UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities
Exchange Act of 1934 (Amendment No.
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Filed by the
Registrant
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Filed by a
Party other than the Registrant
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Check the appropriate
box:
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Preliminary
Proxy Statement
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CONFIDENTIAL, FOR USE
OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional
Materials
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Soliciting
Material under §.240.14a-12
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JETBLUE AIRWAYS CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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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):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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Fee
paid previously with preliminary materials.
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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.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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JETBLUE AIRWAYS CORPORATION
27-01 Queens Plaza North
Long Island City, New York 11101
April 5, 2016
To our Stockholders:
It is our pleasure to invite you to attend
our 2016 annual meeting of stockholders, which will be held at our corporate headquarters located at 27-01 Queens Plaza North,
Long Island City, New York on Tuesday, May 17, 2016, beginning at 10:00 a.m. (Eastern Time). You may also attend the meeting virtually
via the Internet at
www.virtualshareholdermeeting.com/jblu2016,
where you will be able to vote electronically and
submit questions during the meeting. You will need the 12-digit control number included with these proxy materials to attend the
annual meeting virtually. The following notice of annual meeting of stockholders outlines the business to be conducted at the
meeting. Only stockholders of record at the close of business on March 21, 2016 will be entitled to notice of and to vote at the
annual meeting.
As in the past, we are using the Internet as
our primary means of furnishing proxy materials to stockholders. Accordingly, most stockholders will not receive copies of our
proxy materials. We instead are mailing a notice with instructions for accessing the proxy materials and voting via the Internet
(the “Notice of Internet Availability”). We encourage you to review these materials and vote your shares. This delivery
method allows us to conserve natural resources and reduce the cost of delivery while also meeting our obligations to you, our stockholders,
to provide information relevant to your continued investment in JetBlue. If you received the Notice of Internet Availability by
mail and would like to receive a printed copy of our proxy materials, please follow the instructions for requesting such materials
included in the Notice of Internet Availability.
You may vote via the Internet, by telephone or,
if you receive a paper proxy card in the mail, by mailing the completed proxy card. If you attend the annual meeting, you may vote
your shares at the annual meeting (in person or virtually via the Internet) even if you previously voted your proxy. Please vote
as soon as possible to ensure that your shares will be represented and counted at the annual meeting.
Very truly yours,
Robin Hayes
Chief Executive Officer, President and Director
On behalf of the Board of Directors of JetBlue
Airways Corporation
Table of Contents
JETBLUE AIRWAYS CORPORATION
27-01 Queens Plaza North
Long Island City, New York 11101
Notice
of Annual Meeting of Stockholders
To be held on May 17, 2016
10:00 a.m. (Eastern
Time)
27-01 Queens Plaza North, Long Island City, New York and via the
Internet
at www.virtualshareholdermeeting.com/jblu2016.
Items of Business
We are holding the 2016 annual meeting of stockholders for the following
purposes:
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To elect ten directors nominated by the
Board of Directors to serve until the 2017 annual meeting of stockholders;
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2.
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To ratify the selection of Ernst & Young LLP
(E&Y) as our independent registered public accounting firm for the fiscal year ending December 31, 2016;
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3.
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To approve, on an advisory basis, the compensation
of our named executive officers;
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4.
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To approve amendments to our certificate of incorporation
permitting the removal of directors without cause; and
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5.
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To transact such other business as may properly come
before the annual meeting and any postponement(s) or adjournment(s) thereof.
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The proxy statement describes these items in more detail. As of the
date of this notice, we have not received notice of any other matters that may be properly presented at the annual meeting.
Record Date:
March 21, 2016
Voting:
YOUR VOTE IS VERY IMPORTANT.
Whether
or not you plan to attend the annual meeting of stockholders in person or virtually via the Internet, we urge you to vote and
submit your proxy in order to ensure the presence of a quorum. You have the following options for submitting your vote before
the 2016 annual meeting: Internet, toll-free telephone, mobile device or mail. If you are a beneficial owner whose shares are
held of record by a broker, your broker has discretionary voting authority to vote your shares only on routine matters, which
at our upcoming meeting will only be the ratification of the selection of our independent registered public accounting firm (Proposal
No. 2), even if the broker does not receive voting instructions from you. Non-routine matters to be considered at the meeting
are the election of directors (Proposal No. 1), the advisory vote to approve compensation of our named executive officers (Proposal
No. 3), and the approval of amendments to our certificate of incorporation to permit the removal of directors without cause (Proposal
No. 4), as described further in the proxy statement. Your broker does not have discretionary authority to vote on non-routine
matters without instructions from you, in which case a “broker non-vote” will occur and your shares will not be voted
on these matters.
Date These Proxy Materials Are First Being
Made Available on the Internet:
On or about April 5, 2016
IF YOU PLAN TO ATTEND
Only stockholders and certain other permitted attendees may attend
the annual meeting. Please note that space limitations make it necessary to limit in person attendance to stockholders and one
guest. Admission to the annual meeting will be on a first-come, first-serve basis. Registration will begin at 9:00 a.m. Either
an admission ticket or proof of ownership of JetBlue stock, as well as a form of government-issued photo identification, such as
a driver’s license or passport, must be presented in order to be admitted to the annual meeting. If you are a stockholder
of record, your admission ticket is attached to your proxy card. Stockholders holding stock in an account at a brokerage firm,
bank, broker-dealer, or other similar organization (“street name” holders) will need to bring a copy of a brokerage
statement reflecting their stock ownership as of the record date. No cameras, recording equipment, electronic devices, use of cell
phones, large bags or packages will be permitted at the annual meeting.
You will need your twelve digit control number to attend and vote
virtually.
By order of the Board of Directors
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April 5, 2016
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James G. Hnat
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Long Island City, New York
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General Counsel and Corporate Secretary
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 17, 2016
The notice of annual
meeting, the proxy statement and our fiscal 2015 annual report to stockholders are available on our website at
http://investor.jetblue.com.
Additionally, in accordance with Securities and Exchange Commission rules, you may access our proxy materials at
www.proxyvote.com.
2016 Proxy Statement – Summary
This summary highlights information contained elsewhere in this
Proxy Statement. This summary does not contain all of the information you should consider. You should read the entire Proxy Statement
carefully before voting.
GENERAL INFORMATION
(see pages 6-9)
Meeting:
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Annual Meeting of Stockholders
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Date:
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May 17, 2016
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Time:
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10:00 a.m. (Eastern Time)
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Place:
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27-01
Queens Plaza North, Long Island City, New York and via the Internet at
www.virtualshareholdermeeting.com/jblu2016
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Record Date:
March 21, 2016
Stock Symbol:
JBLU
Exchange:
NASDAQ
Common Stock Outstanding as of Record Date:
322,046,556
Registrar & Transfer Agent:
Computershare
State of Incorporation:
Delaware
Corporate Headquarters:
27-01 Queens Plaza North, Long Island
City, NY 11101
Corporate Website:
www.jetblue.com
Investor Relations Website:
http://investor.jetblue.com
2017 Annual Meeting Deadline for Stockholder Proposals:
December
6, 2016
EXECUTIVE COMPENSATION
(see pages 24 -49)
CEO:
Robin Hayes (age: 49, tenure as CEO 1 years)*
CEO 2015 Total Direct Compensation:
$3,276,159
Base Salary:
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$550,000
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Annual Incentive Bonus:
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$718,850
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Long-Term Equity:
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RSUs paid with respect
to 2015 performance period
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$960,000
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PSUs
granted in 2015 for 2015-2017 performance period
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$700,000
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Employment Agreement:
Yes (through 2018)
Clawback Policy:
Yes
Tax Gross Up Policy:
No new agreements for senior management
going forward
Stock Ownership Guidelines:
3x base salary for CEO, 1x base
salary for other named executive officers
CORPORATE GOVERNANCE PRACTICES
Director Nominees:
10
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One management-employee
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Nine independent
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Director Term:
One year
Election Standard for Director Election:
Majority of votes
cast (abstentions are not counted as votes cast)
Supermajority Vote Requirements:
No
Board Meetings in 2015:
6
Standing Board Committees (Meetings in 2015):
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Audit Committee:
10
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Compensation Committee:
7
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Corporate Governance & Nominating Committee:
5
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Airline Safety Committee:
4
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ITEMS OF BUSINESS:
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Election of Directors
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2.
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Ratification of Appointment of Independent Registered Public Accounting
Firm (Ernst & Young LLP)
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3.
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Approval, on an Advisory Basis, of the Compensation of Our Named Executive
Officers
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4.
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Approval of Amendments to Our Certificate of Incorporation
to Permit the Removal of Directors Without Cause
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* Mr. Hayes became our Chief Executive Officer effective February
16, 2015.
JETBLUE AIRWAYS CORPORATION
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2016 Proxy Statement
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5
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PROXY
STATEMENT 2016 ANNUAL MEETING OF STOCKHOLDERS
We are making this proxy statement available to you on or about April 5,
2015 in connection with the solicitation of proxies by our board of directors (the “Board of Directors” or the “Board”)
for the JetBlue Airways Corporation 2016 annual meeting of stockholders. At JetBlue and in this proxy statement, we refer to our
employees as crewmembers. Also in this proxy statement, we sometimes refer to JetBlue as the “Company,” “we”
or “us,” and to the 2016 annual meeting of stockholders as the “annual meeting.” When we refer to the Company’s
fiscal year, we mean the annual period ended or ending on December 31 of the stated year. Information in this proxy statement for
2015 generally refers to our 2015 fiscal year, which was from January 1 through December 31, 2015.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL
MEETING AND VOTING
What is the record date?
The record date (the “Record Date”) for the annual meeting
is March 21, 2016. On the Record Date, there were 322,046,556 shares of our common stock outstanding
and there were no outstanding shares of any other class of stock.
Who is entitled to vote?
Only stockholders of record at the close of business on the Record
Date are entitled to vote at the annual meeting and any postponement(s) or adjournments thereof. Holders of shares of common stock
as of the Record Date are entitled to cast one vote per share on all matters.
What is the difference between holding shares as a holder of record
and as a beneficial owner?
Most of our stockholders hold their shares in an account at a brokerage
firm, bank, broker dealer or other nominee holder, rather than holding share certificates in their own name. As summarized below,
there are some distinctions between shares held of record and those owned beneficially.
Stockholder of Record
If on the Record Date, your shares were registered directly in your
name with our transfer agent, Computershare Trust Company, N.A., then you are a stockholder of record (also known as a “registered
holder”) who may vote at the annual meeting. As the stockholder of record, you have the right to direct the voting of your
shares by returning the enclosed proxy card to us or to vote in person or virtually at the annual meeting. Whether or not you plan
to attend the annual meeting in person or virtually, please complete, date and sign the enclosed proxy card and provide specific
voting instructions to ensure that your shares will be voted at the annual meeting.
Beneficial Owner
If on the Record Date, your shares were held in an account at a brokerage
firm, bank, broker-dealer or other similar organization, you are considered the beneficial owner of shares held “in street
name,” and the Notice is being forwarded to you by that organization. The organization holding your account is considered
the stockholder of record for purposes of voting at the annual meeting. As the beneficial owner, you have the right to instruct
your nominee holder on how to vote your shares and to attend the annual meeting. However, since you are not the stockholder of
record, you may not vote these shares in person virtually at the annual meeting unless you receive a valid proxy from your brokerage
firm, bank, broker-dealer or other nominee holder. To obtain a valid proxy, you must make a special request of your brokerage firm,
bank, broker-dealer or other nominee holder. If you do not make this request, you can still vote by completing your proxy card
and delivering the proxy card to your nominee holder; however, you will not be able to vote online at the annual meeting.
JETBLUE AIRWAYS CORPORATION
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2016 Proxy Statement
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6
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How do I vote?
Registered holders may vote:
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By Internet:
go to
www.proxyvote.com
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By toll-free telephone:
call 1-800-690-6903;
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By mobile device;
or
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By mail (if you received a paper copy of the proxy materials by mail):
mark, sign, date and promptly mail the enclosed
proxy card in the postage-paid envelope.
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If your shares are held in the name of a broker, bank or other holder
of record, follow the voting instructions you receive from the holder of record to vote your shares.
Why did I receive a Notice in the mail regarding the Internet
availability of proxy materials instead of a full set of proxy materials?
Pursuant to rules adopted by the
Securities and Exchange Commission (“SEC”), the Company has elected to provide access to its proxy materials over
the Internet. Accordingly, the Company is sending such Notice to the Company’s stockholders of record and beneficial
owners. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or
request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet
or to request a printed copy may be found in the Notice. In addition, stockholders may request to receive proxy materials in
printed form by mail or electronically by email on an ongoing basis. The Board of Directors encourages you to take advantage
of the availability of the proxy materials on the Internet.
What does it mean if I receive more than one proxy card?
If your shares are registered differently or are held in more than
one account, you will receive more than one proxy card. Please sign and return all proxy cards to ensure that all of your shares
are voted.
How will my shares be voted at the annual meeting if I do not
specify on the proxy card how I want my shares to be voted?
If you are the record holder of your shares and do not specify on
your proxy card (or when giving your proxy by telephone or the Internet) how you want to vote your shares, your shares will be
voted:
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FOR
the election of each of the ten director candidates nominated by the Board of Directors;
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FOR
the ratification of the selection of Ernst & Young LLP (Ernst & Young) as our independent registered
public accounting firm for the fiscal year ending December 31, 2016;
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FOR
advisory approval of the compensation of our named executive officers;
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FOR
approval of amendments to our certificate of incorporation to permit the removal of directors without cause;
and
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in accordance with the best judgment of the named proxies on any other matters properly brought
before the annual meeting and any postponement(s) or adjournment(s) thereof.
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If you are a beneficial owner of shares and do
not specify how you want to vote, your shares may not be voted by the record holder and will not be considered as present and entitled
to vote on any matter to be considered at the annual meeting, except with respect to the ratification of the Company’s independent
auditors. If your shares are held of record by a brokerage firm bank, broker-dealer, or other nominee, we urge you to give instructions
to your brokerage firm bank, broker-dealer, or other nominee as to how you wish your shares to be voted so you may participate
in the stockholder voting on these important matters.
What can I do if I change my mind after I vote?
Any proxy may be revoked at any time prior
to its exercise at the annual meeting. A stockholder who delivers an executed proxy pursuant to this solicitation may revoke
it at any time before it is exercised by (i) executing and delivering a later-dated proxy card to our Corporate Secretary
prior to the annual meeting; (ii) delivering written notice of revocation of the proxy to our Corporate Secretary prior to
the annual meeting; (iii) voting again by telephone, by mobile device or over the Internet prior to 11:59 p.m., Eastern Time,
on May 16, 2016; or (iv) attending and voting online at the annual meeting. Attendance at the annual meeting, in and of
itself, will not constitute a revocation of a proxy. If you hold your shares through a brokerage firm, bank, broker-dealer or
other nominee, you may revoke any prior voting instructions by contacting that firm or by voting in person via legal proxy at
the annual meeting.
JETBLUE
AIRWAYS CORPORATION
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2016 Proxy Statement
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What is a quorum?
To carry on the business of the annual meeting, a minimum number of
shares, constituting a quorum, must be present. The quorum for the annual meeting is a majority of the outstanding common stock
of the Company represented in person or by proxy. Abstentions and “broker non-votes” (which are explained below) are
counted as present to determine whether there is a quorum for the annual meeting.
What are broker non-votes?
A “broker non-vote” occurs
when a beneficial owner of shares held by a broker, bank or other nominee fails to provide the record holder with voting
instructions on any non-routine matters brought to a vote at the annual meeting. “Broker non-votes” are not
counted as votes for or against the proposal in question or as abstentions. If you are a beneficial owner whose shares are
held of record by a broker, your broker has discretionary voting authority to vote your shares only on routine matters, such
as the ratification of selection of our independent registered public accounting firm (Proposal No. 2), even if the broker
does not receive voting instructions from you. Non-routine matters include the election of directors (Proposal No. 1), the
advisory vote to approve the compensation of our named executive officers (Proposal No. 3), and approval of amendments to
amend our certificate of incorporation to permit the removal of directors without cause (Proposal No. 4). Your broker does
not have discretionary authority to vote on non-routine matters without instructions from you, in which case a “broker
non-vote” will occur and your shares will not be voted on these matters.
What vote is required to adopt each of the proposals?
Proposal 1: Election of Directors
We have adopted majority voting procedures
for the election of directors in uncontested elections. If a quorum is present, a nominee for election to a position on the
Board of Directors will be elected by a majority of the votes cast at the meeting (that is, the number of shares voted
“for” the nominee must exceed the number of shares voted “against” the nominee). However, a director
who fails to receive the required number of votes at the next annual meeting of stockholders at which he or she faces
reelection is required to tender his or her resignation to the Board and the Board may either accept the resignation or
disclose its reasons for not doing so in a report filed with the SEC within 90 days of the certification of election results.
As discussed above, if your broker holds shares in your name and delivers this proxy statement to you, the broker is not
entitled to vote your shares on this proposal without your instructions. Abstentions and broker non-votes are not counted as
votes cast.
Proposal 2: Ratification of Selection
of Independent Registered Public Accounting Firm
The affirmative vote of a majority of the
votes represented at the annual meeting, either in person or by proxy, and entitled to vote on this proposal, is required to
ratify the selection of the independent registered public accounting firm. Abstentions will be counted as present for the
purposes of this vote, and therefore will have the same effect as a vote against the proposal. Broker non-votes will be
counted as present and are entitled to vote on the proposal.
Proposal 3: Approval, on an Advisory Basis,
of the Compensation of Our Named Executive Officers
The affirmative vote of a majority of the
votes represented at the annual meeting, either in person or by proxy, and entitled to vote on this proposal, is required to
approve the advisory vote on executive compensation. The results of this vote are not binding on the Board, whether or not
the proposal is passed. In evaluating the stockholder vote on an advisory proposal, the Board will consider the voting
results in their entirety. Abstentions will be counted as present for the purposes of this vote, and therefore will have the
same effect as a vote against this proposal. Broker non-votes will not be counted as present and are not entitled to vote on
the proposal.
Proposal 4: Approval of Amendments to
Our Certificate of Incorporation to Permit the Removal of Directors Without Cause
Approval of Proposal 4, the amendment of
our certificate of incorporation to permit the removal of directors without cause, requires the affirmative vote of a
majority of the votes represented at the annual meeting, either in person or by proxy, and entitled to vote on this proposal.
Abstentions will be counted as present for the purposes of this vote, and therefore will have the same effect as a vote
against the proposal. Broker non-votes will not be counted as present and are not entitled to vote on the proposal.
JETBLUE AIRWAYS CORPORATION
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2016 Proxy Statement
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How do foreign owners vote?
To comply with restrictions imposed by federal law on foreign ownership
of U.S. airlines, our Amended and Restated Certificate of Incorporation and our Amended and Restated Bylaws (the “Bylaws”)
restrict foreign ownership of shares of our common stock. The restrictions imposed by federal law currently require that no more
than 25% of our voting stock be owned or controlled, directly or indirectly, by persons who are not United States citizens. Our
Bylaws provide that no shares of our common stock may be voted by or at the direction of non-citizens unless such shares are registered
on a separate stock record, which we refer to as the “foreign stock record.” Our Bylaws further provide that no shares
of our common stock will be registered on the foreign stock record if the amount so registered would exceed the foreign ownership
restrictions imposed by federal law. Any holder of JetBlue common stock who is not a United States citizen and has not registered
its shares on the foreign stock record maintained by us is not be permitted to vote its shares at the annual meeting. The enclosed
proxy card contains a certification that by signing the proxy card or voting by telephone or electronically, the stockholder certifies
that such stockholder is a United States citizen as that term is defined in the Federal Aviation Act or that the shares represented
by the proxy card have been registered on our foreign stock record. As of the Record Date for the annual meeting, shares representing
less than 25% of our total outstanding voting stock are registered on the foreign stock record.
Under Section 40102(a)(15) of the Federal Aviation Act, the term “citizen
of the United States” is defined as: (i) an individual who is a citizen of the United States, (ii) a partnership each of
whose partners is an individual who is a citizen of the United States, or (iii) a corporation or association organized under the
laws of the United States or a state, the District of Columbia or a territory or possession of the United States of which the president
and at least two-thirds of the Board of Directors and other managing officers are citizens of the United States, and in which at
least 75% of the voting interest is owned or controlled by persons that are citizens of the United States.
Who pays for soliciting the proxies?
We pay for the cost of soliciting the proxies. We have retained Morrow
& Co., LLC, 470 West Avenue, Stamford, CT 06902, a professional soliciting organization, to assist in soliciting proxies from
brokerage firms, custodians and other fiduciaries. The Company expects the fees for Morrow & Co., LLC to be approximately $7,500
plus expenses. In addition, our directors, officers and associates may, without additional compensation, also solicit proxies by
mail, telephone, personal contact, facsimile email or through similar methods. We will, upon request, reimburse brokerage firms
and others for their reasonable expenses in forwarding solicitation material to the beneficial owners of our stock.
Will the annual meeting be webcast?
Yes. In addition to attending in person, you
may attend the meeting virtually via the Internet at
www.virtualshareholdermeeting.com/jblu2016
, where you will be able
to vote electronically and submit questions during the meeting. The audio broadcast will be archived on that website for at least
120 days.
What is “householding” and how does it affect me?
The SEC has adopted rules that permit companies and intermediaries
such as brokers to satisfy delivery requirements for proxy statements with respect to two or more stockholders sharing the same
address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as
“householding,” potentially provides extra convenience for stockholders and cost savings for companies. We and some
brokers household proxy materials, delivering a single proxy statement or annual report to multiple stockholders sharing an address,
unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker
or us that they or we will be householding materials to your address, householding
will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate
in householding and would prefer to receive a separate proxy statement or annual report, please notify us by sending a written
request to Investor Relations, JetBlue Airways Corporation, 27-01 Queens Plaza North, Long Island City, New York 11101 or by calling
us at (718) 286-7900. You may also notify us to request delivery of a single copy of our annual report or proxy statement if you
currently share an address with another stockholder and are receiving multiple copies of our annual report or proxy statement.
Is there a list of stockholders
entitled to vote at the annual meeting?
The names of stockholders entitled to vote at the annual meeting will
be available at the annual meeting and for ten days prior to the annual meeting for any purpose germane to the annual meeting,
between the hours of 9:00 a.m. and 4:30 p.m. (Eastern Time), at our principal executive offices at 27-01 Queens Plaza North, Long
Island City, New York 11101, by contacting our General Counsel, James Hnat.
When will the voting
results be announced?
We will announce preliminary voting results at the annual meeting.
We will report final results on our website at
www.jetblue.com
and in a filing with the SEC on a Form 8-K.
JETBLUE AIRWAYS CORPORATION
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2016 Proxy Statement
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9
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PROPOSAL 1
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ELECTION
OF DIRECTORS
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There are currently eleven members of our Board of Directors.
Assuming the election of all nominees, immediately following the annual meeting the size of our Board of Directors will be set
at ten directors. Mr. Jens Bischof, a director since 2011, is not standing for re-election in May. The Company thanks Mr. Bischof
for his exemplary service to JetBlue. As discussed in greater detail below, the Board is recommending that you reelect all of the
nominees for a one-year term.
Based on the recommendation of the Corporate Governance and Nominating
Committee, the Board of Directors has nominated Peter Boneparth, David Checketts, Stephan Gemkow, Virginia Gambale, Robin Hayes,
Ellen Jewett, Stanley McChrystal, Joel Peterson, Frank Sica and Thomas Winkelmann, each a current director of the Company, each
to be elected as a director of the Company to serve on our Board of Directors until the 2017 annual meeting of stockholders or
until such time as until their respective successors have been duly elected and qualified or until his or her prior death, disability,
resignation, retirement, disqualification or removal from office.
We do not know of any reason why any nominee named in this proxy
statement would be unable or unwilling to serve as a director if elected. If any nominee is unable or unwilling to serve as a director
if elected, the shares of common stock represented by all valid proxies will be voted at the annual meeting for the election of
such substitute as the Board may recommend. The Board may reduce the number of directors to eliminate the vacancy or the Board
may fill the vacancy at a later date after selecting an appropriate nominee. If a quorum is present, a nominee for election to
a position on the Board of Directors will be elected by a majority of the votes cast at the meeting (that is, the number of shares
voted “for” the nominee must exceed the number of shares voted “against” the nominee). Abstentions and
broker non-votes are not counted as votes cast. However, a director who fails to receive the required number of votes at the next
annual meeting of stockholders at which he or she faces reelection is required to tender his or her resignation to the Board and
the Board may either accept the resignation or disclose its reasons for not doing so in a report filed with the SEC within 90 days
of the certification of election results.
The Board of Directors recommends that stockholders
vote “FOR” each nominee.
Nominees for Director
|
|
|
|
Independent
|
Standing
Committee
|
Name
|
Age
|
Position(s)
with the Company
|
Director
Since
|
(Y/N)
|
Memberships
|
Peter
Boneparth
|
56
|
Director
|
2008
|
Y
|
Audit
|
David
Checketts
|
60
|
Director
|
2000
|
Y
|
Compensation
|
Virginia
Gambale
|
56
|
Director
|
2006
|
Y
|
Audit,
Compensation
|
Stephan
Gemkow
|
56
|
Director
|
2008
|
Y
|
Compensation
|
Robin
Hayes
|
49
|
President, CEO &
Director
|
2015
|
N
|
Airline
Safety
|
Ellen
Jewett
|
57
|
Director
|
2011
|
Y
|
Audit
|
Stanley
McChrystal
|
61
|
Director
|
2010
|
Y
|
Airline
Safety, G&N
|
Joel
Peterson
|
68
|
Chairman of the Board
|
1999
|
Y
|
G&N
|
Frank
Sica
|
65
|
Vice Chairman of the
Board
|
1998
|
Y
|
G&N
|
Thomas
Winkelmann
|
56
|
Director
|
2013
|
Y
|
Airline
Safety
|
Director Qualifications and Biographical Information
Our Board is composed of a diverse group of leaders in their respective
fields. Many of the current directors have leadership experience at major domestic and international companies with operations
inside and outside the United States, as well as experience on other companies’ boards, which provides an understanding of
different business processes, challenges and strategies. Other directors have experience at academic institutions or from the U.S.
military which brings unique perspectives to the Board. Further, each of the Company’s directors has other specific qualifications
that make them valuable members of our Board, such as financial literacy, talent and brand management, customer service experience
and crewmember relations, as well as other experience that provides insight into issues we face.
The Board reviews diversity of viewpoints, background, experience,
accomplishments, education and skills when evaluating nominees. The Board believes this diversity is demonstrated in the range
of experiences, attributes and skills of the current members of the Board. The Board believes that such diversity is important
because it provides varied perspectives, which promotes active and constructive discussion among Board members and between the
Board and management, resulting in more effective oversight of management’s formulation and implementation of strategic initiatives.
The Board believes that directors should contribute positively to the existing chemistry and collaborative culture among the Board
members. The Board also believes that its members should possess a commitment to the success of the Company, proven leadership
qualities, sound judgment and a willingness to engage in constructive debate. While we have no formal policy on director diversity,
the Corporate Governance and Nominating Committee seeks to attract and retain directors who have these qualities to achieve an
ultimate goal of a well-rounded Board that functions well as a team, something which is critically important to the
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Company. In determining whether an incumbent director should stand
for reelection, the Corporate Governance and Nominating Committee considers the above factors, as well as that director’s
personal and professional integrity, attendance, preparedness, participation and candor, the individual’s satisfaction of
the criteria for the nomination of directors set forth in our Corporate Governance Guidelines and other relevant factors as determined
by the Board. Periodically, the Corporate Governance and Nominating Committee reviews the Company’s short- and long-term
business plans to gauge what additional current and future skills and experience may be required of the Company’s Board and
any future Board candidates. The Corporate Governance and Nominating Committee seeks to use the results of the assessment process
as it identifies and recruits potential director candidates.
