FY06 Executive Bonus Plan Agreement for Company Executives
This agreement outlines the FY06 Executive Bonus Plan for qualifying executives of the Company. Bonuses are calculated based on each executive's base salary and a set bonus percentage, then adjusted according to the Company's pre-tax profit margin and competitive performance compared to peer airlines. The Board has the authority to further adjust bonuses by up to 20% based on individual performance and retains full discretion over the granting and terms of any bonus. The plan applies only if the Company meets minimum profit margin requirements for the fiscal year.
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Exhibit 10.21
EXECUTIVE BONUS PLAN—FY06
So long as the Company achieves a minimum profit margin for FY06, as more fully described below, qualifying executives of the Company will be awarded a bonus in accordance with the following computations:
Base Bonus
The Base Bonus will be equal to the executive's base salary earned during the fiscal year times a Base Bonus Percentage assigned by the Board to his or her position. For FY06, the Base Bonus Percentage for each executive position is as set forth below:
| Title | Bonus Percentage | ||
|---|---|---|---|
| President & CEO | 75 | % | |
| Senior Vice President & Chief Operating Officer | 65 | % | |
| Senior Vice President & Chief Financial Officer | 65 | % | |
| Senior Vice President—In-Flight and Administrative Services | 55 | % | |
| Vice President | 45 | % | |
| Senior Directors | 30 | % | |
| Directors | 20 | % |
Profit Adjustment
The Base Bonus will then be adjusted based on the pre-tax profit margin achieved by the Company for the fiscal year as follows:
PAB = BB × APM/TPM, where
| PAB | = | The executive's Profit Adjusted Bonus | ||
| BB | = | The executive's Base Bonus | ||
| APM | = | The Company's pre-tax profit margin, expressed as a percentage, adjusted for unusual items as approved by the Board, as subject to the Maximum Profit Margin described below | ||
| TPM | = | The Target Pre-Tax Profit Margin as established by the Board for the fiscal year |
provided, no executive will be paid a bonus unless the Company's APM is at least equal to or greater than a Minimum Profit Margin (mPM), and the APM cannot exceed a Maximum Profit Margin (MPM), each as established by the Board for the fiscal year.
For the Company's FY06, the TPM is 8%, the mPM is 2% and the MPM is 12%.
Competitive Performance Adjustment
The Profit Adjusted Bonus for each executive will be further adjusted based on the Company's financial performance in certain categories compared to a peer group of competitors, each as determined by the Board in advance of the fiscal year, and calculated as follows:
CAB = PAB × (PR/50%), where
| CAB | = | Competitive Adjusted Bonus | ||
| PAB | = | Profit Adjusted Bonus | ||
| PR | = | The Company's percentile ranking against the Peer Group in the performance category selected by the Board for the fiscal year |
provided, the PAB will not be adjusted below a minimum performance adjustment factor (mPF) or above a maximum performance adjustment factor (MPF) as established by the Board in advance of the fiscal year.
For FY06, the Peer Group is all major and low-cost airlines not operating under bankruptcy protection at any time during the measurement period; the performance category is Pre-Tax Profit Margin as calculated under GAAP for the 12 month period equal to the Company's fiscal year, excluding extraordinary items; mPF is .5 if the PR is equal to or less than 25%; and MPF is 1.5 if the PR is equal to or greater than 75%.
Discretionary Adjustment
The CAB for any executive officer may be further increased or decreased by the Board in its sole discretion by anywhere from 0% to 20% based on individual performance.
Notwithstanding any provision of this Bonus Plan, the decision to grant a bonus to any employee of the Company and the terms and conditions of such bonus will rest with the Board in its sole discretion.
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