EXHIBIT 10.57
(AMERICA WEST AIRLINES LOGO)
PERFORMANCE-BASED AWARD PLAN
SECTION I. PURPOSE
Unlike many of its competitor airlines, America West Airlines (the "Company")
presently does not offer its key employees a long-term, performance-based
compensation arrangement. The purpose of the America West Airlines
Performance-Based Award Plan (the "Plan") is to
- - Focus management efforts on the creation of long-term stockholder value.
- - Encourage strategic decision-making by providing rewards for the long-term
achievement of Company goals.
The Plan is effective as of January 1, 2003 (the "Effective Date").
SECTION II. ELIGIBILITY CRITERIA
Eligible participants in the Plan (each a "Participant") are officers of the
Company whose responsibilities have a direct and significant impact on Company
results. Participants are selected at the sole discretion of the Compensation
Committee of the Board of Directors (the "Committee"). Participation in one
performance cycle (as such term is defined in Section IV) under the Plan does
not assure participation in any other performance cycle.
A person who is hired by the Company as an eligible officer or promoted to
eligible officer status, in either case after the commencement of a performance
cycle (as such term is defined in Section IV) or a transition performance cycle
(as such term is defined in Section IV) (i) shall participate in the Plan only
with respect to performance cycles, if any, that commence on or after the date
of hire or promotion, and (ii) shall participate in transition performance
cycles on such basis, if any, as the Committee may provide.
SECTION III. AWARD LEVELS
Participants have the opportunity to earn cash awards under the Plan based on
the achievement of long-term Company performance and, with certain exceptions
set forth in Section V, continued active employment by the Company in an
eligible position through the date of payment of the cash awards. Threshold,
target, and maximum award levels are set forth below. All award levels are
expressed as a percentage of a Participant's base salary, as in effect on the
date of payment of the cash award.
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AWARD LEVELS EXPRESSED AS
PERCENTAGES OF BASE SALARY
OFFICER LEVEL THRESHOLD TARGET MAXIMUM
------------- --------- ------ -------
CEO 54% 125% 200%
EVP 43% 100% 175%
SVP 30% 70% 140%
Performance below the threshold level for any performance cycle (as such term is
defined in Section IV) or transition performance cycle (as such term is defined
in Section IV) will result in no cash award. The maximum award for any
performance cycle is two times the target award, and the maximum award for any
transition performance cycle is the target award, subject in both cases to
further limitations contained in the America West 2002 Incentive Equity Plan.
SECTION IV. AWARD CALCULATION
Awards are calculated based on Total Stockholder Return ("TSR") of the Company
over the performance cycle (as such term is defined in this section) or
transition performance cycle (as such term is defined in this section) relative
to the TSRs of a pre-defined competitive peer group. TSR, for purposes of this
Plan, is the rate of return, including both the price appreciation of the
Company's Class B Common Stock or a competitive peer company's common stock and
the reinvestment of any dividends declared on such common stock, over the
relevant performance cycle or transition performance cycle. In order to smooth
out market fluctuations, the average daily closing price (adjusted for splits
and dividends) for the common stock of the Company and of the companies in the
pre-defined competitive peer group for the three months prior to the first and
last days of the performance cycle or transition performance cycle will be used
to determine TSR. Daily closing price of a share of common stock is the stock
price at the close of trading (4:00 p.m. Eastern Time) of the national exchange
(New York Stock Exchange, the Nasdaq Stock Market or the American Stock
Exchange) on which such stock is traded.
A) PERFORMANCE CYCLES AND TRANSITION PERFORMANCE CYCLES
A performance cycle, over which TSR is measured, is the three-year period
beginning January 1 of a given year and ending December 31 of the second
following year (each a "Performance Cycle"). The first Performance Cycle
under the Plan begins January 1, 2003 and ends December 31, 2005. The
Committee, in its sole discretion, may authorize subsequent Performance
Cycles, and it is anticipated, although not assured, that a subsequent
three-year Performance Cycle will begin each January 1, starting with
January 1, 2004.
