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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 Definitive Proxy Statement
 Definitive Additional Materials
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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)

 

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MESSAGE FROM OUR
CHIEF EXECUTIVE OFFICER

 

JETBLUE AIRWAYS CORPORATION
27-01 Queens Plaza North
Long Island City, New York 11101

 

April 3 , 2020

 

To our Stockholders:

 

It is our pleasure to invite you to attend our 2020 annual meeting of stockholders of JetBlue Airways Corporation, on Thursday, May 14, 2020 at 9 a.m., Eastern Daylight Time. This year’s annual meeting will be conducted virtually, via live audio webcast. You will be able to attend the annual meeting of stockholders online and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/jblu2020. You will be able to vote your shares electronically during the meeting by logging in using the 16-digit control number included in your Notice of Internet Availability of the proxy materials, on your proxy card or on the voting instructions form accompanying these proxy materials.

 

We continue to embrace the latest technology to provide expanded access, improved communication and cost savings for our stockholders and the Company. As we’ve learned, hosting a virtual meeting enables increased stockholder attendance and participation from locations around the world. In addition, the online format allows us to communicate more effectively via a pre-meeting forum that you can enter by visiting www.proxyvote.com with your control number. We encourage you to log on and ask any questions you may have, which we will try to answer during the meeting. We recommend that you log in a few minutes before the meeting on May 14 to ensure you are logged in when the meeting starts. Finally, the safety of our crewmembers, customers and stockholders is important to us. In light of the recommendations issued by the CDC against public gatherings due to Covid-19, we think a virtual only meeting is advisable.

 

The following notice of annual meeting of stockholders outlines the business to be conducted at the virtual annual meeting. Only stockholders of record at the close of business on March 19, 2020 will be entitled to notice of and to vote at the virtual annual meeting. Further details about how to attend the meeting online and the business to be conducted at the annual meeting are included in the accompanying Notice of Annual Meeting and Proxy Statement.

 

We are again providing access to our proxy materials online under the U.S. Securities and Exchange Commission’s (the “SEC”) “notice and access” rules. As a result, we are mailing to many of our stockholders a notice instead of a paper copy of this proxy statement and our 2019 Annual Report on Form 10-K. The notice contains instructions on how to access documents online. The notice also contains instructions on how stockholders can receive a paper copy of our materials, including this proxy statement, our 2019 Annual Report, and a form of proxy card or voting instruction card. 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.

 

Your vote is important. Regardless of whether you attend the annual meeting, we hope you vote as soon as possible. You may vote by proxy online or by phone, or, if you received paper copies of the proxy materials by mail, you may also vote by mail by following the instructions on the proxy card or voting instruction card. Additionally, if you attend the virtual annual meeting, you may vote your shares at the meeting via the Internet even if you previously voted your proxy. Voting online or by phone, by written proxy or by voting instruction card ensures your representation at the annual meeting regardless of whether you attend the virtual meeting.

 

Very truly yours,

 

Robin Hayes

Chief Executive Officer and Director

On behalf of the Board of Directors of JetBlue Airways Corporation

 

 

TABLE OF CONTENTS

 

PROXY STATEMENT SUMMARY 05
   
CORPORATE GOVERNANCE AT JETBLUE 15
   
THE BOARD OF DIRECTORS 26
   
MANAGEMENT PROPOSAL 1
TO ELECT DIRECTORS
29
   
MANAGEMENT PROPOSAL 2
TO APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
36
   
NAMED EXECUTIVE OFFICER COMPENSATION DISCUSSION AND ANALYSIS 37
   
COMPENSATION COMMITTEE REPORT 50
   
SUMMARY COMPENSATION TABLE 51
   
GRANTS OF PLAN-BASED AWARDS 52
   
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 54
   
OPTION EXERCISES AND STOCK VESTED 56
   
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL 57
   
PAY RATIO OF CHIEF EXECUTIVE OFFICER COMPENSATION TO MEDIAN EMPLOYEE COMPENSATION 63
   
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 64
   
MANAGEMENT PROPOSAL 3
TO APPROVE THE JETBLUE AIRWAYS CORPORATION 2020 OMNIBUS EQUITY INCENTIVE PLAN
66
   
MANAGEMENT PROPOSAL 4
TO APPROVE THE JETBLUE AIRWAYS CORPORATION 2020 CREWMEMBER STOCK PURCHASE PLAN
73
   
MANAGEMENT PROPOSAL 5
TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
77
   
AUDIT COMMITTEE REPORT 80
   
MANAGEMENT PROPOSAL 6
TO APPROVE AN AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO PROVIDE STOCKHOLDERS WITH THE RIGHT TO REQUEST THAT THE COMPANY CALL A SPECIAL MEETING
81
   
MANAGEMENT PROPOSAL 7
TO APPROVE AN AMENDMENT OF THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO PROVIDE STOCKHOLDERS WITH THE RIGHT TO ACT BY WRITTEN CONSENT
83
   
PROPOSAL 8
STOCKHOLDER PROPOSAL
85
   
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING 87
   
OTHER MATTERS 92
   
ADDITIONAL INFORMATION 92
   
APPENDIX A REGULATION G RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES A-1
   
APPENDIX B B-1
   
APPENDIX C C-1
   
APPENDIX D D-1
   
APPENDIX E E-1

 

 
www.jetblue.com   

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    2

 

 

 

 

 

 

TO BE HELD ON MAY 14, 2020

 

9:00 a.m. (Eastern Daylight Time)

 

via the Internet at
www.virtualshareholdermeeting.com/jblu2020.

 

JETBLUE AIRWAYS CORPORATION
27-01 Queens Plaza North
Long Island City, New York 11101

 

NOTICE

of Annual Meeting
of Stockholders

 

This notice of annual meeting, proxy statement and form of proxy for JetBlue Airways Corporation (“JetBlue” or the “Company”) are being distributed and made available on or about April 3, 2020 .

 

TIME AND DATE

 

9 a.m., Eastern Daylight Time, on Thursday, May 14, 2020

 

PLACE

 

Online at www.virtualshareholdermeeting.com/jblu2020

 

ITEMS OF BUSINESS

 

1. To elect the ten directors named in this proxy statement;
2. To approve, on an advisory basis, the compensation of our named executive officers (“say on pay” vote);
3. To approve the JetBlue Airways Corporation 2020 Omnibus Equity Incentive Plan
4. To approve the JetBlue Airways Corporation 2020 Crewmember Stock Purchase Plan
5. To ratify the selection of Ernst & Young LLP, as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020;
6. To approve an amendment to the Company’s certificate of incorporation to provide stockholders with the right to request that the Company call a special meeting
7. To approve an amendment to the Company’s certificate of incorporation to provide stockholders with the right to act by written consent
8. To vote on a stockholder proposal, relating to stockholder approval of bylaw amendments if properly presented at the meeting; and
9. Such other business as may properly come before the meeting.


