Shareholder Proposals

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Shareholder Proposals

Proposal 5: Stockholder Proposal

Mr. Steve Nieman has given notice of his intention to arrange for his proxy, Mr. John Chevedden, to present a proposal at the 2019 Annual Meeting. Mr. Nieman’s address is 15204 NE 181st Loop, Brush Prairie, WA 98606, and Mr. Nieman represents that he has continuously owned no less than 100 shares of the Company's common stock since October 20, 2017.  Mr. Nieman’s proposal and supporting statement, as submitted to the Company, appear below.

The Board of Directors opposes adoption of Mr. Nieman’s proposal and asks stockholders to review the Board's response, which follows Mr. Nieman’s proposal and supporting statement below.

The affirmative vote of the holders of a majority of the shares of common stock present, in person or represented by proxy at the meeting and entitled to vote is required to approve this proposal.

Proposal 5 – Political Disclosure Shareholder Resolution

Resolved, that the shareholders of Alaska Air Group, Inc. (“Alaska Air” or “Company”) hereby request that the Company provide a report, updated semiannually, disclosing the Company’s:

 

1.

Policies and procedures for making, with corporate funds or assets, contributions and expenditures (direct or indirect) to (a) participate or intervene in any campaign on behalf of (or in opposition to) any candidate for public office, or (b) influence the general public, or any segment thereof, with respect to an election or referendum.

 

2.

Monetary and non-monetary contributions and expenditures (direct and indirect) used in the manner described in section 1 above, including:

 

a.

The identity of the recipient as well as the amount paid to each; and

 

b.

The title(s) of the person(s) in the Company responsible for decision-making.

The report shall be presented to the board of directors or relevant board committee and posted on the Company’s website within 12 months from the date of the annual meeting.  This proposal does not encompass lobbying spending.

Supporting Statement

As long-term shareholders of Alaska Air, I support transparency and accountability in corporate electoral spending.  This includes any activity considered intervention in a political campaign under the Internal Revenue Code, such as direct and indirect contributions to political candidates, parties, or organizations, and independent expenditures or electioneering communications on behalf of federal, state, or local candidates.

Disclosure is in the best interest of the company and its shareholders.  The Supreme Court recognized this in its 2010 Citizens United decision, which said, “[D]isclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way.  This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.”

Publicly available records show Alaska Air has contributed at least $400,000 in corporate funds since the 2010 election cycle (CQMoneyLine: http://moneyline.cq.com http://moneyline.cq.com http://moneyline.cq.com <http://moneyline.cq.com>>; National Institute on Money in State Politics: http://www.followthemoney.org http://www.followthemoney.org> http://followthemoney.org <http://followthemoney.org>>).

However, relying on publicly available data does not provide a complete picture of the Company’s electoral spending.  For example, the Company’s payments to trade associations that may be used for election-related activities are undisclosed and unknown.  This proposal asks the Company to disclose all of its electoral spending, including payments to trade associations and other tax-exempt organizations, which may be used for electoral purposes.  This would bring our Company in line with a growing number of leading companies, including UPS, Norfolk Southern, and Union Pacific, which present this information on their websites.

The Company’s Board and shareholders need comprehensive disclosure to fully evaluate the use of corporate assets in elections.  We urge your support for this critical governance reform.

Political Disclosure Shareholder Resolution – Proposal 5

THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE AGAINST PROPOSAL 5 FOR THE FOLLOWING REASONS:

The Board of Directors has considered this proposal regarding disclosure of political spending, as well as the views of its long-term stockholders, and believes this proposal does not serve the best interests of the Company or its stockholders and recommends a vote AGAINST it.  The Board of Directors recommends a vote against this proposal because:

Most of the information sought by the proposal is already publicly available under existing laws and regulations, including in the form of public disclosures made by the Company to relevant regulatory bodies.

The Board of Directors has adopted a formal policy regarding political activities, political contributions, and transparency, which is publicly available in the “Governance Documents” section of the Company’s Investor Relations website.

Additional disclosure would be duplicative and potentially misleading and would not be in the best interests of stockholders.

Alaska Air Group, Inc.’s Board believes that transparency and accountability in public spending is consistent with the Company’s values; however, the Board also believes that the Company’s current practices are consistent with applicable laws and regulations as well as similar practices at other companies.

Significant disclosure regarding the Company’s political spending and related activities is already publicly available

The Company is subject to extensive regulation at the federal, state and local levels, and is committed to complying with applicable campaign finance laws and other laws related to political contributions.  Consistent with federal campaign finance laws, the Company does not make corporate contributions to federal candidates, political parties or political committees.  Any federal political contributions are made solely by the Company’s non-partisan political action committee (“PAC”), which is funded solely through individual employees’ voluntary contributions.  Some states permit corporate contributions to candidates or political parties or initiatives, and the Company complies with all such laws and regulations.

