<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
SkyWest, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
SkyWest, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
SKYWEST, INC.
------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held August 8, 1995
---------------------------------
To the Shareholders of
SKYWEST, INC.:
The Annual Meeting of Shareholders of SkyWest, Inc. will be held at the
SkyWest Corporate Offices, 444 South River Road, St. George, Utah 84790, on
Tuesday, August 8, 1995, at 11:00 a.m. The purpose of the Annual Meeting is to
consider and vote upon the following matters, as more fully described in the
accompanying Proxy Statement:
(1) To elect nine members of the Board of Directors, each to serve
until the next annual meeting of shareholders and until their
respective successors have been duly elected and qualified.
(2) To approve the SkyWest AllShare Incentive Stock Option Plan.
(3) To approve the SkyWest, Inc. 1995 Employee Stock Purchase Plan.
(4) To ratify the appointment of Arthur Andersen LLP as independent
auditors for the fiscal year ending March 31, 1996.
(5) Such other matters as may properly come before the meeting.
The Board of Directors has fixed the close of business on June 30, 1995
as the record date for the determination of shareholders entitled to receive
notice of and to vote at the Annual Meeting or any adjournment thereof. The
Board of Directors intends to nominate the following as directors:
Jerry C. Atkin Ian M. Cumming
J. Ralph Atkin Henry J. Eyring
Sidney J. Atkin Steven F. Udvar-Hazy
W. Martin Braham Hyrum W. Smith
Mervyn K. Cox
BY ORDER OF THE BOARD OF DIRECTORS
Eric D. Christensen
DATED: July 7, 1995 Corporate Secretary
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, TO
ASSURE THAT YOUR SHARES WILL BE REPRESENTED, PLEASE DATE, FILL IN, SIGN AND MAIL
THE ENCLOSED PROXY IN THE ACCOMPANYING POSTAGE PAID ENVELOPE. YOUR PROXY WILL
NOT BE USED IF YOU ARE PRESENT AT THE ANNUAL MEETING AND DESIRE TO VOTE YOUR
SHARES PERSONALLY.
<PAGE> 3
SKYWEST, INC.
444 South River Road
St. George, Utah 84790
---------------------
PROXY STATEMENT
---------------------
FOR ANNUAL MEETING OF SHAREHOLDERS
AUGUST 8, 1995
SOLICITATION OF PROXIES
This Proxy Statement is being furnished to the shareholders of SkyWest,
Inc., a Utah corporation (the "Company"), in connection with the solicitation by
the Board of Directors of the Company of proxies from holders of outstanding
shares of the Company's Common Stock, no par value (the "Common Stock"), for use
at the Annual Meeting of Shareholders of the Company to be held Tuesday, August
8, 1995, and at any adjournment or postponement thereof (the "Annual Meeting").
This Proxy Statement, the Notice of Annual Meeting of Shareholders and the
accompanying form of proxy are first being mailed to shareholders of the Company
on or about July 7, 1995.
The Company will bear all costs and expenses relating to the
solicitation of proxies, including the costs of preparing, printing and mailing
to shareholders this Proxy Statement and accompanying material. In addition to
the solicitation of proxies by use of the mails, the directors, officers and
employees of the Company, without receiving additional compensation therefor,
may solicit proxies personally or by telephone or telegram. Arrangements will be
made with brokerage firms and other custodians, nominees and fiduciaries for the
forwarding of solicitation materials to the beneficial owners of the shares of
Common Stock held by such persons, and the Company will reimburse such brokerage
firms, custodians, nominees and fiduciaries for reasonable out-of-pocket
expenses incurred by them in connection therewith.
VOTING
The Board of Directors has fixed the close of business on June 30, 1995
as the record date (the "Record Date") for determination of shareholders
entitled to notice of and to vote at the Annual Meeting. As of the Record Date,
there were issued and outstanding 10,322,132 shares of Common Stock. The holders
of record of the shares of Common Stock on the Record Date entitled to be voted
at the Annual Meeting are entitled to cast one vote per share on each matter
submitted to a vote at the Annual Meeting.
PROXIES
Shares of the Common Stock which are entitled to be voted at the Annual
Meeting and which are represented by properly executed proxies will be voted in
accordance with the instructions indicated on such proxies. If no instructions
are indicated, such shares will be voted FOR the election of each of the nine
director nominees; FOR the approval of the SkyWest AllShare Incentive Stock
Option Plan; FOR the approval of the SkyWest, Inc. 1995 Employee Stock Purchase
Plan; FOR the ratification of the appointment by the Board of Directors of
Arthur Andersen LLP, to be the independent auditor of the Company for the fiscal
year ending March 31, 1996; and, in the discretion of the proxy holder, as to
any other matters which may properly come before the Annual Meeting. A
shareholder who has executed and returned a proxy may revoke it at any time
prior to its exercise at the Annual Meeting by executing and returning a proxy
bearing a later date, by filing with the Secretary of the Company, at the
address set forth above, a written notice of revocation bearing a later date
than the proxy being revoked, or by voting the Common Stock covered thereby in
person at the Annual Meeting.
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<PAGE> 4
VOTE REQUIRED
The presence of a majority of the issued and outstanding shares of
Common Stock entitled to vote, represented in person or by proxy, is required
for a quorum at the Annual Meeting. Holders of shares of Common Stock are
entitled to one vote at the Annual Meeting for each share of Common Stock held
of record at the Record Date. In the election of directors, shareholders will
not be allowed to cumulate their votes. The nine nominees receiving the highest
number of votes will be elected. Accordingly, abstentions and broker non-votes
will not affect the outcome of the election. The approval of the SkyWest
AllShare Incentive Stock Option Plan and the SkyWest, Inc. 1995 Employee Stock
Purchase Plan, the ratification of the selection of an independent auditor, and
any other matter presented for approval by the shareholders will be approved, in
accordance with Utah law, if the votes cast in favor of a matter exceed the
votes cast opposing such matter. As a result, abstentions and broker non-votes
will not affect the outcome of any matter.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
Following the Annual Meeting, the Board of Directors shall consist of
nine directors all of whom will be elected at the Annual Meeting. Such directors
will serve until the next annual meeting of shareholders and until their
successors are duly elected and qualified. Shareholders do not have cumulative
voting rights in the election of directors (each shareholder is entitled to vote
one vote for each share held for each director). Unless authority is withheld,
it is the intention of the persons named in the enclosed form of proxy to vote
"FOR" the election as directors of the persons identified as nominees for
directors in the table below. If the candidacy of any one or more of such
nominees should, for any reason, be withdrawn, the proxies will be voted "FOR"
such other person or persons, if any, as may be designated by the Board of
Directors. The Board has no reason to believe that any nominee herein named will
be unable or unwilling to serve.
NOMINEES FOR DIRECTORS AND DIRECTORS
The following table sets forth information about each nominee for
election as a director and each person presently serving as a director who has
not been nominated for reelection:
NOMINEES.
JERRY C. ATKIN, 46, joined the Company in July 1974 as Director of
Finance. In 1975, he assumed the office of President and Chief Executive
Officer. He was elected Chairman in 1991. Prior to employment by the Company,
Mr. Atkin was employed by a public accounting firm, and is a certified public
accountant. Mr. Atkin is a board member of Blue Cross Blue Shield of Utah, a
medical insurance company. He is also a member of the Board of Zions
Bancorporation, a Utah bank holding company. Mr. Atkin has served as a director
of the Company since 1974.
J. RALPH ATKIN, 52, was the founder of the Company and served as
President and Chief Executive Officer from 1972 to 1975. He served as Chairman
of the Board of Directors from 1972 to 1991. From 1984 to 1988, he served as
Senior Vice President of the Company. From 1987 to March 1991, he was President
and director of Airfax Express, Inc., a Utah trucking company. In May, 1991, a
petition under the federal bankruptcy laws was filed by Airfax Express, Inc.
From March 1991 to January 1993, he was Director of Business and Economic
Development for the State of Utah. Mr. Atkin is currently the Chief Executive
Officer of EuroSky, a regional airline in Austria. Mr. Atkin is also a director
of Fairchild Aircraft Incorporated and Fairchild Aircraft Services Incorporated.
Mr. Atkin has served as a director of the Company since 1972.
SIDNEY J. ATKIN, 60, was elected Vice Chairman in 1988. For more than
the past five years, Mr. Atkin has been President of Sugarloaf Corp., a Utah
corporation involved in the operation of restaurants and motels. Mr. Atkin is a
member of the Dixie College Board of Trustees. Mr. Atkin has served as a
director of the Company since 1973.
W. MARTIN BRAHAM, 50, was appointed to the Company's Board of Directors
in 1994. Mr. Braham is Delta Air Lines Inc.'s designee to the Company's Board of
Directors which is provided for in an agreement with Delta Air Lines Inc.
("Delta"). Mr. Braham has been Senior Vice President--Airport Customer Service
for Delta since March 1993. He has served in various other capacities at Delta
since 1969, including Assistant Vice President--Stations, Assistant Vice
President--International Airport Customer Service and Vice President--Airport
Customer Service.
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<PAGE> 5
MERVYN K. COX, 58, has been for more than the past five years an
orthodontist engaged in private practice, and has also engaged in the
development and management of real estate. Mr. Cox has served as a director of
the Company since 1974.
IAN M. CUMMING, 54, has been since 1978 Chairman of Leucadia National
Corporation, a publicly held, diversified financial services holding company
principally engaged in personal and commercial lines of property and casualty
insurance, life and health insurance, banking and lending, manufacturing and the
trading stamps business. He has served as a director of the Company since 1986.
Mr. Cumming is also a director of MK Gold Company and Allcity Insurance Company,
both of which are public companies.
HENRY J. EYRING, 31, has been employed since 1989 by Monitor Company, a
strategy consulting firm based in Cambridge, Massachusetts, and is currently
manager of corporate and country relationships. He has also worked in the firm's
corporate consulting practice and in the firm's "Office of the Chairman,"
managing internal operations.
STEVEN F. UDVAR-HAZY, 49, is currently President, Director and Chief
Executive Officer of International Lease Finance Corporation, a wholly-owned
subsidiary of American International Group, Inc., which leases and finances
commercial jet aircraft worldwide. Mr. Udvar-Hazy has been engaged in aircraft
leasing and finance for 31 years. He has served as a director of the Company
since 1986.
HYRUM W. SMITH, 51, is co-founder, Chief Executive Officer and Chairman
of Franklin Quest, a public company in business to help people gain control over
their lives and increase their productivity. Mr. Smith has served as the Chief
Executive Officer of Franklin Quest since April 1991. Mr. Smith was Senior Vice
President of Franklin Quest from December 1984 to April 1991.
DIRECTORS.
BRENT V. ATKIN, 43, is an Officer, Director and General Manager of
Rudger C. Atkin, Inc., a corporate cattle ranch located in southern Utah and
northern Arizona, positions he has held for more than the past five years. Mr.
Atkin has served as a director of the Company since 1980 and his current term
ends in 1995.
LEE C. ATKIN, 62, is involved in the management of real estate,
farming, recreational and ranching investments. Mr. Atkin was a dentist in St.
George, Utah for 32 years prior to his retirement in 1992. He has served as a
director of the Company since 1975 and his current term ends in 1995.
DELL C. STOUT, 61, has been President of Stout Home Furnishings, a
Hurricane, Utah company engaged in the sale of home furnishings and appliances,
for more than the past five years. He is also the President and Chief Executive
Officer of Stout Investments, a land development company. Mr. Stout has served
as a director of the Company since 1975 and his current term ends in 1995.
MEETINGS AND COMMITTEES. During the fiscal year ended March 31, 1995
("fiscal 1995"), the Board of Directors held five meetings. All members attended
at least 75% of all board meetings and applicable committee meetings except for
Ian M. Cumming. The Board of Directors has a Compensation Committee that
approves board fees and the Company's officers' compensation, except
compensation for the CEO which is approved by the Board of Directors upon
recommendation of the Compensation Committee. The Compensation Committee also
recommends for approval by the Board of Directors the amount of contributions to
the employees' retirement plan. The members of the Compensation Committee are J.
