ASA Bonus

[JoeMerchant]

The three tiers are "good," "better," and "excellent?" What are the delineation points between the three tiers? And how do these three tiers translate to a dollar amount?

D0.....65%, 60%, and 53%.
A14....86%, 82%, and 75%.
Comp..99.4%, 99%, and 98%
Customer Experience 3.85%, 3.81%, and 3.65%.

We hit the top on everything but customer experience....

My quarterly bonus was a little over a thousand bucks....put it in the 401k and got the company match on it.

In addition, Skywest grants us restricted stock every year. That isn't in the contract. It has a 3 year vesting period.

 

[Nevets]

D0.....65%, 60%, and 53%.
A14....86%, 82%, and 75%.
Comp..99.4%, 99%, and 98%
Customer Experience 3.85%, 3.81%, and 3.65%.

We hit the top on everything but customer experience....

My quarterly bonus was a little over a thousand bucks....put it in the 401k and it got the company match on it.

In addition, Skywest grants us restricted stock every year. That isn't in the contract. It has a 3 year vesting period.

And each tier is worth $25 for a possible total of $300, right? I understand how your profit sharing part works. Now, on the stock grants, how exactly are the stocks awarded? I think that longevity has something to do with it, right?

 

[Nevets]

The standards for the three levels are variable in relation to the current goals for the quarter. If you meet a criteria, that is worth $25, if you exceed a higher criteria it is $50 and if you exceed by a wider margin, you get $75 for that criteria. One of the four areas has two subparts worth $12.50/$25.00/$37.50 each. The standards are not unachievable but the $300 max is a real challenge.

Thanks, so each quarter have different benchmarks to achieve the bonus?

 

[Andy Neill]

Thanks, so each quarter have different benchmarks to achieve the bonus?

Yes, the quarterly benchmarks can change. When I was there, $225 was a typical performance bonus.

 

[XPOO]

Nevets,

In case you were wondering, All SkyWest employees with at least one year of service as of June 30, 2008 received:

$125 - Dept. Zero of 67.6%
$25 - Arr. 14 of 81.6%
$125 - Completion of 99.5%
$125 - Bags at 8.4/1000
$25 - PAX Experience of 86.6%

All SkyWest employees with at least two years of service received an additional bonus based on their quarterly earnings multiplied by OO 2Q Profit Margin, which was 4.02%

 

[Andy Neill]

Nevets,

In case you were wondering, All SkyWest employees with at least one year of service as of June 30, 2008 received:

$125 - Dept. Zero of 67.6%
$25 - Arr. 14 of 81.6%
$125 - Completion of 99.5%
$125 - Bags at 8.4/1000
$25 - PAX Experience of 86.6%

All SkyWest employees with at least two years of service received an additional bonus based on their quarterly earnings multiplied by OO 2Q Profit Margin, which was 4.02%

So the performance reward can now go above $300 per quarter? The figures you gave add up to $425. What is the max? $500?

 

[XPOO]

So the performance reward can now go above $300 per quarter? The figures you gave add up to $425. What is the max? $500?

Yes, max became $500 this year.

 

[Andy Neill]

Yes, max became $500 this year.

Way cool!

 

[Nevets]

Nevets,

In case you were wondering, All SkyWest employees with at least one year of service as of June 30, 2008 received:

$125 - Dept. Zero of 67.6%
$25 - Arr. 14 of 81.6%
$125 - Completion of 99.5%
$125 - Bags at 8.4/1000
$25 - PAX Experience of 86.6%

All SkyWest employees with at least two years of service received an additional bonus based on their quarterly earnings multiplied by OO 2Q Profit Margin, which was 4.02%

Thanks for that. Do you know how the stock grants are calculated?

 

[McNugent]

So the performance reward can now go above $300 per quarter? The figures you gave add up to $425. What is the max? $500?

I'm an FO and got $360 this time so I'm sure the captains must be making up close to the max.

 

[Long Time Gone]

I got close to $800 on the ASA side. All of it into the 401K. Don't forget the match on top of it.

 

[XPOO]

Thanks for that. Do you know how the stock grants are calculated?

All employees with over three years of service as of January 31st, 2008 received a stock grant in February 2008. The number of shares granted has historically been determined by a formula weighted 80% on earnings and 20% on longevity.

 

[XPOO]

I got close to $800 on the ASA side. All of it into the 401K. Don't forget the match on top of it.

Almost a grand here. But I blew it all already.

 

[Long Time Gone]

Almost a grand here. But I blew it all already.

Bummer, you changed your response before I could quote you. I was going to tell you that I haven't called you a name in at least a month, so don't start yourself.