All contributions to and expenditures by the Company’s non-partisan PAC are disclosed on publicly accessible and easily searchable databases maintained by appropriate regulatory bodies.  First, the PAC files monthly reports of receipts and disbursements as required by the Federal Election Commission, which are publicly available at fec.gov Second, the Company and each of the Company’s registered lobbyists file semi-annual reports disclosing political contributions with the Secretary of the U.S. Senate and the Clerk of the U.S. House—searchable copies of these reports are available at http://www.senate.gov/lobby and http://lobbyingdisclosure.house.gov.  The relatively small number of contributions made directly by the Company to state and local candidates are generally required to be disclosed by the recipient or, in some cases, by the Company.  Like the federal reports, these disclosures are commonly made in the form of publicly accessible and searchable online databases.

The Company has procedures in place to promote transparency and accountability and to effectively oversee decisions regarding political spending and participation in the U.S. political process

The Company’s Board of Directors has adopted a formal policy regarding political spending disclosures that sets forth the Company’s practices regarding its political contribution processes.  The policy is available on the Company’s website at https://alaskaairgroupinc.gcs-web.com/corporate-governance/highlights.  The policy includes standards for participating in the political process for both the Company and its employees, as well as for appropriate disclosure and reporting of political contributions and political activities.

The Company’s Vice President of External Relations, in consultation with the General Counsel and the Government Affairs team, is responsible for overseeing all of the Company’s political engagements, including political contributions and involvement with industry trade associations.  In addition, the Governance and Nominating Committee of the Board of Directors receives regular updates concerning political contributions, as well as the Company’s policy and practices for determining that a particular contribution would be in the best interests of the Company and its stockholders.

The Company belongs to a number of trade associations, primarily to give the Company access to the business, technical and industry standard-setting expertise of these associations. Our participation in the political process is designed to promote and protect the economic future of the Company, our stockholders and employees. Participation as a member of these associations comes with the understanding that we may not always agree with all of the positions of the organizations or other members, but that we believe that the associations address many issues in a meaningful and influential manner and in a way that will continue to provide strong financial returns for the Company. Requiring the Company to disclose payments made to these associations is potentially misleading because it is not necessarily indicative of our position on any particular issue, politically or otherwise. Moreover, under the Internal Revenue Code, the extent to which trade associations engage in political activities is already required to be disclosed by the associations, although disclosure of memberships or of dues paid by members is not required to be disclosed.

Additional disclosures are not necessary and would not be in the best interests of the Company or its stockholders

The Board believes that the Company’s existing practices and disclosures are sufficient to provide stockholders with transparency regarding its governance and risk management in the area of political activities.  Because parties with interests that are adverse to the Company are also likely to participate in the political process to advance their own business objectives, the Board believes that the specific disclosures recommended by the proposal could place the Company at a competitive disadvantage by revealing Company strategies and priorities, which are designed to protect the economic future of the Company and its stockholders.

For the reasons stated above, and because the Board believes that the Company’s practices are consistent with those of other similarly situated companies, the Board recommends a vote AGAINST the proposal.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST PROPOSAL 5 WITH RESPECT TO THE POLITICAL DISCLOSURE SHAREHOLDER RESOLUTION.

Proposal 6: Stockholder Proposal

Mr. John Chevedden has given notice of his intention to present a proposal at the 2019 Annual Meeting. Mr. Chevedden's address is 2215 Nelson Avenue, No. 205, Redondo Beach, CA 90278, and Mr. Chevedden represents that he has continuously owned no less than 100 shares of the Company's common stock since October 1, 2017.  Mr. Chevedden's proposal and supporting statement, as submitted to the Company, appear below.

The Board of Directors opposes adoption of Mr. Chevedden's proposal and asks stockholders to review the Board's response, which follows Mr. Chevedden's proposal and supporting statement below.

The affirmative vote of the holders of a majority of the shares of common stock represented at the Annual Meeting, in person or by proxy and entitled to vote on the matter is required to approve this proposal.

Proposal 6 – Enhance Shareholder Proxy Access

RESOLVED: Stockholders ask the board of directors to amend its proxy access bylaw provisions and any associated documents, to include the following change:

A shareholder proxy access director candidate shall not need to obtain a specific percentage vote in order to qualify as a shareholder proxy access director candidate at any future shareholder meeting.

