Proxy Statement Summary

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Proxy Statement Summary

Our acquisition of Virgin America in late 2016 positions us as the 5th largest airline in the U.S. with an unparalleled ability to serve West Coast travelers . . .

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. . . with award-winning customer service.

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Our combined airline provides a vast network of business and leisure travel options for customers living on the West Coast . . .

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…and gives us a significant presence in all major West Coast Metropolitan areas. 

AnchorageSeattlePortlandSan FranciscoLAX
46 Flights
9 Gates
289 Flights
32 Gates
123 Flights
20 Gates
100 Flights*
10 Gates
78 Flights
12 Gates
Bay AreaLA Basin
150 Flights*103 Flights
* Includes flights announced as of March 20, 2017

In addition, our partner portfolio provides expansive global travel utility.

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From day one, the combined airline offers more seats from the West Coast than any other airline.

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And, with costs lower than those of legacy carriers, . . .

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CASM is for the 12 months ended December 31, 2016 (Alaska includes Virgin America)

…the combination provides an expanded platform for significant growth of our low-fare, premium product.

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We have a history of returning capital to our owners and consistently increasing our dividend.

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With the 2016 acquisition, a greater portion of our capital has been allocated to growing our business, which will create significant value for our owners.

Highlighted below is a summary of selected information provided in this Proxy Statement. Please review the entire Proxy Statement and Alaska Air Group’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 before voting your shares.

Matters To Be Voted On

Item for BusinessBoard RecommendationEffect of Abstention
1.Elect 10 DirectorsFOR each Director NomineeNone
2.Approve on an advisory basis the Compensation of the Company’s Named Executive OfficersFORA Vote Against
3.Approve on an advisory basis the Frequency of the Advisory Vote to Approve the Compensation of the Company’s Named Executive OfficersEVERY ONE YEARNone
4.Approve an Amendment to the Company’s Certificate of Incorporation to Increase the Number of Authorized Shares of Common StockFORA Vote Against
5.Ratify the Appointment of KPMG LLP as the Company’s Independent Registered Public Accountants for the Fiscal Year 2017FORA Vote Against
6.Consider a Stockholder Proposal Regarding Changes to the Company’s Proxy Access BylawAGAINSTA Vote Against

Governance Highlights

As part of Alaska Air Group’s commitment to high ethical standards, our board follows sound governance practices. These practices are described in more detail in our Corporate Governance Guidelines, which are available on the Company’s website at www.alaskaair.com.

TopicPractice
Independence
  • 9 out of 10 nominees are independent.

  • Board committees are composed exclusively of independent directors.
Lead Independent Director
  • The board has appointed a lead independent director who:
    • acts as liaison between the independent directors and the board chairman;

    • presides at meetings where the chairman is not present or has a conflict of interest;

    • approves board meeting agendas and meeting schedules;

    • leads the independent directors’ evaluation of the CEO; and

    • interviews independent directors annually prior to nomination.

Executive Sessions
  • Independent directors meet regularly without management.
Annual Election
  • All directors are elected annually to one-year terms.
Majority Voting
  • In uncontested elections, directors are elected by a majority of votes cast.
Director Evaluations
  • The board and each committee conduct annual self-evaluations.

  • Every three years, director evaluations are conducted by a third party.

Stock Ownership
  • Each director is expected to hold shares of Alaska Air Group stock equivalent to three times his or her annual cash retainer.
Other Directorships
  • Directors are encouraged to limit service to no more than four other public company boards.
Stockholder Communications
  • The board has adopted a protocol to allow those stockholders with long-term significant holdings of our stock to meet directly with board members on appropriate topics.
Poison Pill
  • The Company does not have a stockholder rights plan.
Proxy Access
  • Stockholders who meet certain requirements may include director nominees in the Company’s proxy statement.
Right to Call Special Meeting
  • Stockholders holding 10 percent or more of the outstanding stock have the right to call a special meeting.
Confidential Voting
  • Records that identify the vote of a particular stockholder are kept confidential from the Company except in a proxy contest or as required by law.
Single Voting Class
  • Common stock is the only class of voting shares outstanding.
Director Tenure
  • Directors are subject to term and age limits as described in our Corporate Governance Guidelines.

Our Board

All nominees meet the New York Stock Exchange governance standards for director independence, except for Mr. Tilden, who is not independent due to his position as an executive officer.

Nominee and Principal OccupationAgeDirector SinceCommittee Membership
Patricia M. Bedient
Former Executive Vice President,
The Weyerhaeuser Company
632004Lead Independent Director
Audit
Governance and Nominating
Marion C. Blakey
President and CEO, Rolls-Royce North America
682010Safety
Compensation and Leadership Development
Phyllis J. Campbell
Chairman, JPMorgan Chase & Co. Pacific Northwest Region
652012Governance and Nominating (Chair)
Dhiren R. Fonseca
Partner, Certares LP
522014Audit
Jessie J. Knight, Jr.
Managing Director, Knight Angels Consulting LLC
662002Governance and Nominating
Safety (Chair)
Dennis F. Madsen
Consultant and Former President and CEO, Recreational Equipment, Inc.
682003Compensation and Leadership Development
Audit
Helvi K. Sandvik
Consultant and Former President, NANA Development Corporation
592013Safety
J. Kenneth Thompson
President and CEO, Pacific Star Energy LLC
651999Compensation and Leadership Development (Chair)
Safety
Bradley D. Tilden
Chairman, President and CEO, Alaska Air Group, Inc.
562010
Eric K. Yeaman
President and COO, First Hawaiian Bank
492012Audit (Chair)

Executive Compensation Practices

Our executive compensation program is aligned with our business strategy and is designed to attract and retain top talent and reward the achievement of key business goals. The following practices ensure alignment of interests between stockholders and executives and are considered good governance by our Compensation and Leadership Development Committee and by the majority of our stockholders.

TopicPractice
Pay for Performance
  • A significant percentage of total direct compensation is based on the achievement of performance-based goals that are challenging, yet attainable and that drive achievement of the Company’s business strategy.

  • The Committee considers company performance when setting CEO pay.
"Say on Pay"
  • We annually ask stockholders to provide an advisory vote on our pay practices, which the Committee considers when setting CEO pay.
Stock Ownership Requirements
  • Our minimum stockholding requirements are 5 times base salary for the CEO, 3 times base salary for executive vice presidents of Alaska Airlines, and 1.5 times base salary for the president and CEO of Horizon Air.
Change-in-Control Provisions
  • We have double-trigger change-in-control provisions that require the actual or constructive termination of employment and the consummation of a change-in-control transaction.
Clawback Policy
  • Our policy allows recovery of incentive cash or equity compensation that is based on financial statements that were subsequently restated due to the individual’s fraudulent or grossly negligent act or omission.
Independent Compensation Consultant
  • The Committee retains a compensation consultant that does not provide any other services to the Company.
Hedging of Company Stock
  • Executive officers and board members may not engage in transactions that create a hedge against fluctuations in the price of Alaska Air Group stock.
Pledging of Company Stock
  • Executive officers and board members may not pledge Alaska Air Group stock as collateral for any obligation.
Severance Tax Gross-Ups
  • Our change-in-control and severance arrangements do not provide for tax gross-ups.
Employment Contracts
  • None of our named executive officers has an employment contract.
Repricing of Stock Options
  • Our equity incentive plan does not permit repricing or exchange of underwater stock options without stockholder approval.

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