Ralph Atkin, Brent V. Atkin, Steven F. Udvar-Hazy and W. Martin Braham. The
Compensation Committee met three times during fiscal 1995. The Board of
Directors has an Audit Committee that reviews the auditor reports and
recommendations and interviews and makes recommendations to the Board of
Directors for the selection of the Company's independent auditors. The members
of the Audit Committee are Sidney J. Atkin, Dell C. Stout, Mervyn K. Cox and Lee
C. Atkin. The Audit Committee met twice during fiscal 1995. The Board of
Directors has a Nominating Committee which recommends to the Board of Directors
nominees for election. The Nominating Committee will consider nominees
recommended by shareholders if submitted in writing to the Committee. The
members of the Nominating Committee are Sidney J. Atkin, Mervyn K. Cox, Ian M.
Cumming and W. Martin Braham. The Nominating Committee met three times during
fiscal 1995.
RELATIONSHIPS. J. Ralph Atkin, Sidney J. Atkin and Lee C. Atkin are
brothers. Jerry C. Atkin and Brent V. Atkin are the nephews of J. Ralph Atkin,
Sidney J. Atkin and Lee C. Atkin.
3
<PAGE> 6
EXECUTIVE OFFICERS
In addition to Jerry C. Atkin, certain information is furnished with
respect to the following executive officers of the Company:
RON B. REBER, 41, joined the Company in 1977 and has served in various
capacities, including Vice President--Sales and Market Planning for SkyWest
Airlines, Inc. and Senior Vice President-Customer Service and Marketing. He is
currently Executive Vice President and Chief Operating Officer with general
responsibility for customer service agents, market development, flight
schedules, pricing, flying operations and maintenance. He also serves as
President of National Parks Transportation, Inc., a wholly-owned subsidiary of
the Company.
BRADFORD R. RICH, 34, joined the Company in 1987 as Corporate
Controller. He was previously employed with a public accounting firm and is a
certified public accountant. He is currently Executive Vice President, Chief
Financial Officer and Treasurer, with responsibility for financial accounting,
treasury, public reporting, investor relations, internal audit and management
information systems.
CLIFFORD N. LANGNESS, 49, has served as President of Scenic Airlines,
Inc., a wholly-owned subsidiary of the Company, since April 1992. Mr. Langness
was the Vice President and General Manager of Scenic Airlines, Inc. from April
1985 until April 1992.
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table provides certain summary information concerning the
compensation paid or accrued by the Company and its subsidiaries, to or on
behalf of the Company's Chief Executive Officer and each of the other executive
officers whose annual salary and bonus exceeded $100,000 (collectively the
"Named Executive Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM
COMPENSATION
---------------------------------------------- ------------
OTHER ANNUAL OPTIONS ALL OTHER
NAME AND POSITION YEAR SALARY BONUS COMPENSATION(1) GRANTED COMPENSATION(2)
- ------------------------- ---- -------- -------- --------------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Jerry C. Atkin F95 $185,999 $127,000 $36,753 25,000 6,260
Chairman, President and F94 170,036 280,000 24,411 25,000 2,844
Chief Executive Officer F93 168,157 128,716 15,097 21,750 3,862
Ron B. Reber F95 88,357 50,000 15,599 8,000 2,695
Executive Vice President F94 79,828 110,000 10,538 7,000 1,371
and Chief Operating Officer F93 80,617 48,859 7,178 7,500 1,453
Bradford R. Rich F95 88,822 50,000 15,882 8,000 2,777
Executive Vice President and F94 82,360 110,000 10,858 7,000 1,367
Chief Financial Officer F93 77,290 51,859 6,858 7,500 990
Clifford N. Langness F95 100,915 18,638 9,839 8,000 2,801
President of Scenic Airlines F94 99,558 31,339 10,951 7,000 1,488
F93 73,529 38,986 7,791 7,500 1,121
</TABLE>
- ---------------------------
(1) Consists of deferred compensation payments made pursuant to the Executive
Deferred Compensation Plan (the "Plan"). See "Report of the Compensation
Committee--Executive Deferred Compensation Plan."
(2) Consists of the Company's contributions to the Company's 401(k) plan that
were allocated to the accounts of the Named Executive Officers in the 1995
fiscal year.
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<PAGE> 7
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth individual grants of stock options made
to the Named Executive Officers during the fiscal year ended March 31, 1995.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
PERCENT OF TOTAL STOCK PRICE APPRECIATION FOR
OPTIONS GRANTED OPTION TERM
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION -----------------------------
NAME GRANTED(1) FISCAL YEAR PRICE DATE 5% 10%
- ------------------------- ---------- ---------------- -------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Jerry C. Atkin........... 25,000 12.6% $33.25 03/31/00 $282,705 $641,360
Ron B. Reber............. 8,000 4.0 33.25 03/31/00 90,465 205,235
Bradford R. Rich......... 8,000 4.0 33.25 03/31/00 90,465 205,235
Clifford N. Langness..... 8,000 4.0 33.25 03/31/00 90,465 205,235
</TABLE>
- ---------------------------
(1) All options granted are Incentive Stock Options granted under the Company's
Amended and Combined Incentive and Nonstatutory Stock Option Plan. All of
the options first become exercisable on April 1, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES
The following table sets forth the aggregate value of unexercised
options to acquire shares of the Common Stock held by the Named Executive
Officers on March 31, 1995 and the value realized upon the exercise of options
during the fiscal year ended March 31, 1995.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT FY-END(#) FY-END($)(3)
------------------- -----------------------
SHARES ACQUIRED VALUE EXERCISABLE(2)/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE
- --------------------------- --------------- -------------- ------------------- -----------------------
<S> <C> <C> <C> <C>
Jerry C. Atkin............. 0 $ 0 64,750/25,000 $402,716/$0
Ron B. Reber............... 0 0 14,500/8,000 $70,313/$0
Bradford R. Rich........... 0 0 14,500/8,000 $70,313/$0
Clifford N. Langness....... 13,500 428,520 7,000/8,000 $0/$0
</TABLE>
- ---------------------------
(1) Calculated based on the difference between the exercise price and the value
of the shares as of the date acquired.
(2) Includes options exercisable within 60 days of the end of the Company's
fiscal year.
(3) Calculated based on the difference between the exercise price and the price
of a share of the Company's Common Stock on March 31, 1995. The price of
the Common Stock of the Company on March 31, 1995 was $14.38 as reported on
the NASDAQ Stock Market/National Market System.
COMPENSATION COMMITTEE INTERLOCKS
J. Ralph Atkin served as a Chairman of the Compensation Committee
during the fiscal year ended March 31, 1995. Mr. Atkin was the founder of the
Company and served as President and Chief Executive Officer from 1972 to 1975.
Mr. Atkin also served as Senior Vice President of the Company from 1984 to
1988.
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<PAGE> 8
DIRECTOR'S COMPENSATION
Beginning in August 1995, all directors, except Jerry C. Atkin, will
receive a fee of $1,000 for each Board meeting and $500 for each committee
meeting and $16,000 as an annual retainer. Committee chairmen also will receive
an additional $500 for each meeting.
REPORT OF THE COMPENSATION COMMITTEE
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that incorporate by reference, in
whole or in part, subsequent filings including, without limitation, this Proxy
Statement, the following Report of the Compensation Committee and the
Performance Graph set forth on page 9 hereof shall not be deemed to be
incorporated by reference into any such filings.
The Securities and Exchange Commission's ("SEC") rules addressing
disclosure of executive compensation in proxy statements require the
Compensation Committee to include in this Proxy Statement a report from the
Compensation Committee addressing, with respect to the most recently completed
fiscal year, (a) the Company's policies regarding executive compensation
generally, (b) the factors and criteria considered in setting the compensation
of the Company's Chief Executive Officer, Jerry C. Atkin, and (c) any
relationship between such compensation and the Company's performance.
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors, which is responsible for
establishing the policies governing the Company's compensation program and the
amount of compensation for each of the Company's executive officers. The
Compensation Committee is currently composed of the Company's four (4)
independent directors and has oversight responsibility for all executive
compensation and executive benefit programs of the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors
regularly reviews and approves decisions with respect to compensation of the
Company's officers and other employees. The Board of Directors has appointed
four (4) of its independent, nonemployee members to serve on the Compensation
Committee and has empowered the committee to:
- Recommend to the Board compensation for the CEO, including under
the incentive/bonus plan;
- Approve all other officers' compensation;
- Approve Company-wide and officer incentive/bonus plans;
- Recommend to the Board profit sharing/retirement contributions;
- Review Company compensation packages as a whole;
- Administer the Company's Amended and Combined Incentive and
Nonstatutory Stock Option Plan;
- Administer the Company's AllShare Incentive Stock Option Plan;
and
- Administer the Company's 1995 Employee Stock Purchase Plan.
EXECUTIVE COMPENSATION POLICIES.
The Company's executive compensation policies, as endorsed by the
Compensation Committee, have been designed to provide a balanced compensation
program that will assist the Company in its efforts to attract, motivate and
retain talented executives who the Compensation Committee and senior management
believe are important to the Company's long-term financial success. The Company
seeks to accomplish this goal by providing a compensation program that, in the
judgment of the Compensation Committee and senior management:
- is competitive with compensation programs offered by the
Company's primary competitors and by other comparable
companies;
- integrates certain compensation elements with the Company's
financial performance by linking an incentive plan to the
Company's return on equity as well as other corporate and
operational goals; and
- links certain compensation elements with an opportunity to own
the Company's Common Stock so that its executives will have a
personal interest in the increase in share value and, as a
result, have common interests with the Company's shareholders.
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<PAGE> 9
The Compensation Committee believes that each of these factors is
integrally important to the long-term financial success of the Company. In
designing and implementing the individual components of the Company's executive
compensation program, the Company seeks a balance among these factors that will
vary depending on the level of policy-making and operational responsibility of
the executive. The Compensation Committee and senior management annually review
the structure of the Company's executive compensation program to ensure that
these goals are being accomplished.
EXECUTIVE COMPENSATION PROGRAM.
The components of the Company's current executive compensation program
include salary and annual cash incentive bonus awards, and long-term incentive
plans in the form of stock option plans and deferred compensation plans.
SALARIES AND CASH INCENTIVE BONUS AWARDS.
The Compensation Committee establishes the salaries and bonus awards
for all officers, except the CEO, whose salary and annual bonus award it
recommends for approval by the full Board. The salary and bonus award levels are
established and adjusted annually based on factors such as: competitive trends,
annual inflation rates, overall financial performance of the Company and
individual performance of the executives. The base salary for the executive
officers is generally fixed below industry average levels with the opportunity
to receive annual bonuses that could make total compensation comparable. The
Company's annual bonus awards to its executive officers, some of which are
reflected in the Summary Compensation Table, are based on the financial
performance of the Company together with subjective and objective performance
criteria.
At the beginning of each fiscal year, the Compensation Committee
establishes cash bonus award guidelines which are based on the Company's
performance. For fiscal 1995, the Company adopted an incentive plan for all
officers, including executive officers, pursuant to which the amount of the
bonus was based upon the Company achieving certain levels of performance as
measured by return on equity. For example, the Compensation Committee
established a bonus range of $20,000 to $76,000 for each Executive Vice
President, with the actual amount of the bonus, if any, dependent on the
Company's return on equity. The Compensation Committee and the Board of
Directors, however, have discretionary authority to vary the amounts or
percentages paid based on extraordinary performance, achievement of (or failure
to achieve) objectives and other similar factors. For fiscal 1995, bonuses were
paid based on the incentive plan as adopted. A separate incentive bonus plan,
paid quarterly, was in effect for all other employees employed at least two
years.
EMPLOYEE RETIREMENT PLAN - 401(K).
The Company maintains the SkyWest Airlines Employee Retirement Plan
(the "Retirement Plan") which is a defined contribution plan, for the benefit
of employees who have completed at least one year of service with the Company.