This proposal is important because a shareholder proxy access candidate might not obtain the current required 25%-vote (and thus unfortunately be disqualified the following year under our current rule) even if he or she is the most qualified candidate to join our Board of Directors.  Shareholders may simply believe that at the time of the annual meeting that the company is not ready for a proxy access candidate and hence may not support the candidate simply because the timing is not right.

The proxy access candidate may see emerging opportunities for Alaska Air and it might take time for shareholders to appreciate it.  A year later a majority of shareholders might determine that the timing is right and hence they should not be deprived of voting for a highly qualified candidate.

It is especially important to improve a shareholder right, such as proxy access, to make up for our Board of Directors, under the leadership of Phyllis Campbell (who chaired the Board’s Governance Committee), taking away an important shareholder right – the right to an in-person annual meeting.  We did not even have an opportunity to vote on giving up this right.  Perhaps this downsizing of shareholder rights is to be expected since Ms. Campbell had 16-years long tenure and long-tenure is the opposite of shareholder-oriented independence in a director.

For decades shareholders of U.S. companies had a once-a-year opportunity to ask a $14 million CEO and directors questions in person.  Now our directors can casually flip their phones to mute during the annual shareholder meeting and continue with their golf game.

Our management is now free to run a make-believe meeting with Investor Relations devising softball questions in advance while tossing out serious shareholder questions.  Then our $14 million CEO can simply read the scripted IR answers from a teleprompter – no opportunity for the clarification of a vague answer.

The lack of an in-person annual meeting means that a board meeting can be scheduled months after the so-called virtual meeting – by which time any serious issues raised by shareholders under these adverse conditions will be long forgotten by the directors.  Plus a virtual meeting guarantees that there will be no media coverage for the benefit of shareholders.

Shareholders can vote against the $14 million paycheck of a CEO who refuses to answer shareholder questions in-person and acts like in-person contact with shareholders is a nuisance.

Please vote yes to help make up for the loss of an in-person annual meeting:

Enhance Shareholder Proxy Access – Proposal 6

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST PROPOSAL 6 FOR THE FOLLOWING REASONS:

In December 2015, the Board of Directors adopted a bylaw amendment granting proxy access to stockholders who meet certain stock holding and other eligibility requirements. The Company’s proxy access bylaw permits a stockholder, or a group of up to 20 stockholders, owning at least 3% of our outstanding shares of common stock continuously for at least three years, to nominate and include in our annual meeting proxy materials the greater of two director candidates or 20% of the total number of current director seats.  

In addition, the Company’s proxy access bylaw provides that a candidate who does not receive at least 25% of the votes cast in favor of such candidate’s election will not be eligible to be nominated as a proxy access candidate for the following two annual meetings.  The Board believes that the Company’s proxy access bylaw, including this provision regarding re-nominations, is consistent with prevailing market practice and strikes the appropriate balance between promoting stockholder nomination rights and protecting the interests of all of the Company’s stockholders.

The Board believes that the change advocated by the proponent is potentially disruptive and unnecessary.  The requirement that a candidate receive at least 25% of the votes cast in favor of such candidate in order to be eligible to be nominated as a proxy access nominee for the following two annual meetings is a reasonable limitation that prevents the re-nomination of a candidate who failed to receive significant stockholder support. This provision is designed solely to prevent stockholders from abusing the proxy access process, subjecting the Company and other stockholders to the expense and effort of responding to proxy access, after that process has already been used once with a particular candidate whom stockholders as a whole did not meaningfully support.

A failure to demonstrate meaningful stockholder support for election as a director does not warrant the administrative burden and expense incurred to implement the proxy access right. A 25% threshold also represents less than half of the majority vote required for election as one of the Company’s directors. Recurring re-nominations without a voting percentage threshold could deny other eligible stockholders the opportunity to submit a more viable candidate due to procedures for selecting among nominees where there are multiple nominees from stockholders.

In addition, after considering this proposal, reviewing best practices employed by other companies, and seeking feedback from stockholders representing approximately 48% of the Company’s common stock, the Board believes that the inclusion of a re-nomination provision in the Company’s proxy access bylaw is consistent with approximately 80% of S&P 1500 companies that have implemented proxy access, and that the 25% threshold for re-nomination is by far the most common.  Complete elimination of a re-nomination threshold does not reflect the prevailing market practice.  

The proposal also addresses other matters unrelated to the subject of the proposal, such as the Company’s virtual shareholder meeting format. The Board’s position on virtual shareholder meetings is addressed in the Corporate Governance section of this Proxy Statement.

For the reasons stated above, the Board recommends a vote AGAINST the proposal.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST PROPOSAL 6 WITH RESPECT TO ENHANCED SHAREHOLDER PROXY ACCESS.

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