Anyway, my pre-tax was $771.54, with $712.51 of it going into my 401K after the petty taxes (SSI and Medicare).

 

[Nevets]

All employees with over three years of service as of January 31st, 2008 received a stock grant in February 2008. The number of shares granted has historically been determined by a formula weighted 80% on earnings and 20% on longevity.

80% on the company's earnings or the employee's earnings?

So that would be 80% times the earnings plus 20% of X years of longevity?

 

[XPOO]

80% on the company's earnings or the employee's earnings?

So that would be 80% times the earnings plus 20% of X years of longevity?

No, no, no.

Let's say SkyWest has 100,000 shares total to grant to its employees. Let's also say that of the 11,000 employees only 5,000 are eligible because they have been employed for more than three years. This means that SkyWest has 100,000 shares to divy out to 5,000 employees. Giving each employee 20 shares would not be fair to those who make more and/or have been here much longer than three years. So they are divied out on a sliding scale based 80% on how much you made the previous year and 20% on longevity. I hope that makes more sense.

 

[XPOO]

Bummer, you changed your response before I could quote you. I was going to tell you that I haven't called you a name in at least a month, so don't start yourself.

Anyway, my pre-tax was $771.54, with $712.51 of it going into my 401K after the petty taxes (SSI and Medicare).

Yeah, I almost fell off the wagon. I had a moment of clarity shortly thereafter and came to my senses. I probably should have put mine into 401(k), but I don't believe I will live long enough to enjoy having a retirement.

 

[Nevets]

No, no, no.

Let's say SkyWest has 100,000 shares total to grant to its employees. Let's also say that of the 11,000 employees only 5,000 are eligible because they have been employed for more than three years. This means that SkyWest has 100,000 shares to divy out to 5,000 employees. Giving each employee 20 shares would not be fair to those who make more and/or have been here much longer than three years. So they are divied out on a sliding scale based 80% on how much you made the previous year and 20% on longevity. I hope that makes more sense.

Yeah, that makes a little more sense. So for example, if an three year employee made $50k last year, how much would they get in your example compared to a ten year employee that made $100k?

 

[Andy Neill]

Yeah, that makes a little more sense. So for example, if an three year employee made $50k last year, how much would they get in your example compared to a ten year employee that made $100k?

Nevets, let me begin by saying I don't know the contents of the black box that spits out stock grants. I'll also say that I appreciate you being open to good ideas from a good company.

Since the purpose of your inquiry is to establish a similar program at XJT, why don't you derive a sensible model. For instance, if we go from the premise that the stock grants are based primarily on each employee's earnings and secondarily on each employees longevity, you could establish a point system as follows:

Points = [0.80 * earnings] * [0.20 * YOS]
Add up all the points and divide by the total of all employees times the number of shares to be awarded would be the number of shares each employee would get.

Using your figures, that would be
[0.8 * 50,000] * [0.2 *3] = 24000 points for emp A
[0.8 * 100,000] * [0.2 * 10] = 160,000 points for emp B
If emp B has 1 tenth of 1% of all the points to be awarded and there are 50,000 shares to be distributed, then emp B will get 50 shares and emp A will get 7.5 shares.

That's one system and you may find another more universally appealing to your group.

 

[Nevets]

Nevets, let me begin by saying I don't know the contents of the black box that spits out stock grants. I'll also say that I appreciate you being open to good ideas from a good company.

Since the purpose of your inquiry is to establish a similar program at XJT, why don't you derive a sensible model. For instance, if we go from the premise that the stock grants are based primarily on each employee's earnings and secondarily on each employees longevity, you could establish a point system as follows:

Points = [0.80 * earnings] * [0.20 * YOS]
Add up all the points and divide by the total of all employees times the number of shares to be awarded would be the number of shares each employee would get.

Using your figures, that would be
[0.8 * 50,000] * [0.2 *3] = 24000 points for emp A
[0.8 * 100,000] * [0.2 * 10] = 160,000 points for emp B
If emp B has 1 tenth of 1% of all the points to be awarded and there are 50,000 shares to be distributed, then emp B will get 50 shares and emp A will get 7.5 shares.

That's one system and you may find another more universally appealing to your group.

Thanks for your input. Yeah, we are looking at other ways of income in the future and that is why I ask. I am always open to any ideas especially from those companies that have been financially successful as SKW has been for many years.

But its not that I don't have ideas of how to go about doing it but more about how does everyone else do it. Then take the best of all ideas and put them together in some sort of hybrid.

That is the only reason I ask.