered had there been no such cash
or other settlement shall not be counted against the shares
available for issuance under this Plan. In the event that shares of
Common Stock are delivered in respect of a dividend equivalent
right granted under this Plan, only the actual number of shares
delivered with respect to the award shall be counted against the
share limits of this Plan. To the extent that shares of Common
Stock are delivered pursuant to the exercise of a stock
appreciation right or stock option granted under this Plan, the
number of underlying shares as to which the exercise related shall
be counted against the applicable share limits under
Section 4.2, as opposed to only counting the shares actually
issued. (For purposes of clarity, if a stock appreciation right
relates to 100,000 shares and is exercised at a time when the
payment due to the participant is 15,000 shares, 100,000 shares
shall be charged against the applicable share limits under
Section 4.2 with respect to such exercise.) Shares that are
subject to or underlie awards granted under this Plan which expire
or for any reason are cancelled or terminated, are forfeited, fail
to vest, or for any other reason are not paid or delivered under
this Plan shall again be available for subsequent awards under this
Plan. Shares that are exchanged by a participant or withheld by the
Corporation as full or partial payment in connection with any award
under this Plan, as well as any shares exchanged by a participant
or withheld by the Corporation or one of its Subsidiaries to
satisfy the tax withholding obligations related to any award, shall
not be available for subsequent awards under this Plan. Refer to
Section 8.10 for application of the foregoing share limits
with respect to assumed awards. The foregoing adjustments to the
share limits of this Plan are subject to any applicable limitations
under Section 162(m) of the Code with respect to awards
intended as performance-based compensation thereunder. |
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4.4 |
Reservation of Shares; No Fractional Shares; Minimum
Issue . The Corporation shall at all times
reserve a number of shares of Common Stock sufficient to cover the
Corporation’s obligations and contingent obligations to
deliver shares with respect to awards then outstanding under this
Plan (exclusive of any dividend equivalent obligations to the
extent the Corporation has the right to settle such rights in
cash). No fractional shares shall be delivered under this Plan. The
Administrator may pay cash in lieu of any fractional shares in
settlements of awards under this Plan. No fewer than 100 shares may
be purchased on exercise of any award (or, in the case of stock
appreciation or purchase rights, no fewer than 100 rights may be
exercised at any one time) unless the total number purchased or
exercised is the total number at the time available for purchase or
exercise under the award. |
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5.1 |
Type and Form of A wards .
The Administrator shall determine the type or types of award(s) to
be made to each selected Eligible Person. Awards may be granted
singly, in combination or in tandem. Awards also may be made in
combination or in tandem with, in replacement of, as alternatives
to, or as the payment form for grants or rights under any other
employee or compensation plan of the Corporation or one of its
Subsidiaries. The types of awards that may be granted under this
Plan are: |
5.1.1 Stock
Options . A stock option is the grant of a right to
purchase a specified number of shares of Common Stock during a
specified period as determined by the Administrator. An option may
be intended as an incentive stock option within the meaning of
Section 422 of the Code (an “ISO”) or a
nonqualified stock option (an option not intended to be an ISO).
The award agreement for an option will indicate if the option is
intended as an ISO; otherwise it will be deemed to be a
nonqualified stock option. The maximum term of each option (ISO or
nonqualified) shall be ten (10) years. The per share exercise
price for each option shall be not less than 100% of the fair
market value of a share of Common Stock on the date of grant of the
option. When an option is exercised, the exercise price for the
shares to be purchased shall be paid in full in cash or such other
method permitted by the Administrator consistent with
Section 5.5.