Mr. Boneparth
served as Senior Advisor of Irving
Capital Partners, a private equity group, from 2009 through 2014. He served as president and Chief Executive Officer of the Jones
Apparel Group from 2002 to 2007. Mr. Boneparth is a director of Kohl’s Corporation. As a senior retail executive, Mr. Boneparth’s
qualifications and experience include finance and investment experience, talent management, international business experience,
knowledge of brand enhancement and customer service, oversight of risk management and crewmember relations.
Mr. Checketts
is the Managing
Partner of Checketts Partners Investment Management, a private equity firm founded in 2011 focused on sports, media and entertainment
investments. Its portfolio companies include ScoreBig,Inc. and Veritone Inc. Mr. Checketts served as Chairman and CEO of Legends
Hospitality Management, founded by the NY Yankees and Dallas Cowboys, from December 2011 to October 2015. Mr. Checketts founded
SCP Worldwide in 2006 which owned and operated the St. Louis Blues, Scottrade Center, the 2009 Major League Soccer Champions Real
Salt Lake, Rio Tinto Stadium and ESPN 700 Sports talk radio. From 1994 to 2001, Mr. Checketts was President and Chief Executive
Officer of Madison Square Garden Corporation. From 1991 to 1994, Mr. Checketts was the President of the New York Knicks professional
basketball team. From 1990 to 1991, he was Vice President of Development for the National Basketball Association. From 1984 to
1990, Mr. Checketts was President of the Utah Jazz professional basketball team. As an investor and chairman of an investment
firm, Mr. Checketts’ qualifications and experience include business operations, finance and investment experience, knowledge of
our competitive landscape, and experience with customer service, brand and talent management.
Ms. Gambale
has been a Managing Partner of Azimuth
Partners LLC, a strategic and advisory firm in the field of technology and data communications solutions, since 2003. Prior to
founding Azimuth Partners, Ms. Gambale was a Partner at Deutsche Bank Capital and ABS Ventures from 1999 to 2003. Prior to that,
she held the position of Chief Information Officer at both Bankers Trust Alex Brown and Merrill Lynch. Ms. Gambale serves on the
National Association of Corporate Directors Risk Oversight Advisory Council. Ms. Gambale is an adjunct faculty member for Columbia University’s Masters in Technology Leadership program and is also one of 3 members of the Executive Advisory Board of Columbia University’s Center for Technology Management. Within the past five years, Ms. Gambale served as
a director of Piper Jaffray Companies and Motive, Inc. As a former Chief Information Officer and a partner at a firm involved with
technology and data communications, Ms. Gambale’s qualifications and experience include the management of large-scale, high-transaction
volume systems and technology infrastructure, as well as investing in innovative technologies and developing the ability to adapt
and grow these technologies to significantly enhance the performance of operations, risk management and delivery of new products.
Mr. Gemkow
became
the Chief Executive Officer of Franz Haniel & Cie. GmbH in August 2012. From 2006-2012, he was the Chief Financial
Officer of Deutsche Lufthansa AG and a member of the Deutsche Lufthansa AG Executive Board. Mr. Gemkow joined Deutsche
Lufthansa AG in 1990, working in various management capacities before serving as Senior Vice President Group Finance from
July 2001 until January 2004. Mr. Gemkow then joined the Executive Board of Lufthansa Cargo AG, where he was responsible for
Finance and Human Resources. Within the past five years, Mr. Gemkow served on the boards of GfK SE, a public company in
Germany, Amadeus IT Holding S.A., and Celesio AG. Currently, Mr. Gemkow is Chairman of the Supervisory Board of TAKKT AG as
well as member of the Supervisory Board of Evonik Industries AG. As the former Chief Financial Officer of an international
airline, Mr. Gemkow’s experience and qualifications include finance and investment experience, a deep understanding
of human resources and labor relations, airline operational experience, knowledge of the competitive landscape,
experience with government and regulatory affairs, risk management, including commodities risk, customer service and
brand enhancement, international experience and general airline industry knowledge.
Mr. Hayes
became JetBlue’s Chief Executive
Officer, President and a member of the Board of Directors in February 2015. Prior to this position, Mr. Hayes was JetBlue’s
President, responsible for the airline’s commercial and operations areas including Airport Operations, Customer Support (Reservations),
Flight Operations, Inflight, System Operations, Technical Operations, as well as Communications, Marketing, Network Planning and
Sales from December 2013 until February 2015. He served as JetBlue’s Executive Vice President and Chief Commercial Officer
from August 2008 until December 2013. Prior to joining JetBlue, he was British Airways’ Executive Vice President for The
Americas. Over the span of a 19-year career with British Airways, he also served as Area General Manager for Europe, Latin America
and the Caribbean. As a senior airline executive, Mr. Hayes’ qualifications include over 25 years of aviation experience,
knowledge of the competitive landscape, brand enhancement and management.
Ms. Jewett
is Managing Partner of Canoe Point Capital,
LLC, an investment firm providing capital for early stage companies that have social purpose. From 2010 through 2015, Ms. Jewett was the Managing Director Head
of U.S. Government and Infrastructure for BMO Capital Markets covering airports and infrastructure banking. She sat on the Management Committee of the U.S. Fixed Income Division. Prior to that, Ms.
Jewett spent more than 20 years at Goldman, Sachs & Co. specializing in airport infrastructure financing, most recently serving
as head of the public sector transportation group, and previously, as head of the airport finance group. Ms. Jewett serves as President of the Board of the Brearley School. As a finance professional, Ms. Jewett’s qualifications and experience include
domestic and international finance, business and investment experience, talent management and experience in the areas of airports
and infrastructure.
General (Ret.)
McChrystal
is a retired 34-year U.S. Army veteran of multiple wars. Gen. McChrystal commanded the U.S. and
NATO’s International Security Force in Afghanistan, served as the director of the Joint Staff and was the
Commander of Joint Special Operations Command, where he was responsible for the nation’s deployed military counter
terrorism efforts. Gen. McChrystal is a graduate of the United States Military Academy at West Point, the United States Naval
Command and Staff College and was a military fellow at both the Council on Foreign Relations and the Kennedy School of
Government at Harvard University. General McChrystal is currently teaching a seminar on leadership at the Jackson Institute
for Global Affairs at Yale University and serves alongside his wife Annie on the Board of Directors for the Yellow Ribbon
Fund, a non-profit organization committed to helping wounded veterans and their families. Gen. McChrystal is a director of
Navistar International Corp. and serves on their Finance Committee. He serves as Chairman of the board of Siemens Government
Technologies, Inc., a wholly-owned indirect subsidiary and a Federal Business Entity of Siemens AG, since December 2011.
Since August 2011, he has served as a member of the Board of Advisors of General Atomics, a world leader of resources for
high-technology systems ranging from the nuclear fuel cycle to remotely operated surveillance aircraft, airborne sensors, and
advanced electric,
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electronic, wireless and laser technologies. Within the last five years, Gen. McChrystal served in the board
of Knowledge International. As a former senior military leader, Gen. McChrystal has experience in logistics, air traffic
issues, talent management and experience with government and regulatory affairs.
Mr. Peterson
is the
founding partner of Peterson Partners, LLP, a private equity firm he founded in 1995. He is also the founding partner of
Peterson Ventures, which manages a portfolio of small, early-stage investments and Whitman I Peterson, a real estate
investment fund founded in 2008. From 1973 through 1990, Mr. Peterson served in several positions at Trammell Crow Company, a
commercial real estate development company, including Chief Executive Officer from 1988 through 1990 and Chief Financial
Officer from 1977 to 1985. Mr. Peterson has taught at the Stanford University Graduate School of Business since 1992 where he
is the Robert L. Joss Consulting Professor of Management and has served as a director for the Center for Leadership
Development and Research and on the Advisory Council to the School. He is also an overseer for the Hoover Institution, a
policy think tank at Stanford University, and serves on the board of Franklin Covey. Within the last five years, Mr. Peterson
served on the Board of Ladder Capital Finance Corp. As a private equity investor and former Chief Executive Officer and
Chief Financial Officer of a commercial real estate company, Mr. Peterson’s qualifications and experience include
knowledge of real estate, customer service, talent management and leadership development.
Mr. Sica
has served as a Managing Partner at Tailwind
Capital, a private equity firm, since 2006. From 2004 to 2005, Mr. Sica was a Senior Advisor to Soros Private Funds Management. From 2000 to 2003,
Mr. Sica was President of Soros Private Funds Management LLC, which oversaw the direct real estate and private equity investment
activities of Soros. In 1998, Mr. Sica joined Soros Fund Management, where he was a Managing Director responsible for Soros’
private equity investments. From 1988 to 1998, Mr. Sica was a Managing Director in Morgan Stanley’s Merchant Banking Division.
In 1996, Mr. Sica was elevated to Co-CEO of Morgan Stanley’s Merchant Banking Division. From 1974 to 1977, Mr. Sica was an
officer in the U.S. Air Force. Mr. Sica is a director of CSG Systems International, Inc., Safe Bulkers, Inc. and Kohl’s Corporation.
Within the past five years, Mr. Sica also served as a director of NorthStar Realty Finance Corporation. As a private equity investor,
Mr. Sica’s qualifications and experience include finance and investment experience, talent management, experience in the
areas of real estate, technology, risk management oversight (including commodities risk), general airline industry knowledge and
international business and finance experience.
Mr. Winkelmann
has been Chief Executive Officer
of Lufthansa German Airlines (Hub Munich) since January 1, 2016. He is also a member of the Group Executive Committee of Lufthansa
Group. He served as Chief Executive Officer of Germanwings GmbH from September 2006 through December 2015. Previously, he served
as Vice-President of the Americas for Lufthansa German Airlines. Mr. Winkelmann has held senior management positions for Lufthansa
in the United States since 1998. He started as Manager of Area Management Latin America and the Caribbean. Since September 2000,
as Vice-President of The Americas based in New York, Mr. Winkelmann was responsible for the entire Lufthansa organization in North
and South America. His responsibilities included all operative functions, sales, marketing and the stations. Moreover, he was a
member of the Executive Board of Eurowings Luftverkehrs AG from 2006 to 2008. Before joining Lufthansa in 1998, Mr. Winkelmann
held management positions, among others, at Deutsche Reisebüro GmbH and at Kaufhof AG in Germany and in the U.S. As a senior
airline executive, Mr. Winkelmann’s qualifications and experience include sales, marketing, revenue management, airline operations,
knowledge of North America, Latin American and the Caribbean as well as general airline industry knowledge.
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CORPORATE
GOVERNANCE PRACTICES
Majority of Independent Directors
We have a majority of independent directors serving on our Board.
We currently have only one employee director, Mr. Hayes, our Chief Executive Officer and President, on our Board of eleven members.
For more information, see “Board Meetings and Board Committee Information—Independent Directors.”
Separation of Chairman of the Board and Chief Executive Officer—Board
Leadership Structure
The Board recognizes that one of its key responsibilities is to
evaluate and determine its optimal leadership structure so as to provide independent oversight of management. We believe that the
interests of the Company and our stockholders are best served by separating the positions of Chief Executive Officer and Chairman
of the Board. We believe this governance structure empowers both the Board of Directors and the Chief Executive Officer, and promotes
balance between the authority of those who oversee our business and those who manage it on a day-to-day basis. In our independent
Chairman, our Chief Executive Officer has a counterpart who can be a thought partner. We believe this corporate structure also
permits the Board of Directors to have a healthy dynamic that enables its members to function to the best of their abilities, individually
and as a unit. Nevertheless, the Board recognizes that it is important to retain the organizational flexibility to determine whether
the roles of the Chairman of the Board and Chief Executive Officer should be separated or combined in one individual and that,
given the dynamic and competitive environment in which we operate, the right Board leadership structure may vary as circumstances
warrant. The Board may periodically evaluate whether the Board leadership structure should be changed in light of specific circumstances
applicable to us.
Annual Elections of Board Members
JetBlue’s Bylaws provide that directors are elected annually.
Majority Vote Policy
Each member of our Board of Directors is elected by a majority
of the votes cast in an uncontested election. The majority vote standard requires that a director nominee receive a majority of
the votes cast in an uncontested election in order to be formally elected. For the purpose of uncontested elections, abstentions
and broker non-votes are not counted as votes cast.
Removal of Supermajority Provisions from our Charter Documents
As approved by our stockholders, we removed supermajority voting
requirements from our Bylaws in order to give our stockholders a more meaningful vote in various corporate matters.
Executive Compensation Practices
We strive for transparent and balanced compensation
packages, as discussed more fully in the Compensation Discussion and Analysis, which starts on page 25.
Equity Ownership Guidelines
Our directors hold their equity compensation until their retirement
from our Board. Our Corporate Governance and Nominating Committee adopted stock ownership requirements for management: 3x base
salary for our CEO and 1x base salary for our other named executive officers, to be implemented and met over a five year period,
starting in calendar year 2012. Newly hired or newly appointed named executive officers have five years from the date of hire or
appointment to meet the stock ownership guidelines. As of December 2015, each of our named executive officers met or exceeded our
ownership guidelines, including common stock and unvested restricted stock units but excluding unvested performance stock units
and vested underwater stock options. We anticipate reviewing and revising our executive stock ownership guidelines periodically.
Retirement and Pension Practices
We do not provide our executives with significant post-employment
retirement or pension benefits. We sponsor a retirement plan with a 401(k) component for all of our crewmembers.
Environmental, Sustainability and Corporate Social Responsibility
Practices
Our sustainability strategy focuses on safeguarding
JetBlue’s ability to grow and profit through smart natural-resource planning and long-term consideration of our business
impact. We are achieving this by focusing our sustainability programs on change management, stakeholder engagement and risk mitigation.
This includes waste stream reduction in airports and on airplanes, greenhouse gas measuring and offsetting and biofuels research.
Our Social Responsibility programs include a seasonal farm at T5, our terminal at John F. Kennedy International Airport, planting
trees to improve air quality in our hometown communities and hosting reading programs in the cities we fly to. We engage in a
variety of community initiatives involving business partners and crewmembers including, for example, building playgrounds, making
and donating quilts to children in hospitals and donating books to the communities in which we live and work. We issue annual
Global Reporting Initiative (GRI4) compliant Responsibility Reports, all of which are publically available for comment. More information
on these efforts is available at
http://www.jetblue.com/green.
Corporate Governance Guidelines
We have adopted governance guidelines to
help us maintain the vitality of our Board, including areas relating to Board and committee composition, annual meeting attendance,
stockholder communication with the Board, qualifications and the director candidate selection process including our policy on
consideration of candidates recommended by stockholders and our Code of Business Conduct and our values—Safety, Caring,
Integrity, Passion and Fun. The Corporate Governance Guidelines cover a number of other matters, including the Board’s role
in overseeing executive compensation, compensation and expenses for non-management directors, communications between stockholders
and directors, Board committee structures and assignments and review and approval of related person transactions. These guidelines
are available at
http://investor.jetblue.com
.
Code of Business Conduct
We are committed to operating our business
with high levels of accountability, integrity and responsibility. Our Code of Business Conduct, or the Code, governs our affairs
and is a means by which we commit ourselves to conduct our business in an honest and ethical manner. The Code governs the members
of our Board of Directors, our crewmembers and third parties that represent JetBlue and includes provisions relating to how we
strive to deal with each other, our business partners, our investors and the public. The Code provides for granting of a waiver
of the Code if approved. Any waiver that is granted, and the basis for granting the waiver, will be publicly communicated as appropriate,
including by posting on our website, as soon as practicable. We granted no waivers under our Code of Business Conduct in 2015.
The Code is available at
http://investor.jetblue.com.
We intend to post any amendments and any waivers of our Code of
Business Conduct on our website within four business days of such amendment or waiver.
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Stockholder Communications with the
Board of Directors
Stockholders may communicate with our Board of Directors by sending
correspondence to the JetBlue Board of Directors, c/o Corporate Secretary, JetBlue Airways Corporation, 27-01 Queens Plaza North,
Long Island City, New York 11101. The name of any specific intended director should be noted in the correspondence. Our Corporate
Secretary will forward such correspondence to the intended recipient or as directed by such correspondence; however, our Corporate
Secretary, prior to forwarding any correspondence, has the authority to disregard any communications he deems to be inappropriate,
or to take any other appropriate actions with respect to such inappropriate communication. The Corporate Governance and Nominating
Committee approved procedures with respect to the receipt, review and processing of, and any response to, written communications
sent by stockholders and other interested persons to our Board of Directors, as set forth in our Corporate Governance Guidelines.
Any interested party, including any employee, may make confidential,
anonymous submissions regarding questionable accounting or auditing matters or internal accounting controls and may communicate
directly with the Chairman of the Board by letter to the above address, marked for the attention of the Chairman. Any written communication
regarding accounting, internal accounting controls or other financial matters are processed in accordance with procedures adopted
by the Audit Committee.
Board Oversight of Risk
Our Board of Directors oversees the management of risks inherent
in the operation of the Company’s businesses and the implementation of its strategic plan. The Board performs this oversight
role by relying on several different levels of review. In connection with its reviews of the operations of the Company’s
business and corporate functions, the Board addresses the primary risks associated with those units and functions. In addition,
the Board reviews the risks associated with the Company’s strategic plan at an annual strategic planning session and periodically
throughout the year as part of its consideration of the strategic direction of the Company. Each of the Board’s committees
also oversees the management of Company risks that fall within that committee’s areas of responsibility. In performing this
function, each committee has full access to management, as well as the ability to engage advisors. In addition, the Board monitors
the ways in which the Company attempts to prudently mitigate risks, to the extent reasonably practicable and consistent with the
Company’s long-term strategy.
The Audit Committee oversees the operation of the Company’s
enterprise risk management program, including the identification of the primary risks to the Company’s business and interim
updates of those risks, and periodically monitors and evaluates the primary risks associated with particular business units and
functions. The Company’s Corporate Audit personnel assist management in identifying, evaluating and implementing risk management
controls and methodologies to address identified risks. In connection with its risk management role, at each of its meetings the
Audit Committee meets privately with representatives from the Company’s independent registered public accounting firm, the
head of Corporate Audit and may meet with the Company’s General Counsel. The Audit Committee provides reports to the Board
which describe these activities and related conclusions. The Audit Committee periodically reports to the Board the results of the
risk management program and activities of management’s risk committee.
As part of its oversight of the Company’s executive compensation
program, the Compensation Committee considers the impact of the Company’s executive compensation program, and the incentives
created by the compensation awards that it administers, on the Company’s risk profile. Our management, with the Compensation
Committee, reviews our compensation policies and procedures, including incentives that may create and factors that may reduce the
likelihood of excessive risk taking, to determine whether such incentives and factors present a significant risk to the Company.
Related Party Transaction Policy
We have established written policies and procedures that require
approval or ratification by our Audit Committee of any transaction in excess of $120,000, which involves a “Related Person’s”
entry into an “Interested Transaction”. As defined in our policy, an “Interested Transaction” is any transaction,
arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee
of indebtedness) in which (i) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (ii)
the Company is a participant, and (iii) any Related Person has or will have a direct or indirect interest (other than solely as
a result of being a director or a less than 10 percent beneficial owner of another entity). A “Related Person” is defined
in our policy as any (i) person who is or was (since the beginning of the last fiscal year for which the Company has filed a Form
10-K and proxy statement, even if he or she does not presently serve in that role) an executive officer, director or nominee for
election as a director, (ii) greater than 5 percent beneficial owner of the Company’s common stock, or (iii) immediate family
member of any of the foregoing. Immediate family member includes a person’s spouse, parents, stepparents, children, stepchildren,
siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law and anyone residing in such
person’s home (other than a tenant or employee). Our policies and procedures further provide that only disinterested directors
are entitled to vote on any Interested Transaction presented for Audit Committee approval.
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Transactions
with Related Persons Since the Beginning of Fiscal Year 2015
The Company and its subsidiaries have transactions in the ordinary
course of business with other corporations of which the Company’s executive officers or directors or members of their immediate
families are directors, executive officers, or stockholders. Except as described below, during 2015, there were no actual or proposed
transactions to be disclosed in which we were a participant and the amount involved exceeded $120,000 and in which any related
person, including our executives and directors, had or will have a direct or indirect material interest.
Prior to March 27, 2015, Deutsche Lufthansa AG was a significant
stockholder of JetBlue’s common stock. Each of Mr. Jens Bischof, an officer of Deutsche Lufthansa AG, and Mr. Thomas Winkelmann,
CEO of Germanwings, a Lufthansa subsidiary, were members of our Board of Directors designated by Deutsche Lufthansa AG.
In 2015, Deutsche Lufthansa AG tendered and ultimately exchanged
its €234 million convertible notes, which were secured by JetBlue common stock. The exchange was completed by the end of
the first quarter 2015. Following the tender of the notes and exchange of substantially all of the common stock, Deutsche Lufthansa
AG is no longer deemed a “Related Person”.
As previously reported, the Company receives nacelle maintenance
services from Lufthansa Technik AG, a wholly owned subsidiary of Deutsche Lufthansa AG. We recorded approximately $7 million for the
services, which were provided on an “as needed” basis in 2015.
The Company contracted to receive heavy maintenance services from
Lufthansa Technik AG, a wholly owned subsidiary of Deutsche Lufthansa AG. We recorded approximately $1 million for the services
in 2015.
In 2015, the Company executed an agreement with Oakfield Farms,
a partially owned subsidiary of Deutsche Lufthansa AG, for the provision of on board boxes. We recorded approximately $2 million
for such services in 2015.
The Company contracted with Hawker Pacific, a subsidiary of Lufthansa
Technik AG, to perform maintenance on E190 landing gear. We recorded approximately $6 million for the services in 2015.
As previously reported, the Company receives provisioning services
from LSG SkyChefs, a subsidiary of Deutsche Lufthansa AG, in certain of our BlueCities. We recorded approximately $14 million for
such services in 2015.
As previously reported, we have a contract with LH CityLine, a
subsidiary of Deutsche Lufthansa AG, by which we provide simulator training. The agreement is structured for use of simulator services
on an as needed basis. For 2015, no services were performed under this contract.
As previously reported, Lufthansa Technik AG, a wholly owned subsidiary
of Deutsche Lufthansa AG began providing us with repair services of line replaceable units. There are no minimum commitments under
this arrangement. In 2015, we expensed approximately $18 million.
The Audit Committee approved each arrangement described above
as required by our related party transaction policy.
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BOARD MEETINGS AND BOARD COMMITTEE
INFORMATION
The business of JetBlue is managed under the direction of our
Board of Directors. It has responsibility for establishing broad corporate policies, counseling and providing direction to our
management in the long-term interests of the Company, our stockholders, and for our overall performance. It is not, however, involved
in our operating details on a day-to-day basis. The Board is kept advised of our business through regular reports and analyses
and discussions with our Chief Executive Officer and other officers.
Independent Directors
Our Board of Directors currently has eleven members: Jens Bischof,
Peter Boneparth, David Checketts, Virginia Gambale, Stephan Gemkow, Robin Hayes, Ellen Jewett, Stanley McChrystal, Joel Peterson,
Frank Sica and Thomas Winkelmann. The size of our Board will be reduced to ten members effective at the conclusion of our 2016
annual meeting. Mr. David Barger, who resigned as a director effective February 15, 2015, was the only director who served on our
Board during 2015, other than Mr. Hayes, determined not to be independent.
In connection with the annual meeting and the election of directors,
our Board of Directors reviewed the independence of each director-nominee under the standards set forth in the NASDAQ listing standards.
The NASDAQ definition of independent director includes a series of objective tests. Specifically, a director is deemed independent
under the NASDAQ rules if such director is not an executive officer or employee of the Company or any other individual having a
relationship which, in the opinion of the Company’s Board, would interfere with the exercise of independent judgment in carrying
out the responsibilities of a director. Generally, the following persons are not considered independent:
•
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a director who is, or at any time during the past three years was, employed by the Company;
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•
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a director who accepted or who has a family member who accepted any compensation from the Company in excess of $120,000 during any period of twelve consecutive months within the three years preceding the determination of independence, other than compensation for board or board committee service, compensation paid to a family member who is an employee (other than an executive officer) of the Company, or benefits under a tax-qualified retirement plan, or non-discretionary compensation.
|
In making these determinations, the Board reviewed and discussed
information provided by the directors with regard to each director’s business and personal activities as they may relate
to JetBlue and our management. Our full Board affirmatively determined that each of Peter Boneparth, David Checketts, Virginia
Gambale, Stephan Gemkow, Ellen Jewett, Stanley McChrystal, Joel Peterson, Frank Sica and Thomas Winkelmann are independent. With
respect to Ms. Gambale, Mr. Checketts and Mr. Gemkow, the Board considered all factors specifically relevant to determining whether
a director has a relationship to the Company which is material to that director’s ability to be independent from management
in connection with the duties of a Compensation Committee member. Further, with respect to Mr. Boneparth, Ms. Gambale and Ms. Jewett,
the Board considered the additional requirements of NASDAQ and the SEC specifically relevant to whether a director is independent
for purposes of serving on the Audit Committee. Based upon the Board’s review, each of our Audit Committee, Compensation
Committee, and Corporate Governance and Nominating Committee of the Board are comprised of directors who have been determined to
be independent under the applicable NASDAQ listing standards and applicable rules and regulations of the SEC. Mr. Hayes is not
independent as defined.
Board Structure and Meetings
Our Board of Directors conducts its business through meetings
of the Board and through activities of its committees. The Board of Directors and its committees meet throughout the year on a
set schedule and also hold special meetings and act by written consent from time to time as appropriate. Board agendas include
regularly scheduled executive sessions of the non-management directors to meet without the presence of management, which are presided
over by our Chairman of the Board, who is currently Joel Peterson. Our Board of Directors currently has an Audit Committee, a Compensation
Committee, a Corporate Governance and Nominating Committee and an Airline Safety Committee. The Board has delegated various responsibilities
and authority to different committees of the Board. From time to time, the Board of Directors appoints ad hoc committees to oversee
special projects for the Board. Committees regularly report on their activities and actions to the full Board of Directors. Members
of the Board have access to all of our crewmembers outside of Board meetings. The Board of Directors held a total of six meetings
during 2015. All of the directors attended at least 75% of the aggregate of all meetings of the Board and of each committee at
the times when he or she was a member of the Board or such committee during fiscal year 2015. The Company has a policy encouraging
at least a majority of our directors to attend each annual meeting of stockholders. All of the members of our Board of Directors
attended our 2015 annual meeting of stockholders held on May 21, 2015.