The Retirement Plan is qualified under Section 401(a) and (k) of the Internal
Revenue Code ("Code").
The Retirement Plan provides for pre-tax participant contributions and
matching contributions by the Company, subject to the requirements of Section
401(k) of the Code. The Company may also make discretionary contributions for
participants without regard to participant contributions. Matching
contributions totaled $1,119,515 and a discretionary contribution of $616,910
was made for fiscal year 1995. The Company's officers are not eligible for
matching contributions made by the Company.
Separate accounts are maintained for all contributions and directed by
participants among nine types of investment funds, not including Common Stock
of the Company.
All contributions to a participant's account under the Retirement Plan
are nonforfeitable. The Retirement Plan permits certain withdrawals and loans
during service. Distributions from the Retirement Plan are made upon termination
either in a lump sum or in annual installments over a period of up to ten years
(but in no event over a period exceeding five years following a participant's
death).
7
<PAGE> 10
EXECUTIVE DEFERRED COMPENSATION PLAN.
The Company's Deferred Compensation Plan (the "Plan") was adopted by
the Compensation Committee of the Board of Directors on August 7, 1990 and
became effective January 1, 1991. Under the terms of the Plan, the Company
contributes to the Plan eight percent of the compensation paid to the officers
of the Company during the prior calendar year. Under the Plan, the Company
maintains split dollar life insurance policies on the lives of participants. The
officer is the owner of such policies and the Company is responsible for payment
of premiums. The premiums are recoverable by the Company and will be paid to
each participant as deferred compensation following termination of employment.
The earnings under the policies and death proceeds of policies will be paid to
the participant or to a designated beneficiary. Participants of this Plan are
not eligible for matching contributions under the Retirement Plan.
STOCK OPTION PLANS.
The Company's Amended and Combined Incentive and Nonstatutory Stock
Option Plan (the "Option Plan") was adopted by the Board of Directors in April
1991 and approved by the Shareholders of the Company in August 1991. The Option
Plan provides for the grant of options ("Options") to purchase shares of Common
Stock which may be either incentive stock options ( "Incentive Stock Options")
as that term is defined in the Code or nonstatutory stock options ("Nonstatutory
Options") . Options under the Option Plan are granted by the Compensation
Committee. The maximum number of shares of Common Stock available for issuance
upon exercise of Options under the Option Plan is 1,500,000. Directors,
managers, key employees and others who hold positions of significant
responsibility or whose performance or potential contribution, in the judgment
of the Committee, would benefit the Company, are eligible to receive Options
under the Option Plan.
The Committee has complete authority to determine the persons to whom
and the time or times at which grants of Options will be made, whether such
Options will be Incentive Stock Options or Nonstatutory Options, the exercise
price, term, restrictions on exercise and transferability and vesting
schedules, all of which are set forth in a Stock Option Agreement. In no event,
however, shall (i) the exercise price of an Incentive Stock Option be less than
the fair market value of a share of Common Stock on the date of grant, or (ii)
an Option be exercisable after the expiration of ten years from the date of
grant, and no Option shall be exercisable before six months have lapsed from the
date of grant (except in the case of death or disability). In considering the
grant of Options to executive officers, the Committee takes into consideration
such factors as the projected value of the Company's Common Stock in the future
based on the Company obtaining its performance goals, the executive officers'
current salary and the overall performance of the Company. The Committee
attempts to award Options in an amount that will provide executive officers with
Options that will have a value in the future equal to a targeted percentage of
the officers' base salary if the Company's performance goals are met during the
vesting period.
STOCK PURCHASE PLAN.
The Company's executive officers are also eligible to participate in
the Company's 1995 Employee Stock Purchase Plan. See Proposal No. 3 for a
description of the material terms of the Company's 1995 Employee Stock Purchase
Plan.
CHIEF EXECUTIVE OFFICER COMPENSATION FOR FISCAL YEAR 1995.
Using the process and criteria discussed above, effective July 1, 1994
the Compensation Committee recommended and the Board adopted Jerry C. Atkin's
base salary of $190,000 and set the range for his annual bonus award at $48,000
to $191,000. After the end of fiscal 1995, the Compensation Committee awarded
Mr. Atkin a $127,000 bonus based on the Company's return on equity and his
performance during the year. During fiscal 1995, the Compensation Committee also
awarded 25,000 Options to Mr. Atkin based on the criteria described above.
COMPENSATION COMMITTEE
J. Ralph Atkin
Brent V. Atkin
Steven F. Udvar-Hazy
W. Martin Braham
8
<PAGE> 11
PERFORMANCE GRAPH
Set forth below is a graph comparing the five year-cumulative
shareholder return on SkyWest's Common Stock against the five year-cumulative
total return on the CRSP Index for NASDAQ Stock Market (US Companies) and the
CRSP Index for NASDAQ Stocks (SIC 4510-4519) (an index composed of NASDAQ
companies engaged in air transportation, which includes regional airlines whose
stocks trade on NASDAQ) for the periods indicated. The graph assumes an initial
investment of $100.00 with dividends reinvested over the periods indicated.
Comparison of Five Year-Cumulative Total Returns
Performance Graph for
SkyWest, Inc.
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
SYMBOL INDEX DESCRIPTION 03/30/90 03/28/91 03/31/92 03/31/93 03/31/94 03/31/95
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
______ SkyWest, Inc. 100.0 93.8 158.7 376.2 744.2 322.8
CRSP Index for
NASDAQ Stock Market
- - - - - (US Companies) 100.0 114.2 145.6 167.3 180.6 200.8
CRSP Index for
NASDAQ Stocks (SIC
........ 4510-4519) 100.0 109.8 145.2 241.0 226.1 236.4
</TABLE>
Notes:
A. The lines represent yearly index levels derived from compounded daily
returns that include all dividends.
B. If the yearly interval, based on the fiscal year-end, is not a trading day,
the preceding trading day is used.
C. The index level for all series was set to 100.0 on 03/30/90.
9
<PAGE> 12
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Company and Delta operate under a joint marketing and code sharing
agreement under which the Company uses the Delta two letter designator code (DL)
in displaying its schedules on all flights in the automated airline reservation
systems used throughout the industry.
As of March 31, 1995, Delta owned 1,553,899 shares of Common Stock
which represented 15.0% of the outstanding Common Stock of the Company. The
Company leases various terminal facilities from Delta and Delta provides certain
services to the Company, including advertising, reservation and ground handling
services. Expenses paid to Delta under these agreements were approximately
$3,309,000, $3,493,000 and $5,024,000 during the years ended March 31, 1993,
1994 and 1995, respectively.
The Company had net receivables from Delta totaling approximately
$2,810,000 and $941,000 as of March 31, 1994 and 1995, respectively.
DISCLOSURE OF DELINQUENT FILINGS
Lee C. Atkin, a director of the Company, filed one late report on Form
4 during fiscal 1995, relating to a single transaction.
10
<PAGE> 13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of May 20, 1995, information with
respect to the Company's Common Stock owned beneficially by each director or
nominee for director, by the Named Executive Officers, by all officers and
directors as a group and by each person known by the Company to be a beneficial
owner of more than 5% of the outstanding Common Stock of the Company. Except as
otherwise indicated below, each person named has sole voting and investment
power with respect to the shares indicated.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNERS BENEFICIAL OWNERSHIP OF CLASS(1)
- ------------------------------------------------------------------- -------------------- -----------
<S> <C> <C>
Delta Air Lines Holdings, Inc.
Hartsfield Atlanta International Airport
Atlanta, Georgia 30320 ........................................ 1,553,899 15.0%
Sidney J. Atkin(2) ................................................ 510,141(4) 4.9
Jerry C. Atkin(2) ................................................. 496,524(5) 4.8
Mervyn K. Cox(2) .................................................. 290,000 2.8
Dell C. Stout(2) .................................................. 150,083(6) 1.4
Lee C. Atkin(2) ................................................... 135,002 1.3
Brent V. Atkin(2) ................................................. 47,420(7) *
J. Ralph Atkin(2) ................................................. 6,562(8) *
Steven F. Udvar-Hazy(2) ........................................... 150 *
Ian M. Cumming(2) ................................................. 0 *
W. Martin Braham(2) ............................................... 0(9) *
Hyrum W. Smith(3) ................................................. 0 *
Henry J. Eyring(3) ................................................ 0 *
Ron B. Reber ...................................................... 7,513(10) *
Bradford R. Rich .................................................. 9,110(11) *
Clifford N. Langness .............................................. 29,000 *
All Officers and Directors, as a group (13 persons)(12) ........... 1,681,505 16.2
</TABLE>
- ----------------------
* Less than 1%.
(1) Based on total outstanding shares of 10,322,132 as of June 22, 1995.
(2) Director.
(3) Nominee for Director.
(4) Includes 307,500 shares held by a family limited partnership of which Mr.
Atkin and his wife are the general partners, and 187,790 shares held by Mr.
Atkin as trustee of a trust for the benefit of his family.
(5) Includes 206,950 shares held separately by Carolyn J. Atkin, his wife, and
39,750 shares issuable upon exercise of options.
(6) Includes 60,000 shares held as trustee for the Boyd C. Stout Family Living
Trust.
(7) All shares are held jointly with Nanette Atkin, his wife.
(8) All shares are held by a family limited partnership of which Cheri Atkin,
the wife of J. Ralph Atkin, is the general partner.
(9) Does not include 1,553,899 shares held by Delta Air Lines Holdings, Inc. as
to which beneficial ownership is disclaimed by W. Martin Braham.
(10) Includes 7,500 shares issuable upon exercise of options.
(11) Includes 7,500 shares issuable upon exercise of options.
(12) Includes 54,750 shares issuable upon exercise of options.
11
<PAGE> 14
PROPOSAL NO.2 --APPROVAL OF SKYWEST'S
ALLSHARE INCENTIVE STOCK OPTION PLAN
GENERAL
SkyWest's AllShare Incentive Stock Option Plan (the "Incentive Plan")
was adopted by the Board of Directors on November 8, 1994, subject to
shareholder approval. The following description of the Incentive Plan does not
purport to be complete and is qualified in its entirety by reference to the
full text of the Incentive Plan.
DESCRIPTION OF THE INCENTIVE PLAN
PURPOSE. The purpose of the Incentive Plan is to provide a means
whereby employees of the Company or its subsidiaries can each enlarge his or
her proprietary interest in the Company, thereby encouraging the judgment,
initiative and efforts of the employees for the successful conduct of the
Company's business. The Incentive Plan is also intended to create common
interests between employees and the shareholders of the Company and to assist
the Company in attracting, retaining and motivating employees.
ADMINISTRATION. The Incentive Plan is administered by a committee (the
"Committee") of the Board of Directors consisting of not less than three
directors. The Committee shall construe and interpret the Incentive Plan,
establish such operating guidelines and rules as it deems necessary for the
proper administration of the Incentive Plan and make such determinations and
take such other action in connection with the Incentive Plan as it deems
necessary and advisable. The Committee shall determine the individuals to whom
and the time or times at which options shall be granted, the number of shares to
be subject to each option and the applicable exercise price for all options
granted under the Incentive Plan.
DURATION OF THE INCENTIVE PLAN. The Incentive Plan became effective on
November 8, 1994, subject to shareholder approval, and will remain in effect
until terminated by the Board of Directors; provided, however, that no options
shall be granted under the Incentive Plan after November 7, 2004.
SHARES SUBJECT TO THE INCENTIVE PLAN. The Incentive Plan provides for
the issuance of incentive stock options ("Incentive Options") as that term is
defined in Section 422 of the Code and nonqualified stock options which are not
governed by the provisions of Section 422 of the Code ("Nonqualified Options")
for shares of the Company's Common Stock (the Incentive Options and the
Nonqualified Options are referred to collectively as the "Options"). The
Incentive Plan currently provides that the maximum aggregate number of shares of
Common Stock that may be delivered upon exercise of Options granted under the
Incentive Plan is 500,000 shares (subject to adjustment as provided below). If
any Option granted under the Incentive Plan expires or terminates for any
reason without having been exercised in full, the unpurchased shares with
respect to that Option shall again be available for other Options to be granted
under the Incentive Plan unless the Incentive Plan shall have been terminated.