ADJOURNMENTS AND POSTPONEMENTS

 

Any action on the items of business described above may be considered at the annual meeting at the time and on the date specified above or at any time and date to which the annual meeting may be properly adjourned or postponed.

 

RECORD DATE

 

You are entitled to vote only if you were a JetBlue stockholder as of the close of business on March 19, 2020.

 

By order of the Board of Directors

 

Brandon Nelson

 

General Counsel and Corporate Secretary

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 14, 2020

 

The notice of annual meeting, the proxy statement and our fiscal year 2019 annual report are available on our website at http://investor.jetblue.com. Additionally, in accordance with the SEC rules, you may access our proxy materials at www.proxyvote.com.


 

VOTE IN ADVANCE OF THE MEETING:      
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.   BY INTERNET
Go to www.proxyvote.com
  BY TELEPHONE
call 1-800-690-6903 (toll free)
  BY MAIL
mark, sign, date and promptly mail the enclosed proxy card in the postage-paid envelope

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    3

 

 

VOTING

 

Your vote is very important. Regardless of whether you plan to virtually attend the annual meeting, we hope you will vote as soon as possible. You may vote your shares over the Internet or via a toll-free telephone number. If you received a paper copy of a proxy or voting instruction card by mail, you may submit your proxy or voting instruction card for the annual meeting by completing, signing, dating and returning your proxy or voting instruction card in the pre-addressed envelope provided. Stockholders of record and beneficial owners will be able to vote their shares electronically at the annual meeting. For specific instructions on how to vote your shares, please refer to the section entitled Questions and Answers about the Annual Meeting and Voting beginning on page 87 of the proxy statement.

 

VIRTUAL MEETING ADMISSION

 

Stockholders of record as of March 19, 2020, will be able to participate in the annual meeting by visiting our annual meeting website www.virtualshareholdermeeting.com/jblu2020. To participate in the annual meeting, you will need the 16-digit control number included on your Notice of Internet Availability of the proxy materials, on your proxy card or on the instructions that accompanied your proxy materials.

 

The annual meeting will begin promptly at 9:00 a.m., Eastern Daylight Time. Online check-in will begin at 8:50 a.m., Eastern Daylight Time. Please allow ample time for the online check-in procedures.

 

ANNUAL MEETING WEBSITE AND PRE-MEETING FORUM

 

The online format used by JetBlue for the annual meeting also allows us to communicate more effectively with you. Stockholders can access our pre-meeting forum, where you can submit questions in advance of the annual meeting, by visiting our annual meeting website at www.proxyvote.com. Stockholders can also access copies of our proxy statement and 2019 Annual Report on Form 10-K at the annual meeting website.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    4

 

 

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. PLEASE READ THE ENTIRE PROXY STATEMENT CAREFULLY BEFORE YOU VOTE.

 

Annual Stockholders Meeting (see pages 87-91)

 

 

Date

May 14, 2020

 

Time

9:00 a.m. (Eastern Daylight Time)

 

Place

Via the Internet at
www.virtualshareholdermeeting.com/jblu2020

 

Record Date: March 19, 2020

 

Mailing Date: This Proxy Statement was first mailed to stockholders on or about April 3, 2020

 

Meeting Agenda: The meeting will cover the proposals listed under voting matters and vote recommendations below, and any other business that may properly come before the meeting.

 

Voting: Stockholders as of the record date are entitled to vote. Each share of common stock of JetBlue Airways Corporation (the “Company”) is entitled to one vote for each director nominee and one vote for each of the proposals.

Stock Symbol: JBLU

 

Exchange: Nasdaq

 

Common Stock Outstanding as of Record Date: 269,707,459

 

Registrar & Transfer Agent: Computershare Trust Company, N.A.

 

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


 

Voting Matters and Vote Recommendations

 

Proposals   Board
Recommends
  Reasons for Recommendation   See Page
1. To elect ten directors named in the proxy statement   Vote FOR   The Board and its Governance and Nominating Committee believe the ten director nominees possess the skills and experience to effectively monitor performance, provide oversight and advise management on the Company’s long term strategy.   29
2. To approve, on an advisory basis, the compensation of our named executive officers (“say on pay” vote )   Vote FOR   Our executive compensation programs demonstrate our execution on our pay for performance philosophy.   36
3. To approve the JetBlue Airways Corporation 2020 Omnibus Equity Incentive Plan   Vote FOR   The Board believes having the stockholders approve the JetBlue Airways Corporation 2020 Omnibus Equity Incentive Plan is in the Company’s best interests.   66
4. To approve the JetBlue Airways Corporation 2020 Crewmember Stock Purchase Plan   Vote FOR   The Board believes having the stockholders approve the JetBlue Airways Corporation 2020 Crewmember Stock Purchase Plan is in the Company’s best interests.   73

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    5

 

 

Proposals   Board
Recommends
  Reasons for Recommendation   See Page
5. To ratify the selection of Ernst & Young LLP as the Company’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2020   Vote FOR   Based on the Audit Committee’s assessment of Ernst & Young’s qualifications and performance, the Board and Audit committee believe EY’s retention for fiscal year 2020 is in the best interest of the Company   77
6. To approve an amendment to the Company’s certificate of incorporation to provide stockholders with the right to request that the Company call a special meeting   Vote FOR   The Board and its Governance and Nominating Committee believe that having stockholders vote on an amendment to the amended and restated certificate of incorporation to provide stockholders with the right to request that the Company call a special meeting is in the Company’s best interests.   81
7. To approve an amendment to the Company’s certificate of incorporation to provide stockholders with the right to act by written consent   Vote FOR   The Board and its Governance and Nominating Committee believe that having stockholders vote on an amendment to the amended and restated certificate of incorporation to provide stockholders with the right to act by written consent is in the Company’s best interests.   83
8. To vote on a Stockholder proposal relating to stockholder approval of bylaw amendments , if properly presented at the Annual Meeting   Vote AGAINST   The Company believes that the stockholder proposal is not in the best interests of the Company.   85

 

VOTE IN ADVANCE OF THE MEETING        
   

BY INTERNET

Vote your shares at www.proxyvote.com Have your Notice of Internet Availability or proxy card in hand for the 16 digit control number needed to vote.

 

BY TELEPHONE

Call 1-800-690-6903

(toll free)

 

BY MAIL

Sign, date and return the enclosed proxy card or voting instruction form. 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.

 

IN PERSON

Vote online during the meeting

See P. 87 “Questions and answers about the Annual Meeting” for details about voting at the meeting.