JETBLUE AIRWAYS CORPORATION
-
2016 Proxy Statement
|
16
|
COMMITTEE MEMBERSHIP AS OF MARCH 2016
|
|
|
|
Corporate
|
|
|
|
|
|
Governance
|
|
|
|
Audit
|
Compensation
|
and Nominating
|
Airline Safety
|
Director
|
Independent (Y/N)
|
Committee
|
Committee
|
Committee
|
Committee
|
Jens Bischof
|
Y
|
|
|
|
|
Peter Boneparth
|
Y
|
Chair
|
|
|
|
David Checketts
|
Y
|
|
X
|
|
|
Virginia Gambale
|
Y
|
X
|
Chair
|
|
|
Stephan Gemkow
|
Y
|
|
X
|
|
|
Robin Hayes
|
N
|
|
|
|
X
|
Ellen Jewett
|
Y
|
X
|
|
|
|
Stanley McChrystal
|
Y
|
|
|
X
|
Chair
|
Joel Peterson
|
Y
|
|
|
Chair
|
|
Frank Sica
|
Y
|
|
|
X
|
|
Thomas Winkelmann
|
Y
|
|
|
|
X
|
Audit Committee
On behalf of the Board of Directors, the
Audit Committee oversees (i) the integrity of our financial statements, (ii) the appointment, compensation, qualifications, independence
and performance of our independent registered public accounting firm, (iii) compliance with ethics policies and legal and regulatory
requirements, (iv) the performance of our internal audit function and (v) our financial reporting process and systems of internal
accounting and financial controls. The Audit Committee is also responsible for determining whether to approve any related party
transactions required to be disclosed pursuant to Item 404(a) of Regulation S-K. The responsibilities and activities of the Audit
Committee are further described in “Report of the Audit Committee” and the Audit Committee charter. The Audit Committee
operates under a written charter, which was adopted by the Board of Directors and is available on our website at
http://investor.jetblue.com
.
The current members of the Audit Committee are Peter Boneparth
(Chair), Virginia Gambale and Ellen Jewett, each of whom is an independent director within the meaning of the applicable rules
and regulations of the SEC and NASDAQ. The Board has determined that each member of the Audit Committee is financially literate
within the meaning of the NASDAQ listing standards. In addition, the Board of Directors determined that Mr. Boneparth is an “audit
committee financial expert” as defined under applicable SEC rules. The Audit Committee meets a minimum of four times a year,
and holds such additional meetings as it deems necessary to perform its responsibilities. The Audit Committee met ten times during
fiscal year 2015. A report of the Audit Committee is set forth elsewhere in this proxy statement.
Compensation Committee
The Compensation Committee determines our
compensation policies and the level and forms of compensation provided to our Board members and executive officers, as discussed
more fully under “Compensation Discussion and Analysis” beginning on page 25 of this
proxy statement. In addition, the Compensation Committee reviews and approves stock-based compensation for our directors, officers
and employees, and oversees the administration of our Amended and Restated 2011 Incentive Compensation Plan (the “2011 Incentive
Compensation Plan”) and our Amended and Restated 2011 Crewmember Stock Purchase Plan (the “2011 Crewmember Stock Purchase
Plan”). Additionally, the Compensation Committee approves the “Compensation Discussion and Analysis” with respect
to compensation of the Company’s executive officers in accordance with applicable rules of the SEC and provides a report
in the Company’s annual proxy statement indicating that the Committee recommends to the Board of Directors that the “Compensation
Discussion and Analysis” be included in the Company’s annual proxy statement and annual report on Form 10-K. The Compensation
Committee is authorized to retain and terminate compensation consultants, legal counsel or other advisors to the Committee and
to approve the engagement of any such consultant, counsel or advisor, to the extent it deems necessary or appropriate after specifically
analyzing the independence of any such consultant retained by the Committee. The charter of the Compensation Committee is available
on our website at
http://investor.jetblue.com
. The current members of the Compensation Committee are David Checketts, Virginia
Gambale (chair), and Stephan Gemkow, each of whom is an independent director within the meaning of the applicable NASDAQ rules,
including the enhanced independence requirements applicable to members of compensation committees. The Compensation Committee
meets a minimum of four times a year, and holds such additional meetings as it deems necessary to perform its responsibilities.
The Compensation Committee met seven times during fiscal year 2015. A report of the Compensation Committee is set forth elsewhere
in this proxy statement.
JETBLUE AIRWAYS CORPORATION
-
2016 Proxy Statement
|
17
|
Corporate Governance and Nominating Committee
The Corporate Governance and Nominating
Committee is responsible for developing our corporate governance policies and procedures, and for recommending those policies
and procedures to the Board for adoption. This Committee also is responsible for making recommendations to the Board regarding
the size, structure and functions of the Board and its committees. The Corporate Governance and Nominating Committee identifies
and recommends new director nominees in accordance with selection criteria established by the Board. This Committee also is responsible
for conducting the annual evaluation of the performance of the Board, its committees and each director, ensuring that the Audit,
Compensation, and Corporate Governance and Nominating Committees of the Board and all other Board committees are comprised of
qualified directors, developing and recommending a succession plan for the Chief Executive Officer, and developing and recommending
corporate governance policies and procedures appropriate to the Company. The charter of the Corporate Governance and Nominating
Committee is available on our website at
http://investor.jetblue.com
. The current members of the Corporate Governance
and Nominating Committee are Stanley McChrystal, Joel Peterson (Chair) and Frank Sica, each of whom is an independent director
within the meaning of applicable NASDAQ rules. The Corporate Governance and Nominating Committee meets a minimum of four times
a year, and holds such additional meetings as it deems necessary to perform its responsibilities. The Corporate Governance and
Nominating Committee met five times during fiscal year 2015.
Airline Safety Committee
The Airline Safety Committee is responsible
for monitoring and review of our flight operations and safety management system and reports to the Board of Directors on such
topics. The charter of the Airline Safety Committee is available on our website at
http://investor.jetblue.com
. The current
members of the Airline Safety Committee are Robin Hayes, Stanley McChrystal (Chair) and Thomas Winkelmann. The Airline Safety
Committee meets a minimum of four times a year, and holds such additional meetings as it deems necessary to perform its responsibilities.
The Airline Safety Committee met four times during fiscal year 2015.
Board Candidate Nomination Process
In evaluating and determining whether to nominate a candidate
for a position on our Board, the Corporate Governance and Nominating Committee considers, among other criteria, integrity and values,
relevant experience, diversity, and commitment to enhancing stockholder value. Candidates may come to the attention of the Corporate
Governance and Nominating Committee through recommendations from current Board members, stockholders, officers or other recommendations.
The committee reviews all candidates in the same manner regardless of the source of the recommendation.
The Corporate Governance and Nominating Committee will consider
stockholder recommendations of candidates when the recommendations are properly submitted in accordance with the provisions of
our Bylaws. A stockholder who wishes to recommend a prospective nominee for our Board should notify the Company’s Corporate
Secretary in writing at JetBlue Airways Corporation, 27-01 Queens Plaza North, Long Island City, New York 11101. The notice must
set forth certain information specified in the Bylaws about the stockholder and the proposed action. The size of our Board is currently
set at eleven members but will be reduced to ten members following the annual meeting. Directors are authorized to fill any vacancy
on the Board.
Compensation Committee Interlocks and Insider Participation
None of the current members of our Compensation Committee (whose
names appear under “— Report of the Compensation Committee”) is, or has ever been, an officer or employee of
the Company or any of its subsidiaries. In addition, during the last fiscal year, no executive officer of the Company served as
a member of the Board of Directors or the compensation committee of any other entity that has one or more executive officers serving
on our Board or our Compensation Committee.
JETBLUE AIRWAYS CORPORATION
-
2016 Proxy Statement
|
18
|
DIRECTOR COMPENSATION
Director compensation is evaluated and determined by the Compensation
Committee of our Board of Directors. The following table summarizes compensation paid to our non-employee directors during the
fiscal year ended December 31, 2015. The footnotes and narrative discussion following the table describe details of each form of
compensation paid to our directors and other material factors relating to the director compensation arrangements.
Name
|
Fees Earned or Paid in Cash
|
Stock Awards
|
Options
|
Total
|
(a)
|
($)
(b)
|
($)
(1)
(c)
|
($)
(2)
(d)
|
($)
(h)
|
Robin Hayes
(3)
|
-
|
-
|
|
-
|
David Barger
(3)
|
-
|
-
|
-
|
-
|
Jens Bischof
|
56,250
|
59,999
|
-
|
116,249
|
Peter Boneparth
|
85,000
|
59,999
|
-
|
144,999
|
David Checketts
|
59,500
|
59,999
|
-
|
119,499
|
Virginia Gambale
|
78,500
|
59,999
|
-
|
138,499
|
Stephan Gemkow
|
61,000
|
59,999
|
-
|
120,999
|
Ellen Jewett
|
65,000
|
59,999
|
-
|
124,999
|
Stanley McChrystal
|
70,000
|
59,999
|
-
|
129,999
|
Joel Peterson
|
90,000
|
59,999
|
-
|
149,999
|
Ann Rhoades
(4)
|
35,500
|
59,999
|
-
|
95,499
|
Frank Sica
|
60,000
|
59,999
|
-
|
119,999
|
Thomas Winkelmann
|
58,750
|
59,999
|
-
|
118,749
|
(1)
|
Includes 3,565 deferred
stock units granted on February 13, 2015 to the then-sitting directors. At December 31, 2015, 47,969 deferred stock units
remained outstanding for each of Ms. Gambale, and Messrs. Checketts, Gemkow, Peterson, and Sica, 40,969 for Mr. Boneparth,
34,437 for Mr. Bischof, 34,319 for Gen. McChrystal, 29,067 for Ms. Jewett and 16,083 for Mr. Winkelmann. Ms. Rhoades retired
from the Board of Directors in May 2015. Her vested DSUs were settled in November 2015. Accordingly, as of December 31, 2015,
Ms. Rhoades did not have deferred stock units outstanding. The amount represented reflects the grant date fair value of the
deferred common stock units based on JetBlue’s stock price on the grant date as computed in accordance with Financial
Accounting Standards Board Accounting Standards Codification 718, Compensation — Stock Compensation (“FASB ASC
Topic 718”). Please refer to Note 7 of our consolidated financial statements in our Annual Report on Form 10-K for the
year ended December 31, 2015, as filed with the SEC, for further discussion related to the assumptions used in our valuation.
For information on the valuation assumptions with respect to grants made prior to 2015, please refer to the notes to our financial
statements in our applicable Annual Report on Form 10-K.
|
(2)
|
The Company granted
no stock options in 2015. As of December 31, 2015, 27,000 options remained outstanding for each of Messrs. Peterson and Checketts.
|
(3)
|
Mr.
Hayes and Mr. Barger were employees of the Company in 2015. Mr. Barger retired in February 2015, and Mr. Hayes became a
member of the Board of Directors in February 2015. They did not receive any compensation for their director service to the
Company. Mr. Hayes and Mr. Barger’s compensation is reported in the Summary Compensation Table on page 39 of this proxy
statement.
|
(4)
|
Ms. Rhoades served
on our Board until May 21, 2015. As a result and in accordance with the terms of the DSU award agreement, her 2015 grant of
deferred stock units was forfeited upon her retirement from the board.
|
In 2015, our director compensation package was composed of an
annual retainer fee of $55,000 (paid quarterly) and a committee retainer, with Audit Committee members being paid $10,000 per year
for committee membership, Compensation Committee members being paid $6,000 per year for committee membership, and Corporate Governance
and Nominating Committee and Airline Safety Committee members each being paid $5,000 per year for committee membership. Committee
chairs were paid the following annual retainers: Audit Committee: $30,000; Compensation Committee: $16,000; Corporate Governance
and Nominating Committee: $10,000; and Airline Safety Committee: $10,000. The chairman of the Board is paid $25,000 per year. Board
members also received an annual equity grant of $60,000 in deferred stock units, or DSUs, with a one-year vesting schedule. New
directors were awarded $35,000 in DSUs with 3-year ratable vesting, made at the time a director joins Board. The intended cash-to-equity
allocation of this package is 50% to 50%, with the objective of paying total annual compensation in the range of approximately
$125,000 to $130,000 per Board member to each director who is not a committee chair, assuming attendance at all meetings of the
Board and the standing committees on which the director serves.
In 2015, the Compensation Committee engaged Pay Governance LLC
(“Pay Governance”), a compensation consulting firm, as its independent compensation advisor. At the Compensation Committee’s
request, Pay Governance reviewed our director compensation program and recommended certain changes for the fiscal year 2016, including
a recommendation to increase the amount of compensation our directors receive in the form of equity in order to ensure alignment
with stockholder interests. Following Pay Governance’s recommendations, for the fiscal year 2016, our Board Compensation
package consists of an annual retainer fee of $65,000 (paid quarterly). Fees beyond the annual retainer for both committee membership
and Chair duties are described as “supplemental fees.” The Board chair’s supplemental fee is $50,000. Committee
chairs are paid the following in supplemental fees: Audit Committee: $20,000; Compensation Committee: $10,000; Corporate Governance
and Nominating Committee: $5,000; and Airline Safety Committee: $5,000. Committee membership fees were revised for 2016 as follows:
Audit Committee members receive a supplemental fee of $15,000 per year, Compensation Committee members receive a supplemental fee
of $10,000 per year, Corporate Governance and Nominating Committee members receive a supplemental fee of $10,000 per year and Airline
Safety Committee members receive a supplemental fee of $10,000 per year.
Following the recommendation to
increase in the amount of compensation our directors receive in the form of equity, the Compensation Committee raised the
annual equity grant starting in 2016 to $100,000 in DSUs, with a one-year vesting schedule and a “hold until
retirement” feature. No change was made to the initial equity grant for new directors, which is $35,000 in DSUs with a
three-year ratable vesting. Given the retainer and supplemental fees described above, the intended cash-to-equity allocation
of the revised package is 35% to 65%, with the objective of paying annual compensation of $165,000 per Board member to each
director who is not on a committee.
Our Board expects to review director compensation periodically,
to ensure that the director compensation package remains competitive such that we are able to recruit and retain qualified directors.
Our non-employee directors receive flight benefits and reimbursement of expenses, as set forth below. As is customary in the airline
industry, all members of the Board of Directors and their immediate family may travel without charge on our flights.
In 2015, Mr. Peterson donated his Board cash compensation and
Mr. Sica donated $4,000 of the cash portion of his Board compensation to the JetBlue Crewmember Crisis Fund, a non-profit organization
that assists JetBlue crewmembers facing emergency hardship situations.
We reimburse our directors, including our full-time crewmember
directors, for expenses incurred in attending meetings. In 2015, no directors (including their family members) received $10,000
or more in aggregate perquisites or other personal benefits (including the incremental cost of flight benefits). We do not provide
tax gross-up payments to members of our Board of Directors.
JETBLUE AIRWAYS CORPORATION
-
2016 Proxy Statement
|
19
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information known to the
Company regarding the beneficial ownership of its common stock as of March 21, 2016, by (i) each person known by the Company to
be the beneficial owner of more than 5% of the outstanding shares of its common stock, (ii) each of our directors and nominees,
(iii) each of our named executive officers and (iv) all of our executive officers and directors serving as of March 21, 2016, as
a group. We have one class of voting securities outstanding which is entitled to one vote per share, subject to the limitations
on voting by non-U.S. citizens described below under “Additional Information.” All share and option amounts and share
prices and option exercise prices contained in this proxy statement have been adjusted for our December 2002, November 2003
and December 2005 three-for-two stock splits.
|
|
Common Stock Beneficially
|
|
|
|
|
|
|
Owned and Shares
|
|
|
|
|
|
|
Individuals Have the Right
|
|
|
|
Percentage
|
Executive Officers and Directors Name of Beneficial Owner
|
|
to Acquire within 60 Days
(1)
|
|
Total
(2)
|
|
of Class
|
Robin Hayes
|
|
400,893
|
|
603,216
|
|
*
|
Mark Powers
|
|
241,908
|
|
346,758
|
|
*
|
James Hnat
|
|
82,753
|
|
145,794
|
|
*
|
Martin St. George
|
|
58,668
|
|
96,565
|
|
*
|
Alexander Chatkewitz
|
|
1,045
|
|
9,364
|
|
*
|
Jens Bischof
|
|
-
|
|
38,715
|
|
*
|
Peter Boneparth
|
|
-
|
|
45,247
|
|
*
|
David Checketts
|
|
27,000
|
|
79,247
|
|
*
|
Virginia Gambale
|
|
-
|
|
52,247
|
|
*
|
Stephan Gemkow
|
|
-
|
|
52,247
|
|
*
|
Ellen Jewett
|
|
-
|
|
33,345
|
|
*
|
Stanley McChrystal
|
|
-
|
|
38,597
|
|
*
|
Joel Peterson
|
|
589,240
|
|
641,487
|
|
*
|
Frank Sica
|
|
38,644
|
|
90,891
|
|
*
|
Thomas Winkelmann
|
|
-
|
|
20,361
|
|
*
|
All executive officers and directors as a group (15 persons)
|
|
1,498,819
|
|
2,294,081
|
|
0.5%, 0.7%
|
5% Stockholders Name of Beneficial Owner
|
|
|
|
|
|
|
BlackRock, Inc.
(3)
|
|
|
|
22,089,915
|
|
6.86%
|
FMR LLC
(4)
|
|
|
|
22,268,790
|
|
6.91%
|
PRIMECAP Management Company
(5)
|
|
|
|
20,107,514
|
|
6.24%
|
The Vanguard Group
(6)
|
|
|
|
23,771,021
|
|
7.38%
|
|
|
|
|
|
|
|
*
|
Represents ownership of less than one percent.
|
|
|
(1)
|
Beneficial ownership is determined in accordance with the rules of the SEC and consists of either or both voting or investment power with respect to securities. Shares of common stock issuable upon the exercise of options or warrants or upon the conversion of convertible securities that are immediately exercisable or convertible or that will become exercisable or convertible within 60 days of March 21, 2016 are deemed beneficially owned by the beneficial owner of such options, warrants or convertible securities and are deemed outstanding for the purpose of computing the percentage of shares beneficially owned by the person holding such instruments, but are not deemed outstanding for the purpose of computing the percentage of any other person. This column lists beneficial ownership of voting securities as calculated under SEC rules. Except as otherwise indicated in the footnotes to this table, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. In accordance with SEC rules, this column also includes shares that may be acquired pursuant to stock options that are exercisable within 60 days of March 21, 2016 as follows: Mr. Checketts (27,000), Mr. Hnat (15,000), Mr. Powers (31,500), and Mr. St. George (38,000). Unless otherwise indicated, the address of each person listed in the table is c/o JetBlue Airways Corporation, 27-01 Queens Plaza North, Long Island City, New York 11101. All executive officers and directors as a group beneficially own, or have the right to acquire within 60 days of March 21, 2016, less than 1% of the outstanding common stock. A total of 322,046,556 shares of common stock were outstanding on March 21, 2016, pursuant to rule 13d-3(d)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
|
|
|
(2)
|
This column shows the individual’s total JetBlue stock-based holdings, including the voting securities shown in the “Common Stock Beneficially Owned and Shares Individuals Have the Right to Acquire within 60 Days” column (as described in footnote 1), plus non-voting interests including, as appropriate, deferred stock units, performance stock units and restricted stock units which will not vest or become exercisable within 60 days of March 21, 2016. If all of the equity represented in the Total column were to vest (with no equity cancelled or forfeited), all executive officers and directors, as a group, would own 0.7% of the outstanding common stock.
|
JETBLUE
AIRWAYS CORPORATION
-
2016 Proxy Statement
|
20
|
(3)
|
The information reported is based on a Schedule 13G/A, as filed with the SEC on January 26, 2016, in which BlackRock, Inc. reported that it and certain of its subsidiaries had sole voting power over 21,115,411 shares and sole dispositive power over 22,089,915 shares. The principal business address of BlackRock, Inc. is 55 East 52 St., New York, NY 10055.
|
|
|
(4)
|
The information reported is based on a Schedule 13G/A, as filed with the SEC on February 12, 2016, by FMR, LLC and Abigail P. Johnson, in which FMR LLC, a parent holding company, reported that it and certain of its subsidiaries and affiliates and other companies had sole voting power over 4,983,842 shares and sole dispositive power over 22,268,790 shares. Through their ownership of voting common shares and the execution of a shareholders’ voting agreement, Abigail P. Johnson and other members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC., such that Abigail P. Johnson may be deemed to have sole dispositive power of 22,268,790 shares. However, neither FMR LLC nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act (“Fidelity Funds”) advised by Fidelity Management & Research Company, a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds’ Boards of Trustees. The principal business address of each of FMR LLC is 245 Summer Street, Boston, MA 02210.
|
|
|
(5)
|
The information reported is based on a Schedule 13G/A, as filed with the SEC on February 12, 2016, in which PRIMECAP Management Company reported that it held sole voting power over 9,889,351 shares and sole dispositive power over 20,107,514 shares. The principal business address of PRIMECAP Management Company is 225 South Lake Ave. #400, Pasadena, CA 91101.
|
|
|
(6)
|
The information reported is based on a Schedule 13G/A, as filed with the SEC on February 10, 2016, in which The Vanguard Group reported that it held sole voting and shared dispositive power over 208,681 shares and sole dispositive power over 23,562,340 shares. According to the Schedule 13G/A, Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 208,681 shares of common stock of the Company as a result of its serving as investment manager of collective trust accounts. The principal business address of The Vanguard Group is 100 Vanguard Boulevard, Malvern, PA 19355.
|
JETBLUE
AIRWAYS CORPORATION
-
2016 Proxy Statement
|
21
|
PROPOSAL 2
|
TO RATIFY THE SELECTION OF ERNST &
YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER
31, 2016
|
The Audit Committee of the Board has appointed Ernst & Young
LLP as the independent registered public accounting firm to audit the Company’s consolidated financial statements and internal
control over financial reporting for the fiscal year ending December 31, 2016. Representatives of Ernst & Young LLP will be
present at the annual meeting to respond to appropriate questions from stockholders and make a statement if desired.
While the Audit Committee retains Ernst & Young LLP as our
independent registered public accounting firm, the Board of Directors is submitting the selection of Ernst & Young LLP to the
stockholders for ratification.
Unless contrary instructions are given, shares represented by
proxies solicited by the Board will be voted for the ratification of the selection of Ernst & Young LLP as our independent
registered public accounting firm for the year ending December 31, 2016. If the selection of Ernst & Young LLP is not ratified
by the stockholders, the Audit Committee will reconsider the matter. Even if the selection of Ernst & Young LLP is ratified,
the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at
any time during the year if it determines that such a change is in our best interests.
Fees to Independent Registered Public Accounting Firm
The following table presents fees for professional services rendered
by Ernst & Young LLP for the years ended December 31, 2015 and 2014, respectively, and fees billed for other services rendered
by Ernst & Young LLP during those periods.
|
|
2015
|
|
|
2014
|
|
Audit fees
(1)
|
|
$
|
1,733,850
|
|
|
$
|
1,598,900
|
|
Audit-related fees
(2)
|
|
$
|
35,750
|
|
|
$
|
86,500
|
|
Tax fees
(3)
|
|
$
|
46,950
|
|
|
$
|
99,895
|
|
TOTAL
|
|
$
|
1,816,550
|
|
|
$
|
1,785,295
|
|
|
|
(1)
|
Includes fees related to: (a) the integrated audit of our consolidated financial statements and internal control over financial reporting; (b) the review of the interim consolidated financial statements included in quarterly reports; (c) services that are normally provided by Ernst & Young LLP in connection with statutory and regulatory filings or engagements and attest services, except those not required by statute or regulation; and (d) consultations concerning financial accounting and reporting standards.
|
|
|
(2)
|
Audit-related services principally include fees for audit and attest services that are not required by statute or regulation.
|
|
|
(3)
|
Includes fees for tax services, including tax compliance, tax advice and tax planning.
|
Pre-Approval Policies and Procedures
The Audit Committee has adopted a policy that requires
advance approval of all audit, audit-related, tax and other services performed by our independent registered public
accounting firm. This policy provides for pre-approval by the Audit Committee of all audit and permissible non-audit services
before the firm is engaged to perform such services. The Audit Committee is authorized from time to time to delegate to one
of its members the authority to grant pre-approval of permitted non-audit services, provided that all decisions by that
member to pre-approve any such services must be subsequently reported, for informational purposes only, to the full Audit
Committee.
The affirmative vote of a majority of the votes represented at
the annual meeting, either in person or by proxy, and entitled to vote on this proposal, is required to ratify the selection of
the independent registered public accounting firm.
The Board of Directors recommends that stockholders
vote “FOR” ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public
accounting firm for fiscal year 2016.
JETBLUE
AIRWAYS CORPORATION
-
2016 Proxy Statement
|
22
|
AUDIT COMMITTEE REPORT
The Audit Committee of the JetBlue Board of Directors is comprised
of three non-employee directors, each of whom, in the Board’s business judgment, is independent within the meaning of the
applicable rules and regulations of the SEC and NASDAQ. The Audit Committee operates under a written charter adopted by the Board.
As described more fully in its charter, the Audit Committee oversees on behalf of the Board of Directors the Company’s accounting,
auditing and financial reporting processes. The Committee has the resources and authority it deems appropriate to discharge its
responsibilities.
Management has the primary responsibility for the Company’s
financial statements and financial reporting process, including establishing, maintaining and evaluating disclosure controls and
procedures, and establishing, maintaining and evaluating internal control over financial reporting. The Company’s independent
registered public accounting firm, Ernst & Young LLP, or Ernst & Young, is responsible for performing an independent audit
of the Company’s consolidated financial statements in accordance with generally accepted auditing standards and issuing a
report relating to Ernst & Young’s audit; as well as expressing an opinion on the effectiveness of internal control over
financial reporting. In fulfilling its responsibilities, the Audit Committee held meetings throughout 2015 with Ernst &Young
in private without members of management present.
In this context, the Audit Committee has reviewed and discussed
with management and its independent registered public accounting firm the Company’s audited consolidated financial statements
and the results of management’s assessment of the effectiveness of the Company’s internal control over financial reporting
and the independent auditor’s audit of the Company’s internal control over financial reporting. Management represented
to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with accounting principles
generally accepted in the United States.
The Audit Committee discussed with the Company’s independent
registered public accounting firm matters required to be discussed by applicable Public Company Accounting Oversight Board (PCAOB)
rules, including the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments
and the clarity of the disclosures in the financial statements. Ernst & Young also provided to the Audit Committee the written
disclosures and letter regarding their independence required by applicable requirements of the PCAOB regarding the independent
registered public accounting firm’s communications with the Audit Committee concerning independence. The Audit Committee
also discussed with Ernst & Young their independence from the Company and its management, and considered whether the non-audit
services provided by the independent registered public accounting firm to the Company are compatible with maintaining the firm’s
independence.
The Company also has an internal audit department that reports
to the Audit Committee. The Audit Committee reviews and approves the internal audit plan once a year and receives updates of internal
audit results throughout the year. The Audit Committee discussed with the Company’s internal auditors and independent registered
public accounting firm the overall scope and plans for their respective audits. The Audit Committee met with the internal auditors
and the independent registered public accounting firm, with and without management present, to discuss the results of their examinations,
their evaluations of the Company’s internal control over financial reporting, and the overall quality of the Company’s
financial reporting.
In reliance on the review and discussions referred to above, and
in the exercise of its business judgment, the Audit Committee recommended to the Board of Directors (and the Board of Directors
approved) that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2015 as filed with the SEC. In addition, the Audit Committee has selected, and the Board has ratified,
subject to stockholder ratification, the appointment of Ernst & Young LLP as the Company’s independent registered public
accounting firm for the fiscal year ending December 31, 2016.
The Audit Committee reviews and assesses the adequacy of its charter
on an annual basis. While the Audit Committee believes that the charter in its present form is adequate, it may in the future recommend
to the Board of Directors amendments to the charter to the extent it deems necessary to react to changing conditions and circumstances.
Audit Committee of JetBlue
Peter Boneparth,
Chair
Virginia Gambale
Ellen Jewett
The Audit Committee Report does not constitute
soliciting material, and shall not be deemed to be filed or incorporated by reference into any other Company filing under the
Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates the Audit
Committee Report by reference therein.