Any Common Stock issued pursuant to the Incentive Plan may be authorized but
unissued shares or treasury shares.
In the event of any dividend on the Common Stock payable in shares, or
in the case of any subdivision or combination of the outstanding Common Stock,
the aggregate number of shares of Common Stock to be delivered upon the exercise
of all Options granted under the Incentive Plan, and the maximum number of
shares issuable under the Incentive Plan, shall be increased or decreased
proportionately.
ELIGIBILITY. Options may be granted only to employees of the Company
and its subsidiaries that the Committee, in its sole discretion, shall determine
to be eligible for participation in the Incentive Plan. Directors of the Company
who are not employees of the Company and employees of the Company who are
subject to Section 16 of the Securities Exchange Act of 1934 are not eligible to
receive Options under the Incentive Plan. Accordingly, none of the Company's
directors or executive officers, including the Named Executive Officers, is
eligible to participate in the Incentive Plan. In addition, no employee may be
granted Options in the aggregate which will result in that employee receiving
more than 10% of the maximum number of shares available for issuance under the
Incentive Plan. Approximately 1,900 employees are currently eligible to
participate in the Incentive Plan.
OPTIONS. The Committee, in its sole discretion, may grant both
Incentive Options and Nonqualified Options from time to time. The Committee has
complete authority, subject to the terms of the Incentive Plan, to determine the
persons to whom and the time or times at which grants of Options will be made.
The exercise price of an Option granted under the Incentive Plan shall not be
less than the fair market value of the shares on the date
12
<PAGE> 15
of the grant of the Option, which shall be the closing sale price for a share of
Common Stock of the Company as reported on the NASDAQ Stock Market/National
Market System, on such date. The closing sale price of the Common Stock was
$21.25 per share on June 22, 1995. The purchase price for the Options must be
paid in full at the time of exercise in a manner acceptable to the Committee.
The Committee, in its sole discretion, shall determine the time or times when
each Option vests, becomes exercisable and terminates. The term of an Option,
however, may not be more than ten years from the date of grant. The optionee
shall also be required to pay the amount of tax to be withheld at the time of
exercise.
The Committee granted a total of 120,000 Options to all eligible
employees of the Company and its subsidiaries on February 7, 1995. Each of the
Options becomes fully exercisable on July 1, 1997 and expires on June 30, 2000,
and has an exercise price of $13.75. The Committee has determined that all
full-time management and administrative employees and all full-time and
part-time hourly employees (including flight crew members) of the Company or its
subsidiaries who are employed in such capacity by the Company or its
subsidiaries on the date of the grant of Options are eligible to receive a grant
of Options. The number of Options granted to each employee is equal to that
percentage of the total number of Options granted determined by dividing the
employee's earnings by the sum of all eligible employees' earnings.
TERMINATION OF EMPLOYMENT/MISCONDUCT. Upon the termination of the
optionee's employment for any reason whatsoever, including retirement, the
Options will terminate as to all shares covered by Options which have not become
exercisable as of the date of such termination and shall terminate as to all
shares covered by Options which have not been exercised within three months of
the date of such termination. Options shall be exercisable, however, by the
optionee or the estate of a deceased optionee for a period of six months after
the optionee's disability or death. If an optionee engages in any type of
misconduct as enumerated in the Incentive Plan, including unauthorized
disclosure of confidential information or trade secrets, breach of any contract
or any unlawful trading in the securities of the Company, the optionee shall
forfeit all rights to any outstanding Options except as otherwise determined by
the Committee.
BUY OUT OF OPTION GAINS. At any time after an Option becomes
exercisable, the Committee shall have the right to elect in its sole discretion,
without the consent of the holder of the Option, to cancel such Option and pay
to the optionee the excess of the fair market value of the shares covered by
such Option over the exercise price of such Option at the date the Committee
provides written notice of the intention to exercise such right. Buy out
payments may be made in cash, in shares of Common Stock, or both. Payments of
any such buy out amounts shall be made net of any applicable federal, state and
local withholding taxes.
AMENDMENT OF PLAN. Under the terms of the Incentive Plan, the Board of
Directors may amend the Incentive Plan at any time without shareholder approval.
The Board of Directors, however, shall not make any change in the Options which
would impair the rights of an optionee with respect to outstanding Options
except as otherwise expressly provided by the Incentive Plan.
GENERAL PROVISIONS. Neither the Incentive Plan nor the grant of any
Option thereunder shall be deemed to give any individual the right to remain
employed by the Company or any of its subsidiaries or to alter his or her status
as an at-will employee of the Company. Recipients of Options shall have no
obligation to exercise such Options. No employee shall have any claim or right
to be granted an Option under the Incentive Plan, and a grant of an Option shall
not give the employee any right to receive any other grant under the Incentive
Plan.
FEDERAL INCOME TAX CONSEQUENCES
The following tax discussion is a brief summary of federal income tax
law applicable to the Incentive Plan. The discussion is intended solely for
general information and omits certain information which does not apply generally
to all participants in the Incentive Plan.
INITIAL GRANT OF OPTIONS. A recipient of Options, whether Nonqualified
Options or Incentive Options, incurs no income tax liability, and the Company
obtains no deduction, from the grant of Options.
INCENTIVE OPTIONS. The holder of an Incentive Option will not be
subject to federal income tax upon the exercise of the Incentive Option, and
the Company will not be entitled to a tax deduction by reason of such exercise,
provided that the holder is still employed by the Company (or terminated
employment no longer than three months before the exercise date). Additional
exceptions to this exercise timing requirement apply upon the death or
disability of the optionee. A sale of the shares of Common Stock received upon
the exercise of an Incentive Option which occurs both more than one year after
the exercise of the Incentive Option and more than two years after the
13
<PAGE> 16
grant of the Incentive Option will result in the realization of long-term
capital gain or loss in the amount of the difference between the amount realized
on the sale and the exercise price for such shares. Generally, upon a sale or
disposition of the shares prior to the foregoing holding requirements (referred
to as a "disqualifying disposition"), the optionee will recognize ordinary
compensation income, and the Company will receive a corresponding deduction,
equal to the lesser of (i) the excess of the fair market value of the shares on
the date of transfer to the optionee over the exercise price, or (ii) the
excess of the amount realized on the disposition over the exercise price.
The excess of the fair market value of the shares of Common Stock at
the time of the exercise of an Incentive Option over the option price will
increase the optionee's alternative minimum taxable income subject to the
alternative minimum tax, unless a subsequent disqualifying disposition occurs
in the same taxable year of the optionee in which the Common Stock was
purchased.
NONQUALIFIED OPTIONS. Upon the exercise of a Nonqualified Option, the
amount by which the fair market value of the shares of Common Stock on the date
of exercise exceeds the exercise price will be taxed to the optionee as ordinary
compensation income. The Company will generally be entitled to a deduction in
the same amount, provided it satisfies certain requirements relating to the
terms of the Option and makes all required wage withholdings on the compensation
element attributable to the exercise. In general, the optionee's tax basis in
the shares acquired by exercising a Nonqualified Option is equal to the fair
market value of such shares on the date of exercise. Upon a subsequent sale of
any such shares in a taxable transaction, the optionee will realize capital gain
or loss in an amount equal to the difference between his or her basis in the
shares and the sale price.
BUY OUT PAYMENT. Upon receipt of any buy out payments, a participant
under the Incentive Plan will recognize ordinary compensation income in the
amount of both the cash and the fair market value of the shares of Common Stock
received, and generally the Company will be entitled to a corresponding
deduction. In the event the participant receives shares of Common Stock, any
shares so acquired will have a tax basis equal to their fair market value on the
date of such payment, and the holding period of the shares will commence on the
day following that date. Upon a subsequent sale of such shares, the participant
will recognize capital gain or loss (long-term or short-term, depending on
whether the shares were held for more than twelve months before the sale) in an
amount equal to the difference between his or her basis in the shares and the
sale price.
VALUE OF BENEFITS
The Company is unable to determine the amount of benefits that may be
received by participants under the Incentive Plan because the amount, pricing
and timing of awards under the Incentive Plan are subject to the discretion of
the Committee and may vary, the value of the Options is dependent on the future
price of the Company's Common Stock, and the employee does not have an
obligation to exercise any Options.
THE BOARD OF DIRECTORS BELIEVES THE INCENTIVE PLAN IS IN THE BEST
INTERESTS OF THE COMPANY, AND THEREFORE, UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR APPROVAL OF THE INCENTIVE PLAN.
PROPOSAL NO. 3 -- APPROVAL OF THE SKYWEST, INC.
1995 EMPLOYEE STOCK PURCHASE PLAN
GENERAL
On November 8, 1994, the Board of Directors adopted the SkyWest, Inc.
1995 Employee Stock Purchase Plan (the "Stock Purchase Plan"). The Stock
Purchase Plan became effective upon approval by the Board of Directors, subject
to shareholder approval. The following description of the Stock Purchase Plan
does not purport to be complete and is qualified in its entirety by reference to
the full text thereof.
DESCRIPTION OF THE STOCK PURCHASE PLAN
PURPOSE. The purpose of the Stock Purchase Plan is to provide a method
whereby employees of the Company and certain of its subsidiaries will have an
opportunity to acquire a proprietary interest in the Company through the
purchase of shares of Common Stock. The Company believes that the Stock Purchase
Plan is important because it provides incentives to present and future employees
of the Company and its subsidiaries by allowing them to share in the growth of
the Company.
14
<PAGE> 17
The Stock Purchase Plan is intended to qualify as an "employee stock
purchase plan" under Section 423 of the Code. A maximum of 500,000 shares
(subject to certain anti-dilution provisions) of Common Stock are available for
issuance under the Stock Purchase Plan.
ADMINISTRATION. The Stock Purchase Plan is administered by a committee
(the "Committee") of the Board of Directors consisting of no fewer than three
members of the Board of Directors. Each member of the Committee must qualify as
a "disinterested person" with respect to the Stock Purchase Plan as defined in
Rule 16b-3 promulgated pursuant to the Exchange Act. The Committee is presently
composed of the Compensation Committee of the Board of Directors. The Committee
has the authority to interpret and construe all provisions of the Stock Purchase
Plan and to make all decisions and determinations relating to the operation of
the Stock Purchase Plan.
DURATION. The Stock Purchase Plan became effective on November 8, 1994,
subject to shareholder approval, and will remain in effect until June 30, 2000,
unless terminated earlier by the Board of Directors. No termination of the Stock
Purchase Plan may adversely affect the rights of any employee with respect to
outstanding options under the Stock Purchase Plan without the consent of the
employee.
SHARES SUBJECT TO STOCK PURCHASE PLAN. The maximum number of shares of
Common Stock which may be issued under the Stock Purchase Plan is currently
500,000 shares. In the event the outstanding shares of Common Stock are
increased, decreased, changed into, or exchanged for a different number or kind
of shares or securities of the Company through reorganization, merger,
recapitalization, reclassification, stock split, reverse stock split or similar
transaction, the maximum number of shares available for issuance under the Stock
Purchase Plan shall be proportionately adjusted.
ELIGIBILITY. Participation in the Stock Purchase Plan is limited to
employees of the Company and its subsidiaries who have completed 90 days of
employment with the Company. Employees who own five percent or more of the
voting stock of the Company, however, may not participate in the Stock Purchase
Plan. Approximately 1,970 employees are eligible to participate in the Stock
Purchase Plan.
OFFERINGS UNDER THE STOCK PURCHASE PLAN. The Stock Purchase Plan
provides for a series of six-month offerings commencing on July 1 and January 1
of each calendar year during the term of the Stock Purchase Plan. The first six
month offering shall commence on July 1, 1995 and the last six month offering
shall commence on January 1, 2000.