5.1.2 Additional
Rules Applicable to ISOs. To the extent that the aggregate
fair market value (determined at the time of grant of the
applicable option) of stock with respect to which ISOs first become
exercisable by a participant in any calendar year exceeds $100,000,
taking into account both Common Stock subject to ISOs under this
Plan and stock subject to ISOs under all other plans of the
Corporation or one of its Subsidiaries (or any parent or
predecessor corporation to the extent required by and within the
meaning of Section 422 of the Code and the regulations
promulgated thereunder), such options shall be treated as
nonqualified stock options. In reducing the number of options
treated as ISOs to meet the $100,000 limit, the most recently
granted options shall be reduced first. To the extent a reduction
of simultaneously granted options is necessary to meet the $100,000
limit, the Administrator may, in the manner and to the extent
permitted by law, designate which shares of Common Stock are to be
treated as shares acquired pursuant to the exercise of an ISO. ISOs
may only be granted to employees of the Corporation or one of its
subsidiaries (for this purpose, the term “subsidiary”
is used as defined in Section 424(f) of the Code, which
generally requires an unbroken chain of ownership of at least 50%
of the total combined voting power of all classes of stock of each
subsidiary in the chain beginning with the Corporation and ending
with the subsidiary in question). There shall be imposed in any
award agreement relating to ISOs such other terms and conditions as
from time to time are required in order that the option be an
“incentive stock option” as that term is defined in
Section 422 of the Code. No ISO may be granted to any person
who, at the time the option is granted, owns (or is deemed to own
under Section 424(d) of the Code) shares of outstanding Common
Stock possessing more than 10% of the total combined voting power
of all classes of stock of the Corporation, unless the exercise
price of such option is at least 110% of the fair market value of
the stock subject to the option and such option by its terms is not
exercisable after the expiration of five years from the date such
option is granted.
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5.1.3 Stock
Appreciation Rights. A stock appreciation right or “
SAR ” is a right to receive a payment, in cash and/or
Common Stock, equal to the excess of the fair market value of a
specified number of shares of Common Stock on the date the SAR is
exercised over the “ base price ” of the award,
which base price shall be set forth in the applicable award
agreement and shall be not less than 100% of the fair market value
of a share of Common Stock on the date of grant of the SAR. The
maximum term of a SAR shall be ten (10) years.
5.1.4 Other
Awards. The other types of awards that may be granted under
this Plan include: (a) stock bonuses, restricted stock,
performance stock, stock units, phantom stock, dividend
equivalents, or similar rights to purchase or acquire shares,
whether at a fixed or variable price or ratio related to the Common
Stock, upon the passage of time, the occurrence of one or more
events, or the satisfaction of performance criteria or other
conditions, or any combination thereof; (b) any similar
securities with a value derived from the value of or related to the
Common Stock and/or returns thereon; or (c) cash awards
granted consistent with Section 5.2 below.
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5.2 |
Section 162(m) Performance-Based Awards
. Without limiting the generality of the foregoing, any of
the types of awards listed in Section 5.1.4 above may be, and
options and SARs granted to officers and employees (“
Qualifying Options ” and “ Qualifying
SARS ,” respectively) typically will be, granted as
awards intended to satisfy the requirements for
“performance-based compensation” within the meaning of
Section 162(m) of the Code (“ Performance-Based
Awards ” ). The grant, vesting, exercisability or
payment of Performance-Based Awards may depend (or, in the case of
Qualifying Options or Qualifying SARs, may also depend) on the
degree of achievement of one or more performance goals relative to
a pre-established targeted level or level using one or more of the
Business Criteria set forth below (on an absolute or relative
basis) for the Corporation on a consolidated basis or for one or
more of the Corporation’s subsidiaries, segments, divisions
or business units, or any combination of the foregoing. Any
Qualifying Option or Qualifying SAR shall be subject only to the
requirements of Section 5.2.1 and 5.2.3 in order for such
award to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code. Any
other Performance-Based Award shall be subject to all of the
following provisions of this Section 5.2. |
5.2.1 Class;
Administrator . The eligible class of persons for
Performance-Based Awards under this Section 5.2 shall be
officers and employees of the Corporation or one of its
Subsidiaries. The Administrator approving Performance-Based Awards
or making any certification required pursuant to Section 5.2.4
must be constituted as provided in Section 3.1 for awards that
are intended as performance-based compe
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