 

Our Director Nominees(1)

 

          Committee Memberships
Name Occupation Age Director
since
Independent Other Public
Boards
Audit Comp Airline
Safety
G&N Finance

B. Ben Baldanza
Owner and investor of Diemacher, LLC, former CEO, Spirit Airlines

58 2018 Y 1      

Peter Boneparth(2)
Advisor to the Blackstone Group, LLP

60 2008 Y 1      

Virginia Gambale
Managing Partner, Azimuth Partners LLC

60 2006 Y 3        

Robin Hayes
CEO, JetBlue Airways

53 2015 N 0        

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    6

 

 

          Committee Memberships
Name Occupation Age Director
since
Independent Other Public
Boards
Audit Comp Airline
Safety
G&N Finance

Ellen Jewett
Managing Partner, Canoe Point Capital, LLC

61 2011 Y 1      

Robert Leduc
Former President, Pratt & Whitney, a subsidiary of United Technologies Corporation

64 nominee Y 0      

Teri McClure
Former Chief Human Resources Officer, United Parcel Services, Inc.

56 2019 Y 0      

Sarah Robb O’Hagan
CEO, EXOS, the Human Performance Company

47 2018 Y 0        

Vivek Sharma
CEO and Founder, InStride

45 2019 Y          

Thomas Winkelmann
Executive Chairman of Zeitfracht Group

60 2013 Y 0    

 

    Chair

 

    Member

 

    Financial Expert

 

(1) Reflects committee and committee Chair assignments to be implemented following the 2020 Annual Meeting, as Mr. Joel Peterson and Mr. Frank Sica are not standing for re-election and Mr. Stephan Gemkow resigned earlier this year.
(2) Upon Mr. Peterson’s departure from the Board in May 2020, Mr. Boneparth will assume the role of independent Board Chair.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    7

 

 

Executive Compensation Advisory Vote

 

We are executing on our pay for performance philosophy

 

 

We aim to design our executive compensation program to reward our named executive officers for the Company’s success without incentivizing undue risk.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    8

 

 

Business Overview

 

How Did We Do in 2019?

 

2019 Financial and Operational Performance

 

On a GAAP basis, our full year results were as follows:

 

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    9

 

 

2019 Highlights

 

We believe our differentiated product and culture, competitive costs, and high-value geography relative to other airlines contributed to our continued success in 2019. Our 2019 operational highlights include:

 

Product Enhancements

 

Throughout 2019, we continued to invest in industry-leading products which we believe will continue to differentiate our offerings from the other airlines.

 

Cabin Restyle - We made significant progress on our cabin restyle program which includes two iterations. Phase 1 of the program introduced our popular Airbus A321 interior to our Airbus A320 aircraft. Phase 2, which began in early 2019, includes enhancements to provide our customers with a cabin experience of the future. It features a new seat design with memory foam cushion comfort and adjustable headrests, a next generation inflight entertainment system with an expanded collection of on demand movies, television shows including full seasons and video content, plus new gaming features, and expanded Fly-Fi® coverage over water to support our growing network.
Mobile Application - We updated our mobile application to include an in-app chat functionality. With the added in-app functionality, customers will have even more options for connecting with our customer support crewmembers.
Fare Options 2.0 - Since launching our first fare options platform in 2015, we have gained deep insights into what customers want when they select a fare. In November 2019, we launched fare options 2.0 to offer the choices that today’s customers want, including a new low fare for price sensitive travelers which we call Blue Basic, and an updated option for customers who value additional benefits like flexibility and speed, which we refer to as Blue Extra. Blue Basic is designed to help customers save while still offering the full JetBlue experience. Customers choosing the Blue Basic option will enjoy the same great experience with the most legroom in coach, free brand-name snacks and drinks, free high-speed wi-fi, DIRECTV® and movies at every seat, and our award-winning customer service. Blue Extra offers customers full change flexibility, early boarding, and Even More® Speed at a significant discount over the cost of purchasing these services as add-ons.

 

Network

 

We continued to gain relevance in our high-value geography by building out our focus cities to establish a position of strength. Our network growth in 2019 was primarily aimed at adding more connect-the-dot routes in Boston and Fort Lauderdale. In Boston, we added more flights on 12 of our most popular routes and adjusted schedules to offer up to 18 and 14 hourly flights per day to New York and Washington D.C., respectively. In Fort Lauderdale, we launched daily flights to St. Maarten and Phoenix. In addition to strengthening our transcon market, the new Fort Lauderdale - Phoenix flights will not only give Arizona customers a direct link to South Florida, but also onward connections to the Caribbean and Latin America.

 

In February 2019, we began daily round trip service from Fort Lauderdale to Guayaquil, Ecuador. Guayaquil joined Quito as our second BlueCity in Ecuador, highlighting our success in this South American country.

 

In April 2019, we announced plans to launch multiple daily flights from Boston and JFK to London beginning in 2021. London will be our first BlueCity in Europe.

 

In June 2019, we announced plans to start winter seasonal service between JFK and Guadeloupe with three times weekly service which launched in February 2020. The new service grows our already expansive footprint in the Caribbean and Latin America, and caters to leisure travelers in the Northeast looking to experience a unique island getaway during the cold winter months.

 

In September 2019, we announced plans to launch daily nonstop service between JFK and Georgetown, Guyana beginning in April 2020.

 

In October 2019, we relocated our operations in Houston from William P. Hobby Airport to George Bush Intercontinental Airport to better serve our customers.

 

In December 2019, we launched daily nonstop services between JFK and Guayaquil, our first route enabled by the capabilities of the Airbus A321 new engine option (“neo”) aircraft. This route is the longest in our network, stretching beyond our previous longest route by more than 200 nautical miles.

 

We continued to examine our network to ensure we are making the best use of our aircraft and in 2019 we announced our plans to discontinue operations in Anchorage, La Romana in the Dominican Republic, and Mexico City. We believe these adjustments will promote healthy growth and improve the profitability of our network.

 

As a result of the decision by the U.S. Government to no longer permit air carriers to operate scheduled services to Cuban cities except for Havana, we ended our operations in Camagüey, Holguín and Santa Clara in December 2019.

 

Fleet

 

During 2019, we took delivery of six Airbus A321neo aircraft and bought out the lease of one of our aircraft. In connection with our plans to launch flights to London in 2021, we amended our purchase agreement with Airbus in April 2019 to convert 13 Airbus A321neo deliveries into A321 Long Range (“A321LR”) deliveries. The A321LR aircraft offers higher fuel capacity with a range of about 4,000 nautical miles.

 

In June 2019, we further amended our purchase agreement with Airbus to convert an additional 13 Airbus A321neo deliveries into the A321 Xtra Long Range (“A321XLR”) deliveries. We believe the range of the Airbus A321XLR will allow us to expand our relevance in Boston and New York by adding more destinations into Europe. In addition, we also converted 10 of our options for the Airbus A220-300 aircraft into firm orders.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    10

 

 

We anticipate that we will take delivery of a maximum of eleven Airbus A321neo aircraft and our first Airbus A220 aircraft in 2020.