An eligible employee may elect to participate in an offering under the
Stock Purchase Plan by authorizing the Company to make deductions from his or
her pay on each payday during the time the employee is a participant in an
offering at any rate between 2% and 15% of his or her base salary. On the
commencement date of an offering, the Company will grant to each employee who
elects to participate in an offering under the Stock Purchase Plan an option to
purchase a maximum number of shares. The maximum number of shares is based on
the amount of the employee's projected accumulated payroll deductions. No
employee will be granted an option which permits him or her to purchase in
excess of $25,000 of Common Stock per calendar year under all employee stock
purchase plans.
Options will be deemed to have been exercised automatically on the
offering termination date for the purchase of the number of full shares of
Common Stock which the accumulated payroll deductions in an employee's account
will purchase, but not in excess of the maximum number of shares for which an
option has been granted to an employee.
EXERCISE PRICE OF OPTIONS. The price per share to be paid by
participants under the Stock Purchase Plan shall be the lesser of (i) 85% of the
fair market value of the Common Stock on the applicable offering commencement
date, or (ii) 85% of the fair market value of the Common Stock on the applicable
offering termination date. The fair market value of the Common Stock shall be
the closing sale price of the Common Stock on the NASDAQ Stock Market/National
Market System on the applicable date or the nearest prior trading day, if the
applicable date is not a trading day. The closing sale price of the Common Stock
on June 22, 1995 was $21.25. The exercise price shall be payable only through
payroll deductions from an employee's compensation except in certain
circumstances involving a leave of absence.
TERMINATION OF EMPLOYMENT. Upon the termination of a participant's
employment for any reason during an offering, including retirement (but
excluding death while in the employ of the Company or the continuation of a
leave of absence), the payroll deductions credited to the participant's account
shall be returned to the participant and shall not be used to purchase shares of
Common Stock under the Stock Purchase Plan. In the event the
15
<PAGE> 18
participant's employment is terminated as a result of his or her death, his or
her designated beneficiary shall have the right to elect to (i) withdraw all
payroll deductions credited to the participant's account under the Stock
Purchase Plan, or (ii) exercise the participant's option on the offering
termination date for the purchase of the number of full shares which the
participant's accumulated payroll deductions will purchase at the applicable
exercise price.
AMENDMENT AND TERMINATION. The Board of Directors may amend, suspend or
terminate the Stock Purchase Plan or any portion thereof at any time; provided,
however, that no amendment may be made without shareholder approval to the
extent such amendment would (a) increase the maximum number of shares which may
be issued under the Stock Purchase Plan, or (b) amend the requirements as to the
class of employees eligible to participate in the Stock Purchase Plan or permit
members of the Committee to participate in the Stock Purchase Plan.
GENERAL PROVISIONS. No participant or his legal representatives,
legatees or distributees will be deemed to be the holder of any shares of Common
Stock subject to an offering until the option has been exercised and the
purchase price for the shares has been paid. Neither payroll deductions credited
to a participant's stock purchase account nor any rights with regard to the
exercise of rights to receive shares of Common Stock under the Stock Purchase
Plan may be assigned, transferred, pledged or otherwise disposed of in any way
by a participant other than by will or the laws of descent and distribution.
Options under the Stock Purchase Plan will be exercisable during a participant's
lifetime only by him, his guardian or legal representative.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following tax discussion is a brief summary of federal income tax
law applicable to the Stock Purchase Plan. The discussion is intended solely for
general information and omits certain information which does not apply generally
to all participants in the Stock Purchase Plan.
GRANT OF OPTIONS. In the opinion of the Company, the Stock Purchase
Plan qualifies as an "employee stock purchase plan" within the meaning of
Section 423 of the Code. As such, a recipient of options under the Stock
Purchase Plan incurs no income tax liability, and the Company obtains no
deduction, from the grant of the options. The payroll deductions, however, are
made on an after-tax basis. Participants will not be entitled to deduct or
exclude from income or social security taxes any part of the payroll deductions.
EXERCISE OF OPTIONS. An employee will not be subject to federal income
tax upon the exercise of an option granted under the Stock Purchase Plan, nor
will the Company be entitled to a tax deduction by reason of such exercise,
provided that the holder is still employed by the Company (or terminated
employment no longer than three months before the exercise date). The employee
will have a cost basis in the shares of Common Stock acquired upon such exercise
equal to the option exercise price.
DISPOSITION OF SHARES ACQUIRED UNDER STOCK PURCHASE PLAN. In order to
defer taxation on the difference between the fair market value and exercise
price of shares acquired upon exercise of an option, the employee must hold the
shares during a holding period which runs through the later of one year after
the option exercise date or two years after the date the option was granted. The
only exceptions are for dispositions of shares upon death, as part of a tax-free
exchange of shares in a corporate reorganization, into joint tenancy with right
of survivorship with one other person, or the mere pledge or hypothecation of
shares.
If an employee disposes of stock acquired under the Stock Purchase Plan
before expiration of the holding period in a manner not described above, such as
by gift or ordinary sale of such shares, the employee must recognize as ordinary
compensation income in the year of disposition the difference between the
stock's fair market value and exercise price as of the date of exercise. This
amount must be recognized as income even if it exceeds the fair market value of
the shares as of the date of disposition or the amount of the sales proceeds
received. The Company will be entitled to a corresponding compensation expense
deduction.
Disposition of shares after expiration of the required holding period
will result in the recognition of gain or loss in the amount of the difference
between the amount realized on the sale of the shares and the exercise price for
such shares. Any loss on such a sale will be a long-term capital loss. Any gain
on such a sale will be taxed as ordinary income up to the amount of the
difference between the fair market value and the exercise price as of the date
of exercise with any additional gain taxed as a long-term capital gain.
16
<PAGE> 19
VALUE OF BENEFITS
The Company is unable to determine the amount of benefits that may be
received by participants under the Stock Purchase Plan as participation is
discretionary with each employee.
THE BOARD OF DIRECTORS BELIEVES THE STOCK PURCHASE PLAN IS IN THE BEST
INTERESTS OF THE COMPANY, AND THEREFORE, UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR APPROVAL OF THE STOCK PURCHASE PLAN.
PROPOSAL NO. 4 -- RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
Ratification of the appointment by the Board of Directors of the
independent public accountants for the Company for the current fiscal year
ending March 31, 1996 is to be voted upon at the Annual Meeting. The Board of
Directors recommends shareholder ratification of the appointment of Arthur
Andersen LLP, whose appointment has been approved, subject to shareholder
approval, by the Board of Directors. Representatives of Arthur Andersen LLP are
expected to be present at the Annual Meeting to answer any questions
shareholders may have and will be given the opportunity to make a statement if
they desire to do so.
The affirmative vote of a majority of the votes cast on this proposal
shall constitute ratification of the appointment of Arthur Andersen LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR FISCAL
1996.
OTHER MATTERS
OTHER BUSINESS
The Board of Directors does not know of any matter to be presented at
the Annual Meeting that is not listed in the Notice of Annual Meeting and
discussed above. If other matters should come before the Annual Meeting,
however, the proxy holders will vote in accordance with their best judgment.
PROPOSALS OF SECURITY HOLDERS FOR 1996 ANNUAL MEETING
Shareholders desiring to submit proposals for the Proxy Statement for
the 1996 Annual Meeting will be required to submit them to the Company in
writing on or before April 10, 1996. Any shareholder proposal must also be
proper in form and substance, as determined in accordance with the Securities
Exchange Act of 1934 and the rules and regulations promulgated thereunder.
ADDITIONAL INFORMATION
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1995 will be furnished without charge upon receipt of a written
request. The exhibits to that Report will also be provided upon request and
payment of copying charges. Requests should be directed to the Corporate
Secretary, SkyWest, Inc., 444 South River Road, St. George, Utah 84790.
17
<PAGE> 20
APPENDIX A
PROXY SKYWEST, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jerry C. Atkin, Bradford R. Rich and Eric D.
Christensen, and each of them, as proxies, with full power of substitution, and
hereby authorizes them to represent and to vote, as designated below, all shares
of Common Stock of SkyWest, Inc., a Utah corporation (the "Company"), held of
record by the undersigned on June 30, 1995 at the Annual Meeting of Shareholders
(the "Annual Meeting") to be held at the Skywest Corporate Offices, 444 South
River Road, St. George, Utah 84790, on August 8, 1995, at 11:00 a.m., local
time, or at any adjournment thereof, upon the matters set forth below, all in
accordance with and as more fully described in the accompanying Notice of Annual
Meeting and Proxy Statement, receipt of which is hereby acknowledged.
1. ELECTION OF DIRECTORS, each to serve until the next annual meeting of
shareholders and until their respective successors shall have been duly elected
and qualified.
/ / FOR all nominees listed below (except as marked to the contrary below)
/ / WITHHOLD AUTHORITY to vote for all nominees listed below
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW)
JERRY C. ATKIN J. RALPH ATKIN SIDNEY J. ATKIN
W. MARTIN BRAHAM MERVYN K. COX IAN M. CUMMING
HENRY J. EYRING STEVEN F. UDVAR-HAZY HYRUM W. SMITH
2. PROPOSAL TO APPROVE THE SKYWEST ALLSHARE INCENTIVE STOCK OPTION PLAN.
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO APPROVE THE SKYWEST, INC. 1995 EMPLOYEE STOCK PURCHASE PLAN.
/ / FOR / / AGAINST / / ABSTAIN
4. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP, as the independent
auditor of the Company.
/ / FOR / / AGAINST / / ABSTAIN
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE DIRECTOR NOMINEES NAMED ABOVE, FOR THE PROPOSALS TO
APPROVE THE ALLSHARE INCENTIVE STOCK OPTION PLAN AND THE 1995 EMPLOYEE STOCK
PURCHASE PLAN AND FOR THE RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP
AS THE INDEPENDENT AUDITOR OF THE COMPANY.
Please complete, sign and date this proxy where indicated and return
it promptly in the accompanying prepaid envelope.
Dated: , 1995 Signature: Signature if held jointly:
Please sign above exactly as the shares are issued. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized
person.)
<PAGE> 21
APPENDIX B
---------------------------
SKYWEST, INC.
---------------------------
SKYWEST'S ALLSHARE
INCENTIVE STOCK OPTION PLAN
SECTION 1. PURPOSE.
This SkyWest AllShare Incentive Stock Option Plan (hereinafter referred
to as the "Plan") is intended as a means whereby employees (hereinafter referred
to as "Employee" or "Employees" and "Optionee" or "Optionees") of SkyWest, Inc.
(hereinafter referred to as the "Company") or its subsidiaries (hereinafter
referred to as the "Subsidiaries") can each enlarge his or her proprietary
interest in the Company, thereby encouraging the judgment, initiative and
efforts of the Employees for the successful conduct of the Company's business.
The Plan is also intended to create common interests between the Employees and
the other shareholders of the Company, and to assist the Company in attracting,
retaining and motivating Employees.
SECTION 2. ADMINISTRATION OF THE PLAN.
The Board of Directors of the Company shall appoint a Stock Option
Committee (hereinafter referred to as the "Committee") of not less than three
(3) directors to administer the Plan. The members of the Committee shall serve
at the pleasure of the Board, which shall have the power at any time, or from
time to time, to remove members from the Committee or to add members thereto.
The Committee shall construe and interpret the Plan, establish such operating
guidelines and rules as it deems necessary for the proper administration of the
plan and make such determinations and take such other action in connection with
the Plan as it deems necessary and advisable. It shall determine the individuals
to whom and the time or times at which Options shall be granted, the number of
shares to be subject to each Option, the Option price and the duration of leaves
of absence which may be granted to participants without constituting a
termination of their employment for purposes of the Plan. Any such construction,
interpretation, rule, determination or other action taken by the Committee
pursuant to the Plan shall be final, binding and conclusive on all interested
parties, including the Company, its subsidiaries and all former, present and
future Employees of the Company or its Subsidiaries.