In addition to the three-year Performance Cycles described in the
preceding paragraph, there will also be two transition performance cycles
over which TSR is measured, one commencing January 1, 2003 and ending
March 31, 2004 and the second commencing January 1, 2003 and ending March
31, 2005 (each a "Transition Performance Cycle"). Awards for Transition
Performance Cycles will be based on both (i) the TSR ranking of the
Company relative to the TSRs of its competitive peer group over such
Transition Performance Cycles and (ii) the Company not being in default
under the terms of the
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Guarantee Agreement dated as of January 18, 2002 among Citibank, N.A., as
lender, Citibank, N.A., as agent, and Air Transportation Stabilization
Board (the "ATSB Guarantee") as of March 31, 2004, for purposes of the
first Transition Performance Cycle, and as of March 31, 2005, for purposes
of the second Transition Performance Cycle, (each such date, a "Trigger
Date").
B) PEER GROUP AND AWARD PAYOUT PERCENTAGES
As of the Effective Date, the competitive peer group consists of the
following fourteen companies: AirTran, Alaska, American, ATA Holdings,
Continental, Delta, Frontier, Hawaiian, JetBlue, Midwest Express,
Northwest, Southwest, United and US Airways. Such competitive peer group
is subject to modification, in the Committee's sole discretion, to take
account of unforeseen events such as mergers, dispositions, bankruptcies
and other significant business changes. Award payout percentages will be
based on the TSR of the Company relative to the TSRs of competitive peer
group companies, as follows:
COMPANY TSR PAYOUT AS A %
RELATIVE RANK OF BASE SALARY
------------- --------------
SVP EVP CEO
--- --- ---
1 of 15 140% 175% 200% Maximum
2 of 15 130% 165% 190%
3 of 15 120% 154% 179%
4 of 15 110% 143% 168%
5 of 15 100% 133% 158%
6 of 15 90% 122% 147%
7 of 15 80% 111% 136%
8 OF 15 70% 100% 125% TARGET
9 of 15 60% 86% 108%
10 of 15 50% 71% 89%
11 of 15 40% 57% 71%
12 of 15 30% 43% 54% Threshold
13 of 15 0% 0% 0%
14 of 15 0% 0% 0%
15 of 15 0% 0% 0%
Notwithstanding the ranking of the Company's TSR, award payout percentages
for each of the Transition Performance Cycles will not exceed the target
payouts set forth in the above table.
SECTION V. AWARD PAYMENT TIMING, EARLY PAYMENT AND TERMINATION
If the TSR of the Company is at or above the threshold for a Performance Cycle
or a Transition Performance Cycle, and in the case of a Transition Performance
Cycle, the Company is not in default under the terms of the ATSB Guarantee as of
the relevant Trigger Date, awards will be paid in cash within sixty (60) days
following the end of the Performance Cycle or Transition Performance Cycle. For
example, awards for the Performance Cycle that runs from January 1,
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2003 through December 31, 2005 will be paid no later than March 1, 2006, and
awards for the Transition Performance Cycle that runs from January 1, 2003
through March 31, 2004 will be paid no later than June 1, 2004. Payments will be
subject to all required federal, state, and local tax withholding.
In the event of the termination of a Participant's employment with the Company
on account of retirement (as defined below), total disability (as defined in the
Company's long term disability plan under which the Participant is covered) or
death, (i) the Company shall pay to the Participant (or the Participant's estate
in the case of death), at the same time as awards, if any, are paid to other
Participants for the same Performance Cycle, the award that the Participant
would have earned and received with respect to the Performance Cycle, if any,
that ends with the calendar year in which such termination occurs, had the
Participant's employment continued until the award payment date for such
Performance Cycle; and (ii) with respect to a Transition Performance Cycle, the
Company shall pay to the Participant (or the Participant's estate in the case of
death), on the award payment date, if any, next following the Participant's
termination of employment, the cash award, if any, that the Participant would
have earned and received for that Transition Performance Cycle had the
Participant's employment continued until the award payment date, but such award
shall be prorated to reflect the period of employment from the commencement of
the Participant's participation in the Plan with respect to that Transition
Performance Cycle to the date of employment termination. For purposes of the
foregoing, "retirement" shall mean the termination of the Participant's
employment with the Company after attainment of age fifty-five (55) and
completion of ten (10) years of service with the Company. Awards for any other
Performance Cycles or Transition Performance Cycle will not be earned or paid.