 

Customer Service

 

JetBlue and our crewmembers were recognized in 2019 for industry leading customer service.

 

J.D. Power and Associates named JetBlue its Top Low Cost Airline for Customer Satisfaction for 2019. Within the J.D. Power study, we led in four of the seven categories: aircraft, inflight services, flight crew, and reservations. This is our 13th J.D. Power and Associates award.
Airline Ratings awarded JetBlue 7 out of 7 stars for safety, and 5 out of 5 stars for our product offerings. It also named us the Best Low Cost Airline in the Americas.
We were recognized in the 2019 TripAdvisor Travelers’ Choice® Awards for the Best Regional Business Class and Best in Passenger Comfort in North America.
At The Points Guy Awards, JetBlue took top honors in both Best Domestic Business Class Product and Best Domestic Economy Product for a second year in a row. We were also recognized by The Points Guy as the Best Airline for Families.
We are the number one domestic airline in Travel + Leisure’s World’s Best Awards 2019.

 

Our crewmembers

 

During 2019, our crewmembers recognized JetBlue as one of America’s “Best Large Employers” by Forbes. JetBlue ranked #11 through a survey that asked individuals how likely they would be to recommend their employer to someone else. We were also ranked #15 in the list of Top 50 Top-Rated Workplaces by Indeed. Indeed compiled this list by including companies that are members of the Fortune 500 Index with at least 100 reviews between June 2017 and June 2019. These companies are the most highly rated on overall employee experience.

 

JetBlue’s Approach to Environmental, Social and Governance Matters (“ESG”)

 

JetBlue’s mission is to Inspire Humanity. We strongly believe that strong corporate governance, informed by engagement directly with our stakeholders, creates the foundation that allows us to pursue our mission.

 

At JetBlue, we strive to conduct our business in ways that are principled, transparent, and accountable to key stakeholders. We have safeguarded our values of Safety, Caring, Integrity, Passion and Fun since our first flight.

 

We believe pursuing our mission generates long-term value. We focus our efforts where we can have the most positive impact on our business and the communities we serve, including issues related to environmental sustainability, youth and education, the community, culture and human capital. As a reflection of the importance of these matters, our Governance and Nominating Committee oversees responsibility for ESG initiatives and reporting. We have more information about our efforts in these areas on our website.

 

Governance

 

Board and Committee Structure and Composition

 

Independent Chairman of the Board; Chairman and CEO positions have been separated since 2008.
9 of 10 director nominees are independent, with Robin Hayes, our CEO, as our sole non-independent director nominee.
All members of each of the Audit, Compensation and Governance and Nominating Committee (the “Governance Committees”) are independent and these committees regularly meet in executive session.
40% of all director nominees are female.
Independent directors regularly meet in executive session.
We have a robust orientation program for new directors and ongoing training for continuing directors.
All Audit Committee members are financially literate, and a majority are audit committee financial experts.
The Compensation Committee uses an independent compensation consultant.

 

BOARD INDEPENDENCE

 

 

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    11

 

 

Advanced Shareholder Rights

 

A robust, ongoing stockholder engagement program
Annual elections of all Directors
A majority vote standard in director elections
A thoughtful approach to board composition and refreshment
Annual board and committee evaluations
Limitation on the number of public company boards on which Directors may serve
Stockholders’ right to request the Company call a special meeting (to be voted on at this Meeting)
Stockholders’ right to act by written consent (to be voted on at this Meeting)
Proxy access

 

Strong Stockholder Support on Say on Pay

 

Our stockholders supported say on pay at 98.4% at our 2019 Annual Meeting. Our Compensation Committee believes the vote indicates support for our program.

 

See “Corporate Governance at JetBlue” at page 10 for more information.

 

 

Environmental/Sustainability Initiatives and Reporting

 

We believe it is our responsibility to manage our environmental footprint and explore associated risks and opportunities. Our Board established an ESG subcommittee to oversee this area. We employ a dedicated Sustainability and ESG crewleader to oversee the efforts of our entire airline and keep our management team and Board aware of climate-related risks and opportunities when developing strategy, performance, and budgets. Our Sustainability and ESG group leads climate change risk and opportunity assessment efforts and performs risk assessment related to possible emissions regulations on an on-going basis. In 2019, the Governance and Nominating Committee discussed efforts by the Company to use ESG efforts to mitigate macro risks and best position JetBlue to be a leader in this area. The Governance and Nominating Committee determined to establish a subcommittee to assist it in these efforts. The Governance and Nominating Committee evaluated the impact of the CORSIA regulatory regime and the Company’s efforts on its Sustainability Accounting Standards Board (SASB) and Task Force on Climate- Related Financial Disclosure reporting. The Governance and Nominating Committee expects to be more focused on the costs associated with the cost of carbon offsetting compliance. More information on these efforts is available on our website.

 

In January 2020, JetBlue announced plans to become carbon neutral on domestic flights by July 2020 with offsetting up to 17 billion pounds of carbon by investing in projects focused on initiatives like forest conservation.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    12

 

 

Diversity and Inclusion

 

We cultivate and measure the visual and non-visual diversity of our workforce and leadership teams, recognizing that both aspects support enhanced organizational decision-making. Thematically, diversity and inclusion falls under the social focus of ESG. The work itself is done cross functionally over multiple teams including throughout our People Department and managed by a dedicated ESG crewleader. We have ongoing programs to encourage a diverse talent pipeline specifically for technical roles, like pilots.

 

We are taking measured and organic steps toward building a leadership pipeline that is reflective of our crewmember and customer base. This also includes our Board of Directors. New guidelines include limits on tenure and an age-based retirement threshold. In 2019, we made changes to the Board that bring new perspectives and diversity (in age, background, as well as visual diversity). We have improved gender diversity on the board. The Board in May, assuming all nominees are elected/reelected, will have four female directors out of ten directors. We have also increased age diversity with 2 directors in their 40s. The average Board tenure is 9 years as of March, 2020.

 

This and other ESG topics will be covered in our 2019 annual SASB and TCFD report.

 

Corporate Social Responsibility

 

General JetBlue For Good/CSR

 

JetBlue For Good is JetBlue’s platform for social impact and corporate responsibility. Giving back is part of JetBlue’s DNA and is core to its mission of inspiring humanity. Centered around volunteerism and service, JetBlue For Good focuses on the areas that are most important to the airline’s customers and crewmembers - community, youth/education and the environment. Combining JetBlue’s corporate efforts with its customers’ and crewmembers’ passions, the common theme is Good – JetBlue For Good.