JETBLUE
AIRWAYS CORPORATION
-
2016 Proxy Statement
|
23
|
PROPOSAL 3
|
TO APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
|
In accordance with the Dodd-Frank Wall Street Reform and Consumer
Protection Act (the “Dodd-Frank Act”) enacted in 2010, an advisory vote on the frequency of stockholders votes on executive
compensation was conducted in connection with the 2011 annual meeting of stockholders. The Board recommended, our stockholders
agreed, and the Board subsequently approved that the advisory vote on executive compensation be held on an annual basis. Accordingly,
we are asking stockholders to approve an advisory resolution on compensation of our named executive officers as described in the
“Compensation Discussion and Analysis” section, the compensation tables and related narrative discussion included in
this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives stockholders an opportunity to
approve, reject or abstain from voting with respect to our fiscal year 2015 executive compensation programs and policies and the
compensation paid to our named executive officers. This vote is not intended to address any specific item of compensation, but
rather the overall compensation of our named executive officers as described in this proxy statement.
At the Company’s annual meeting of stockholders held in
May 2015, our stockholders were asked to approve the Company’s fiscal 2014 executive compensation programs. A substantial
majority (95.6%) of the votes cast on the “say-on-pay” proposal at that meeting were voted in favor of the proposal.
The Compensation Committee believes that these results reaffirm our stockholders’ support of the Company’s approach
to executive compensation.
Please read the Compensation
Discussion and Analysis beginning on page 25 for additional details about our executive compensation program, including
information about the fiscal year 2015 compensation of our named executive officers.
Our Compensation Committee has structured our executive compensation
program to achieve the following key objectives:
•
|
Support our strategy and stay true to our Values:
We aim to align compensation programs with business strategies focused on long-term growth and creating value for our stockholders. We motivate crewmembers to overcome challenges and to deliver commitments, all while living our Values of Safety, Caring, Integrity, Passion and Fun;
|
|
|
•
|
Attract and retain top talent:
We aim to set target compensation to be competitive with the airline industry, given our BlueCity and support center locations, route network, unique market placement, structure and size relative to other airlines; and
|
|
|
•
|
Pay for performance:
We hold our named executive officers accountable for their performance in light of Company goals, industry economics and individual performance. We believe the proportion of executive compensation designed to be delivered in variable pay should depend on the executive’s position and the ability of that position to influence our overall corporate performance and structure named executive officers’ compensation packages accordingly.
|
Because your vote on this proposal is advisory, it will not be
binding on us, the Compensation Committee or the Board. However, the Compensation Committee and the Board will take into account
the outcome of the vote when considering future executive compensation arrangements. Furthermore, your advisory vote will serve
as an additional tool to guide the Board and the Compensation Committee in continuing to align the Company’s executive compensation
programs with the interests of JetBlue and its stockholders.
The Compensation Committee and the Board of Directors believe
that the policies and procedures articulated in the Compensation Discussion and Analysis section are effective in achieving our
goals and that the compensation of our named executive officers reported in this proxy statement has contributed to the Company’s
recent and long-term success. Accordingly, we are asking you to endorse our executive compensation program by voting for the following
resolution: RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item
402 of Regulation S-K, including the Compensation Discussion and Analysis section, compensation tables and narrative discussion
is hereby APPROVED.
The affirmative vote of a majority of the votes represented at
the annual meeting, either in person or by proxy, and entitled to vote on this proposal is required to approve the advisory vote
on executive compensation.
The Board of Directors recommends that stockholders
vote “FOR” the foregoing resolution for the reasons outlined above.
JETBLUE
AIRWAYS CORPORATION
-
2016 Proxy Statement
|
24
|
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis section of the proxy
statement explains the key elements of our executive compensation program and compensation decisions with respect to the following
officers identified in the Summary Compensation Table below (the “named executive officers”) as of December 31, 2015:
Robin Hayes
|
President and Chief Executive Officer (effective February 16, 2015)
|
Mark Powers
|
Executive Vice President and Chief Financial Officer
|
James Hnat
|
Executive Vice President and General Counsel
|
Martin St. George
|
Executive Vice President Commercial & Planning
|
Alexander Chatkewitz
|
Vice President and Controller
|
David Barger
|
Former Chief Executive Officer (retired effective February 15, 2015)
|
Executive Summary
At JetBlue, Integrity is one of our
five core values; along with Safety, Caring, Passion and Fun. We believe honesty builds trust. We hold ourselves to a high
standard of integrity and strive for transparency with our executive compensation programs. JetBlue is a passenger airline
that has established a new airline category based on service, style and cost. Known for its award-winning customer service
and free TV as much as for its competitive fares, JetBlue believes it offers its customers a distinctive experience—the
JetBlue Experience—with best-in-class offerings in the markets it serves. The Compensation Committee believes that our
executive compensation program is instrumental in helping the Company to achieve its business goals and promote its
values.
Executive Compensation Program Elements
KEY FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM
WE DO
|
|
WE
DO NOT
|
|
Emphasize
performance-based, at-risk pay
|
|
|
No
tax gross ups for senior executive officers only
|
|
Apply
rigorous, stockholder-aligned performance objectives for executive bonus payments
|
|
|
No
repricing of underwater stock options
|
|
Consider
risk in our executive compensation program
|
|
|
No
single trigger change in control provisions - the 2011 Incentive Compensation Plan has a double trigger in place for change
in control provisions
|
|
Our
Compensation Committee uses an independent consultant
|
|
|
No
retirement benefits provided exclusively to senior executive officers
|
|
Have
executive stock ownership guidelines
|
|
|
No
evergreen provisions in our compensation plans
|
|
Have
a “hold until retirement” requirement for director stock ownership
|
|
|
|
|
Require
equity to vest over a period of at least 3 years
|
|
|
|
|
Maintain
an executive compensation clawback policy, which includes recoupment and forfeiture provisions
|
|
|
|
|
Use
a structured approach to CEO performance evaluation and related compensation decisions
|
|
|
|
|
Emphasize
a culture of safety
|
|
|
|
|
Review
share utilization annually
|
|
|
|
|
Devote
significant time to management succession and leadership development efforts
|
|
|
|
|
Provide
limited executive perquisites; executives’ health and welfare benefits are the same as those of other salaried employees
|
|
|
|
|
|
|
|
WE DESIGN COMPENSATION PLANS WITH PROVISIONS TO MITIGATE UNDUE RISK
|
|
|
|
|
|
|
•
|
Our Executive Compensation performance measures drive longer term performance
|
|
|
|
|
|
|
•
|
Short term metrics are diverse and
include Controllable Costs, Customer NPS, On Time Departure (D0) and Pre-tax Margin
|
|
|
|
|
|
|
•
|
Our annual and long-term performance awards are based on different metrics, with little or no overlap
|
|
|
|
|
|
|
•
|
Our clawback policy serves as a risk mitigator
|
|
|
|
|
|
|
•
|
We maintain a cap on incentive compensation payments
|
|
|
|
|
|
JETBLUE
AIRWAYS CORPORATION
-
2016 Proxy Statement
|
25
|
How Did We Do in 2015?
JetBlue reported strong results for 2015:
•
|
For the full year 2015, JetBlue reported operating income of $1.2 billion, compared to operating income of $515 million in 2014.
|
|
|
•
|
For the full year 2015, on a GAAP basis, JetBlue reported pre-tax income of $1.1 billion compared to $623 million in 2014. Excluding special items on a non-GAAP basis, pre-tax income in 2014 was $382 million.
|
*
|
Fiscal year 2014 excluding special items.
|
For further information regarding our
revenue and earnings per diluted share for the referenced periods, please see our Annual Report on Form 10-K for the year ended
December 31, 2015, Item 6. Selected Financial Data (starting on page 28) and Item 7. Management’s Discussion and Analysis
of Financial Condition and Results of Operations (starting at page 31, and see page 33). In our proxy statement and Compensation
Discussion and analysis, we refer to Operating Expenses per Available Seat Mile, ex-Fuel and Profit Sharing (“CASM”),
Return on Invested Capital, Net Income and Pre-tax Income, excluding special items and Free Cash Flow, which are non-GAAP financial
measures. Appendix B to this proxy statement contains a reconciliation of these non-GAAP measures to our audited GAAP financial
statements.
The following table summarizes some of our financial results for
2015:
($ in millions, except per share amounts)
|
|
Fiscal 2014
|
|
|
Fiscal 2015
|
|
|
% Change
|
|
Operating Revenues
|
|
$
|
5,817
|
|
|
$
|
6,416
|
|
|
|
10.3
|
%
|
Pretax income
|
|
$
|
623
|
|
|
$
|
1,097
|
|
|
|
76
|
%
|
Operating margin
|
|
|
8.9
|
%
|
|
|
19.0
|
%
|
|
|
134
|
%
|
Earnings per diluted common share excluding special items
|
|
$
|
0.70
|
|
|
$
|
1.98
|
|
|
|
182
|
%
|
On a GAAP basis, net income for the fourth
quarter 2015 was $190 million, or $0.56 per diluted share. This compares to JetBlue’s fourth quarter 2014 net income,
excluding special items of $87 million, or $0.26 per diluted share. For the full year 2015, JetBlue reported net income
of $677 million, or $1.98 per diluted share. This compares to JetBlue’s 2014 net income excluding special items of $232
million, or $0.70 per diluted share.
In 2015, JetBlue reported record fourth quarter operating revenues
of $1.6 billion. Revenue passenger miles for the fourth quarter increased 12.4% to 10.6 billion on a capacity increase of 10.4%,
resulting in a fourth quarter load factor of 83.6%, an increase of 1.5 points year over year. Yield per passenger mile in the fourth
quarter was 13.62 cents, down 3.6% compared to the fourth quarter of 2014. Passenger revenue per available seat mile (PRASM) for
the fourth quarter of 2015 decreased 1.9% year over year to 11.39 cents and operating revenue per available seat mile (RASM) decreased
0.2% year over year to 12.62 cents.
JETBLUE
AIRWAYS CORPORATION
-
2016 Proxy Statement
|
26
|
Overall, we had a strong year on many
fronts:
2015 Financial Performance
Financial results
|
|
Capacity Growth
|
9.5%
|
RASM
|
0.8%
|
CASM
ex-Fuel/Profit Sharing
|
0.5%
|
Fuel price
|
$1.93/gal
|
Operating Margin
|
19%
|
Earning
per Share
|
$1.98
|
ROIC
|
13.7%
|
2015
— best in the industry
|
|
#1 Unit Revenue Growth
|
|
#1 Operating Margin Growth
|
|
#1 Pre-tax Margin Growth
|
|
#1 Stock price performance (Up 43%)
|
Our total fuel cost in 2014 was $1.912 billion compared to $1.348
billion in 2015 or, $2.99 per gallon in 2014 versus $1.93 per gallon in 2015 (total cost and average price per gallon each include
related fuel taxes as well as effective fuel hedging gains and losses).
Our stock price gained 43% over the
year and outperformed the airline index as well.
JETBLUE AIRWAYS STOCK APPRECIATION VS. AIRLINE INDEX (XAL), 2015
JETBLUE
AIRWAYS CORPORATION
-
2016 Proxy Statement
|
27
|
We believe our differentiated product and culture, competitive
costs and high-value geography relative to our competitors contributed to our continued success in 2015. Our 2015 highlights include:
Product enhancements
– Throughout 2015 we
continued to invest in industry-leading products which we believe will continue to differentiate our product offering from the
other airlines.
In June 2014, we launched our premium transcontinental product
called Mint
TM
. It includes 16 fully lie-flat seats, four of which are in suites with a privacy door, a first in the U.S. domestic
market. During 2015, we announced additional transcontinental Mint
TM
service, as well as added two international Mint
TM
destinations, Barbados and Aruba.
We continued to install our Fly-Fi
TM
in-flight internet service
across our Airbus fleet, and completed retrofitting all of our Airbus A321 and A320 aircraft by the end of October 2015. Our first
Fly-Fi
TM
enabled Embraer E190 aircraft made its inaugural commercial flight in October 2015. We anticipate retrofitting our
remaining Embraer E190 aircraft with Fly-Fi
TM
during 2016, at which point, free Fly-Fi
TM
service will be available on
our entire fleet.
We introduced Fare Options during the second quarter of 2015.
As a result, customers have a choice to purchase tickets from three branded fares: Blue, Blue Plus, and Blue Flex. Each fare includes
different offerings, such as free checked bags, reduced change fees, and additional TrueBlue® points.
Innovation continues to be a major driver in our product offerings.
We were the first airline to accept Apple Pay in-flight. Our customers have been able to use their iPhone for all onboard purchases
since March 2015. In December 2015, we released an enhanced suite of mobile applications aimed at bringing even more convenience
to our customers. With the latest update, customers have even more control over their JetBlue Experience with the ability to select
and change seat assignments after check in, purchase Even More
TM
Space seats or other ancillary services, and use their
phone’s camera feature to input credit card and passport information.
Fleet
– In 2015, we converted six of the 10
Airbus A321 deliveries scheduled for 2016 to our Mint
TM
cabin configuration. During the fourth quarter, we bought out
the leases on six Airbus A320 aircraft. In 2015, we took delivery of 12 Airbus A321 aircraft, two of which were equipped with our
Mint
TM
cabin layout.
Network
– We continued to expand and grow
in our high-value geography. In 2015, we expanded our network with six new BlueCities, bringing our total as of the end of December
2015 to 93 BlueCities, and added several connect-the-dot routes. With the success of our Mint
TM
service between New York and
California, we launched new routes to the Caribbean in the fall of 2015 and expect to begin Mint
TM
service from Boston in
March 2016.
TrueBlue
®
and partnerships
–
We expanded our portfolio of commercial airline partnerships throughout 2015 and announced code-sharing agreements with Icelandair,
Royal Air Maroc, Silver Airways and Seaborne Airlines.
Customer Service
– JetBlue and our Crewmembers
were recognized in 2015 for industry leading customer service. J.D. Power and Associates recognized JetBlue and our Crewmembers
for the 11
th
consecutive year as the “Highest in Airline Customer Satisfaction among Low-Cost Carriers.”
Our score climbed to 801 on a 1,000-point scale, making us the first airline to ever surpass 800 points within the segment.
We also received the top score on the American Customer Satisfaction
Index (ACSI) among airlines. Our score of 81 is 10 points above the average for the airline industry. Additionally, we received
7 out of 7 stars for safety, and 5 out of 5 stars for our product offering from Airline Ratings.
Our Crewmembers
– During 2015, our Crewmembers
recognized JetBlue as one of “America’s “Best Places to Work” by Forbes. JetBlue ranked #19 through a survey
that asked individuals how likely they would be to recommend their employer to someone else.
2015
Pay Decisions
(see page 31 for more details)
In 2015, with the tailwind of lower fuel prices and the benefits
derived from exciting product enhancements and industry-leading service innovations to the JetBlue experience, JetBlue had an excellent
year. As in years past, we had challenges. However, we approached them in true JetBlue fashion, adhering to our values even when
things were not going well with the goal of doing the right thing for our customers, crewmembers and stockholders even as we sought
to Inspire Humanity.
As more fully described below, our corporate performance factor
came in at 130.7% of target. In the same time period, we shared a record 2015 profit sharing payout of approximately $147 million
with our profit sharing eligible crewmembers! This was close to almost eight weeks of income for a full time crewmember, split
into an early payment at the end of 2015 and the remainder in early 2016.
As part of our ongoing compensation program development, in 2013
we increased the amount of “at risk” pay for our senior executives by introducing a performance based pay structure
for our executive leadership team. These performance stock units, or PSUs, are based on achievement of goals over a three year
performance period. Assuming achievement of goals, these PSUs are payable in common stock following the completion of the relevant
performance period upon certification of performance by the Compensation Committee. This is the first year our executives became
eligible to receive PSUs, for the 2013-2015 performance period.
Although the Summary Compensation Table and Supplemental Summary
Compensation Table include the PSU award amounts in the Stock Awards column, the amounts reflected for the 2014-2016 and 2015-2017
performance periods have not yet been paid and are notional at this point. The tables assume performance based on an assessment
of performance to date, as required by the SEC’s rules and regulations. As noted above, in early 2016, the Compensation Committee
certified the results of the 2013-2015 performance period and those awards, based on the performance period just completed, reflect
actual performance achieved and amounts paid out. PSUs are awarded, if at all, following the completion of the relevant performance
period upon the Compensation Committee’s certification of performance.
For 2015, Mr. Barger, our then-Chief Executive Officer did not
receive a salary increase. When Mr. Hayes became our President and Chief Executive Officer effective February 16, 2015, he received
a salary increase to $550,000 in light of his promotion to Chief Executive Officer. When Mr. St. George was promoted from
Senior Vice President to Executive Vice President Commercial & Planning effective February 16, 2015, he received a salary increase
to $400,000. Mr. Powers and Mr. Hnat each received a modest merit increase in 2015 to $425,000. For 2015, no change was made to
the target bonus opportunities of any of our named executive officers.
JETBLUE
AIRWAYS CORPORATION
-
2016 Proxy Statement
|
28
|
Results of the 2015 Advisory Vote on Executive Compensation
(“Say-on-Pay”)
At our 2015 annual meeting of stockholders, our stockholders were
asked to approve, on an advisory basis, the Company’s fiscal 2014 executive compensation programs (“say-on-pay”).
Approximately 95.6% of the aggregate votes cast on the “say-on-pay” proposal at that meeting were voted in favor of
the proposal. JetBlue engages with stockholders and other stakeholders to discuss a variety of aspects of our business and welcomes
stockholder input and feedback.
The Compensation Committee strives to continue to ensure that
the design of the Company’s executive compensation programs is focused on long-term stockholder value creation, emphasizes
pay for performance and does not encourage the taking of short-term risks at the expense of long-term results. The Compensation
Committee intends to continue to use the “say-on-pay” vote as a guidepost for stockholder sentiment and continue to
take into account stockholder feedback in making compensation decisions.
Compensation Philosophy & Principles
We strive to apply the following principles for compensating our
crewmembers, including our named executive officers:
WHAT We Reward
|
|
WHY We Reward
|
Support our strategy and stay true to our Values
|
|
We aim to align compensation programs with business strategies focused on long-term growth and creating value for our stockholders. We motivate crewmembers to overcome challenges and to deliver on commitments, all while living our values of Safety, Caring, Integrity, Passion and Fun.
|
Attract and retain top talent
|
|
We aim to set target compensation to be competitive with the airline industry, given our BlueCity and support center locations, route network, unique market placement, structure and size relative to other airlines.
|
Pay for performance
|
|
We hold our named executive officers accountable for their performance in light of Company goals, industry economics and individual performance.
|
How JetBlue Pays for Performance
Our compensation program is designed to reward our named executive
officers for the Company’s continued success. Consistent with our compensation philosophy, the Compensation Committee sets
the compensation of our executive officers, including our named executive officers, substantially based on their achievement of
annual financial and operational objectives that we believe further our long-term business
goals and the creation of sustainable long-term stockholder value.
The performance-based equity component of our executive compensation packages pays out, if at all, following the completion of
the relevant three year performance period upon the Compensation Committee’s certification of performance results. As a result,
the majority of our named executive officers’ total compensation is tied to performance and is “at risk.”
JETBLUE
AIRWAYS CORPORATION
-
2016 Proxy Statement
|
29
|
The following features of our 2015 compensation programs promote
further aligning our compensation practices with best practices in compensation governance and with our overall compensation philosophy:
Summary of Fiscal Year 2015 Executive Compensation Decisions
|
REWARD
|
|
|
HOW
AWARD VALUE IS
|
|
|
ELEMENT
|
OBJECTIVE
|
KEY
FEATURES
|
CALCULATED
|
2015
DECISIONS
|
|
Base
Salary
|
To
attract and retain
the
best talent
|
Fixed
element of
compensation
paid in cash
|
Reviewed
against individual’s
level
of skill, experience and
responsibilities.
Benchmarked
against a group of
comparably sized corporations and
industry
peers
|
Changes
to base salary to
maintain
competitiveness
|
|
Annual
Incentive
Award
|
To
motivate and incentivize
performance
over a one-year
period.
|
Award
value and measures are
reviewed
annually
to ensure they support
our
strategy.
(Page 34)
|
Performance
is measured against
financial
and non-financial
performance targets.
(Page 34)
|
Performance
resulted in award at
130.7%
of target.
(Page 35)
|
Long-Term
Equity Award
RSUs
|
To
incentivize performance and
retention
over the long-term.
Aligns interests with our
executives
with long-term
interests of shareholders.
|
Performance
is measured
annually and
equity vests over
three years, subject to forfeiture.
(Page 35)
|
Based
on achievement of metric
driven
operational and strategic
goals.
(Page 35)
|
All
NEOs met or
exceeded targets.
(Page 36)
|
Long-Term
Equity Award
PSUs
|
To
motivate and incentivize
sustained
performance
over the long-term.
Aligns
interests of our
executives with long-term
interests
of shareholders.
|
Performance
is measured at the
end
of a three year period.
PSUs payout, if at all,
in
common stock.
(Page 36)
|
Based
on achievement of one
absolute
and one relative goal.
(Page 36)
|
2014-2016
and 2015-2017
performance
periods in progress;
2013-2015 performance period paid out
at
134.5%
(Page 37)
|
We also provide health and welfare benefits, available to
our full-time crewmembers, including medical, dental, life insurance and disability programs; a 401(k) plan; and change in
control plans. We provide retirement benefits (a 401(k) plan open to all crewmembers) and limited perquisites including space
available flight privileges for all crewmembers, and, as is common in the airline industry, positive space flight privileges
for executive officers and their immediate family members; possible relocation assistance for supervisor level and above; and
a wellness physical for executives designed to further business continuity, available every other year.
Best Practices in
Compensation Governance
In addition to the core compensation program, the Company provides
or has implemented the following:
•
|
Executive Compensation Clawback Policy.
Our Board of Directors
has adopted a clawback policy, which requires reimbursement of all or a portion of any bonus, incentive payment, or equity-based
award granted to or received by any executive officer and certain other officers after January 1, 2010 where: (a) the payment
was predicated upon the achievement of certain financial results that were subsequently the subject of a restatement, (b)
in the Board’s view the executive engaged in willful misconduct that caused or partially caused the need for the restatement,
and (c) a lower payment would have been made to the executive based upon the restated financial results.
|
|
|
•
|
Director Stock Ownership.
Our Board of Directors has adopted
a policy whereby directors hold their grants of deferred stock units throughout their tenure as a director. Vested equity
is issued six months following the director’s departure from the Board of Directors. Directors are not required to hold
a specific number of shares of common stock since such a requirement would be redundant in light of our hold through retirement
policy.
|
|
|
•
|
No Tax Gross Ups.
Beginning in 2013, on a going forward basis,
the Company adopted a policy that affirmatively states that, going forward, we will not make or promise to make to our senior
executives any tax gross up payments except for those provided pursuant to a plan, policy or arrangement applicable to management
employees generally.
|
|
|
•
|
No Retirement Benefits.
We have limited retirement benefits
and our 401(k) plan is offered to all crewmembers subject to its generally applicable eligibility conditions.
|
|
|
•
|
Executive Stock Ownership.
Our Corporate Governance and Nominating
Committee has adopted stockholding guidelines for our named executive officers to be phased in over a five year period (by 2017)
along the following lines:
|
|
|
|
–
|
Our CEO – 3X base salary; and
|
|
|
|
|
–
|
Our other named executive officers – 1X base salary.
|
|
|
|
|
•
|
Our policy permits us to count common stock and unvested restricted stock units towards the ownership guidelines, excluding unvested PSUs and vested underwater stock options.
|
|
|
|
|
•
|
All of our named executive officers met or exceeded these ownership guidelines at December 31, 2015.
|
|
|
|
|
•
|
Newly hired or newly appointed named executive officers have five years from the date of hire or appointment to meet the stock ownership guidelines.
|
|
|
|
|
•
|
We anticipate reviewing and revising our executive stock ownership periodically.
|
|
|
|
•
|
Equity Plan Best Practices.
Our 2011 Incentive Compensation
Plan does not have an evergreen reload provision, prohibits repricing without stockholder approval and includes double trigger
change in control provisions and in general requires minimum vesting periods for equity of at least three years.
|
JETBLUE AIRWAYS CORPORATION
-
2016 Proxy Statement
|
30
|
Compensation Mix
We believe that a significant amount of our named executive officer
compensation should be tied to the Company’s performance and an increasing amount of it should be at risk. Our bonus and
equity goals (discussed in more detail beginning on page 34 ) are designed to drive business objectives
that we believe further our long-term business goals and the creation of sustainable long-term stockholder value. The mix of compensation
elements below for our named executive officers during 2015 (other than Mr. Barger who retired from the Company effective February
15, 2015) as illustrated below is based on the Compensation Committee’s executive compensation philosophy (as set forth in
the Supplemental Compensation Table on page 33 ).
Determining Executive Compensation
The Compensation Committee assists the Board with respect
to oversight and determination of compensation for the Company’s directors and executive officers. The Compensation
Committee oversees the Company’s executive compensation policies and reviews and establishes, subject to approval by
our Board of Directors, the compensation for our Chief Executive Officer. The Compensation Committee is charged with review
of pay levels and policies related to salaries, bonuses and grants of awards and oversight of our equity incentive plans. In
determining levels of base salaries, annual bonuses, RSU awards and PSU awards, the Compensation Committee uses the relevant
executive officer’s current level of total compensation as the starting point. The Committee bases any adjustments to
the current pay level on several factors, including the scope and complexity of the functions the executive officer oversees,
the contribution of those functions to our overall performance, individual experience and capabilities, individual
performance and competitive pay practices. Variations in compensation among our executive officers reflect differences in
these factors.
The Compensation Committee used the following
tools in determining executive vice presidents’ base salary, annual incentive cash targets, and equity awards:
•
|
Competitive Peer Group Survey;
|
|
|
•
|
Internal Pay Equity Review;
|
|
|
•
|
Tally Sheets;
|
|
|
•
|
Management Recommendations; and
|
|
|
•
|
Annual Performance Reviews.
|
Generally, at the Compensation Committee’s first quarter
meeting(s) of any given year, the Compensation Committee approves target total direct compensation for the upcoming year, which
is comprised of:
In the first quarter of 2016, the Compensation Committee reviewed
the Company’s and the named executive officers’ performance for fiscal year 2015. After considering various data and
input provided by management, the Compensation Committee approved the Company’s corporate performance factor, annual incentive
bonus and equity awards for the named executive officers.
JETBLUE AIRWAYS CORPORATION
-
2016 Proxy Statement
|
31
|
Compensation Consultant
The Compensation Committee has the authority to retain independent,
third-party compensation consultants and to obtain independent advice and assistance from internal and external legal, accounting
and other advisors. The Chair of the Compensation Committee reports the Committee’s actions and recommendations for the previous
quarter to the full Board at the next regularly scheduled Board meeting.
The Compensation Committee engaged Pay Governance LLC (Pay Governance)
as its independent advisor on matters of executive compensation for 2015. The Compensation Committee’s consultant reports
directly to the Committee and provides no other services to the Company or any of its affiliates. For 2015, the Committee assessed
the independence of Pay Governance pursuant to the SEC and NASDAQ rules and concluded that no conflict of interests exists that
would prevent Pay Governance from independently representing the Compensation Committee.
As discussed below under “Peer Competitive Group Survey—Market
Assessment,” Pay Governance provided the Company and the Committee with compensation data regarding the companies in our
competitor peer group. The Company used this data to develop its recommendations to the Compensation Committee for 2015 compensation
levels. Pay Governance also provided suggestions on the design of the annual bonus and long-term incentive plans, including for
the long-term performance based incentive program, the performance measures and weighting, the factors for the Committee to review
when determining whether to adjust the formulaic amount, and the general range of adjustments to apply. Pay Governance did not
perform any separate additional services for management.