Actions by a majority of the Committee at a meeting at which a quorum
is present, or actions approved in writing by all of the members of the
Committee, shall be the valid acts of the Committee. No member of the Board of
Directors or the Committee shall be liable for any action or determination made
in good faith with respect to the Plan or any Option granted under it.
SECTION 3. MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN.
Subject to any adjustment as provided in the Plan, the shares to be
offered under the Plan may be, in whole or in part, authorized but unissued
Common Shares of the Company, or issued Common
<PAGE> 22
Shares which shall have been reacquired by the Company and held by it as
treasury shares. The aggregate number of Common Shares to be delivered upon
exercise of all Options granted under the Plan shall not exceed 500,000 plus the
amount of any additional Common Shares which may result from any share
distributions effected after the approval of this Plan by the Board of Directors
of the Company. If any Option granted hereunder shall expire or terminate for
any reason without having been exercised in full, the unpurchased shares with
respect thereto shall again be available for other Options to be granted under
the Plan unless the Plan shall have been terminated.
SECTION 4. SELECTION OF OPTIONEES.
All those Employees of the Company or its Subsidiaries as shall be
determined from time to time by the Committee shall be eligible to participate
in the Plan, provided, however, that directors who are not Employees of the
Company and Employees of the Company who are subject to Section 16 of the
Securities Exchange Act of 1934 with respect to the Company's securities, will
not be eligible to receive Options under the Plan and, provided further, that no
Employee may be granted Options in the aggregate which would result in that
Employee receiving more than ten percent (10%) of the maximum number of shares
available for issuance under the Plan. Except as provided herein, any person who
has been granted an Option under a prior stock option plan of the Company may be
granted an additional Option or Options under the Plan if the Committee shall so
determine.
SECTION 5. OPTION PRICE.
The purchase price for the shares covered by each Option granted shall
be the fair market value of the shares on the date of the grant of the Option.
Such fair market value shall be equal to the closing sale price for Common
Shares of the Company as reported on The NASDAQ Stock Market, National Market
System, on such date.
SECTION 6. OPTION REQUIREMENTS.
The Options granted pursuant to the Plan shall be authorized by the
Committee and shall be evidenced in writing in a form approved by the Committee
and shall include the following terms and conditions:
(a) Optionee. Each Option shall state the name of the Optionee.
(b) Number of Shares. Each Option shall state the number of
shares to which that Option pertains.
(c) Purchase Price. Each Option shall state the Option price,
which shall be not less than one hundred percent (100%) of the fair market value
of the shares covered by such Option on the date of grant of such Option. See
Section 5, Option Price, and Section 27, date of grant.
(d) Payment. The purchase price for the Options being exercised
must be paid in full at the time of exercise in a manner acceptable to the
Committee. In addition, in order to enable the Company to meet any applicable
federal (including FICA), state and local withholding tax requirements, an
Optionee shall also be required to pay the amount of tax to be withheld at the
time of exercise. No Common shares will be delivered to any Optionee until all
such amounts have been paid.
(e) Length of Option. Each Option shall be granted for a period
to be determined by the Committee but in no event to exceed more than ten (10)
years. However, subject to Sections 9 and 10, each Option shall be exercisable
only during such portion of its term as the Committee shall
2
<PAGE> 23
determine, and only if the Optionee is employed by the Company or a Subsidiary
of the Company within three months of the time of such exercise.
SECTION 7. METHOD OF OPTIONS.
Each Option shall be exercised pursuant to the terms of such Option and
pursuant to the terms of the plan by giving written notice to the Company at its
principal place of business or other address designated by the Company,
accompanied by a cash, check, shares or other property acceptable to the
Committee, in payment of the Option price for the number of shares specified and
paid for. From time to time the Committee may establish procedures relating to
effecting such exercises. No fractional shares shall be issued as a result of
exercising an Option. The Company shall make delivery of such shares as soon as
possible; provided, however, that if any law or regulation requires the Company
to take action with respect to the shares specified in such notice before
issuance thereof, the date of delivery of such shares shall then be extended for
the period necessary to take such action.
SECTION 8. NON-TRANSFERABILITY OF OPTIONS.
Except as set forth in Section 10, an Option is exercisable during an
Optionee's lifetime only by the Optionee. The Options shall not be transferable
except by will or the laws of descent and distribution, and shall terminate as
provided in this Plan.
SECTION 9. EARLIER TERMINATION OF OPTIONS.
Upon the termination of the Optionee's employment for any reason
whatsoever, including retirement, the Options will terminate as to all shares
covered by Options which have not become exercisable as of the date of such
termination and shall terminate as to all shares covered by Options which have
not been exercised within three (3) months of the date of such termination.
Notwithstanding the preceding sentence, however, Options shall be exercisable
following the death or disability of the Optionee as set forth in Section 10.
SECTION 10. EXERCISE UPON DEATH OR DISABILITY.
In the event an Optionee dies while employed by the Company or a
Subsidiary, the estate of the deceased Optionee shall have the right to exercise
any rights the Optionee would otherwise have under this Plan for a period of six
(6) months after the date of the Optionee's death, with exercise to be made as
set forth in Section 7.
In the event an Optionee becomes Disabled while employed by the Company
or a Subsidiary, the Optionee (or, in the event the Optionee is incapacitated
and unable to exercise Options, the Optionee's legal guardian or legal
representative whom the Committee deems appropriate based on applicable facts
and circumstances) shall have the right to exercise any rights the Optionee
would otherwise have under this Plan for a period of six (6) months after the
date the Optionee becomes Disabled, with exercise to be made as set forth in
Section 7.
SECTION 11. INCENTIVE OR NON-QUALIFIED OPTIONS.
The Options granted under the Plan shall be designated by the Committee
as incentive options as that term is defined in Section 422 of the Internal
Revenue Code ("Incentive Options") or as non-qualified options, as the
Committee, in its sole discretion, may determine.
SECTION 12. INCENTIVE OPTIONS HOLDING PERIOD; DISQUALIFYING DISPOSITION.
With respect to the Common Shares acquired upon exercise of Options
designated as Incentive Options by the Committee, no sale of such shares can be
made within two years from the date said Option was granted or within one year
from the date said Option was exercised, whichever is greater. Any gain upon
sale of shares acquired upon exercise of Incentive Options and sold before the
expiration of the required period, a "Disqualifying Disposition," will be
treated as ordinary income to the Optionee.
3
<PAGE> 24
SECTION 13. EFFECT OF CHANGE IN COMMON SHARES SUBJECT TO THE PLAN.
In the event any dividend upon the Common Shares payable in shares is
declared by the Company, or in case of any subdivision or combination of the
outstanding Common Shares, the aggregate number of Common Shares to be delivered
upon exercise of all Options granted under the Plan shall be increased or
decreased proportionately so that there will be no change in the aggregate
purchase price payable upon the exercise of the Option, and the maximum number
of Common Shares issuable under the Plan shall also be increased or decreased
proportionately. In the event of any other recapitalization or any
reorganization, merger, consolidation or any change in the corporate structure
or capital stock of the Company, the Committee shall make such adjustment, if
any, as it may deem appropriate to reflect accurately the terms of the Option as
to the number and kind of shares deliverable upon subsequent exercising of the
Option and in the Option prices under the Option.
SECTION 14. LISTING AND REGISTRATION OF COMMON SHARES; COMPLIANCE WITH
APPLICABLE LAWS.
If at any time the Committee shall determine that listing, registration
or qualification of the Common Shares covered by the Option upon any securities
exchange or quotation system or under any state or federal law, or the consent
or the approval of any governmental regulatory body is necessary or desirable as
a condition of or in connection with the purchase of Common Shares under the
Option, or, in the discretion of the Committee, the Option cannot be exercised
in accordance with applicable law, the Option may not be exercised in whole or
in part unless and until such listing, registration, qualification, consent,
approval or compliance shall have been effected or obtained free of any
conditions not acceptable to the Committee. Any person exercising an Option
shall make such representations and agreements and furnish such information as
the Committee may request to assure compliance with the foregoing or any other
applicable legal requirements.
SECTION 15. NO OBLIGATION TO EXERCISE OPTION.
The granting of a Option shall impose no obligation upon the Optionee
to exercise such option.
SECTION 16. MISCONDUCT.
In the event that an Optionee has (i) used for profit or disclosed to
unauthorized persons, confidential information or trade secrets of the Company
or its Subsidiaries, or (ii) breached any contract with or violated any
fiduciary obligation to the Company or its Subsidiaries including, without
limitation, any act by Optionee of dishonesty or fraud which act is materially
damaging or detrimental to the business or operations of the Company, or (iii)
engaged in unlawful trading in the securities of the Company or its Subsidiaries
or of another company based on information gained as a result of that Optionee's
employment with the Company or its Subsidiaries, then that Optionee shall
forfeit all rights to any unexercised Options granted under the Plan and all of
that Optionee's outstanding Options shall automatically terminate and lapse,
unless the Committee shall determine otherwise.
SECTION 17. BUY OUT OF OPTION GAINS.
At any time after any Option becomes exercisable, the Committee shall
have the right to elect, in its sole discretion and without the consent of the
holder thereof, to cancel such Option and pay to the Optionee the excess of the
fair market value of the Common Shares covered by such Option over the Option
price of such Option at the date the Committee provides written notice (the "Buy
Out Notice") of the intention to exercise such right. Buy outs pursuant to this
provision shall be effected by the Company as promptly as possible after the
date of the Buy Out Notice. Payments of buy out amounts may be made in cash, in
Common Shares or partly in cash, and partly in Common Shares, as the Committee
deems advisable. To the extent payment is made in Common Shares, the number of
shares
4
<PAGE> 25
shall be determined by dividing the amount of the payment to be made by the fair
market value of a Common Share at the date of the Buy Out Notice. In no event
shall the Company be required to deliver a fractional Common Share in
satisfaction of this buy out provision. Payments of any such buy out amounts
shall be made net of any applicable federal (including FICA), state and local
withholding taxes. For the purposes of this Section 18, fair market value shall
be equal to the closing sales price for Common Shares of the Company as reported
on The NASDAQ Stock Market, National Market System, on the relevant date.
SECTION 18. NO RIGHTS TO OPTIONS OR EMPLOYMENT.
No Employee or other person shall have any claim or right to be granted
an Option under the Plan. Having received an Option under the Plan shall not
give an Employee any right to receive any other grant under the Plan. An
Optionee shall have no rights to or interest in any Option except as set forth
herein. Neither the Plan nor any action taken herein alters the status of
Employee's employment as an at-will employee of the Company or shall be
construed as giving any Employee any right to be retained in the employ of the
Company or its Subsidiaries.
SECTION 19. MERGER, CONSOLIDATION, ETC..
In the event that the Company is a party to a plan or agreement for
merger or consolidation or reclassification of its securities or the exchange of
its securities for the securities of another person which has acquired the
Company's assets or which is in control (as defined in Section 368(c) of the
Internal Revenue Code of 1986, as amended) of a person which has acquired the
Company's assets, where the terms of such plan or agreement are binding upon all
shareholders of the Company, except to the extent that dissenting shareholders
may be entitled to relief under Part 13 of the Utah Revised Business Corporation
Act, then Options granted and outstanding pursuant to the Plan, notwithstanding
the date of exercise fixed in the grant of such Options, shall become
immediately exercisable and each Optionee shall be entitled to receive, upon
payment of the amount required for exercise of each Option, securities or cash
consideration, or both, equal to those the Optionee would have been entitled to
receive under such plan or agreement if the Optionee had already exercised such
Option. Each outstanding Option shall also be subject to the agreement governing
any merger or consolidation, reclassification or exchange of securities which
agreement may provide, without limitation, for the conversion of outstanding
Options into options to acquire securities of the surviving corporation.
SECTION 20. AMENDMENT OR TERMINATION.