 

CSR – Youth/Education & Community-focused

 

JetBlue’s core programs and partnerships directly impact the areas where its customers and crewmembers live and work by enhancing education and providing access to those that are traditionally underserved. Signature programs include the award-winning Soar with Reading initiative which has provided more than $3.75 million worth of books to date to kids who need them most; Blue Horizons For Autism which helps introduce air travel in a realistic environment to families and children affected by autism; and Swing For Good which raises funds for education and youth focused non-profits. The below graphic speaks to our CSR initiatives since our inception or since the date as indicated.

 

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    13

 

 

Political Contributions

 

Recognizing the interest of stockholders in establishing greater transparency about corporate political contributions, we disclose any political contributions to support candidates and ballot measures and how certain of our trade association membership dues are used for political activities in our annual SASB and TCFD reporting. As part of our commitment to transparency, we developed the Political Contributions Policy, which discusses how we engage in the political process. The policy is available at on the investor relations page of www.JetBlue.com.

 

Human Trafficking

 

The issue of human trafficking is one that hits close to home in our industry. Victims of this crime are often hidden in plain sight, including on aircraft and in airports. We work with the U.S. Department of Homeland Security and the U.S. Department of Transportation to support the Blue Lightning initiative, an initiative aimed at stopping human trafficking. We educate our crewmembers on the issue and how to report suspicious activities. We established a cross-team working group to assess what additional policies and practices we can use to help combat this problem.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    14

 

 

CORPORATE GOVERNANCE AT JETBLUE

 

JetBlue’s mission is to Inspire Humanity. We strongly believe that strong corporate governance that is informed by engagement directly with our stakeholders creates the foundation that allows us to pursue our mission. Corporate governance at JetBlue is designed to promote the long-term interests of our stockholders, maintain internal checks and balances, strengthen management accountability, and foster responsible decision making and accountability.

 

Corporate Governance

 

The Board of Directors Provides Operational and Strategic Oversight

 

The Board oversees management, business affairs and integrity, works with management to determine the Company’s mission and long-term strategy, oversees risk management, performs the annual CEO evaluation, oversees CEO succession planning, and oversees internal control over financial reporting and external audit. In addition, Board committees focus on the following:

 

Audit   Financial reporting; internal and external audit; cybersecurity, including in support of the Board’s role in risk oversight of cybersecurity risks; certain other risks not otherwise assigned; certain legal, regulatory, compliance and business continuity matters
Compensation   Compensation and benefits; succession planning at the officer level, including with the Governance and Nominating Committee
Governance and Nominating   Board effectiveness, director qualifications, on boarding and continuing education of directors, political contribution and PAC matters, shareholder engagement, governance framework
ESG Subcommittee   Environmental and sustainability initiatives, social and governance issues, including diversity and inclusion
Airline Safety   Monitor promotion of operational safety culture, flight operations safety and overview of aspects of airline safety
Finance   Oversight of the Company’s financial condition, financing activities, capital plan, budget and related activities

 

Management Drives Our Strategy and Operations

 

Led by the CEO, the senior leadership team is responsible for achieving our mission, establishing and delivering on our strategy, maintaining and inspiring our culture and crewmembers, inspiring and creating innovative and disruptive products, establishing accountability, and controlling risk. The senior leadership team also aligns our structure, operations, people, policies, and compliance efforts to our mission and strategy. The senior leadership team consists of those leading the operation, the commercial team, as well as those leading central functions like Finance, Legal and People (which is how we refer to Human Resources). Members of the senior leadership team appear before the Board regularly, with most attending a Board or committee session each quarter, and also interact with the directors outside the boardroom.

 

Representatives from the Company’s Legal and Government Affairs groups address public policy, regulatory, government affairs, compliance, legal risk, and other issues. The Company’s internal audit function provides objective audit, investigative, and advisory services aimed at providing assurance to senior leadership and the Board that the Company is anticipating, identifying, assessing, and prioritizing risks. Our Tax and Treasury departments report regularly to the Board. Our Infrastructure team, along with others, assists the Board in its governance of major real estate transactions. Our Board and its committees also work closely with representatives from the Company’s People department, the Cybersecurity team and the Information Technology department. Members of the Board have access to all of our crewmembers outside of Board meetings.

 

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The Board of Directors

 

Board Structure

 

Our Board has determined that it is in the best interests of the Company and its stockholders to maintain a separate Independent Board Chair and Chief Executive Officer. Mr. Joel Peterson has served as our independent Chair of the Board since 2008 and will not be standing for re-election at the upcoming Annual Meeting of Stockholders. The Board has selected Mr. Peter Boneparth to assume the independent Chair of the Board position after our Annual Meeting of Stockholders in May 2020. Our Board believes that our current structure, with an independent Chair, who is well-versed in the needs of a complex business and has strong, well-defined governance duties, gives our Board a strong independent leadership and corporate governance structure that best serves the needs of JetBlue and its stockholders. In our independent Chair, our CEO 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. The Board expects to continue to evaluate its leadership structure on an ongoing basis and may make changes as appropriate to JetBlue and its future needs. Our Board believes its leadership structure is appropriate because it effectively allocates authority, responsibility, and oversight between management and the independent members of our Board.

 

Independent Chairman of the Board   Independent Board

Key responsibilities of the Chair include:

Calling meetings of the Board and executive sessions with independent directors

Setting the agenda for Board meetings in consultation with other directors, the CEO, and the corporate secretary

Chairing executive sessions of the independent directors

Working with the Chairs of the Compensation Committee and the Governance and Nominating Committee with regard to the annual CEO performance evaluation

Working with the Governance and Nominating Committee to (1) oversee assessments of the Board and its committees and (2) recommend changes to enhance Board, committee and director effectiveness

Engaging with stockholders

Acting as an advisor to Mr. Hayes on strategic aspects of the CEO role with regular consultations on major developments and decisions likely to be of interest to the Board

Performing the other duties specified in the Corporate Governance Guidelines or assigned by the Board

Setting and maintaining Board culture

 

9 of 10 director nominees are independent – We are committed to maintaining a substantial majority of directors who are independent of the Company and management. Except for our CEO Robin Hayes, all directors are independent.

Quarterly executive sessions of independent directors – At each quarterly Board meeting, the independent directors meet in executive session without Company management present. Additional executive sessions are held as needed.

Strategy – The Independent directors meet in executive session at the annual strategy session.

Independent compensation consultant – The compensation consultant retained by the Compensation Committee is independent of the Company and management.

 

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Board Composition

 

Ensuring the Board is composed of directors who bring diverse viewpoints and perspectives, exhibit a variety of skills, professional experience and backgrounds, and effectively represent the long-term interests of stockholders, is a top priority of the Board and the Governance and Nominating Committee. The Board and the Governance and Nominating Committee believe that different perspectives are critical to a forward-looking and strategic Board as is the ability to benefit from the valuable experience and familiarity that longer-serving directors bring. When recommending to the Board the slate of director nominees for election at the Annual Meeting of Stockholders, the Governance and Nominating Committee strives to maintain an appropriate balance of diversity, skills, and tenure on the Board. The below tables reflect our Board nominees for election.