Competitive Peer
Group Survey—Market Assessment
The Compensation Committee reviewed a report on the Company’s
compensation programs for senior executive officers which incorporated data provided by Pay Governance. Pay Governance collected
compensation data from the companies in our competitor peer group as well as similarly-sized general industry companies, using
the 2015 Towers Watson U.S. CDB Executive Compensation Survey. Pay Governance proposed several enhancements to the approach used
to determine the competitive market. While the enhancements described below resulted in higher estimated market pay levels, we
believe the changes result in more comparable data versus our peers. Pay Governance used a combination of proxy peer group companies
and general industry survey data to develop the competitive market. Specifically, we added Virgin America to the proxy peer group,
resulting in a peer group of 9 companies. This improved our relative statistical positioning versus our peers, in light of revenue,
market capitalization and number of employees. We modified our benchmarking to use a revenue measure that excludes fuel, to improve
comparability and avoid measurement issues with volatile pricing of a key commodity and company expense. Finally, we refined the
current general industry reference group to place greater emphasis on consumer-oriented companies, reflecting the importance of
customer service and relationships in JetBlue’s success.
Our current peer group consists of the following U.S. airlines:
|
|
Market
|
|
|
|
|
Capitalization
|
FY2014
|
|
|
|
($ in millions)
|
Revenue
|
Competing
|
Company
|
Incorporation
|
10/30/2015
|
($ in millions)
|
in Our Market
|
American Airlines Group
|
USA
|
29,134
|
42,650
|
|
Delta Air Lines, Inc.
|
USA
|
39,984
|
40,362
|
|
United Continental Holdings, Inc.
|
USA
|
22,484
|
38,901
|
|
Southwest Airlines Co.
|
USA
|
30,105
|
18,605
|
|
JetBlue Airways Corporation
|
USA
|
7,827
|
6,400
|
|
Alaska Air Group, Inc.
|
USA
|
9,667
|
5,368
|
|
Hawaiian Holdings Inc.
|
USA
|
1,847
|
2,315
|
|
Spirit Airlines
|
USA
|
2,656
|
1,932
|
|
Virgin America Inc.
|
USA
|
1,564
|
1,490
|
|
Republic Airways Holdings Inc.
|
USA
|
293
|
1,375
|
|
These companies, like JetBlue, are airline companies with significant
revenue (over $1 billion) and with significant operations employing a large number of individuals and aircraft in our competing
markets. We believe this comparator group provides a reasonable point of comparison to assist in our assessment of our compensation
programs.
We recognize that this peer group has limitations from a
statistical perspective given the limited number of companies and the wide variation in size of our peers. As a result, the
Compensation Committee uses the competitive data as a reference point to monitor the compensation practices of our primary
competitors. It is not, and was not in 2015, the sole determining factor in executive compensation decisions. The Committee
also considers our Northeast location, route network, cost structure, and size relative to other airlines. The data is used
primarily to ensure that our executive compensation program as a whole is competitive when the Company achieves targeted
performance levels. We do not rely on this information to target any specific pay percentile for our executive officers.
Instead, we use this information as a general overview of market practices and to ensure that we make informed decisions on
executive pay packages. While we do not establish a specific market percentile ranking for the individual compensation
elements that comprise total direct compensation, we review each element to ensure it is reasonable relative to our peer
group. We position pay to maintain our competitive cost advantage versus our peer group and recognize that some of the peer
competitors are significantly larger and more mature than we are and yet we compete for the same talent pool. Consistent with
our compensation objectives discussed above, we incorporate flexibility into our compensation programs and in the executive
assessment process to respond to, and adjust for, changes in the business and economic environment and individual
accomplishments, performance and circumstances. Based on its overall assessment of market pay levels, the
Committee determined that the proposed 2015 total pay of our named executive officers is better positioned, competitively,
although room to improve remains. The Committee expects to continue to adjust relevant pay levels on a go forward, measured
basis, contingent on corporate and individual performance in future years.
JETBLUE AIRWAYS CORPORATION
-
2016 Proxy Statement
|
32
|
Tally Sheets
The Compensation Committee uses tally sheets as a reference
to ensure committee members understand the total compensation being delivered to executives each year and over a multi-year
period. When making executive compensation decisions, the Compensation Committee reviews tally sheets for each senior
executive officer. Tally sheets provide historical pay levels for the past five years, target and realized pay, value of
unvested equity awards, and potential payments at termination for each senior executive officer. Tally sheets enable the
Compensation Committee to assess whether the compensation strategy is effective over time.
Internal Pay Equity
Review
Because of our team-based approach to executive officer compensation,
the Company carefully considers the relative compensation levels among all members of the executive team for internal pay equity.
Accordingly, the Company’s executive compensation program is designed to be internally consistent and equitable in order
to further the Company’s success. The Committee looks at various factors to account for differences in pay levels among the
named executive officers. These factors include competitive data, size and complexity of role and individual and team based goal
achievement.
Performance Evaluation
– Chief Executive Officer
Our Board of Directors evaluates our
Chief Executive Officer’s compensation on an annual basis. The Chief Executive Officer recuses himself from Board
discussions relating to evaluations of his performance. The Board’s evaluation includes both objective and subjective
criteria of the Chief Executive Officer’s performance, which include JetBlue’s financial performance,
JetBlue’s performance with respect to our long-term strategic objectives and the development of our senior management
team. Prior to the Board’s evaluation, the Compensation Committee evaluates the Chief Executive Officer’s
compensation. The Compensation Committee uses the competitive market data discussed above to recommend total direct
compensation for the Chief Executive Officer. The Compensation Committee conducts a performance review without the Chief
Executive Officer’s participation and provides its recommendations to the full Board.
Performance Evaluations
– Named Executive Officers (Other Than the Chief Executive Officer)
The Compensation Committee, together with our Chief
Executive Officer, evaluates the performance of our senior executive officers, including our named executive officers. The
Chief Executive Officer provides a performance assessment and compensation recommendation to the Compensation Committee for
the other named executive officers within the overall team performance framework. The performance evaluation is based on
factors such as achievement of the corporate objectives and performance; advancement of strategic initiatives; leadership and
talent development; individual business area responsibilities; and performance as an executive team member and overall
executive team performance.
With respect to the total compensation of our senior executive
officers other than our Chief Executive Officer, the Compensation Committee also reviews total direct compensation data. The Compensation
Committee makes final determinations regarding the total compensation of our senior executive officers.
Supplemental Comparison
of 2015 and 2014 Direct Compensation to Named Executive Officers
The supplemental compensation table below shows how the
Committee assessed total direct compensation for our named executive officers in 2015 and 2014. It is consistent with the
Committee’s analysis of information presented to it in tally sheets (see “Compensation Practices and Procedures
— Use of Tally Sheets”) and the Committee’s evaluation of our performance relative to established
performance targets. The Committee approves RSU awards when financial results for the previous year are finalized, which
occurs early in the following year. The primary difference between this supplemental compensation table and the 2015 Summary
Compensation Table is that the supplemental compensation table includes grants of restricted stock units in the performance
year to which they relate, rather than in the year when granted. The supplemental compensation table presented below is not
intended to be a substitute for the 2015 Summary Compensation Table, but provides a condensed summary of actual total direct
compensation awarded to the named executive officers for their performance in 2015 and 2014. The amounts reported in this
table differ from the amounts required to be reported under SEC rules in the Summary Compensation Table on page 38, and are
not a substitute for such information.
JETBLUE AIRWAYS CORPORATION
-
2016 Proxy Statement
|
33
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
Stock
|
Incentive Plan
|
All Other
|
|
|
|
Salary
|
Bonus
|
Awards
|
Compensation
|
Compensation
|
Total
|
Name and Principal Position
|
Year
|
($)
(1)
|
($)
(2)
|
($)
(3)
|
($)
(4)
|
($)
(5)
|
($)
|
Robin Hayes
|
2015
|
550,000
|
-
|
1,659,988
|
718,850
|
14,814
|
2,943,652
|
President and Chief Executive Officer
(6)
|
2014
|
490,000
|
-
|
1,749,995
|
360,150
|
14,259
|
2,614,404
|
Mark Powers
|
2015
|
425,000
|
-
|
719,989
|
416,700
|
17,042
|
1,578,732
|
Executive Vice President
|
2014
|
424,000
|
-
|
699,992
|
411,640
|
15,871
|
1,551,503
|
and Chief Financial Officer
|
|
|
|
|
|
|
|
James Hnat
|
2015
|
425,000
|
-
|
449,977
|
277,800
|
11,061
|
1,163,839
|
Executive Vice President
|
2014
|
424,000
|
-
|
449,992
|
207,760
|
13,821
|
1,095,573
|
and General Counsel
|
|
|
|
|
|
|
|
Martin St. George
|
2015
|
400,000
|
-
|
449,992
|
257,500
|
14,127
|
1,1 2 1,61 9
|
Executive Vice President
|
2014
|
|
|
|
|
|
|
Commercial & Planning
|
|
|
|
|
|
|
|
Alexander Chatkewitz
|
2015
|
265,000
|
-
|
124,983
|
119,600
|
594
|
510,176
|
Vice President and Controller
|
2014
|
|
|
|
|
|
|
David Barger
|
2015
|
600,000
|
-
|
-
|
75,000
|
13,605
|
688 ,605
|
Former Chief Executive Officer
(7)
|
2014
|
600,000
|
-
|
399,998
|
441,000
|
18,638
|
1,459,636
|
|
|
(1)
|
Includes annualized salary for the year
indicated.
|
|
|
(2)
|
Compensation reported under this column
consists of signing bonuses and spot bonuses. Annual performance-based bonuses are reported under the “Non-Equity Incentive
Plan Compensation” column.
|
|
|
(3)
|
Includes the aggregate grant date fair
value (calculated in accordance with accounting guidance) of awards of (i) RSUs for the performance year indicated, and (ii)
PSUs granted in 2015 which will be paid, if at all, based on the Company’s performance years 2015 - 2017.
|
|
|
(4)
|
Includes the annual incentive bonuses
paid for the performance year indicated.
|
|
|
(5)
|
Represents Company
401(k) matching contributions under the JetBlue Airways Corporation Retirement Plan in which all of our employees are eligible
to participate, as well as life insurance premiums, positive space flights and executive physicals (if any). The 401(k) matching
contribution for each of Mr. Hayes, Mr. Powers, Mr. St. George and Mr. Barger was $13,250, Mr. Hnat, $7,500 , and Mr. Chatkewitz
$0 .
|
|
|
(6)
|
Mr. Hayes became JetBlue’s President
and Chief Executive Officer on February 16, 2015.
|
|
|
(7)
|
Mr. Barger retired as JetBlue’s
Chief Executive Officer on February 15, 2015.
|
Base Salary
The below table, for comparative purposes, shows annualized base
salaries for 2015 and 2014.
Executive
|
|
2015 salary
|
|
|
2014 salary
|
|
Robin Hayes
(1)
|
|
$
|
550,000
|
|
|
$
|
490,000
|
|
Mark Powers
|
|
$
|
425,000
|
|
|
$
|
424,000
|
|
James Hnat
|
|
$
|
425,000
|
|
|
$
|
424,000
|
|
Martin St. George
(2)
|
|
$
|
400,000
|
|
|
|
-
|
|
Alexander Chatkewitz
(3)
|
|
$
|
265,000
|
|
|
$
|
265,000
|
|
David Barger
(4)
|
|
$
|
600,000
|
|
|
$
|
600,000
|
|
|
|
(1)
|
In connection with Mr. Hayes’
promotion to Chief Executive Officer, Mr. Hayes’ base salary was increased to $550,000 effective February 16, 2015.
|
|
|
(2)
|
Mr. St. George was promoted to Executive
Vice President Commercial & Planning effective February 16, 2015; he was not a named executive officer in 2014.
|
|
|
(3)
|
Mr. Chatkewitz joined JetBlue in December
2014.
|
|
|
(4)
|
Mr. Barger retired as JetBlue’s
Chief Executive Officer on February 15, 2015.
|
Annual Incentive
Bonuses and Equity Compensation
The Company’s annual incentive targets and equity targets
are payable according to the Company’s achievement of its annual performance metrics. Our program has a preliminary threshold
of $1 of pre-tax income. Pre-tax income is also the threshold for profit sharing payments to non-management crewmembers. Profit
sharing is primarily payable to non-equity-eligible crewmembers. Our manager level and above crewmembers, including our named executive
officers, will not benefit from the corporate portion of bonus payments if, as a result of our financial results, our non-management
crewmembers do not receive Retirement Plus (a Company discretionary contribution of 5% of eligible non-management crewmember compensation,
which vests over three years) or profit-sharing.
In 2015, the targets for our corporate performance factor were
expanded to include an operational goal, on time departure or “D0”. Our 2015 targets were D0 and Customer Net Promoter
Score (“NPS”) (each weighted 20%) and Controllable Costs (cost per available seat mile ex-Fuel and Profit Sharing)
and Pre-tax Margin (each weighted 30%). NPS is a brand loyalty analysis. Controllable Costs and Pre-Tax Margin are financial measures
that we believe are important to our long-term success because Pre-Tax Margin measures our overall profitability levels and Controllable
Costs measure our cost growth for operating the airline excluding fuel cost and profit sharing. Our annual incentive bonuses, which
are payable in cash, aim to reward executive officers and members of leadership throughout the organization to the manager level
for attaining annual corporate performance targets.
JETBLUE AIRWAYS CORPORATION
-
2016 Proxy Statement
|
34
|
In addition, in recognition of the need to maintain competitiveness
and noting the importance of an increased amount of “at risk” pay-for-performance based compensation, the Compensation
Committee, for 2015, maintained our Chief Executive Officer’s target bonus opportunity at 100% (or $550,000), the target
bonus opportunity of our Chief Financial Officer to 75%, and of our Executive Vice President and General Counsel at 50%. The target
bonus opportunity of our remaining named executive officers were set at 50% and certain of our Vice Presidents at 30%.
The named executive officers’ maximum bonus is two times
their target bonus.
The Compensation Committee may adjust the formulaic funding upwards
or downwards by up to 35% based on qualitative factors, including operating and financial performance versus our peer group and
the market, variances in fuel costs from the assumptions in the budget, total stockholder return in absolute and as compared to
that of our peer group, and our long-term strategic plan development and execution.
The Compensation Committee relied on our performance assessment
framework to evaluate our results on each goal and then perform a collective assessment across all goals to determine a corporate
performance factor, which is then applied to our annual incentive bonus awards. For 2015, the corporate performance factor was
determined as follows:
|
|
|
|
Payout
|
Actual Payout
|
|
|
|
Performance
|
Achieved as a
|
Approved as a
|
Measure
|
Weight
|
Target
|
Achieved
|
% of Target
|
% of Target
|
D0
|
20%
|
65.0%
|
60.9%
|
|
|
Customer NPS
(1)
|
20%
|
65.5%
|
66.3%
|
|
|
Controllable Cost
(2)
|
30%
|
1.0%
|
0.5%
|
130.7%
|
130.7%
|
Pre-tax Margin
(3)
|
30%
|
9.8%
|
17.1%
|
|
|
|
|
(1)
|
Customer NPS is
a non-financial measure that assesses brand loyalty based on a customer’s subjective survey responses to a customer
experience. NPS is calculated by taking the percent of brand promoters and subtracting the percent of brand detractors, yielding
a score between -100 and 100. The NPS achieved in this table represents quarterly NPS figures averaged for the year.
|
|
|
(2)
|
Controllable Cost
is a financial measure to focus us on the costs which we can control, unlike fuel, for example, which is subject to external
factors. We evaluate Controllable Cost on a year over year percentage change basis in accordance with generally accepted U.S.
accounting principles.
|
|
|
(3)
|
Pre-Tax margin
is a financial measure calculated using generally accepted U.S. accounting principles.
|
A “Met” target assessment would have resulted in a
corporate performance factor of 100%, which would have resulted in a payout of the percentages of base salary for the named executive
officers as discussed above. After evaluating the Company’s performance, the Compensation Committee chose to approve the
recommended performance of 130.7%.
Long-Term Incentive
Equity
Equity grants directly align executive officers’ interests
with the interests of stockholders by rewarding increases in the value of our share price. Such grants enable us to attract, retain
and motivate highly qualified individuals for leadership positions within the Company.
We have historically used RSUs, based on achievement of goals
set the previous year, and with a three year vesting period, to retain and motivate our crewmembers, including our named executive
officers. In 2013, we adopted a long-term incentive plan with performance PSUs as the relevant vehicle in order to continue to motivate our senior
most leaders by introducing a performance-based compensatory element. In 2015, approximately 23% of the total PSU award target
opportunity for eligible named executive officers is in the form of PSUs that are earned (or forfeited) based on the Company’s
goal achievement. We believe this program more closely aligns the interests of our officers and stockholders. With this restructuring,
we transitioned from a program that provided for large periodic equity awards to a steady and sustainable program of more consistent
annual award opportunities.
Restricted Stock Units (RSUs)
We grant equity in the form of RSUs in connection with our annual
performance review, and upon hire or promotion. Our annual equity grants are made following the Compensation Committee meeting
during the first quarter of each year. We do not time our equity grants to coincide with the disclosure of non-public material
information.
To avoid a situation where the same set of metrics triggered both
bonus and equity payouts or paid out neither, we award RSUs that vest over three years to our named executive officers based on
the individual’s achievement of individual performance goals. The executive’s degree of achievement of his individual
goals, and a subjective assessment of the degree of difficulty of those goals, are reflected in the equity grants paid in 2016
based on 2015 performance as shown in the supplemental compensation table. The Committee believes that this maintains some variation
in pay among the senior executive team and continues the process of moving them out of lockstep which the Compensation Committee
no longer believes to be appropriate.
Our RSU equity target awards for 2015 performance are as follows
(reported as fair market value on the date of the restricted stock unit grant):
|
RSU
|
|
Target Opportunity
|
Title
|
($ value of RSUs)
|
President & Chief Executive Officer
|
600,000
|
Executive Vice President and Chief
Financial Officer
|
350,000
|
Executive Vice President, General Counsel
|
300,000
|
Executive Vice President, Commercial &
Planning
|
250,000
|
Vice President, Controller
|
75,000
|
JETBLUE AIRWAYS CORPORATION
-
2016 Proxy Statement
|
35
|
The maximum is 200% of target and the threshold is 50%. The ranges
were selected based on peer compensation data and in light of the Company’s internal pay equity considerations and its financial
performance.
Our named executive officers are evaluated annually on their achievement
of individual goals, tailored to that executive’s responsibilities and the workgroups he supervises. All of our officers
had culture goals, since we believe our strong and unique culture is integral to our success. Our officers also had shared operational
goals. In addition, our CEO had goals relating to innovation and safety, as well as financial and strategic goals, including driving
free cash flow and a strong balance sheet, working with investor relations, and deciding on a corporate position on the Open Skies
debate. Mr. Powers, Mr. Hnat, Mr. St. George, and Mr. Chatkewitz had culture goals, shared operational goals, goals supporting
aspects of the Company’s overall plan and goals relating specifically to the departments which they lead.
Mr. Hayes reviewed the performance of the senior executive officers,
as well as other members of his team. Mr. Hayes, in performing his reviews, used his judgment in evaluating the degree of difficulty
of achieving these individual goals. Each of the other named executive officers met or exceeded his targets, resulting in the equity
awards shown in the applicable tables.
The Compensation Committee, in consultation with the Board of
Directors, reviewed Mr. Hayes’ performance and strong leadership in 2015 in light of the Company’s overall performance
in approving his annual RSU grant.
Based on the assessments of both the Compensation Committee, and,
with respect to Mr. Hayes, the Board of Directors, of individual performance in 2015 and the assessments of the Compensation Committee
with respect to the other senior executive officers’ individual performance in 2015, the following RSU awards were made on
February 24, 2016:
|
2015 Equity Award
|
Name
|
(FMV $)
|
Robin Hayes
|
960,000
|
Mark Powers
|
350,000
|
James Hnat
|
300,000
|
Martin St. George
|
350,000
|
Alexander Chatkewitz
|
125,000
|
|
|
*
|
As noted, in light of Mr.
Barger’s retirement from JetBlue in February 2015, he did not receive a 2015 equity award.
|
We believe this approach was consistent with our pay for performance
philosophy whereby we link our corporate results and individual goal achievement to each named executive officer’s compensation.
These RSUs vest in three equal annual installments on the first, second and third anniversaries of the grant date and are forfeitable
if the officer were to leave the Company before the awards are fully vested.
Performance Stock Units (PSUs)
and Settlement of 2013-2015 PSUs
As noted above, in 2013, the Compensation Committee adopted a
long-term performance incentive program. For the 2015-2017 performance period, the Company’s long-term incentive metrics
included one relative goal (relative to industry ex-Fuel CASM), weighted at one-third, and one absolute goal (ROIC), weighted at
two-thirds. We believe our CASM and ROIC goals are consistent with maintaining our cost structure relative to the industry and
our focus on efficient use of capital. The number of PSUs awarded at the end of the three-year performance period will vary based
on the actual performance. The value earned will be delivered in common stock following the completion of a three-year performance
period subject to our performance against the pre-established corporate goals and certification by the Compensation Committee.
Payouts in respect of the 2015 PSU awards may range from 0 to 200% of the target award based on the Company’s performance
measured against industry relative ex-Fuel CASM and ROIC. The PSU maximum is 200% of target and the threshold is 50% of target.
The 2015 PSU goals, at target, are as follows: $700,000 for the
President and Chief Executive Officer, $370,000 for the Executive Vice President and Chief Financial Officer, and $150,000 for
the other Executive Vice Presidents, including the Executive Vice President and General Counsel and the Executive Vice President
Commercial & Planning.
The PSUs are another way in which the Committee has introduced
variability into the named executive officer compensation packages. Actual amounts of awards granted in April 2015 are disclosed
in the “Summary Compensation Table” and “Grants of Plan-Based Awards” table.
As in years past, the Company wanted to use more than one metric,
while keeping the number of variables limited. For 2015, we felt that having one “absolute” and one “relative”
metric, weighted two-thirds and one-third, respectively, reflected our emphasis on growing ROIC while still controlling costs.
Our 2015 metrics, ROIC and relative ex-fuel CASM, are key measures we use to manage our business and are shared with investors.
We feel that these metrics, align management’s and stockholders’ interests, of improving stockholder value over time.
Our long-term performance-based incentive plan covers three year
forward looking performance periods. We believe our commitment to continued ROIC growth aligns with management’s and stockholders’
interests, of improving stockholder value over the long term. For the 2015-2017 performance period, our team is aiming for continued
ROIC improvement, mindful that we are a growth airline. We do not disclose a specific ROIC target due to the highly volatile nature
of our business. Moreover, the components of ROIC include highly sensitive data, such as projected net income, and we believe that
such disclosure would result in serious competitive harm. These targets were designed to be challenging but attainable if we had
what we considered to be successful years. For 2015, and going forward, we have incorporated “confidence factors” into
our goal setting. This means that we will aim to set target goals that we have at least 50% confidence in achieving. We expect
that using such confidence factors will help us set and achieve better goals and avoid negative incentive effects, despite otherwise
positive performance.
For our relative ex-Fuel CASM target, we seek to maintain competitive
cost positioning. We have not disclosed the relative ex-fuel CASM target because it is competitively sensitive as a forward looking
metric. Given that our business strategy depends, in part, on growth that is profitable only when we maintain our cost advantage
relative to our network carrier competitors, disclosing that figure on a prospective basis would subject us to serious competitive
harm. This metric is difficult to achieve. We operate in a highly volatile industry and as such can experience unanticipated spikes
in operating costs. Our industry is very sensitive to global economic forces. Further, our domestic competitors have all lowered
their costs through bankruptcy or merger activity. We believe maintaining a competitive cost structure is important to our ability
to grow. Maintaining management focus, through our LTI program, is important to this goal.
The number of shares of PSUs for the 2016-2018 performance period
will be determined based on the closing price of the Company’s common stock on the grant date, April 12, 2016. The Compensation Committee approves the grant dates in advance.
JETBLUE AIRWAYS CORPORATION
-
2016 Proxy Statement
|
36
|
Settlement of 2013-2015 Long-Term Incentive Program Performance
Unit Grants
In March 2013, the
Compensation Committee approved grants of performance units, subject to a three-year performance period. The original
2013-2015 PSU grants were made assuming a target performance, but remained subject to performance conditions. The performance
period relating to the 2013 PSUs concluded on December 31, 2015, but the PSUs remained subject to the Compensation
Committee’s certification of performance results.
The 2013 performance unit grants had
two components, one relative and one absolute. The performance goals were independent of each other and equally
weighted—an ROIC goal and a relative ex-Fuel CASM goal. Depending upon actual company performance relative to these
performance goals, the exact number of shares that could have vested ranged from zero to 200 percent of the target award.
Following the conclusion of the performance period, the Compensation Committee calculated the company’s performance
relative to these goals during the three-year performance period to determine the vesting percentage for the 2013 performance
unit grants.
During the performance period, we achieved an ROIC of 8.5%, resulting
in a 146.4% vesting percentage for that half of the program. We achieved an ex-Fuel CASM to industry goal of 10.9%, resulting in
a 122.5% vesting percentage for that half of the program. Based on the Compensation Committee’s calculation of these performance
measures, the 2013 performance unit grants vested at 134.5%. The following table summarizes the performance results with respect
to each of the performance measures applicable to the 2013 LTIP performance unit grants and the corresponding contributions to
the vesting percentage.
Performance Measures — 2013-2015
|
|
|
Result
|
|
|
|
Weight
|
|
|
|
Vesting
|
|
ROIC
|
|
|
146.4
|
%
|
|
|
50
|
%
|
|
|
73
|
%
|
Relative ex-Fuel CASM
|
|
|
122.5
|
%
|
|
|
50
|
%
|
|
|
61
|
%
|
|
|
|
|
|
|
|
TOTAL
|
|
|
134.5
|
%
|
The following table summarizes the
number of PSUs awarded for the 2013-2015 performance cycle in 2016 and the number of shares of common stock to be paid out
with respect to such grants for our named executive officers, based on the 134.5% percent vesting percentage approved by
the Compensation Committee in early 2016.
|
|
Vesting of 2013 Performance Unit Grants
|
|
|
Units at
|
|
|
Vesting
|
|
|
Units upon
|
|
|
|
Grant Date
|
|
|
Percentage
|
|
|
Vesting
|
|
Name
(2)
|
|
(#)
|
|
|
(%)
|
|
|
(#)
|
|
Robin Hayes
|
|
|
44,709
|
|
|
|
134.5
|
%
|
|
|
60,133
|
|
Mark Powers
|
|
|
29,806
|
|
|
|
134.5
|
%
|
|
|
40,089
|
|
James Hnat
|
|
|
14,903
|
|
|
|
134.5
|
%
|
|
|
20,044
|
|
David Barger
(1)
|
|
|
59,612
|
|
|
|
134.5
|
%
|
|
|
50,397
|
|
|
|
(1)
|
Mr. Barger retired in February 2015; accordingly, his 2013-2015
performance units were prorated pursuant to the terms of the award agreement.
|
|
|
(2)
|
Neither Mr. St. George nor Mr. Chatkewitz received the 2013-2015
PSU grant.
|
All Other Compensation
Perquisites and Other Personal Benefits
We offer a limited amount of perquisites and other personal benefits
to our named executive officers. The Compensation Committee believes that these perquisites are reasonable and consistent with
prevailing market practice and the Company’s overall compensation program. Perquisites are not a material part of our compensation program. The Compensation
Committee periodically reviews the levels of perquisites and other personal benefits provided to our named executive officers.
See “— Summary Compensation Table — All Other Compensation.”