The Board of Directors may amend or terminate the Plan at any time,
provided that the Board of Directors shall not (except as provided in Sections
9, 10 and 13 hereof) make any change in the Options which will impair the rights
of the Optionee therein, without the consent of the Optionee. No option shall be
granted hereunder after November 7, 2004.
SECTION 21. OTHER ACTIONS.
This Plan shall not restrict the authority of the Committee, the Board
of Directors or of the Company or its Subsidiaries for proper corporate purposes
to grant or assume stock options, other than under the Plan, to or with respect
to any Employee or other person.
SECTION 22. COSTS AND EXPENSES.
Except as provided in Section 6(d) hereof with respect to taxes, the
costs and expenses of administering the Plan shall be borne by the Company, and
shall not be charged to any grant nor to any Employee receiving a grant.
5
<PAGE> 26
SECTION 23. PLAN UNFUNDED.
The Plan shall be unfunded. Except for reserving a sufficient number of
authorized shares to the extent required by law to meet the requirements of the
Plan, the Company shall not be required to establish any special or separate
fund or to make any other segregation of assets to assure payment of any grant
under the Plan.
SECTION 24. LAWS GOVERNING PLAN.
This Plan shall be construed under and governed by the laws of the
State of Utah.
SECTION 25. CAPTIONS.
The captions to the several sections hereof are not a part of this
Plan, but are merely guides or labels to assist in locating and reading the
several sections hereof.
SECTION 26. EFFECTIVE DATE.
The Plan shall become effective on the date it is approved by the Board
of Directors of the Company, subject however, to approval by the shareholders of
the Company within twelve (12) months of such date. Any Options granted prior to
shareholder approval shall be expressly conditioned upon receiving such
approval.
SECTION 27. DEFINITIONS.
Unless the context clearly indicates otherwise, the following terms,
when used in this Plan, shall have the meaning set forth below:
(a) The "date of grant" or "grant date" of an Option shall be the
date on which an Option is granted under the Plan.
(b) "Option" means the right granted under the Plan to an
Optionee to purchase a Common Share of the Company at a fixed price for a
specified period of time.
(c) "Option price" means the price at which a Common Share
covered by an Option granted hereunder may be purchased.
(d) With regard to any particular Employee, "Disabled" shall have
the meaning set forth in the Company's long term disability program applicable
to such Employee.
ADOPTED as of the 8th day of November, 1994.
BY THE BOARD OF DIRECTORS:
/s/ ERIC CHRISTENSEN
------------------------------
Secretary
6
<PAGE> 27
APPENDIX C
---------------------------
SKYWEST, INC.
---------------------------
1995
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE 1. THE PLAN
SkyWest, Inc., a Utah corporation (the "Company"), hereby establishes
the SkyWest, Inc. 1995 Employee Stock Purchase Plan (the "Plan"), to provide a
method whereby employees of the Company and certain of its subsidiaries will
have an opportunity to acquire a proprietary interest in the Company through the
purchase of shares of the no par value Common Stock of the Company (the "Common
Stock"). The Plan is intended to qualify as an "employee stock purchase plan"
under section 423 of the Internal Revenue Code of 1986, as amended (the "Code").
The provisions of the Plan shall be construed so as to meet all of the
requirements of such a plan under Code section 423.
ARTICLE 2. DEFINITIONS
2.1. Base Pay. "Base Pay" shall mean salary, wages or other regular
rate of pay, including overtime, before reduction for contributions to plans
maintained under Code section 401(k) and 125 (such as profit-sharing and
cafeteria plans), but excluding bonuses, shift premiums, and other extraordinary
forms of compensation.
2.2. Committee. "Committee" shall mean the committee described in
Article 11.
2.3. Employee. "Employee" shall mean any common-law employee of the
Company.
2.4. Subsidiary. "Subsidiary" shall mean any present or future
corporation which would be a "subsidiary corporation" with respect to the
Company as that term is defined in Code section 424. A Subsidiary's employees
shall participate in the Plan, however, only if the Subsidiary is designated as
a participating Subsidiary by the Committee. References in the Plan to
employment by, or periods of employment with, the Company include employment by
or with all such participating Subsidiaries, including during periods of
employment prior to such participation.
ARTICLE 3. ELIGIBILITY AND PARTICIPATION
3.1. Initial Eligibility. Any Employee who has completed 90 days'
employment by the Company and shall be employed by the Company on the applicable
Offering Commencement Date shall
<PAGE> 28
be eligible to participate in such Offering. Whether or not an Employee
participates in any Offering will not have any effect on eligibility in
subsequent Offerings.
3.2. Leave of Absence. For purposes of eligibility to participate in an
Offering, a person on a leave of absence from the Company shall be deemed to be
an Employee for the first 90 days of such leave of absence but such Employee's
employment shall be deemed to have terminated at the close of business on the
90th day of such leave of absence unless such Employee shall have returned to
regular full-time or part-time (as the case may be) employment prior to the
close of business on such 90th day. Termination by the Company of any Employee's
leave of absence, other than termination of such leave of absence on return to
full-time or part-time employment, shall terminate an Employee's employment for
all purposes of the Plan and shall terminate such Employee's eligibility to
participate in Offerings and the right to exercise any option previously
granted.
3.3. Restrictions on Participation. Notwithstanding any other Plan
provision to the contrary, no Employee shall be granted an option to purchase
Common Stock under the Plan:
(a) if, immediately after the grant, such Employee would own
stock, and/or hold outstanding options to purchase stock, possessing 5% or more
of the total combined voting power or value of all classes of stock of the
Company or of any Subsidiary (for purposes of this paragraph, the rules of
section 424(d) of the Code shall apply in determining stock ownership of any
employee); or
(b) which permits the Employee's rights to purchase stock under
all employee stock purchase plans of the Company or any of its Subsidiaries to
accrue at a rate which exceeds $25,000 in fair market value of the stock
(determined at the time such option is granted) for each calendar year in which
such option is at any time outstanding.
3.4. Commencement of Participation.
(a) An eligible Employee may become a participant by completing
an authorization for a payroll deduction on the form provided by the Company and
filing it with the Employee Benefits Department of the Company during the month
immediately preceding the applicable Offering Commencement Date for an Offering
(as those terms are defined below) or at such other times or places as may be
established from time to time by the Committee.
(b) Payroll deductions for a participant shall commence with the
first payday on or after the applicable Offering Commencement Date when an
authorization for a payroll deduction becomes effective and shall end with the
last payday on or before the Offering Termination Date of the Offering to which
such authorization is applicable unless sooner terminated by the participant as
provided in Article 8.
ARTICLE 4. OFFERINGS
4.1. Offerings. The Plan will be implemented by five annual offerings
of Common Stock (the "Offerings") beginning on the 1st day of July in each of
the years 1995 through 1999, each Offering terminating on June 30 of the
following year; provided, however, that each annual Offering may, in the
discretion of the Committee exercised prior to the commencement thereof, be
divided into two six-month
2
<PAGE> 29
Offerings commencing, respectively, on July 1 and January 1 and terminating on
December 31 and June 30, respectively. The maximum number of shares issued in
the respective Offerings shall be:
- From July 1, 1995 to June 30, 1996: 100,000 shares.
- In each succeeding year (July 1 to June 30): 100,000 shares,
plus unissued shares from the prior Offerings, whether offered
or not.
If six-month Offerings are made, the maximum number of shares to be issued shall
be one-half of the number of shares set forth for the annual period in which the
six-month Offering falls (i.e. one-half of 100,000 shares plus one-half of the
unissued shares from the prior Offerings), plus, if the Offering is a January
Offering, unissued shares, whether offered or not, from the immediately
preceding six-month Offering. As used in the Plan, "Offering Commencement Date"
means the July 1 or January 1, as the case may be, on which the particular
Offering begins and "Offering Termination Date" means the December 31 or June
30, as the case may be, on which the particular Offering terminates.
ARTICLE 5. PAYROLL DEDUCTIONS
5.1. Amount of Deduction. At the time a participant files his
authorization for payroll deduction, the participant shall elect to have
deductions made from his or her pay on each payday during the time the Employee
is a participant in an Offering at any rate designated by the Employee but not
less than 2% and not more than 15% of the participant's Base Pay, in effect on
the Offering Commencement Date of such Offering.
5.2. Participant's Account. All payroll deductions made for a
participant shall be credited to an account for the participant under the Plan.
A participant may not make any separate cash payment into such account except
when on leave of absence and then only as provided in Section 5.4 hereof.
5.3. Changes in Payroll Deductions. A participant may discontinue
participation in the Plan as provided in Article 8, but no other change can be
made during an Offering and, specifically, a participant may not alter the
amount of payroll deductions for that Offering.
5.4. Leave of Absence. If a participant goes on a leave of absence,
such participant shall have the right to elect: (a) to withdraw the balance in
his or her account pursuant to Section 7.2 hereof, (b) to discontinue
contributions to the Plan but remain a participant in the Plan with respect to
the amounts contributed prior to the cessation of contributions, or (c) to
remain a participant in the Plan during such leave of absence, authorizing
deductions to be made from payments by the Company to the participant during
such leave of absence and undertaking to make cash payments to the Plan on each
payday to the extent that amounts payable by the Company to such participant are
insufficient to meet such participant's authorized Plan payroll deductions. The
options in (b) and (c) above are subject, however, to the limitations on the
period of leaves of absence set forth in Section 8.5.
ARTICLE 6. GRANTING OF OPTIONS
6.1. Number of Option Shares.
(a) On the applicable Offering Commencement Date, a participating
Employee shall be deemed to have been granted an option to purchase a maximum
number of shares of Common Stock equal to an amount determined as follows: an
amount equal to (i) that percentage of the Employee's Base Pay which he has
elected to have withheld multiplied by (ii) the Employee's projected Base Pay
for the
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applicable Offering Period, and (iii) divided by 85% of the market value of the
Common Stock on the applicable Offering Commencement Date. The market value of
the Common Stock shall be determined as provided in paragraph (a) of Section 6.2
below.
(b) An Employee's projected Base Pay for an Offering Period shall
be determined by multiplying, in the case of an annual Offering, his normal
bi-weekly rate of Base Pay (as in effect on the last day prior to the
Commencement Date of the Offering) by 26 or the hourly rate by 2,080 or, in the
case of a six-month offering, by 13 or 1040, as the case may be; provided that,
in the case of a part-time hourly employee, the Employee's projected Base Pay
during the Offering Period shall be determined by multiplying such Employee's
hourly rate by the number of regularly scheduled hours of work for such Employee
during such Offering; and further provided that, in the case of Employees paid
on the basis of flight hours, the flight hour rate shall be multiplied by 1,000
or, in the case of a six-month offering, by 500.
6.2. Option Price. The option price of Common Stock purchased with
payroll deductions made during each Offering for a participant therein shall be
the lower of:
(a) 85% of the closing sale price of the stock on the NASDAQ Stock
Market/National Market System ("NASDAQ/NMS") on the applicable Offering
Commencement Date (or on the nearest prior business day on which shares of
Common Stock are traded on the NASDAQ/NMS if no shares of Common Stock are
traded on the applicable Offering Commencement Date); or
(b) 85% of the NASDAQ/NMS closing sale price of the stock on the
NASDAQ/NMS on the applicable Offering Termination Date (or on the nearest prior
business day on which shares of Common Stock are traded on the NASDAQ/NMS if no
shares of Common Stock are traded on the applicable Offering Termination Date).
ARTICLE 7. EXERCISE OF OPTION
7.1. Automatic Exercise. Unless a participant gives written notice to
the Company as hereinafter provided, his option to purchase Common Stock with
payroll deductions made during any Offering Period will be deemed to have been
exercised automatically on the Offering Termination Date applicable to such
Offering, for the purchase of the number of full shares of Common Stock which
the accumulated payroll deductions in his account at that time will purchase at
the applicable option price (but not in excess of the number of shares for which
options have been granted to the participant pursuant to Section 6.1), and any
excess in his account at that time will be returned to the participant.