 

 

Board Structure: Committees

 

To support effective corporate governance, the Board delegates certain responsibilities to its committees, who report on their activities to the Board.

 

Five Standing Committees – Our Board has an Audit Committee, a Compensation Committee, a Governance and Nominating Committee, an Airline Safety Committee and a Finance Committee. Each Committee has a charter describing its specific responsibilities, which can be found on our investor relations page on our website. The table below provides current membership for each Board Committee. In 2019, our Board established an ESG subcommittee to the Governance and Nominating Committee, to address Environmental, Social and Governance issues pertinent to our business.
   
Committees are Independent – Our Governance Committees (Audit, Compensation and Governance and Nominating) and our Finance Committee are staffed by independent directors. Our CEO serves on the Airline Safety Committee.
   
Regular Committee Executive Sessions of Independent Directors – Members of the Audit, Compensation and Governance and Nominating Committees regularly meet in executive session.
   
Committees have authority to engage legal counsel or other advisors or consultants – Each committee can retain advisors or consultants as it deems appropriate to carry out its responsibilities.
   
Independent compensation consultant – The Compensation Committee retains Pay Governance LLC (“Pay Governance”)

 

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  to advise the Committee on marketplace trends in executive compensation, management proposals for compensation programs, and executive officer compensation decisions. Pay Governance also evaluates compensation for  non-employee directors, the next levels of senior management, and equity compensation programs generally. Pay Governance consults with the Committee about its recommendations to the Board on chief executive officer compensation. Pay Governance is directly accountable to the Committee. To maintain the independence of the firm’s advice, Pay Governance does not provide any services for JetBlue other than those described above.
The Compensation Committee consultant maintains its independence – Annually, the Compensation Committee assesses the independence of its compensation consultant. A consultant satisfying the following requirements will be considered independent. The consultant (including each individual employee of the consultant providing services):

 

  Is retained and terminated by, has its compensation fixed by, and reports solely to, the Compensation Committee
  Is independent of the Company
  Maintains and adheres to the Pay Governance independence policy to prevent conflicts of interest
  Does not directly own JetBlue common stock
  Will not perform any work for Company management except at the request of the Compensation Committee Chair and in the capacity of the Compensation Committee’s agent
  Does not provide any unrelated services or products to the Company, its affiliates, or management, except for surveys purchased from the consultant firm
  Do not have any business or personal relationship with a Committee member or with an executive officer of JetBlue
  In 2019, the fees received for the JetBlue engagement were less than 1% of PG’s annual revenues

 

In assessing the consultant’s independence, the Compensation Committee also considers the nature and amount of work performed for the Compensation Committee during the year, the nature of any unrelated services performed by the consultant for the Company, and the fees paid for those services in relation to the firm’s total revenues. Every year, the consultant prepares for the Compensation Committee an independence letter providing assurances and confirmation of the consultant’s independent status under the noted standards. The Compensation Committee believes that Pay Governance has been independent during its engagement as a consultant to the Compensation Committee.

 

Audit Committee Financial Experts – The Board has determined that each Audit Committee member has sufficient knowledge in financial and auditing matters to serve on the Audit Committee. The members of the Audit Committee meet the Nasdaq Stock Market (“Nasdaq”) listing standard of financial sophistication and a majority are “audit committee financial experts” under SEC rules (Ms. Gambale, Ms. Jewett and Messrs. Baldanza and Boneparth).

 

Responsibilities

 

AUDIT  

Members*:

Ben Baldanza
Peter Boneparth (Chair)
Virginia Gambale
Ellen Jewett
Teri McClure
Sarah Robb O’Hagan
Vivek Sharma

 

Meetings held in 2019: 9

Pursuant to its charter, on behalf of the Board of Directors, the Audit Committee oversees:

 

  the integrity of our financial statements,

  the appointment, compensation, qualifications, independence and performance of our independent registered public accounting firm,

  compliance with ethics policies and legal and regulatory requirements,

  the performance of our internal audit function,

  our financial reporting process and systems of internal accounting and financial controls and

  other items including risk assessment and compliance.

 

The Audit Committee is also responsible for review and approval of 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.

 

Each member 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, Ms. Gambale, Ms. Jewett and Mr. Baldanza each 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. A report of the Audit Committee is set forth elsewhere in this proxy statement.

 

At the 2020 Annual Meeting, Mr. Boneparth will assume the position of Board Chair. Mr. Baldanza will serve as Chair of the Audit Committee and we anticipate the Audit Committee will consist of Virginia Gambale, Ellen Jewett, Robert Leduc and Vivek Sharma.

 

The Audit Committee operates under a written charter, which was adopted by the Board and is available on our website at http://investor.jetblue.com.

 

*     Memberships as of December 31, 2019.

 

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COMPENSATION  

Members*:

Virginia Gambale (Chair)
Stephan Gemkow
Sarah Robb O’Hagan
Thomas Winkelmann

 

Meetings held in 2019: 9

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 28 of this proxy statement),

  evaluates the performance of named executive officers, including the CEO, CFO, President and COO, GC and Corporate Secretary,

  reviews and recommends to the Board compensation for our non-employee directors,

  reviews and approves stock-based compensation for our directors, officers and crewmembers,

  oversees the administration of our Amended and Restated 2011 Incentive Compensation Plan, and Amended and Restated 2011 Crewmember Stock Purchase Plan (and successor plans), and

  prepares and recommends to the full Board for inclusion in this proxy statement a Compensation Committee report. The Compensation Committee report for this proxy statement is on page 50 .

 

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. Each member 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. A report of the Compensation Committee is set forth elsewhere in this proxy statement.

 

At the 2020 Annual Meeting, assuming all director nominees are (re) elected, we anticipate the Compensation Committee will consist of Virginia Gambale (Chair), Teri McClure, Sarah Robb O’Hagan and Thomas Winkelmann.

 

The charter of the Compensation Committee is available on our website at http://investor.jetblue.com.

 

GOVERNANCE AND NOMINATING

Members*:

Ellen Jewett (Chair)
Joel Peterson
Frank Sica
Thomas Winkelmann

 

Meetings held in 2019: 4

The 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,

  making recommendations to the Board regarding the size, structure and functions of the Board and its committees, identifying and recommending new director nominees in accordance with selection criteria established by the Board.

  conducting the annual evaluation of the performance of the Board, its committees and each director, ensuring that the Audit, Compensation, and 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 CEO, and

  developing and recommending corporate governance policies and procedures appropriate to the Company.

 

Each member is an independent director within the meaning of the applicable Nasdaq rules. The 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.

 

At the 2020 Annual Meeting, Messrs. Peterson and Sica will be stepping down from the Board. Assuming all director nominees are (re) elected, we anticipate the Governance and Nominating Committee will consist of Ellen Jewett (Chair), Peter Boneparth, Teri McClure and Thomas Winkelmann.