Post-Employment Benefits
To promote retention and recruiting, we also offer limited arrangements
that provide certain post-employment benefits in order to alleviate concerns that may arise in the event of a crewmember’s
separation from service with us and enable crewmembers to focus on Company duties while employed by us.
•
|
Severance Benefits.
In the event of a change in control, post-employment
severance benefits for our named executive officers are provided through our Executive Change in Control Severance Plan (the
“Executive Plan”) and Amended and Restated 2002 Stock Incentive Plan or 2011 Incentive Compensation Plan, as applicable.
Our Executive Plan is intended to ensure stability within the Company during a period of uncertainty resulting from the possibility
of a change in control of the Company by providing incentives for certain designated crewmembers, including our named executive
officers, to remain in our employ. See “—Agreements Governing Termination,” “—Agreements
Governing a Change in Control,” “—Potential Payments Upon Termination or Change in Control” below.
Otherwise, severance benefits are provided to departing executives on a case-by-case basis.
|
|
|
•
|
Retirement Benefits.
Our executive officers may participate
in our 401(k) defined contribution retirement plan provided to substantially all other U.S. crewmembers and do not receive
special retirement plans or benefits. For our executive officers as well as all other participating crewmembers, we match
employee contributions under this plan 100% up to 5% of eligible earnings, subject to all applicable regulatory limits, and
the match vests over five years. Our award agreements under the Incentive Compensation Plan were amended in 2014 to include
retirement provisions for retirement eligible crewmembers, which provide for either accelerated or continued vesting of RSUs
and PSUs.
|
JETBLUE AIRWAYS CORPORATION
-
2016 Proxy Statement
|
37
|
Tax Impacts
Section 162(m) of the Internal Revenue Code of 1986, as
amended, or the Code, generally disallows a tax deduction for compensation in excess of $1,000,000 paid per year to each of
our Chief Executive Officer and our three most highly paid other executive officers (other than our Chief Financial Officer).
Qualifying “performance-based compensation” is not subject to this deduction limitation if certain requirements
are met. With regard to equity incentive plan compensation awards made in 2015, we intend to generally structure our
compensation programs such that amounts payable under these programs are not subject to the deduction limitations of Section
162(m). However, the Committee reserves the right to design programs that are intended to accomplish a full range of
compensation objectives important to our success, even where the compensation paid under such programs may not be exempt from
the deduction limitations of Section 162(m). For 2015, due to the Company’s net operating loss carryforwards, the
limitation on our compensation deduction resulted in no significant income tax obligation.
Other provisions of the Code can also affect compensation decisions.
Under Sections 280G and 4999 of the Code, a 20% excise tax is imposed upon certain individuals who receive payments upon a change
in control if the payments received by them equal or exceed an amount approximating three times their average annual compensation.
The excise tax is imposed on all such payments exceeding one time an individual’s average annual compensation. A company
will also lose its tax deduction for such “excess parachute payments”. As discussed under “Payments upon a Change
in Control-Executive Change in Control Plan,” below, the Executive Plan provides for tax “gross-up” payments
to our named executive officers to cover the cost of this excise tax.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the “Compensation
Discussion and Analysis” section with our management. Based on such review and discussion, the Compensation Committee recommended
to the Board of Directors that the “Compensation Discussion and Analysis” be included in this proxy statement and incorporated
by reference in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2015.
The Compensation Committee of JetBlue:
David Checketts
Virginia Gambale
(Chair)
Stephan Gemkow
JETBLUE AIRWAYS CORPORATION
-
2016 Proxy Statement
|
38
|
SUMMARY COMPENSATION TABLE
The following table provides certain information concerning the
compensation for services rendered to us during the years ended December 31, 2015, 2014 and 2013 by our named executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Incentive Plan
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)
(1)
|
|
|
($)
(2)
|
|
|
($)
(3)
|
|
|
($)
(4)
|
|
|
($)
|
|
Robin Hayes
|
|
|
2015
|
|
|
|
542,500
|
|
|
|
-
|
|
|
|
1,999,996
|
|
|
|
718,850
|
|
|
|
14,814
|
|
|
|
3,276,159
|
|
President and Chief Executive
|
|
|
2014
|
|
|
|
490,000
|
|
|
|
-
|
|
|
|
1,012,489
|
|
|
|
360,150
|
|
|
|
14,259
|
|
|
|
1,876,898
|
|
Officer
(5)
|
|
|
2013
|
|
|
|
445,833
|
|
|
|
40,590
|
|
|
|
912,493
|
|
|
|
208,710
|
|
|
|
13,435
|
|
|
|
1,621,062
|
|
Mark Powers
|
|
|
2015
|
|
|
|
424,917
|
|
|
|
-
|
|
|
|
769,981
|
|
|
|
416,700
|
|
|
|
17,042
|
|
|
|
1,6 76,421
|
|
Executive Vice President
|
|
|
2014
|
|
|
|
423, 917
|
|
|
|
100,000
|
|
|
|
824,993
|
|
|
|
311,640
|
|
|
|
15,871
|
|
|
|
1,675,504
|
|
Chief Financial Officer
|
|
|
2013
|
|
|
|
411,000
|
|
|
|
37,114
|
|
|
|
637,495
|
|
|
|
191,086
|
|
|
|
15,526
|
|
|
|
1,292,221
|
|
James Hnat
|
|
|
2015
|
|
|
|
424,917
|
|
|
|
-
|
|
|
|
499,996
|
|
|
|
277,800
|
|
|
|
11,061
|
|
|
|
1,213,774
|
|
Executive Vice President
|
|
|
2014
|
|
|
|
423, 917
|
|
|
|
-
|
|
|
|
537,494
|
|
|
|
207,760
|
|
|
|
13,821
|
|
|
|
1,1 82,075
|
|
General Counsel
|
|
|
2013
|
|
|
|
411,000
|
|
|
|
30,962
|
|
|
|
449,996
|
|
|
|
159,238
|
|
|
|
8,348
|
|
|
|
1,059,544
|
|
Martin St. George
|
|
|
2015
|
|
|
|
392,479
|
|
|
|
-
|
|
|
|
477,797
|
|
|
|
257,500
|
|
|
|
14,127
|
|
|
|
1,157,844
|
|
Executive Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial & Planning
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alexander Chatkewitz
|
|
|
2015
|
|
|
|
265,000
|
|
|
|
|
|
|
|
74,994
|
|
|
|
119,600
|
|
|
|
594
|
|
|
|
460,188
|
|
Vice President Controller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Barger
|
|
|
2015
|
|
|
|
75,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
75,000
|
|
|
|
13,605
|
|
|
|
163,605
|
|
Former Chief Executive Officer
(6)
|
|
|
2014
|
|
|
|
600,000
|
|
|
|
-
|
|
|
|
2,024,991
|
|
|
|
441,000
|
|
|
|
18,638
|
|
|
|
3,084,629
|
|
|
|
|
2013
|
|
|
|
600,000
|
|
|
|
67,550
|
|
|
|
2,024,996
|
|
|
|
347,850
|
|
|
|
15,588
|
|
|
|
3,055,984
|
|
|
|
(1)
|
Compensation reported under
this column consists of signing bonuses and spot bonuses. Annual performance-based bonuses are reported above under the “Non-Equity
Incentive Plan Compensation” column. Amounts reported for fiscal year 2015 represent discretionary adjustments of the
non-equity incentive plan payouts for each named executive officer in excess of the target. See “Compensation Discussion
and Analysis — Summary of Fiscal Year 2015 Executive Compensation Decisions — Annual Incentive and Equity Compensation”
and “— Bonuses” above.
|
|
|
(2)
|
Represents (i) the grant date fair value
of the RSUs based on JetBlue’s stock price on the grant date and (ii) the grant date fair value of the PSUs subject
to performance conditions represented at target level, in each case computed in accordance with FASB ASC Topic 718. With respect
to the PSUs, assuming the maximum performance levels were probable on the grant date, the grant date fair values for each
of our named executive officers PSUs awarded in 2015 would be as follows: Mr. Hayes: $1,399,991, Mr. Powers: $739,964, Mr.
Hnat: $299,998, and Mr. St George: $299,998. Mr. Barger did not receive a 2015 PSU award as he retired in February 2015. Please
refer to Note 7 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31,
2015, as filed with the SEC, for further discussion related to the assumptions used in our valuation as well as the disclosure
of the accounting expense recognized. For information on the valuation assumptions with respect to grants made prior to 2015,
please refer to the notes to our financial statements in our applicable Annual Report on Form 10-K. See the “Grants
of Plan-Based Awards” table below for further information on RSUs and PSUs granted in 2015. Upon Mr. Barger’s
retirement from JetBlue, 90,580 RSUs were forfeited from the 2013 grant and 55,465 PSUs were forfeited from his 2013 and 2014
PSU grants.
|
|
|
(3)
|
Represents incentive bonus earned in
2015, 2014 and 2013, based upon each named executive officer’s achievement of certain specified annual performance targets.
The amounts earned in 2015 were paid on February 19, 2016, the amounts earned in 2014 were paid on February 20, 2015 and the
amounts earned in 2013 were paid on February 20, 2014. See “Compensation Discussion and Analysis—Summary
of Fiscal Year 2015 Executive Compensation Decisions - Annual Incentive” above.
|
|
|
(4)
|
Represents Company 401(k) matching contributions
under the JetBlue Airways Corporation Retirement Plan in which all of our employees are eligible to participate, as well as
life insurance premiums, positive space flights and Executive physicals (if any). The 401(k) matching contribution for each
of Mr. Hayes, Mr. Powers, Mr. Barger, Mr. St George was $13,250, Mr. Hnat, $7,500 , and Mr. Chatkewitz $0.
|
|
|
(5)
|
The Board of Directors appointed Robin
Hayes as Chief Executive Officer, effective February 16, 2015.
|
|
|
(6)
|
Mr. Barger retired from JetBlue effective
February 15, 2015.
|
JETBLUE AIRWAYS CORPORATION
-
2016 Proxy Statement
|
39
|
GRANTS OF PLAN-BASED AWARDS
The following table sets forth certain information,
as of December 31, 2015, concerning individual grants of equity and non-equity plan-based awards made to the named executive officers
during the fiscal year ended December 31, 2015.
|
|
|
|
Estimated
Future Payouts Under
Non-Equity Incentive Plan Awards
(1)
|
|
Estimated
Future Payouts Under
Equity Incentive Plan Awards
(2)
|
|
All Other
Stock Awards:
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of
|
|
of Stock
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Stock or Units
|
|
and Option
|
Name
|
|
Grant Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
(3)
|
|
Awards ($)
(4)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(l)
|
Robin
Hayes
|
|
2/13/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,243
|
|
1,300,000
|
|
|
4/8/2015
|
|
|
|
|
|
|
|
18,144
|
|
36,288
|
|
72,576
|
|
|
|
699,996
|
|
|
|
|
275,000
|
|
550,000
|
|
1,100,000
|
|
|
|
|
|
|
|
|
|
|
Mark Powers
|
|
2/13/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,767
|
|
399,999
|
|
|
4/8/2015
|
|
|
|
|
|
|
|
9,590
|
|
19,180
|
|
38,360
|
|
|
|
369,982
|
|
|
|
|
159,375
|
|
318,750
|
|
637,500
|
|
|
|
|
|
|
|
|
|
|
James Hnat
|
|
2/13/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,796
|
|
349,997
|
|
|
4/8/2015
|
|
|
|
|
|
|
|
3,888
|
|
7,776
|
|
15,552
|
|
|
|
149,999
|
|
|
|
|
106,250
|
|
212,500
|
|
425,000
|
|
|
|
|
|
|
|
|
|
|
Martin St. George
|
|
2/13/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,477
|
|
327,798
|
|
|
4/8/2015
|
|
|
|
|
|
|
|
3,888
|
|
7,776
|
|
15,552
|
|
|
|
149,999
|
|
|
|
|
100,000
|
|
200,000
|
|
400,000
|
|
|
|
|
|
|
|
|
|
|
Alexander Chatkewitz
|
|
2/13/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,456
|
|
74,994
|
|
|
4/8/2015
|
|
|
|
|
|
|
|
-
|
|
-
|
|
-
|
|
|
|
-
|
|
|
|
|
39,750
|
|
79,500
|
|
159,000
|
|
|
|
|
|
|
|
|
|
|
David Barger
|
|
2/13/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
-
|
|
|
4/8/2015
|
|
|
|
|
|
|
|
-
|
|
-
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents the annual incentive bonuses. The Threshold
column reflects the minimum annual bonus award that would have been granted had we achieved minimum performance targets for
2015. The Target column reflects the award granted if we were to achieve all of our 2015 performance targets. The Maximum
column reflects awards that would have been payable for our 2015 performance had we exceeded all of our performance targets
for the year. The payouts are based on performance goals established at the beginning of the year and are therefore completely
at risk. The performance goals for determining the payout are described in “Compensation Discussion and Analysis —
Annual Incentive Bonuses and Equity Compensation” above. Actual payouts are reported in the “Non-Equity Incentive
Plan Compensation” column of the “Summary Compensation Table.”
|
(2)
|
Represents PSUs granted under our 2011 Incentive
Compensation Plan. The Threshold column reflects the minimum equity award units based on achieving the minimum level of performance
in each of the performance metrics described in the relevant PSU Award agreement at December 31, 2015. The Target column reflects
the target equity award units if we were to achieve target level performance. The Maximum column reflects the maximum award
units if we were to achieve the maximum level of each of the performance metrics as described further in footnote (4).
|
(3)
|
Represents RSUs granted under our 2011 Incentive
Compensation Plan. Subject to the named executive officers’ continued employment, these equity awards vest in a series
of three equal annual installments commencing on the first anniversary of the grant date, subject to immediate vesting upon
termination following certain change in control events.
|
(4)
|
Represents total grant date fair value of RSUs
and PSUs as determined in accordance with FASB ASC Topic 718. Please refer to Note 7 of our consolidated financial statements
in our 2015 annual report for further discussion related to the assumptions used in our valuations of RSUs and PSUs.
|
JETBLUE AIRWAYS CORPORATION
-
2016 Proxy Statement
|
40
|
Summary of Employment Agreement with Mr. Barger
On February 11, 2008, we entered into an
employment agreement with David Barger, then our Chief Executive Officer, which was amended in 2009, 2010 and 2013. As amended,
the agreement had a term through February 15, 2015 and provided for an annual salary, effective as of February 1, 2009, of $600,000.
The agreement provided that Mr. Barger was eligible to receive an annual incentive bonus at a target of 50% and a maximum
of 100% of his base salary; a restricted stock unit award with a minimum target at a fair market value of $250,000, with a then
minimum award of $0 and a maximum award of $500,000 (the maximum award is aimed at 2 times his salary, adjusted over time), depending
on his performance against targets as set and reviewed by the Compensation Committee; as well as participation in the Company’s
benefit plans available to executive officers. (Mr. Barger received a supplemental grant of restricted stock units with a grant
date fair value of $250,000 when his employment agreement was amended in 2009.) The agreement was terminable by Mr. Barger or
by the Company. See “—Agreements Governing Termination.”
Summary of Employment Agreement with Mr. Hayes
On February 12, 2015, the Company and Mr.
Hayes entered into an employment agreement (the “Hayes Employment Agreement”) pursuant to which Mr. Hayes was appointed
Chief Executive Officer and President of the Company effective as of February 16, 2015. The Hayes Employment Agreement has a term
of three years, ending on February 28, 2018, with a renewal option for a second three -year term at the discretion of the
Board. The Hayes Employment Agreement provides that Mr. Hayes will be paid an annual salary at the rate of $550,000 and an annual
incentive bonus as provided by the Company to its senior executives, currently at a target of 100% of base salary and a maximum
of 200% of base salary. The annual salary may be increased, but not decreased, from time to time, and the amount of bonus remains
subject to the review and approval of the Compensation Committee in its sole discretion.
The Hayes Employment Agreement also provides
that Mr. Hayes will be eligible to receive an annual award of RSUs and an annual award of PSUs, pursuant to the Company’s
2011 Incentive Compensation Plan and related award agreements, as applicable. The Hayes Employment Agreement provides for health,
fringe, welfare and flight benefits as provided to other senior executive officers of the Company. The Hayes Employment Agreement
provides for certain severance payments should Mr. Hayes be terminated during the term without cause. It contains customary confidentiality,
non-competition, non-solicitation and non-disparagement provisions. The Agreement is terminable by Mr. Hayes or by the Company,
in each case as more fully described below under “Potential Payments upon Termination or Change In Control.” See “—Agreements
Governing Termination.”
Employment Agreements with other Named Executive Officers
None of Mr. Powers, Mr. Hnat, Mr. St. George
or Mr. Chatkewitz have employment agreements with the Company.
JETBLUE AIRWAYS CORPORATION
-
2016 Proxy Statement
|
41
|
OUTSTANDING EQUITY AWARDS AT FISCAL
YEAR-END
The following table sets forth information
concerning all outstanding equity awards for each named executive officer at December 31, 2015.
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
Equity
|
Equity
incentive
|
|
|
|
|
|
|
|
|
|
incentive plan
|
plan awards:
|
|
|
|
|
|
|
|
|
|
awards:
|
market or
|
|
|
|
|
|
|
|
Number
|
|
number of
|
payout value
|
|
|
Number of
|
Number of
|
|
|
|
of Shares
|
Market Value
|
unearned
|
of unearned
|
|
|
Securities
|
Securities
|
|
|
|
or Units of
|
of Shares or
|
shares, units
|
shares, units
|
|
|
Underlying
|
Underlying
|
Options
|
|
|
Stock That
|
Units of Stock
|
or other rights
|
or other rights
|
|
|
Unexercised
|
Unexercised
|
Exercise
|
Option
|
|
Have Not
|
That Have Not
|
that have not
|
that have not
|
|
|
Options
|
Options
|
Price
|
Expiration
|
|
Vested
|
Vested
|
vested
|
vested
|
Name
|
Grant Date
|
Exercisable
|
Unexercisable
|
($)
|
Date
|
|
(#)
|
($)
|
(#)
|
($)
|
(a)
|
(1)
|
(b)
|
(c)
|
(e)
|
(f)
|
|
(g)
|
(h)
(2)
|
(i)
(3)
|
(j)
|
Robin Hayes
|
2/13/2013
|
-
|
-
|
-
|
-
|
|
34,142
|
773,316
|
-
|
-
|
|
4/8/2013
|
-
|
-
|
-
|
-
|
|
-
|
-
|
67,064
|
1,518,988
|
|
2/13/2014
|
-
|
-
|
-
|
-
|
|
44,066
|
998,095
|
-
|
-
|
|
4/8/2014
|
-
|
-
|
-
|
-
|
|
-
|
-
|
77,142
|
1,747,266
|
|
2/13/2015
|
-
|
-
|
-
|
-
|
|
77,243
|
1,749,554
|
-
|
-
|
|
4/8/2015
|
-
|
-
|
-
|
-
|
|
-
|
-
|
72,576
|
1,643,846
|
Mark Powers
|
8/16/2006
|
9,000
|
|
10.365
|
8/16/2016
|
|
-
|
-
|
-
|
-
|
|
8/15/2007
|
9,000
|
|
9.025
|
8/15/2017
|
|
-
|
-
|
-
|
-
|
|
11/14/2007
|
13,500
|
|
7.790
|
11/14/2017
|
|
-
|
-
|
-
|
-
|
|
2/13/2013
|
-
|
-
|
-
|
-
|
|
24,387
|
552,366
|
-
|
-
|
|
4/8/2013
|
-
|
-
|
-
|
-
|
|
-
|
-
|
44,709
|
1,012,659
|
|
2/13/2014
|
-
|
-
|
-
|
-
|
|
41,128
|
931,549
|
-
|
-
|
|
4/8/2014
|
-
|
-
|
-
|
-
|
|
-
|
-
|
51,428
|
1,164,833
|
|
2/13/2015
|
-
|
-
|
-
|
-
|
|
23,767
|
538,323
|
-
|
-
|
|
4/8/2015
|
-
|
-
|
-
|
-
|
|
-
|
-
|
38,360
|
868,854
|
James Hnat
|
5/16/2007
|
15,000
|
|
10.680
|
5/16/2017
|
|
-
|
-
|
-
|
-
|
|
2/13/2013
|
-
|
-
|
-
|
-
|
|
19,510
|
441,902
|
-
|
-
|
|
4/8/2013
|
-
|
-
|
-
|
-
|
|
-
|
-
|
22,355
|
506,329
|
|
2/13/2014
|
-
|
-
|
-
|
-
|
|
34,274
|
776,306
|
-
|
-
|
|
4/8/2014
|
-
|
-
|
-
|
-
|
|
-
|
-
|
17,142
|
388,266
|
|
2/13/2015
|
-
|
-
|
-
|
-
|
|
20,796
|
471,029
|
-
|
-
|
|
4/8/2015
|
-
|
-
|
-
|
-
|
|
-
|
-
|
15,552
|
352,253
|
Martin St.
|
8/16/2006
|
29,000
|
|
10.365
|
8/16/2016
|
|
-
|
-
|
-
|
-
|
George
|
8/15/2007
|
9,000
|
|
9.025
|
8/15/2017
|
|
-
|
-
|
-
|
-
|
|
2/13/2013
|
-
|
-
|
-
|
-
|
|
11,845
|
268,289
|
-
|
-
|
|
2/13/2014
|
-
|
-
|
-
|
-
|
|
14,688
|
332,683
|
-
|
-
|
|
2/13/2015
|
-
|
-
|
-
|
-
|
|
12,997
|
294,382
|
-
|
-
|
|
4/8/2015
|
|
-
|
-
|
-
|
|
6,480
|
146,772
|
-
|
-
|
|
4/8/2015
|
-
|
-
|
-
|
-
|
|
-
|
-
|
15,552
|
352,253
|
Alexander
Chatkewitz
|
2/13/2015
|
-
|
-
|
-
|
-
|
|
4,456
|
100,928
|
-
|
-
|
David Barger
|
4/8/2013
|
-
|
-
|
-
|
-
|
|
-
|
-
|
56,091
|
1,270,461
|
|
2/13/2014
|
-
|
-
|
-
|
-
|
|
120,872
|
2,737,751
|
-
|
-
|
|
4/8/2014
|
-
|
-
|
-
|
-
|
|
-
|
-
|
18,701
|
423,566
|
JETBLUE AIRWAYS CORPORATION
-
2016 Proxy Statement
|
42
|
(1)
|
Please
refer
to
the
table
below
for
the
applicable
vesting
schedules
of
outstanding
option,
RSU
awards
and
PSU
awards.
|
|
Grant Date
|
Expiration
Date
|
Vesting
Schedule
|
|
8/16/2006
|
8/16/2016
|
One-third in three equal annual installments
beginning on August 16, 2007
|
|
5/16/2007
|
5/16/2017
|
One-third in
three equal annual installments beginning on May 16, 2008
|
|
8/15/2007
|
8/15/2017
|
One-third in three equal annual installments
beginning on August 15, 2008
|
|
11/14/2007
|
11/14/2017
|
One-third in
three equal annual installments beginning on November 14, 2008
|
|
2/13/2013
|
-
|
One-third in three equal annual installments
beginning on February 13, 2014
|
|
4/8/2013
|
-
|
Three-year
cliff vesting beginning on April 8, 2013 and subject to meeting certain performance goals for fiscal years 2013, 2014 and
2015
|
|
2/13/2014
|
-
|
One-third in three equal annual installments
beginning on February 13, 2015
|
|
4/8/2014
|
-
|
Three-year
cliff vesting beginning on April 8, 2013 and subject to meeting certain performance goals for fiscal years 2014, 2015 and
2016
|
|
2/13/2015
|
|
One-third in three equal annual installments
beginning on February 13, 2016
|
|
4/8/2015
|
|
One-third in three equal annual installments
beginning on April 8, 2016 (RSUs)
|
|
4/8/2015
|
|
3 year cliff
vesting beginning on April 8, 2015 and subject to meeting certain performance goals for fiscal years 2015, 2016 & 2017
(PSUs)
|
|
(2)
|
The amount listed in this column represents
the product of the closing market price of the Company’s stock as of December 31, 2015 ($22.65) multiplied by the number
of shares of stock subject to the award.
|
|
(3)
|
The number of shares reported for the 2013
PSU awards under our Equity Incentive Plan (and the payout value) is based on achieving the maximum (150%) performance. At
year-end 2015, our measurement of both metrics for the 2013–2015 performance period had us tracking above target. The
actual number of shares earned for 2013 was based on achievement of performance metrics (ROIC and relative ex-fuel CASM) at
the end of the applicable performance period, December 31, 2015 and are payable in common stock, in a range of 0% to 150%
once certified by our Compensation Committee. The Compensation Committee certified the achievement of the performance for
the 2013-2015 performance period at 134.5%, as discussed in the Compensation Discussion and Analysis - Long-Term Incentive
Equity - Performance Stock Units (PSUs) - Settlement of 2013 Long-Term Incentive Program Performance Unit Grants. The number
of shares reported for the 2014 PSU awards under our Equity Incentive Plan (and the payout value) is based on achieving the
maximum (150%) performance. At year-end 2015, our measurement of both metrics for the 2014–2016 performance period has
us tracking towards 133.33% of target. The actual number of shares earned (if any) will be based on achievement of performance
metrics (ROIC and relative ex-fuel CASM) at the end of the applicable performance period, December 31, 2016 and are payable
in common stock, in a range of 0% to 150% once certified by our Compensation Committee. The number of shares reported for
the 2015 PSU awards under our Equity Incentive Plan (and the payout value) is based on achieving the maximum (200%) performance.
At year-end 2015, our measurement of both metrics for the 2015-2017 performance period has us tracking towards 175%. The actual
number of shares earned (if any) will be based on achievement of performance metrics (ROIC and relative ex-fuel CASM) at the
end of the applicable performance period, December 31, 2017 and are payable in common stock, in a range of 0% to 200% once
certified by our Compensation Committee.
|
JETBLUE AIRWAYS CORPORATION
-
2016 Proxy Statement
|
43
|
OPTION EXERCISES AND STOCK VESTED
The following table provides information
concerning vesting of option awards and RSU awards during 2015 for each named executive officer:
|
Option
Awards
|
|
Stock
Awards
|
|
Number
of
|
|
|
Number
of
|
|
|
Shares Acquired
|
Value Realized
|
|
Shares Acquired
|
Value Realized
|
|
on Exercise
|
on Exercise
|
|
on Vesting
|
on Vesting
|
Name
|
(#)
|
($)
|
|
(#)
|
($)
|
Robin Hayes
|
|
|
|
99,547
|
1,675,376
|
Mark Powers
|
|
|
|
77,091
|
1,330,465
|
James Hnat
|
21,000
|
166,643
|
|
56,554
|
951,804
|
Martin St. George
|
|
|
|
31,277
|
526,392
|
Alexander Chatkewitz
|
|
|
|
|
|
David Barger
|
45,000
|
377,740
|
|
239,895
|
4,037,433
|
POTENTIAL PAYMENTS UPON TERMINATION
OR CHANGE IN CONTROL
Each of our named executive officers may
receive various payments if his employment is terminated, depending on the grounds for the termination. Employment may be terminated
in various ways, including the following:
•
|
Voluntary termination of employment by the named executive
officer (with or without “good reason”);
|
|
|
•
|
Termination of employment by the Company (with or
without “cause”);
|
|
|
•
|
Termination in the event of the disability or death
of the named executive officer; and
|
|
|
•
|
Termination following a change in control of the Company.
|
In the table on page 47, we provide estimates
of the payments that our named executive officers would have received had their employment been terminated as of December 31,
2015.
Potential payments made to Mr.