7.2. Withdrawal of Account. By written notice to the Employee Benefits
Department of the Company, at any time prior to the Offering Termination Date
applicable to any Offering, a participant may elect to withdraw all the
accumulated payroll deductions credited to his account at such time.
7.3. Fractional Shares. Fractional shares will not be issued under the
Plan and any accumulated payroll deductions which would have been used to
purchase fractional shares will be held by the Company to be used in the next
Offering, unless the participant requests in writing that such amount be
returned.
7.4. Transferability of Option. During a participant's lifetime,
options held by such participant shall be exercisable only by that participant.
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7.5. Delivery of Stock. As promptly as practicable after the Offering
Termination Date of each Offering, the Company will deliver to each participant,
as appropriate, the shares of Common Stock purchased upon exercise of his
option, subject to the restrictions on disposition described in Section 10.5
ARTICLE 8. WITHDRAWAL
8.1. In General. As indicated in Section 7.2, a participant may
withdraw payroll deductions credited to his account under the Plan at any time
by giving written notice to the Employee Benefits Department of the Company. All
of the participant's payroll deductions credited to his account will be paid to
him promptly after receipt of his notice of withdrawal, and no further payroll
deductions will be made from his pay during such Offering. The Company may, at
its option, treat any attempt to borrow by an employee on the security of his
accumulated payroll deductions as an election, under Section 7.2, to withdraw
such deductions.
8.2. Effect on Subsequent Participant. A Participant's withdrawal from
any Offering will not have any effect upon his eligibility to participant in any
succeeding Offering or in any similar plan which may hereafter be adopted by the
Company.
8.3. Termination of Employment. Upon termination of the participant's
employment for any reason, including retirement (but excluding death while in
the employ of the Company or continuation of a leave of absence for a absence
for a period beyond 90 days), the payroll deductions credited to the
participant's account will be returned to the participant, or, in the case of
his death subsequent to the termination of his employment, to the person or
persons entitled thereto under Section 12.1.
8.4. Termination of Employment Due to Death. Upon termination of the
participant's employment because of his death, his beneficiary (as defined in
Section 12.1) shall have the right to elect, by written notice given to the
Employee Benefits Department of the Company prior to the earlier of the Offering
Termination Date or the expiration of a period of ninety (90) days commencing
with the date of the death of participant, either:
(a) to withdraw all of the payroll deductions credited to the
participant's account under the Plan, or
(b) to exercise the participant's option for the purchase of
Common Stock on the Offering Termination Date next following the date of the
participant's death for the purchase of the number of full shares of Common
Stock with the accumulated payroll deductions in the participant's account at
the date of the participant's death will purchase at the applicable option
price, and any excess in such account will be returned to said beneficiary,
without interest.
If no such written notice of election shall be duly received by the Employee
Benefits Department of the Company, the beneficiary shall automatically be
deemed to have elected, pursuant to paragraph (b), to exercise the participant's
option.
8.5. Leave of Absence. A Participant on leave of absence shall, subject
to the election made by such participant pursuant to Section 5.4, continue to be
a participant in the Plan so long as such participant is on continuous leave of
absence. A participant who has been on leave of absence for more than ninety
(90) days and who, therefore, is not an Employee for the purpose of the Plan
shall not be entitled to participant in any Offering commencing after the 90th
day of such leave of absence. Notwithstanding any other provisions of the Plan,
unless a participant on leave of absence returns to regular full time or part
time employment with the Company at the earlier of: (1) the termination of such
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leave of absence or (b) three months from the 90th day of such leave of absence,
such participant's right to exercise previously granted options shall terminate
on the earliest of such dates.
ARTICLE 9. INTEREST
9.1. Payment of Interest. No interest will be paid or allowed on any
money paid into the Plan or credited to the account of any participant.
ARTICLE 10. STOCK
10.1. Maximum Shares. The maximum number of shares which may be issued
under the Plan, subject to adjustment upon changes in capitalization of the
Company as provided in Section 12.4, shall be the number of shares set forth in
Article 5 (i.e., 100,000 shares in each annual Offering or 50,000 shares in each
six-month Offering plus, in each Offering, all unissued shares from prior
Offerings, whether offered or not) not to exceed 500,000 shares for all
Offerings. If the total number of shares for which options are exercised on any
Offering Termination Date in accordance with Article 6 exceeds the maximum
number of shares for the applicable Offering, the Company shall make a pro-rata
allocation of the shares available for delivery and distribution in as nearly a
uniform manner as shall be practicable and as it shall determine to be
equitable, and the balance of payroll deductions credited to the account of each
participant shall be returned to him as promptly as possible.
10.2. Participant's Interest in Option Stock. A participant will have
no interest in stock covered by Plan options until such options have been
exercised.
10.3. Registration of Stock. Common Stock to be delivered to a
participant under the Plan will be registered in the name of the participant,
or, if the participant so directs by written notice to the Employee Benefits
Department of the Company prior to the Offering Termination Date applicable
thereto, in the names of the participant and one such other person as may be
designated by the participant, as joint tenants with rights of survivorship.
10.4. Restrictions on Exercise. The Board of Directors may, in its
discretion, require as conditions to the exercise of any option that the shares
of Common Stock reserved for issuance upon the exercise of the option shall have
been duly listed, upon official notice of issuance, upon a stock exchange, and
that either:
(a) a Registration Statement under the Securities Act of 1933, as
amended, with respect to said shares shall be effective, or
(b) the participant shall have represented at the time of
purchase, in form and substance satisfactory to the Company, that it is his
intention to purchase the shares for investment and not for resale or
distribution.
ARTICLE 11. ADMINISTRATION
11.1. Appointment of Committee. The Board of Directors shall appoint a
committee (the "Committee") to administer the Plan, which shall consist of no
fewer than three members of the Board of Directors, each of whom shall qualify
as a "disinterested person" with respect to the Plan, as defined in SEC
Regulation ss. 240.16b-3(c)(2)(k).
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11.2. Authority of Committee. Subject to the express provisions of the
Plan, the Committee shall have plenary authority in its discretion to interpret
and construe any and all provisions of the Plan, to adopt rules and regulations
for administering the Plan, to appoint custodians, accountants and other
advisors, and to make all other determinations deemed necessary or advisable for
administrating the Plan. The Committee's determination on the foregoing matters
shall be conclusive.
11.3. Rules Governing the Administration of the Committee. The Board of
Directors may from time to time appoint members of the Committee in substitution
for or in addition to members previously appointed and may fill vacancies,
however caused, in the Committee. The Committee may select one of its members as
its Chairman and shall hold its meetings at such times and places as it shall
deem advisable and may hold telephonic meetings. A majority of its members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. The Committee may correct any defect or omission or
reconcile any inconsistency in the Plan, in the manner and to the extent it
shall deem desirable. Any decision or determination reduced to writing and
signed by a majority of the members of the Committee shall be as fully effective
as if it had been made by a majority vote at a meeting duly called and held. The
Committee may appoint a secretary and shall make such rules and regulations for
the conduct of its business as it shall deem advisable.
ARTICLE 12. MISCELLANEOUS
12.1. Designation of Beneficiary. A participant may file with the
Employee Benefits Department of the Company, a written designation of a
beneficiary who is to receive any stock and/or cash under the Plan upon the
participant's death. Such beneficiary designation may be changed by the
participant at any time by written notice to the Employee Benefits Department of
the Company. Upon the death of a participant and upon receipt by the Company of
proof of the identity and existence at the participant's death of a beneficiary
validly designated by him under the Plan, the Company shall deliver such stock
and/or cash to such beneficiary. Upon the death of a participant and in the
absence of a validly designated surviving beneficiary, the Company shall deliver
such stock and/or cash to the executor or administrator of the deceased
participant's estate, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such stock and/or to the spouse or to any one or more dependents of the deceased
participant as the company may designate. No beneficiary shall, prior to the
death of the participant by whom he has been designated, acquire any interest in
the stock or cash credited to the participant under the Plan.
12.2. Transferability. Neither payroll deductions credited a
participant's account nor any rights with regard to the exercise of an option or
to receive stock under the Plan may be assigned, transferred, pledged, or
otherwise disposed of in any way by the participant other than by will or the
laws of descent and distribution. Any such attempted assignment, transfer,
pledge or other disposition shall be without effect, except that the Company may
treat such act as an election to withdraw funds in accordance with Section 7.2.
12.3. Use of Funds. All payroll deductions received or held by the
Company under this Plan may be used by the Company for any corporate purpose and
the Company shall not be obligated to segregate such payroll deductions.
12.4. Adjustment Upon Changes in Capitalization.
(a) If, while any options are outstanding, the outstanding shares
of Common Stock are increased, decreased, changed into, or exchanged for a
different number of kind of shares or securities of the Company through
reorganization, merger, recapitalization, reclassification, stock split,
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reverse stock split or similar transaction, appropriate and proportionate
adjustments may be made by the Committee in the number and/or kind of shares
which are subject to purchase under outstanding options and in the option
exercise price or prices applicable to such outstanding options. In additions,
in any such event, the number and/or kind of shares which may be offered in the
Offerings described in Article 4 hereof shall also be proportionately adjusted.
No adjustments shall be made, however, for stock dividends. For purposes of this
paragraph (a), any distribution of shares of shareholders in an amount
aggregating 20% or more of the outstanding shares shall be deemed a stock split
and any distributions of shares aggregating less than 20% of the outstanding
shares shall be deemed a stock dividend.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all of the property or stock of the Company to
another corporation, the holder of each option then outstanding under the Plan
will thereafter be entitled to receive at the next Offering Termination Date
upon the exercise of such option for each share as to which such option shall be
exercised, as nearly as reasonably may be determined, the cash, securities
and/or property which a holder of one share of the Common Stock was entitled to
receive upon and at the time of such transaction. The Board of Directors shall
take such steps in connection with such transactions as the Board shall deem
necessary to assure that the provisions of this Section 12.4 shall thereafter be
applicable, as nearly as reasonably may be determined, in relation to the said
cash, securities and/or property as to which such holder of such option might
thereafter be entitled to receive.
12.5. Amendment and Termination. The Board of Directors shall have
complete power and authority to terminate or amend the Plan; provided, however,
that the Board of Directors shall not, without the approval of the stockholders
of the Corporation (a) increase the maximum number of shares which may be issued
under any Offering (except pursuant to Section 12.4); or (b) amend the
requirements as to the class of employees eligible to purchase stock under the
Plan or permit the members of the Committee to purchase stock under the Plan. No
termination, modification, or amendment of the Plan may, without the consent of
an Employee then having an option under the Plan to purchase Common Stock,
adversely affect the rights of such Employee under such option.
12.6. Effective Date. The Plan has been approved by the Board of
Directors and adopted by the Company on November 8, 1994 effective as of such
date, subject, however, to approval by the stockholders of the Company or at
special or annual meeting of the stockholders held within 12 months after the
Plan's adoption date. If the Plan is not so approved, the Plan shall not become
effective. Offerings may commence, however, prior to stockholder approval, but
no options may be exercised until after such approval.
12.7. No Employment Rights. The Plan does not, directly or indirectly,
create any right for the benefit of any Employee or class of Employees to
purchase any shares under the Plan, or create in any Employee or class of
Employees any right with respect to continuation of employment by the Company or
any Subsidiary, and it shall not be deemed to interfere in any way with the
Company's or any Subsidiary's right to terminate, or otherwise modify, an
Employees' employment at any time.
12.8. Effect of Plan. The provisions of the Plan shall, in accordance
with its terms, be binding upon, and inure to the benefit of, all successors of
each participant in the Plan, including, without limitation, such participant's
estate and the executors, administrators or trustees thereof, heirs and
legatees, and any receiver, trustee in bankruptcy or representative of creditors
of such employee.
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ARTICLE 13. EXECUTION
To record the adoption of the Plan as set forth above, the Company has
caused its duly authorized officer to execute this Plan document as of the 8th
day of November, 1994.
SKYWEST, INC.
By: /s/ Eric Christensen
---------------------------
Its: Corporate Secretary
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