 

The charter of the Governance and Nominating Committee is available on our website at http://investor.jetblue.com.

 

*     Memberships as of December 31, 2019.

 

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AIRLINE SAFETY  

Members*:

Ben Baldanza
Robin Hayes
Frank Sica
Thomas Winkelmann (Chair)

 

Meetings held in 2019: 4

The Airline Safety Committee is responsible for:

 

  monitoring and review of our flight operations and safety management system and reports to the Board on such topics.

 

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.

 

At the 2020 Annual Meeting, Mr. Frank Sica will be stepping down from the Board. Assuming all director nominees are (re) elected, we anticipate the Airline Safety Committee will consist of Thomas Winkelmann (Chair), Ben Baldanza, Robert Leduc and Robin Hayes.

 

The charter of the Airline Safety Committee is available on our website at http://investor.jetblue.com.

 

FINANCE  

Members*:
Ben Baldanza
Peter Boneparth
Stephan Gemkow
Ellen Jewett
Frank Sica (Chair)

 

Meetings held in 2019: 7

The Finance Committee is responsible for:

 

  providing management with advice and counsel regarding the Company’s financial condition, financing activities, capital plan and budget and related matters.

 

Established in 2018, the Finance Committee views itself as a consultative resource for management, and it is currently uncompensated.

 

At the 2020 Annual Meeting, Mr. Frank Sica will be stepping down from the Board. Assuming all director nominees are (re) elected, we anticipate the Finance Committee will consist of Ben Baldanza, Peter Boneparth (Chair) and Ellen Jewett.

 

The charter of the Finance Committee is available on our website at http://investor.jetblue.com.

 

*     Memberships as of December 31, 2019.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    20

 

 

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 or the compensation committee of any other entity that has one or more executive officers serving on our Board or our Compensation Committee.

 

Board Oversight

 

Stockholders elect the Board to oversee management and to serve stockholders’ long-term interests. Management is responsible for achieving our mission, delivering on our strategy, creating our culture, inspiring and creating innovative products, establishing accountability, and controlling risk. The Board and its committees work closely with management to balance and align strategy, risk, ESG, and other areas while considering feedback from stakeholders. Essential to the Board’s oversight role is a transparent and active dialogue between the Board and its committees, and management. To support that dialogue, the Board and its committees have access to, receive presentations from, and conduct regular meetings with the Senior Leadership Team, other business and function leaders, subject matter experts, the Company’s enterprise risk management and internal audit functions, and external experts and advisors.

 

Through oversight, review, and counsel, our Board works with management to establish and promote business goals, organizational objectives, and a strategy that is mindful of how our business affects and is affected by the broader environment.

 

Board Oversight of Strategy

 

One of the Board’s primary responsibilities is overseeing management’s establishment and execution of the Company’s strategy. As JetBlue looks to innovate along the travel ribbon, the Board works with management to respond to a dynamically changing environment. At least quarterly, the CEO, the Senior Leadership Team, and leaders from across JetBlue provide detailed business and strategy updates to the Board. At least annually, the Board conducts an even more in-depth review of the Company’s overall strategy. At all of these reviews, the Board engages with the Senior Leadership Team and other business leaders regarding business objectives, technology updates, the competitive landscape, economic trends, and public policy and regulatory developments. At meetings occurring throughout the year, the Board also assesses the competitive landscape, the Company’s budget and capital plan, and performance for alignment to our strategy. The Board looks to the focused expertise of its committees to inform strategic oversight in their areas of focus.

 

Board Oversight of Risk

 

Our Board oversees the management of risk inherent in the operation of the Company’s businesses and the implementation of its strategic plan by relying on several different levels of review.

 

 

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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 business and corporate 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. The Board also reviews certain entity level type risks, including cybersecurity.

 

The Board appreciates the rapidly evolving nature of threats presented by cybersecurity incidents and is committed to the prevention, timely detection, and mitigation of the effects of any such incidents on the Company. With respect to cybersecurity, the Board receives regular reports from Company management, including updates on the internal and external cybersecurity threat landscape, incident response, assessment and training activities, and relevant legislative, regulatory, and technical developments.

 

Each of the Board’s committees 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 ethics and compliance program. 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, such as financial, operational, privacy, cybersecurity, business continuity, legal and regulatory, and reputational risks, and reviews the steps management has taken to monitor and control these exposures. It also periodically monitors and evaluates the primary risks associated with particular business units and functions. The Audit Committee may, in its business judgment, escalate certain risks to the Board as a whole. The Company’s Corporate Audit team assists 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 other members of management. The Audit Committee provides reports to the Board which describe these activities and related conclusions.

 

Management reviews the compensation practices and programs annually to determine if they present a risk to materially adversely affect the Company and presents the review annually to the Compensation Committee. We believe that for the substantial majority of our crewmembers 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 crewmembers do not have the authority to take action on our behalf that could expose us to significant business risks.

 

Compensation Risk Analysis

 

In early 2020, the Compensation Committee reviewed the 2019 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 (i) the use of long-term equity awards to create incentives for senior executives to promote long-term growth of the Company, (ii) clawback policy, (iii) limiting the incentive to take excessive risk for short-term gains by imposing caps on annual cash incentive awards, and (iv) vesting the Compensation Committee with authority to exercise discretion to reduce payouts under our annual cash incentive awards program.

 

For these reasons, we believe that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on us.

 

Stockholder Interests

 

Stock Retention and Ownership Guidelines

 

Our directors hold their equity compensation until their retirement or separation from our Board. For 2019, our executives had the following holding requirements: 6x base salary for our CEO and 2x base salary for our senior executives. The policy has post-tax vesting holding requirements to provide executives with some liquidity options while they are on track to meet the guidelines. As of December 2019, each of Mr. Hayes, Ms. Geraghty, Mr. Priest, and Mr. Sundaram met or exceeded our stock ownership guidelines, including common stock, and unvested restricted stock units but excluding unvested performance stock units and vested underwater stock options. As Mr. Nelson is new to his role, he is making progress towards achieving the ownership guidelines, in accordance with our policy. We anticipate periodically reviewing, and may revise our executive stock ownership guidelines from time to time.

 

Director Stock Ownership Policy Aligns Interests with Stockholders

 

We believe that directors should have a significant financial stake in JetBlue. In 2019, all director stock units, once vested, are deferred until the director’s departure from JetBlue. These director stock units are settled as common stock six months following a director’s separation from the Board.

 

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Compensation Clawback

 

Our Board adopted a policy, often referred to as 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.

 

Hedging Practices

 

Our Insider trading policy prohibits hedging and pledging of our securities by insiders.

 

We Have Advanced Stockholder Rights

 

Majority Voting

 

In an uncontested election, directors are elected by the majority of votes cast.