Hayes upon the termination of his employment or upon a change in control are governed by the terms of his employment
agreement with the Company and the benefit plans in which he participates. In addition to Mr. Hayes, the remaining named
executive officers participate in the JetBlue Airways Corporation Severance Plan (the “Severance Plan”) and the
JetBlue Airways Corporation Executive Change in Control Severance Plan (the “Executive Plan”), which govern the
potential payments due to our named executive officers upon a termination of employment. As of December 31, 2015, none of
Mr. Powers, Mr. Hnat, Mr. St. George or Mr. Chatkewitz had employment agreements with the Company.
Agreements Governing Termination
Payments to Mr. Hayes upon Termination
The Hayes Employment Agreement
provides that, if Mr. Hayes were terminated without Cause (as defined in the Severance Plan) prior to or at the expiration of
the initial three year term or subsequent three year term, he would be eligible to receive severance and benefits under the
Severance Plan. The Severance Plan provides for cash severance of 3 months of base pay for each full year of service, subject
to a minimum of 12 months of base pay and a maximum of 24 months of base pay. The Severance Plan also provides for payment of
pro-rated average annual bonus, which is the average of the two most recently earned regular full-year annual bonus amounts
(excluding any amount of any special, spot or pro-rated bonuses) and either forfeiture, continued vesting or acceleration of
various outstanding equity awards (depending on award type and conditions upon grant). Mr. Hayes is also eligible to receive
continued medical and/or dental benefits during the cash severance pay period, up to a maximum of 12 months, followed by
executive-paid COBRA coverage for so long as the executive pays the applicable monthly COBRA cost of such continuation
coverage, subject to the Company’s discretion. The continued medical and dental benefits and, in certain circumstances, the
acceleration of equity, are subject to the execution of a separation agreement by the executive. Mr. Hayes is also eligible
to receive Company-paid career transition consulting services, with a cost of up to $40,000. If, after termination of his
employment without Cause, Mr. Hayes were to breach any of the confidentiality, non-competition, non-solicitation or return of
proprietary materials provisions contained in the Hayes Employment Agreement, he would forfeit the foregoing payments.
Pursuant to the Hayes Employment Agreement, if Mr. Hayes’ s employment is terminated for Cause, or if Mr. Hayes were to
resign from the Company other than for Good Reason, Mr. Hayes would only be entitled to payment of unpaid base salary through and
including the date of termination or resignation and any other amounts or benefits required to be paid or provided by law or
under any plan, program, policy or practice of the Company. If Mr. Hayes’s employment were terminated by reason of his
death or Disability (as defined in the Hayes Employment Agreement), the Company would pay to Mr. Hayes (or his estate, as
applicable), his base salary through and including the date of termination and any other accrued compensation and
benefits.
For purposes of this agreement, “Cause,”
means a conviction of or a plea of no contest to a felony or other crime involving moral turpitude or dishonesty; fraud or wilful
act of dishonesty against the Company or subsidiary that adversely materially affects the Company or subsidiary; wilful breach
of Company
JETBLUE AIRWAYS CORPORATION
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policies that materially adversely affects JetBlue; intentional damage to JetBlue property or business; gross insubordination;
or habitual neglect of his duties with JetBlue. “Disability” means that Mr. Hayes is (a) unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death
or can be expected to last for a continuous period of not less than 12 months, or by reason of any medically determinable physical
or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than
12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan
covering employees of the Company.
Our employment agreement with Mr. Barger
expired by its terms in February 2015. See narrative disclosure to “Summary Compensation Table” and “Grants
of Plan-Based Awards Table,” at page 40.
Payments to Other Named Executive Officers
As of December 31, 2015, we had no contractual
obligations to make severance payments to any of our named executive officers other than Mr. Hayes (except as provided in the
severance plan described below).
Severance Plan Summary
On May 22, 2014, upon recommendation of
the Compensation Committee, the Board of Directors approved and adopted the JetBlue Airways Corporation Severance Plan (the
“Severance Plan”). The Severance Plan provides that upon occurrence of a Severance Event, as defined in
the Severance Plan, a crewmember who meets the plan conditions for eligibility (a “Participant”) will be paid
cash severance, pursuant to a formula based on job level at the Termination Date, as defined in the Severance Plan, and years
of service. The Severance Plan also provides for payment of pro-rated average annual bonus, and either forfeiture,
continued vesting or acceleration of various outstanding equity awards (depending on award type and conditions upon
grant). Participants may receive medical and/or dental benefits, COBRA payments, and career transition consulting services.
If a crewmember is terminated for Cause or without Good Reason, no severance benefits are payable. The Severance Plan defines
“Cause” as a Participant’s (a) conviction of, or plea of no contest to, a felony or other crime involving
moral turpitude or dishonesty; (b) participation in a fraud or willful act of dishonesty against the Company or a subsidiary
of the Company that adversely affects the Company or any such subsidiary in a material way; (c) willful breach of the
Company’s policies that affects the Company in a material way; (d) causing intentional damage to the Company’s
property or business; (e) conduct that constitutes gross insubordination; or (f) habitual neglect of his or her duties with
the Company or a subsidiary of the Company. The determination of whether a Termination of Employment is for Cause will be
made by the Plan Administrator, as defined in the Severance Plan, in its sole and absolute discretion, and such determination
shall be conclusive and binding on the affected Participant. “Good Reason” is defined as the occurrence of any one of the following conditions with respect to a Participant without the Participant’s prior written consent: (a) a material diminution in the Participant’s base salary; or (b) a material change in geographic location at which the Participant must perform services on behalf of the Company or its subsidiary (for this purpose, a change in any such location will be considered material only if it increases the Participant’s current one-way commute by more that fifty (50) miles; in each case of clause (a) or (b), only if (i) the Participant provides written notice to the Company of the existence of the applicable condition described in such clause within 90 days of the initial existence of the condition, (ii) the Company fails to remedy the condition within 60 days after the Company receives such written notice and (iii) within the 30 day period immediately following the lapse of such 60 day period, the Participant elects to terminate his or her employment.
Arrangements Governing a Change in Control
Executive Change in Control Plan
On June 28, 2007, upon recommendation of
the Compensation Committee, the Board approved and adopted the JetBlue Airways Corporation Executive Change in Control Severance
Plan (the “Executive Plan”). A “change in control,” as defined in the Executive Plan, means: (i) a reorganization,
merger, consolidation or other corporate transaction involving JetBlue, such that the stockholders of the Company immediately
prior to such transaction do not, immediately after such transaction, own more than 50% of the combined voting power of the Company
in substantially the same proportions as their ownership, immediately prior to such business combination, of the voting securities
of the Company; or (ii) the sale, transfer or other disposition of all or substantially all of the Company’s assets, or
the consummation of a plan of complete liquidation or dissolution of the Company. The Executive Plan provides severance and welfare
benefits to eligible employees who are involuntarily terminated from employment without cause or when they resign during the two-year
period following a change in control for “Good Reason” (a “Qualifying Termination Event”). “Good
Reason” means the termination of employment by an eligible employee because of any of the following events: (1) a 10% reduction
by the Company (other than in connection with a Company-wide, across-the-board reduction), in (x) his or her annual base pay or
bonus opportunity as in effect immediately prior to the change in control date or (y) his or her bonus opportunity or 12 times
his or her average monthly salary, or as same may be increased from time to time thereafter; (2) a material reduction in the duties
or responsibilities of the eligible employee from those in effect prior to the change in control; or (3) the Company requiring
the eligible employee to relocate from the office of the Company where an eligible employee is principally employed immediately
prior to the change in control date to a location that is more than 50 miles from such office of the Company (except for required
travel on the Company’s business to an extent substantially consistent with such eligible employee’s customary business
travel obligations in the ordinary course of business prior to the change
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in control
date). For purposes of the Executive Plan, “cause” means a conviction of or a plea of nolo contendere to any
felony or a crime involving moral turpitude or dishonesty; fraud or breach of Company policies which materially adversely
affects the Company; intentional damage to the Company’s property or business; habitual conduct that constitutes gross
insubordination; or habitual neglect of his or her duties with the Company.
A named executive officer who incurs a Qualifying
Termination Event will be entitled to receive two years of salary and two times his or her target bonus for the year in which
termination occurs. In addition, each employee covered by the Executive Plan will be entitled to: (i) payment of his or her accrued
but unused paid time off as of the date of termination; (ii) a pro rata portion of his or her annual bonus for the year in which
termination occurs; and (iii) payment for certain unreimbursed relocation expenses incurred by him or her (if any). Each employee
covered by the Executive Plan who incurs a Qualifying Termination Event will also be entitled to receive reimbursement for all
costs incurred in procuring health and dental care coverage for such employee and his or her eligible dependents under COBRA.
Such reimbursements will be made for 18 months for our named executive officers. During the reimbursement period, if an eligible
employee becomes covered under group health and dental care plans providing substantially comparable benefits to those provided
to similarly situated active employees of the Company, then the Company’s COBRA reimbursement payments will be eliminated.
In addition, named executive officers are eligible for flight benefits for two years following a Qualifying Termination Event.
With respect to named executive officers,
the Executive Plan also contains an excise tax gross-up provision whereby if such employees incur any excise tax by reason of
his or her receipt of any payment that constitutes an excess parachute payment, as defined in Section 280G of the Code, the employee
will be entitled to a gross-up payment in an amount that would place him or her in the same after-tax position he or she would
have been in had no excise tax applied.
The Executive Plan may be amended or terminated
by the Company at any time prior to a change in control. In addition, under the terms of the Executive Plan, the Board is required
to reconsider the terms of the plan within the 90-day period immediately prior to the third anniversary of its adoption in light
of then-current market practices. Such reconsideration took place in September 2010 and the Board made no changes to the Executive
Plan in light of the then ongoing industry changes.
Potential payments upon a change in control
under the Executive Plan are estimated in the table below captioned “Potential Payments Upon Termination.”
Payments in Connection with our Amended and Restated 2002
Stock Incentive Plan
In addition to the above, our Amended
and Restated 2002 Stock Incentive Plan provides for immediate vesting of various equity grants in the event of a change in
control. The phrase “change in control,” as used in the plan, means any of the following: a change in ownership
or control of the Company effected through a merger, consolidation or other reorganization approved by our stockholders
(unless securities representing more than 50% of the total combined voting power of the voting securities of the successor
corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion,
by the persons who beneficially owned our outstanding voting securities immediately prior to such transaction); the sale,
transfer or other disposition of all or substantially all of our assets in a liquidation or dissolution; or the acquisition,
directly or indirectly by any person or group of persons unaffiliated with us, of beneficial ownership of securities
possessing more than 50% of the total combined voting power of our outstanding securities pursuant to a tender or exchange
offer made to our stockholders.
Potential payments upon a change in control
under the Amended and Restated 2002 Stock Incentive Plan are provided in the table below captioned “Potential Payments Upon
Termination.”
Payments in Connection with our 2011 Incentive Compensation
Plan
Under the 2011 Incentive Compensation Plan,
a change in control of the Company will have no effect on outstanding awards under the plan that the Board of Directors or the
Compensation Committee determines will be honored or assumed or replaced with new rights by a new employer (referred to as an
alternative award), so long as the alternative award (i) is based on securities that are, or within 60 days after the change in
control will be, traded on an established United States securities market; (ii) provides the holder with rights and entitlements
(such as vesting and timing or methods of payment) that are at least substantially equivalent to the rights, terms and conditions
of the outstanding award; (iii) has an economic value that is substantially equivalent to that of the outstanding award; (iv)
provides that if the holder’s employment with the new employer terminates under any circumstances, other than due to termination
for cause or resignation without good reason, within 18 months following the change in control (or prior to a change in control,
but following the date on which we agree in principle to enter into that change in control transaction), (1) any conditions on
the holder’s rights under, or any restrictions on transfer or exercisability applicable to, the alternative award will be
waived or will lapse in full, and the alternative award will become fully vested and exercisable, and (2) the alternative award
may be exercised until the later of (a) the last date on which the outstanding award would otherwise have been exercisable, and
(b) the earlier of the third anniversary of the change in control and expiration of the term of the outstanding award; and (v)
will not subject the holder to additional taxes or interest under section 409A of the Code.
If the Board of Directors or the Compensation
Committee does not make this determination with respect to any outstanding awards, then (i) the awards will fully vest and become
non-forfeitable and exercisable immediately prior to the change in control; or (ii) the Board of Directors or the Compensation
Committee will provide that in connection with the change in control (1) each outstanding option and SAR will be cancelled in
exchange for an amount equal to the fair market value of our common stock on the change in control date, reduced by the option
exercise price or grant price of the option or SAR, (2) each outstanding share of restricted stock, restricted stock unit and
any other award denominated in shares will be cancelled in exchange for an amount equal to the number of shares covered by the
award multiplied by the price per share offered for our common stock in the change in control transaction, or, in some cases,
the highest fair market value of the common stock during the 30 trading days preceding the change in control date, (3) any outstanding
award not denominated in shares, including any award the payment of which was deferred, will be cancelled in exchange for the
full amount of the award; (4) the target performance goals applicable to any outstanding awards
JETBLUE AIRWAYS CORPORATION
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will be deemed to be fully attained,
unless actual performance exceeds the target, in which case actual performance will be used, for the entire performance period
then outstanding; and (5) the Board of Directors or the Compensation Committee may otherwise adjust or settle outstanding awards
as it deems appropriate, consistent with the plan’s purposes.
The phrase “change in control,”
as used in the plan, means, very generally, any of the following: (i) the acquisition by certain persons of voting securities
representing 30% or more of our common stock or of the combined voting power of all of our voting securities, (ii) certain changes
in the majority of the members of our Board of Directors, (iii) certain corporate transactions, such as a merger, reorganization,
consolidation or sale of substantially all of our assets, that result in certain changes to the composition of our stockholders,
or (iv) a complete liquidation or dissolution of JetBlue.
Potential payments upon a change in control
under the 2011 Incentive Compensation Plan are provided in the table below captioned “Potential Payments Upon Termination.”
Potential Payments Upon Termination
The table below sets forth potential
benefits that each named executive officer would be entitled to receive upon termination of employment under the various
circumstances outlined above. Other than for Mr. Barger who retired from the Company in February 2015, the amounts shown in
the table are the amounts that would have been payable under existing plans and arrangements if the named executive
officer’s employment had terminated on December 31, 2015. For Mr. Barger, actual amounts paid to him in connection with
his retirement are described below in the narrative immediately following this table. Potential payments to each of Messrs.
Powers, Hnat, St. George and Chatkewitz upon the termination of their employment or upon a change in control are governed by
the terms of the benefit plans in which they participate, including the Severance Plan, the Executive Change in Control Plan,
the 2002 Stock Incentive Plan and 2011 Incentive Compensation Plan. Values for stock option and restricted stock unit grants
are based on our common stock closing price of $22.65 on the NASDAQ Global Select Market on December 31, 2015. The table
below does not include amounts to which the named executive officers would be entitled that are already described in the
other compensation tables appearing earlier in this proxy statement, including the value of equity awards that have already
vested. The actual amounts that would be payable in these circumstances can only be determined at the time of the
executive’s termination or a change in control and accordingly, may differ from the estimated amounts set forth in the
table below.
|
|
Multiple
of Base
|
|
|
Potential Post-Employment Compensation
|
|
|
|
|
|
Salary
|
|
|
|
Accelerated
|
|
Accelerated
|
|
Accelerated
|
|
|
|
|
|
|
|
|
and
|
|
|
|
Vesting
|
|
or
Continued
|
|
or
Continued
|
|
|
|
Estimated
|
|
|
|
|
Target
|
|
Pro-Rata
|
|
of
Stock
|
|
Vesting
of
|
|
Vesting
of
|
|
All
Other
|
|
Tax
Gross-
|
|
|
|
|
Bonus
|
|
Annual
|
|
Options
|
|
RSUs
|
|
PSUs
|
|
Compensation
|
|
Up
|
|
Total
|
|
|
($)
(1)
|
|
Bonus
(2)
|
|
($)
(3)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
(4)
|
|
($)
|
Robin
Hayes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
by the Company without “cause” or by the Crewmember for good reason under Severance Plan
(5)
|
|
1,100,000
|
|
304,725
|
|
|
|
1,855,548
|
|
-
|
|
138,038
|
|
|
|
3,398,311
|
Termination
for reasons of Death or
|
|
|
|
550,000
|
|
|
|
1,449,464
|
|
1,970,324
|
|
|
|
|
|
3,969,788
|
Disability
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
for reasons of Retirement
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
Qualifying
Termination after Change of Control (double trigger)
(8)
|
|
2,200,000
|
|
550,000
|
|
|
|
3,520,965
|
|
2,999,426
|
|
145,557
|
|
2,218,404
|
|
11,634,352
|
Mark
Powers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
by the Company without “cause” or by the Crewmember for good reason under Severance Plan
(5)
|
|
850,000
|
|
319,920
|
|
|
|
1,197,581
|
|
-
|
|
138,038
|
|
|
|
2,505,539
|
Termination
for reasons of Death or Disability
(6)
|
|
|
|
|
|
|
|
1,032,228
|
|
1,282,805
|
|
|
|
|
|
2,315,034
|
Termination
for reasons of Retirement
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
Qualifying
Termination after Change
|
|
|
|
|
|
|
|
2,022,237
|
|
1,886,088
|
|
145,557
|
|
1,297,287
|
|
7,157,419
|
of
Control (double trigger)
(8)
|
|
1,487,500
|
|
318,750
|
|
|
|
|
|
|
|
|
|
|
|
|
James
Hnat
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
by the Company without “cause” or by the Crewmember for good reason under Severance Plan
(5)
|
|
850,000
|
|
198,980
|
|
|
|
987,064
|
|
-
|
|
127,863
|
|
|
|
2,163,907
|
Termination
for reasons of Death or Disability
(6)
|
|
|
|
|
|
|
|
866,770
|
|
548,583
|
|
|
|
|
|
1,415,353
|
Termination
for reasons of Retirement
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
Qualifying
Termination after Change of Control
(double trigger)
(8)
|
|
1,275,000
|
|
212,500
|
|
|
|
1,689,237
|
|
772,524
|
|
130,294
|
|
|
|
4,079,555
|
JETBLUE AIRWAYS CORPORATION
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2016 Proxy Statement
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|
|
|
Multiple
of Base
|
|
|
Potential Post-Employment Compensation
|
|
|
|
|
|
Salary
|
|
|
|
Accelerated
|
|
Accelerated
|
|
Accelerated
|
|
|
|
|
|
|
|
|
and
|
|
|
|
Vesting
|
|
or
Continued
|
|
or
Continued
|
|
|
|
Estimated
|
|
|
|
|
Target
|
|
Pro-Rata
|
|
of
Stock
|
|
Vesting
of
|
|
Vesting
of
|
|
All
Other
|
|
Tax
Gross-
|
|
|
|
|
Bonus
|
|
Annual
|
|
Options
|
|
RSUs
|
|
PSUs
|
|
Compensation
|
|
Up
|
|
Total
|
|
|
($)
(1)
|
|
Bonus
(2)
|
|
($)
(3)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
(4)
|
|
($)
|
Martin
St. George
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
by the Company without “cause”
or by the Crewmember for good reason under Severance Plan
(5)
|
|
800,000
|
|
145,600
|
|
|
|
581,682
|
|
-
|
|
138,038
|
|
|
|
1,665,320
|
Termination
for reasons of Death or Disability
(6)
|
|
|
|
|
|
|
|
434,291
|
|
47,633
|
|
|
|
|
|
481,924
|
Termination
for reasons of Retirement
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
Qualifying
Termination after Change of Control (double trigger)
(8)
|
|
1,200,000
|
|
200,000
|
|
|
|
1,042,127
|
|
176,126
|
|
145,557
|
|
|
|
2,763,810
|
Alexander
Chatkewitz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
by the Company without “cause” or by the Crewmember for good reason under Severance Plan
(5)
|
|
198,750
|
|
79,500
|
|
|
|
33,643
|
|
-
|
|
45,307
|
|
|
|
356,930
|
Termination
for reasons of Death or Disability
(6)
|
|
|
|
|
|
|
|
29,558
|
|
-
|
|
|
|
|
|
29,558
|
Termination
for reasons of Retirement
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
Qualifying
Termination after Change of Control (double trigger)
(8)
|
|
344,500
|
|
79,500
|
|
|
|
100,928
|
|
-
|
|
60,857
|
|
|
|
585,785
|
(1)
|
As of December 31, 2015 we had
no contractual obligations to make any severance payments to our named executive officers, other than Mr. Hayes under the
terms of his employment agreement. Should any of the named executive officers be terminated without cause or good reason,
under our Severance Plan each named executive officer (other than Mr. Chatkewitz) is entitled to two years of salary
continuation based upon their years of service with the Company.
|
(2)
|
Represents an average annual
bonus under the Severance Plan equal to the average of the last two annual bonuses, pro-rated by the number of months
completed in the calendar year of termination. For the purposes of this table, termination is assumed to occur on
December 31, 2015, so the numbers do not reflect pro-ration. Under a change in control scenario, the amount above
represents target annual bonus for the year in which termination occurs, which is payable under the Executive Plan and
is not pro-rated because termination is assumed for purposes of this table to occur on December 31, 2015.
|
(3)
|
All outstanding stock options
held by named executive officers as of December 31, 2015 were fully vested and had an exercise price lower than $22.65, the
closing stock price on the last fiscal day of 2015. Each named executive officer would have 90 days to exercise post
termination. The value of vested, in-the-money stock options held by Mr. Powers is $233,190, Mr. Hnat is $179,550
and Mr. St. George is $478,890 which is the difference between the strike price and the
stock closing price at fiscal year end December 31, 2015.
|
(4)
|
Under Sections 280G and 4999
of the Code, a 20% excise tax is imposed upon individuals who receive payments upon a change in control to the extent the
payments received by them exceed an amount approximating three times their average annual compensation, as discussed above
under “Compensation Discussion and Analysis - Tax and Accounting Impact.” As discussed above under “Potential
Payments upon Termination or Change In Control - Arrangements Governing a change in Control - Executive change of Control
Plan” under our Executive Plan, we provide for tax “gross-up” payments to cover the cost of this excise
tax.
|
(5)
|
Under the terms of the
Severance Plan, each named executive officer would be entitled to 2 years of severance pay, with the exception of Mr.
Chatkewitz who would be entitled to 9 months of severance pay and a bonus payment equal to the average of the last year
years bonus payments. Each named executive officer would also be entitled to accelerated vesting of RSUs scheduled to
vest within the next 11 months following the date of termination for awards granted 2013 and prior and continued vesting
of RSUs scheduled to vest within the next 11 months following the date of termination for awards granted in 2014 and
after. For the purposes of this table the termination date is assumed to be December 31, 2015, which would entitle
continued vesting of 121,309 RSUs and accelerated vesting of 34,142 RSUs for Mr. Hayes, continued vesting of 64,895
RSUs and accelerated vesting of 24,387 RSUs for Mr. Powers, continued vesting of 55,070 RSUs and accelerated vesting
of 19,510 RSUs for Mr. Hnat, continued vesting of 34,165 RSUs and accelerated vesting of 11,845 RSUs for Mr. St.
George and continued vesting of 4,456 RSUs for Mr. Chatkewitz at the closing stock price on the last fiscal day of
2015 under the 2011 Incentive Compensation Plan. All other compensation assumes $40,000 in outplacement services
($30,000 for Mr. Chatkewitz) and $83,000 in an assumed value of lifetime flight benefits for each of Mr. Hayes, Mr.
Powers, Mr. Hnat, and Mr. St. George and $0 for Mr. Chatkewitz. Also includes COBRA coverage in
the amount of $15,037 for Mr. Hayes, $15,037 for Mr. Powers, $4,862 for Mr. Hnat, $15,037 for Mr. St.
George and $15,037 for Mr. Chatkewitz.
|
(6)
|
Assumes prorated vesting in the
event of a termination due to death or disability with a termination date of 12/31/15, Mr. Hayes would already have been paid
his full annual salary, however would be entitled to any other accrued compensation in which case would be his annual bonus
related to performance year 2015 and all of the named executive officers listed above are entitled per the termination provisions
in the PSU Award agreement due to death or disability to pro-rated vesting of PSUs in accordance with the company’s
performance metrics in the agreement up until the termination date. Assumes prorated vesting on 63,994 RSUs and pro-rated
vesting of 86,990 PSUs for Mr. Hayes, 45,573 RSUs and 56,636 PSUs for Mr. Powers, 38,268 RSUs and 24,220 PSUs for Mr.
Hnat, 19,174 RSUs and 2,103 PSUs for Mr. St. George and 1,305 RSUs for Mr. Chatkewitz at the closing stock price on the last
fiscal day of 2015 under the 2011 Incentive Compensation Plan.
|
(7)
|
Assumes continued vesting in
the event of a termination due to retirement with a termination date of December 31, 2015, None of the Named Executive Officers
are retirement eligible as of December 31, 2015.
|
(8)
|
Potential payments to each of
Mr. Hayes, Powers, Hnat, St. George, and Chatkewitz upon a qualifying termination of their employment after a change in
control are governed by the terms of the benefit plans in which they participate, including the Executive Change in
Control Plan and 2011 Incentive Compensation Plan. Assumes accelerated vesting on 155,451 RSUs and 132,425 PSUs for Mr.
Hayes, 89,282 RSUs and 83,271 PSUs for Mr. Powers, 74,580 RSUs and 34,107 PSUs for Mr. Hnat, 46,010 RSUs and 7,776 PSUs
for Mr. St. George and 4,456 RSUs for Mr. Chatkewitz at the closing stock price on the last fiscal day of 2015 per the
Change in Control provisions under the 2011 Incentive Compensation Plan. Under the Executive Plan, a named executive
officer would be entitled to receive: (i) two (2) years of salary and two times (2x) his or her target bonus for the year in
which termination of employment occurs; (ii) payment of his or her accrued but unused paid time off as of the date of
termination; (iii) a prorated portion of his or her annual bonus for the year in which termination occurs, at the target
level of achievement; (iv) payment for certain unreimbursed relocation expenses incurred by him or her (if any); and (v)
reimbursement for all costs incurred in procuring health and dental care coverage for the named executive officer and his or
her eligible dependents under COBRA for 18 months. During the reimbursement period, if an eligible employee becomes
covered under group health and dental care plans providing substantially comparable benefits to those provided to
similarly situated active employees of the Company, then the aforementioned COBRA reimbursement payments will be eliminated.
All other compensation includes COBRA coverage in the amount of $7,294 for Mr. Hnat, $22,557 for Mr. Hayes, Mr. Powers, Mr.
St. George, and Mr. Chatkewitz. Also, includes $40,000 in outplacement services ($30,000 for Mr. Chatkewitz), and $83,000 in
an assumed value of lifetime flight benefits for each of Messers Hayes, Powers, Hnat, and Mr. St. George and $8,300 for
Mr. Chatkewitz.
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In 2013, JetBlue adopted a policy that affirmatively states
that JetBlue Airways Corporation, going forward, will not make or promise to make to its senior executives any tax gross up payments, other than any
tax gross up payments pursuant to existing contractual obligations or the terms of any compensation or benefit plan currently
in effect. For this purpose, a “gross up” would be defined as any payment to or on behalf of a senior executive the
amount of which is calculated by reference to his or her estimated tax liability.
Mr. Barger retired from JetBlue on
February 15, 2015. In connection with his retirement, Mr. Barger received a pro-rated annual non-equity incentive bonus of
$75,000 on February 20, 2015, as disclosed in the “Summary Compensation Table.” Upon Mr. Barger’s
retirement, 90,580 unvested RSUs were forfeited and 120,872 RSUs became subject to continued vesting pursuant to the terms of
the applicable RSU agreement, of which 60,436 RSUs vested in February 2016 and 60,436 RSUs will vest in February 2017.