If the Participant's employment with the Company is terminated for any reason
other than retirement, total disability or death (whether such termination is
voluntary or involuntary), no awards will be earned or paid under the Plan with
respect to any Performance Cycles or Transition Performance Cycles.
SECTION VI. PLAN ADMINISTRATION
The Plan will be administered by the Committee in accordance with Sections 2(q)
and 21 of the America West 2002 Incentive Equity Plan and in a manner that
satisfies the requirements of Section 162(m) of the Internal Revenue Code for
qualified "performance-based" compensation.
Awards generally are calculated and distributed as provided in Sections IV and
V; provided, however, that no award payments will be made unless the Committee
certifies in writing (a) the relative TSR ranking of the Company, (b) that all
other material terms of the Plan have been satisfied and (c) that payments to
Participants in stated amounts are appropriate under the Plan.
SECTION VII. ABSENCE OF PLAN FUNDING; NO EQUITY INTEREST
Benefits under the Plan shall be paid from the general funds of the Company, and
a Participant (or the Participant's estate in the event of death) shall be no
more than an unsecured general creditor of the Company with no special or prior
right to any assets of the Company.
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Nothing contained in the Plan shall be deemed to give any Participant any equity
or other interest in the assets, business or affairs of the Company or any
related company. It is not intended that a Participant's interest in the Plan
shall constitute a security or equity interest within the meaning of any state
or federal securities laws.
SECTION VIII. NO TRANSFERABILITY
A Participant shall not have any right to transfer, sell, alienate, assign,
pledge, mortgage, collateralize or otherwise encumber any of the payments
provided by this Plan.
SECTION IX. NO EMPLOYMENT RIGHTS
This Plan is not intended to be a contract of employment. Both the Participant
and the Company have the right to end their employment relationship with or
without cause or notice.
SECTION X. INTERPRETATION, AMENDMENT AND TERMINATION
The Committee shall have the power to interpret all provisions of the Plan,
which interpretations shall be final and binding on all persons The provisions
of this document shall supersede all provisions of any and all such prior
documents relating to the Plan and its subject matter. However, if the
provisions of this document conflict with any provision of the America West 2002
Incentive Equity Plan, the provisions set forth in the America West 2002
Incentive Equity Plan shall govern in all cases. The laws of the State of
Delaware shall govern all questions concerning the construction, validity and
interpretation of the Plan, without regard to such state's conflict of laws
rules.
The Committee reserves the right to amend or terminate the Plan at any time,
with or without prior notice; provided, however, that all amendments to the Plan
shall preserve the qualification of awards under the Plan as "performance-based"
compensation under Section 162(m) of the Internal Revenue Code. Notwithstanding
the foregoing, (a) except as provided in Section IV with respect to the
calculation of TSR and in the following clause (b), the Committee may not amend
the Plan in a way that would materially impair the rights of a Participant with
respect to a Performance Cycle or Transition Performance Cycle that already has
begun at the time of such amendment, unless such Participant has consented in
writing to such amendment; and (b) in the event of any act of God, war, natural
disaster, aircraft grounding, revocation of operating certificate, terrorism,
strike, lockout, labor dispute, work stoppage, fire, epidemic or quarantine
restriction, act of government, critical materials shortage, or any other act
beyond the control of the Company, whether similar or dissimilar (each a "Force
Majeure Event"), which Force Majeure Event affects the Company or its
subsidiaries or other affiliates, the Committee, in its sole discretion, may (i)
terminate or (ii) suspend, delay, defer (for such period of time as the
Committee may deem necessary), or substitute any awards due currently or in the
future under the Plan, including, but not limited to, any awards that have
accrued to the benefit of Participants but have not yet been paid.
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