Additionally, 50,531 PSUs were prorated in accordance with the terms of the applicable PSU award agreements and are subject
to continued vesting and payable after certification of the performance metrics by the Compensation Committee after the
performance periods have lapsed. Mr. Barger is eligible for lifetime travel privileges on our flights as a founder of the
Company.
Compensation and Risk
Our Compensation Committee regularly conducts risk assessments
to determine the extent, if any, to which our compensation practices and programs may create incentives for excessive risk taking.
Based on these reviews, we believe that for the substantial majority of our employees the incentive for risk taking is low, because
their compensation consists largely of fixed cash salary and a cash bonus that has a capped payout. Furthermore, the majority
of these employees do not have the authority to take action on our behalf that could expose us to significant business risks.
In 2015, as part of its assessment, the Compensation Committee
reviewed the cash and equity incentive programs for senior executives and concluded that certain aspects of the programs actually
reduce the likelihood of excessive risk taking. These aspects include the use of long-term equity awards to create incentives
for senior executives to work for long-term growth of the Company, clawback policies, limiting the incentive to take excessive
risk for short-term gains by imposing caps on annual bonuses, requiring compliance with our Code of Business Conduct and vesting
the Compensation Committee with authority to exercise discretion to reduce payouts under our annual incentive bonus program.
For these reasons, we do not believe that our compensation policies
and practices create risks that are reasonably likely to have a material adverse effect on us.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act, and the rules promulgated
thereunder require our executive officers, directors and persons who beneficially own more than ten percent of a registered class
of our equity securities to file reports of ownership and changes in ownership with the SEC and to furnish to us copies of all
such filings. Based solely upon our review of the copies of such reports furnished to the Company and written representations
that no other reports were required, one Form 4 for Mr. Powers was filed late due to administrative error, during the year ended
December 31, 2015.
PROPOSAL 4
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TO APPROVE
AMENDMENTS TO OUR
CERTIFICATE OF
INCORPORATION
|
Approval of Amendments
At the annual meeting, stockholders will be asked to approve
amendments to the JetBlue Airways Corporation Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”)
to provide that a director may be removed from office with or without cause by the affirmative vote of the holders of a majority
of the outstanding shares of voting stock of the Company entitled to vote at an election of directors.
Description and Purpose
Effective February 11, 2016, our board of directors unanimously
adopted resolutions approving and declaring it advisable and in the best interests of the Company and of our stockholders, to
amend Article III, Section 15 of the Company’s Bylaws to provide that a director of the Company may be removed from
office with or without cause by the affirmative vote of the holders of a majority of shares entitled to vote at an election of
directors.
Our Certificate of Incorporation currently provides that a director
or the entire board may be removed only with cause by the holders of a majority of shares entitled to vote at an election of directors.
Therefore, in connection with the approval of the amendments to Article III, Section 15 of the Company’s Bylaws effective
February 11, 2016, the Company’s board of directors also approved, subject to stockholder approval, a conforming amendment
to Article VI of the Company’s Certificate of Incorporation to provide that any director of the Company may be removed from
office with or without cause by the affirmative vote of the holders of a majority of the outstanding shares of voting stock of
the Company entitled to vote at an election of directors. The board of directors determined that this amendment is in the best
interests of the Company and its stockholders and recommends its approval by the stockholders.
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A copy of the Certificate of Incorporation, marked to show the
proposed changes, with deleted text shown in strikethrough and added text shown as double-underlined, is attached to this proxy
statement as Appendix A.
If the amendment to the Certificate of Incorporation is approved
by the required vote of our stockholders, our board of directors intends to file the amended Certificate of Incorporation with
the Secretary of State of the State of Delaware (the “Secretary of State”). The amended Certificate of Incorporation
will be effective immediately upon acceptance of filing by the Secretary of State or such later time as may be specified in therein.
The Board of Directors
recommends that stockholders vote “FOR” the amendment of JetBlue Airways Corporation Certificate of Incorporation
for the reasons outlined above.
OTHER MATTERS
As of the date of this proxy statement, we do not know of any
other matters that may be presented for consideration at the annual meeting other than the items set forth in the notice of annual
meeting above. If any other matter is properly brought before the annual meeting for action by stockholders, proxies in the enclosed
form returned to the Company will be voted in accordance with the recommendation of the Board of Directors or, in the absence
of such a recommendation, in accordance with the judgment of the proxy holder.
ADDITIONAL INFORMATION
Stockholder Proposals for the 2017 Annual Meeting
Pursuant to our Bylaws, no business may be brought before an
annual meeting unless it is specified in the notice of the meeting or is otherwise brought before the meeting by or at the direction
of the Board of Directors or by a stockholder entitled to vote at the meeting, who has delivered written notice to our Corporate
Secretary at our principal executive offices (containing certain information specified in the Bylaws about the stockholder and
the proposed action). To be timely, the notice must not be received earlier than January 17, 2017 (120 days prior to May 17, 2017,
the one year anniversary of the 2016 annual meeting), nor later than February 16, 2017 (90 days prior to May 17, 2017, the
one-year anniversary of the 2016 annual meeting). The notice must contain the information required by our Bylaws.
The foregoing Bylaw provisions do not affect a stockholder’s
ability to request inclusion of a proposal in our proxy statement within the procedures and deadlines set forth in Rule 14a-8
of the SEC’s proxy rules and referred to in the paragraph below. Pursuant to Rule 14a-8, stockholder proposals intended
to be included in our proxy statement and voted on at our 2017 annual meeting must be received at our offices at Corporate Secretary,
JetBlue Airways Corporation, 27-01 Queens Plaza North, Long Island City, New York 11101, on or before December 6, 2016.
A copy of our Bylaws is available upon request to: Corporate
Secretary, JetBlue Airways Corporation, 27-01 Queens Plaza North, Long Island City, NY 11101. The officer presiding at the meeting
may exclude matters that are not properly presented in accordance with these requirements.
Annual Report to Stockholders
The fiscal 2015 Annual Report to Stockholders
(which is not a part of our proxy soliciting materials) is being mailed with this proxy statement to those stockholders that received
a copy of the proxy materials in the mail. For those stockholders that received the notice of internet availability of proxy materials,
this proxy statement and our fiscal 2015 Annual Report to Stockholders are available at our website at
www.jetblue.com
.
Additionally, and in accordance with SEC rules, you may access our proxy statement at
www.proxyvote.com
, a “cookie-free”
website that does not identify visitors to the site. A copy of the Company’s Annual Report on Form 10-K filed with the SEC
will be provided to stockholders without charge upon written request directed to our General Counsel, JetBlue Airways Corporation,
27-01 Queens Plaza North, Long Island City, NY 11101. The Company’s copying costs will be charged if exhibits to the 2015
Annual Report on Form 10-K are requested. The Company makes available on or through our website free of charge our Annual Report
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to such reports filed pursuant to
Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after filing.
By Order of the Board of Directors,
James G. Hnat
General Counsel
and Corporate Secretary
April 5, 2016
Long Island City, New York
JETBLUE AIRWAYS CORPORATION
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APPENDIX A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF JETBLUE
AIRWAYS CORPORATION
The undersigned, Robin Hayes and James G. Hnat, hereby certify
that:
ONE: They are the duly elected, qualified and acting Chief Executive Officer and Secretary, respectively, of JetBlue Airways
Corporation, a Delaware corporation.
TWO: The Certificate of Incorporation of said corporation was
originally filed in the Office of the Secretary of State of the State of Delaware on August 24, 1998 under the name New Air Corporation.
THREE: The Certificate of Incorporation of said corporation
was subsequently amended and restated, and in each case the Amended and Restated Certificate of Incorporation of said corporation
was originally filed in the Office of the Secretary of State of the State of Delaware on April 17, 2002, May 20, 2008 and May
26, 2010 under the name JetBlue Airways Corporation.
FOUR: The Amended and Restated Certificate of Incorporation
of said corporation is further amended and restated to read in its entirety as follows:
ARTICLE I
The name of this corporation is JetBlue Airways Corporation
(the “Corporation”).
ARTICLE
II
The address of the Corporation’s registered office in
the State of Delaware is 9 East Loockerman Street, City of Dover, County of Kent, Delaware. The name of the Corporation’s
registered agent at such address is National Registered Agents, Inc.
ARTICLE
III
The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State
of Delaware (the “GCL”).
ARTICLE
IV
The Corporation is authorized to issue two classes of stock
to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares that
the Corporation is authorized to issue is Nine Hundred Twenty Five Million (925,000,000). Nine Hundred Million (900,000,000) shares
shall be Common Stock, par value $0.01 per share, and Twenty Five Million (25,000,000) shares shall be Preferred Stock, par value
$0.01 per share. Immediately upon the filing of the Amended and Restated Certificate of Incorporation with the Office of the Secretary
of State of the State of Delaware, each one (1) share of the Corporation’s Class A-1 Common Stock, Class A-2 Common Stock,
Series A-1 Preferred, Series A-2 Preferred, Series B-1 Pre-ferred and Series B-2 Preferred was converted into one (1) share of
Common Stock.
The Preferred Stock may be issued from time to time in one or
more series, without further stockholder approval. The Board of Directors of the Corporation is hereby authorized to fix or alter
the rights, preferences, privileges and restrictions granted to or imposed upon each series of Preferred Stock, and the number
of shares constituting any such series and the designation thereof, or of any of them. The rights, privileges, preferences and
restrictions of any such additional series may be subordinated to, pari passu with (including, without limitation, inclusion in
provisions with respect to liquidation and acquisition preferences, redemption and/or approval of matters by vote), or senior
to any of those of any present or future class or series of Preferred Stock or Common Stock. The Board of Directors is also authorized
to increase or decrease the number of shares of any series prior or subsequent to the issue of that series, but not below the
number of shares of such series then outstanding. In case the number of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the
number of shares of such series.
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ARTICLE
V
In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to make, repeal, alter, amend and rescind any or all of the Bylaws
of the Corporation. In addition, the Bylaws may be amended by the affirmative vote of holders of at least a majority of the outstanding
shares of voting stock of the Corporation entitled to vote at an election of directors.
ARTICLE
VI
The number of directors of the Corporation shall be determined
by resolution of the Board of Directors.
Elections of directors need not be by written ballot unless
the Bylaws of the Corporation shall so provide. Advance notice of stockholder nominations for the election of directors and of
any other business to be brought before any meeting of the stockholders shall be given in the manner provided in the Bylaws of
this Corporation.
At each annual meeting of stockholders, directors of the Corporation
shall be elected to hold office until the expiration of the term for which they are elected, or until their successors have been
duly elected and qualified; except that if any such election shall not be so held, such election shall take place at a stockholders’
meeting called and held in accordance with the GCL.
Each director who is serving as a director on the date of this
Amended and Restated Certificate of Incorporation and who is elected or appointed at or after the 2009 annual meeting of stockholders
shall hold office until the next annual meeting of stockholders and until a successor has been elected and qualified, or until
such director’s earlier resignation or removal from office. Directors elected prior to or at the 2009 annual meeting of
stockholders, including those elected at the 2008 annual meeting of stockholders, shall continue to hold office until the expiration
of the three-year terms for which they were elected, subject to such directors’ prior death, disability, resignation, retirement,
disqualification or removal from office. Any person elected to a newly-created director position or any person elected to fill
a vacancy on the Board of Directors shall serve until the next annual meeting of stockholders and until a successor has been elected
and qualified, subject to such director’s prior death, disability, resignation, retirement, disqualification or removal
from office. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent
director.
Vacancies occurring on the Board
of Directors for any reason may be filled only by vote of a majority of the remaining members of the Board of Directors, even
if less than a quorum, at any meeting of the Board of Directors, or by a sole remaining director. A person so elected by
the Board of Directors to fill a vacancy shall hold office for the remainder of the full term of the director for which
the vacancy was created or occurred and until such director’s successor shall have been duly elected and qualified.
A director may be removed from office
only if such removal is (i) for
with or without
cause
and
(ii)
by the affirmative vote of the holders of
at least
a majority of the outstanding shares
of voting stock of the Corporation entitled to vote at an election of directors.
Directors may not be removed
without cause.
ARTICLE
VII
Stockholders of the Corporation shall take action by meetings
held pursuant to this Amended and Restated Certificate of Incorporation and the Bylaws and shall have no right to take any action
by written consent without a meeting. Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws
may provide. Special meetings of the stockholders, for any purpose or purposes, may only be called by the Board of Directors of
the Corporation and the Chief Executive Officer of the Corporation. The books of the Corporation may be kept (subject to any provision
contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.
ARTICLE
VIII
To the fullest extent permitted by applicable law, this Corporation
is authorized to provide indemnification of (and advancement of expenses to) directors, officers, employees and agents (and any
other persons to which Delaware law permits this Corporation to provide indemnification) through Bylaw provisions, agreements
with such agents or other persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification
and advancement otherwise permitted by Section 145 of the GCL, subject only to limits created by applicable Delaware law (statutory
or non-statutory), with respect to action for breach of duty to the Corporation, its stockholders, and others.
No director of the Corporation shall be personally liable to
the Corporation or any stockholder for monetary damages for breach of fiduciary duty as a director, except for any matter in respect
of which such director shall be liable under Section 174 of the GCL or any amendment thereto or shall be liable by reason that,
in addition to any and all other requirements for such liability, such director (1) shall have breached the director’s duty
of loyalty to the Corporation or its stockholders, (2) shall have acted in manner involving intentional misconduct or a knowing
violation of law or, in failing to act, shall have acted in a manner involving intentional misconduct or a knowing violation of
law, or (3) shall have derived an improper personal benefit. If the GCL is hereafter amended to authorize the further elimination
or limitation of the liability of a director, the liability of a director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the GCL, as so amended.
Each person who was or is made a party or is threatened to be
made a party to or is in any way involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a “proceeding”), including any appeal therefrom, by reason of
JETBLUE AIRWAYS CORPORATION
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the fact that he or she, or a person of whom he or she is the
legal representative, is or was a director or officer of the Corporation or a direct or indirect subsidiary of the Corporation,
or is or was serving at the request of the Corporation as a director or officer of another entity or enterprise, or was a director
or officer of a foreign or domestic corporation which was a predecessor corporation of the Corporation or of another entity or
enterprise at the request of such predecessor corporation, shall be indemnified and held harmless by the Corporation, and the
Corporation shall advance all expenses incurred by any such person in defense of any such proceeding prior to its final determination,
to the fullest extent authorized by the GCL. In any proceeding against the Corporation to enforce these rights, such person shall
be presumed to be entitled to indemnification and the Corporation shall have the burden of proving that such person has not met
the standards of conduct for permissible indemnification set forth in the GCL. The rights to indemnification and advancement of
expenses conferred by this Article VIII shall be presumed to have been relied upon by the directors and officers of the Corporation
in serving or continuing to serve the Corporation and shall be enforceable as contract rights. Said rights shall not be exclusive
of any other rights to which those seeking indemnification may otherwise be entitled. The Corporation may, upon written demand
presented by a director or officer of the Corporation or of a direct or indirect subsidiary of the Corporation, or by a person
serving at the request of the Corporation as a director or officer of another entity or enterprise, enter into contracts to provide
such persons with specified rights to indemnification, which contracts may confer rights and protections to the maximum extent
permitted by the GCL, as amended and in effect from time to time.
If a claim under this Article VIII is not paid in full by the
Corporation within sixty (60) days after a written claim has been received by the Corporation, the claimant may at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant
shall be entitled to be paid also the expenses of prosecuting such claim. It shall be a defense to any such action (other than
an action brought to enforce the right to be advanced expenses incurred in defending any proceeding prior to its final disposition
where the required undertaking, if any, has been tendered to the Corporation) that the claimant has not met the standards of conduct
which make it permissible under the GCL for the Corporation to indemnify the claimant for the amount claimed, but the claimant
shall be presumed to be entitled to indemnification and the Corporation shall have the burden of proving that the claimant has
not met the standards of conduct for permissible indemnification set forth in the GCL. If the GCL is hereafter amended to permit
the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment,
the indemnification rights conferred by this Article VIII shall be broadened to the fullest extent permitted by the GCL, as so
amended.
ARTICLE
IX
At no time shall more than 25% of the voting interest of the
Corporation be owned or controlled by persons who are not “citizens of the United States” (as such term is defined
in Title 49, United States Code, Section 40102 and administrative interpretations thereof issued by the Department of Transportation
or its successor, or as the same may be from time to time amended) (“Non-Citizens”). In the event that Non-Citizens
shall own (beneficially or of record) or have voting control over any shares of capital stock of the Corporation, the voting rights
of such persons shall be subject to automatic suspension to the extent required to ensure that the Corporation is in compliance
with applicable provisions of law and regulations relating to ownership or control of a U.S. air carrier. The Bylaws shall contain
provisions to implement this Article IX, including, without limitation, provisions restricting or prohibiting transfer of shares
of voting stock to Non-Citizens and provisions restricting or removing voting rights as to shares of voting stock owned or controlled
by Non-Citizens. Any determination as to ownership, control or citizenship made by the Board of Directors shall be conclusive
and binding as between the Corporation and any stockholder for purposes of this Article IX.
ARTICLE
X
The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed
by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.
FOUR: The foregoing amendment and restatement has been duly
adopted by the Corporation’s Board of Directors in accordance with the applicable provisions of Sections 242 and 245 of
the General Corporation Law of the State of Delaware.
FIFTH: The foregoing amendment and restatement was approved
by the holders of the requisite number of shares of the Corporation in accordance with Section 228 of the General Corporation
Law of the State of Delaware.
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/s/ Robin Hayes
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Robin Hayes
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CHIEF EXECUTIVE OFFICER
|
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/s/ James G. Hnat
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James G. Hnat
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SECRETARY
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JETBLUE AIRWAYS CORPORATION
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APPENDIX B
REGULATION G RECONCILIATIONS OF NON-GAAP
FINANCIAL MEASURES
We sometimes use non-GAAP measures that are derived from the
consolidated financial statements, but that are not presented in accordance with generally accepted accounting principles in the
U.S., or U.S. GAAP. We believe these non-GAAP measures provide a meaningful comparison of our results to others in the airline
industry and our prior year results. Investors should consider these non-GAAP financial measures in addition to, and not as a
substitute for, our financial performance measures prepared in accordance with U.S. GAAP. Further, our non-GAAP information may
be different from the non-GAAP information provided by other companies.
Operating Expenses per Available Seat Mile, excluding fuel
and profit sharing
Operating expenses per available seat mile, or CASM, is a common
metric used in the airline industry. Our CASM for 2015 through 2011 are summarized in the table below. We exclude aircraft fuel,
profit sharing, and related taxes from operating expenses to determine CASM ex-fuel and profit sharing. We believe that CASM ex-fuel
and profit sharing provides investors the ability to measure financial performance excluding items beyond our control, such as
(i) fuel costs, which are subject to many economic and political factors beyond our control, and (ii) profit sharing, which is
sensitive to volatility in earnings. We believe this measure is more indicative of our ability to manage costs and is more comparable
to measures reported by other major airlines. We are unable to reconcile such projected CASM ex-fuel and profit sharing as the
nature or amount of excluded items are only estimated at this time.
|
|
|
|
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Reconciliation of Operating expense per ASM, excluding fuel and profit sharing
|
|
(in millions; per ASM data in cents;
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
percentages based on unrounded
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
numbers)
|
|
$ per ASM
|
|
|
$ per ASM
|
|
|
$ per ASM
|
|
|
$ per ASM
|
|
|
$ per ASM
|
|
Total operating expenses
|
|
$
|
5,200
|
|
|
|
10.56
|
|
|
$
|
5,302
|
|
|
|
11.78
|
|
|
$
|
5,013
|
|
|
|
11.71
|
|
|
$
|
4,606
|
|
|
|
11.49
|
|
|
$
|
4,182
|
|
|
|
11.23
|
|
Less: Aircraft fuel and related taxes
|
|
|
1,348
|
|
|
|
2.74
|
|
|
|
1,912
|
|
|
|
4.25
|
|
|
|
1,899
|
|
|
|
4.43
|
|
|
|
1,806
|
|
|
|
4.50
|
|
|
|
1,664
|
|
|
|
4.47
|
|
Operating expenses, excluding fuel and related taxes
|
|
|
3,852
|
|
|
|
7.82
|
|
|
|
3,390
|
|
|
|
7.53
|
|
|
|
3,114
|
|
|
|
7.28
|
|
|
|
2,800
|
|
|
|
6.99
|
|
|
|
2,518
|
|
|
|
6.76
|
|
Less: Profit sharing and related taxes
|
|
|
151
|
|
|
|
0.31
|
|
|
|
25
|
|
|
|
0.05
|
|
|
|
12
|
|
|
|
0.03
|
|
|
|
3
|
|
|
|
0.01
|
|
|
|
—
|
|
|
|
—
|
|
Operating
expense, excluding fuel, profit sharing and related taxes
|
|
$
|
3,701
|
|
|
|
7.51
|
|
|
$
|
3,365
|
|
|
|
7.48
|
|
|
$
|
3,102
|
|
|
|
7.25
|
|
|
$
|
2,797
|
|
|
|
6.98
|
|
|
$
|
2,518
|
|
|
|
6.76
|
|
Net Income and Pre-Tax Income, excluding special items
We exclude special items from net income and pre-tax income
as we believe the exclusion of these items is helpful to investors to evaluate JetBlue’s recurring core operational performance
in the periods shown. Therefore, we adjust for these amounts. Special items excluded in the tables below showing the reconciliation
of net income and pre-tax income include the gain on the sale of JetBlue’s wholly-owned subsidiary LiveTV due to the non-recurring
nature of this item.
Reconciliation of Net Income, Income before Income Taxes and EPS excluding Special
Items
|
|
|
Twelve Months Ended December 31,
|
(in millions, except per share amounts)
|
|
2015
|
|
|
2014
|
|
Income before income taxes
|
|
$
|
1,097
|
|
|
$
|
623
|
|
Less: Gain on sale of subsidiary
|
|
|
—
|
|
|
|
241
|
|
Income before income taxes excluding special items
|
|
|
1,097
|
|
|
|
382
|
|
Less: Income tax expense
|
|
|
420
|
|
|
|
222
|
|
Add back: Income tax relating to gain on sale of subsidiary
(1)
|
|
|
—
|
|
|
|
72
|
|
Net Income excluding special items
|
|
$
|
677
|
|
|
$
|
232
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
Earnings per common share
|
|
$
|
2.15
|
|
|
$
|
1.36
|
|
Less: Special items, net of tax
|
|
$
|
—
|
|
|
$
|
0.57
|
|
Earnings per common share excluding special items
|
|
$
|
2.15
|
|
|
$
|
0.79
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
Earnings per common share
|
|
$
|
1.98
|
|
|
$
|
1.19
|
|
Less: Special items, net of tax
|
|
$
|
—
|
|
|
$
|
0.49
|
|
Earnings per common share excluding special items
|
|
$
|
1.98
|
|
|
$
|
0.70
|
|
(1)
|
The capital gain generated from the sale of LiveTV allowed
JetBlue to utilize a capital loss carryforward which resulted in the release of a valuation allowance related to the capital
loss deferred tax asset of $19 million.
|
JETBLUE AIRWAYS CORPORATION
-
2016 Proxy
Statement
|
B-1
|
Return on Invested Capital
Return on invested capital, or ROIC, is an important financial
metric which we believe provides meaningful information as to how well we generate returns relative to the capital invested in
our business. During 2015, our ROIC improved to 13.7%, primarily due to the reduction in fuel prices. We are committed to taking
appropriate actions which will allow us to continue to improve ROIC while adding capacity and continuing to grow. At our Investor
day in November 2014, we forecast that we believe we will improve ROIC to at least 10% by the end of 2017.
We believe this non-GAAP measure provides a meaningful comparison
of our results to the airline industry and our prior year results. Investors should consider this non-GAAP financial measure in
addition to, and not as a substitute for, our financial performance measures prepared in accordance with GAAP.
Reconciliation of Return on Invested Capital (Non-GAAP)
|
|
|
Twelve Months Ended December 31,
|
(in millions, except as otherwise noted)
|
|
2015
|
|
|
2014
|
|
Numerator
|
|
|
|
|
|
|
|
|
Operating Income
|
|
$
|
1,216
|
|
|
$
|
515
|
|
Add: Interest income (expense) and other
|
|
|
1
|
|
|
|
1
|
|
Add: Interest component of capitalized aircraft rent (a)
|
|
|
64
|
|
|
|
65
|
|
Subtotal
|
|
|
1,281
|
|
|
|
581
|
|
Less: Income tax expense impact
|
|
|
491
|
|
|
|
226
|
|
Operating Income After Tax, Adjusted
|
|
$
|
790
|
|
|
$
|
355
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
Average Stockholders’ equity
|
|
$
|
2,869
|
|
|
$
|
2,331
|
|
Average total debt
|
|
|
2,038
|
|
|
|
2,409
|
|
Capitalized aircraft rent
(1)
|
|
|
853
|
|
|
|
869
|
|
Invested Capital
|
|
$
|
5,760
|
|
|
$
|
5,609
|
|
|
|
|
|
|
|
|
|
|
Return on Invested Capital
|
|
|
13.7
|
%
|
|
|
6.3
|
%
|
(1)
|
Capitalized Aircraft Rent
|
|
|
|
|
|
|
|
|
|
Aircraft rent, as reported
|
|
$
|
122
|
|
|
$
|
124
|
|
|
Capitalized aircraft rent (7* Aircraft rent)
(2)
|
|
|
853
|
|
|
|
869
|
|
|
Interest component of capitalized aircraft rent (Imputed interest at 7.5%)
|
|
|
64
|
|
|
|
65
|
|
(2)
|
In determining the Invested Capital
component of ROIC we include a non-GAAP adjustment for aircraft operating leases, as operating lease obligations are not reflected
on our balance sheets but do represent a significant financing obligation. In making the adjustment we used a multiple of
seven times our aircraft rent as this is the multiple which is routinely used within the airline community to represent the
financing component of aircraft operating lease obligations.
|
Free Cash Flow (Non-GAAP)
The table below reconciles cash provided by operations determined
in accordance with U.S. GAAP to Free Cash Flow, a non-GAAP measure. Management believes that Free Cash Flow is a relevant metric
in measuring our financial strength and is useful in assessing our ability to fund future capital commitments and other obligations.
Investors should consider this non-GAAP financial measure in addition to, and not as a substitute for, our financial measures
prepared in accordance with U.S. GAAP.
Reconciliation of Free Cash Flow (Non-GAAP)
|
|
|
Year Ended December 31,
|
(in millions)
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Net cash provided by operating activities
|
|
$
|
1,598
|
|
|
$
|
912
|
|
|
$
|
758
|
|
|
$
|
698
|
|
|
$
|
614
|
|
Less: Capital expenditures
(1)
|
|
|
(837
|
)
|
|
|
(806
|
)
|
|
|
(615
|
)
|
|
|
(542
|
)
|
|
|
(480
|
)
|
Less: Predelivery deposits for flight equipment
|
|
|
(104
|
)
|
|
|
(127
|
)
|
|
|
(22
|
)
|
|
|
(283
|
)
|
|
|
(44
|
)
|
Free Cash Flow
|
|
$
|
657
|
|
|
$
|
(21
|
)
|
|
$
|
121
|
|
|
$
|
(127
|
)
|
|
$
|
90
|
|
(1)
|
The capital expenditures in 2014 includes two capital leases
for approximately $76 million which are classified as a non-cash financing activity in the consolidated statements of cash
flows.
|
JETBLUE AIRWAYS CORPORATION
-
2016 Proxy
Statement
|
B-2
|
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