 

Pursuant to our Bylaws, the Board will not nominate for election as director any nominee who has not agreed to tender, promptly following the annual meeting at which he or she is elected as director, an irrevocable resignation that will be effective upon the failure to receive the required number of votes for reelection at the next annual meeting of stockholders at which he or she faces reelection and acceptance of such resignation by the Board of Directors. If a nominee fails to receive the required number of votes for reelection, the Board (excluding the director in question) may either accept such director’s 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.

 

Annual Elections

 

All directors are elected annually. JetBlue does not have a classified board.

 

Proxy Access

 

We have a “Proxy Access” bylaw that permits eligible stockholders to nominate candidates for election to the JetBlue Board. To be eligible to nominate candidates to be included in the Company’s proxy statement and ballot, stockholders must meet certain requirements.

 

 

PROXY ACCESS

 

Stockholders holding at least

 

3% of our common stock
held by up to 20 stockholders

 

Holding the shares continuously for at least

 

3 years
Can nominate the greater of two candidates or
20% of the Board

whichever is greater, for election at an annual stockholders meeting if such nominating
stockholder(s) and nominee(s) satisfy the requirements set forth in our Bylaws

 

 

Right to Call a Special Meeting

 

Our Board has directed that we submit to our stockholders a proposal to amend our certificate of incorporation to permit stockholders the right to request the Company call a special meeting. If the proposal is approved by our stockholders, we will amend our certificate of incorporation and the corresponding bylaw provisions and the change will become effective.

 

Right to Act by Written Consent

 

Following a vote at our 2019 Annual Meeting, our Board directed that we submit to our stockholders a proposal to amend our certificate of incorporation to permit stockholders to act by written consent. If the proposal is approved by our stockholders, we will amend our certificate of incorporation and the corresponding bylaw provisions and the change will become effective.

 

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Director Onboarding and Education

 

Directors Receive Robust Orientation and Continuing Education Resources

 

Director orientation – Our enhanced and revised director orientation program familiarizes new directors with JetBlue’s business, operations, strategies and policies, and assists them in developing company and industry knowledge to optimize their service on the Board. As we add new Board members, we continue to solicit our Board members’ post-orientation feedback to improve our director orientation program.
   
  The enhanced orientation process includes directors going to our orientation classes for new crewmembers and “shadowing” certain operational leaders to help them appreciate the industry’s complexities. The Board works with management on an ongoing basis to continue to enhance the orientation program with feedback solicited as directors go through the orientation program.
   
Continuing education – We provide our directors with educational opportunities to enhance the skills and knowledge they use to perform their responsibilities, including a membership with the National Association of Corporate Directors (“NACD”). These programs may include internally developed materials and presentations, programs presented by third parties, and financial and administrative support to attend qualifying academic or other independent programs.

 

Evaluation Components – Board, Committees, Directors

 

Under the leadership of the Committee Chair, the Governance and Nominating Committee oversees the Board’s annual evaluation process focused on three components: (1) the Board, (2) Board committees and (3) individual directors. In addition, the Governance and Nominating Committee regularly discusses Board composition and effectiveness during its committee meetings.

 

In 2019, to enhance its processes, the Board performed its own self evaluation, involving individual interviews and feedback provided to the General Counsel for the Board. The General Counsel provided the Board with themes and feedback, for the Board to discuss and to consider in the future. This process generated comments and discussion at all levels of the Board, including with respect to Board composition and processes.

 

Our Corporate Governance Framework

 

Our governance framework is designed to ensure our Board has the necessary skills, expertise, authority and practices in place to review and evaluate management and our business operations in an independent manner. Our goal is to align the interests of directors, management, stockholders and our other stakeholders, and comply with or exceed the requirements of Nasdaq and applicable law and implement best practices. This framework establishes the practices our Board follows with respect to, among other things, Board composition and director nomination, Board meetings and involvement of senior management, director compensation, CEO performance evaluation, management succession planning, and Board committees.

 

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Our Corporate Governance Documents  
Amended and Restated Articles of Incorporation Audit Committee Charter
Amended and Restated Bylaws Compensation Committee Charter
Corporate Governance Guidelines Governance and Nominating Committee Charter
JetBlue Code of Conduct Airline Safety Committee Charter
JetBlue Business Partner Code of Conduct Finance Committee Charter
JetBlue Code of Ethics ESG Subcommittee Charter

 

How to Communicate with Our Board

 

Stockholders may communicate with our Board 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 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, as set forth in our Governance Guidelines.

 

Any interested party, including any JetBlue crewmember, may make confidential, anonymous submissions regarding questionable accounting or auditing matters or internal accounting controls and may communicate directly with the Chair of the Board by letter to the above address, marked for the attention of the Chair. Any written communication regarding accounting, internal accounting controls or other financial matters are processed in accordance with procedures adopted by the Audit Committee.

 

Additionally, based on past experience, we believe that the virtual format of the annual meeting will continue to expand Board outreach to stockholders by allowing stockholders from any location to ask questions of our leaders and directors present at the meeting.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    25

 

 

THE BOARD OF DIRECTORS

 

Director Nominee Selection Process

 

The Governance and Nominating Committee is responsible for recommending to the Board a slate of nominees for election at each Annual Meeting of Stockholders. In 2019, the Governance and Nominating Committee engaged a search firm to enhance its processes. Ms. McClure and Mr. Sharma were both appointed to the Board in 2019. Ms. McClure, Mr. Sharma and a new nominee, Mr. Robert Leduc, are standing for election by the stockholders for the first time in May 2020.

 

The Governance and Nominating Committee considers a wide range of factors when assessing potential director nominees. This assessment includes a review of the potential nominee’s judgment, experience, independence, understanding of the Company’s business or other related industries and such other factors as the Committee concludes are pertinent in light of the current needs of the Board based on the Company’s 3-5 year strategy. The Board considers diversity of viewpoints, background, race, gender, ethnicity, experience, accomplishments, education and skills when evaluating nominees. The Governance and Nominating Committee engages an external search firm to assist it in identifying potential nominees. The Governance and Nominating Committee has emphasized the importance of diversity in its instructions to the search firm. The Board’s needs develop over time. A potential nominee’s qualifications are evaluated to determine whether the potential nominee meets the qualifications required of all directors as well as the key qualifications and experience required to be represented on the Board, as described above. Further, the Governance and Nominating Committee assesses how each potential nominee would impact the skills, experience and diversity represented on the Board as a whole in the context of the Board’s overall composition and the Company’s current and future needs.

 

Board Candidate Nomination Process

 

In evaluating and determining whether to nominate a candidate for a position on our Board, the 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 applies the same criteria in reviewing candidates regardless of the source of the recommendation.

 

Stockholder-Nominated Director Candidates

 

The Board of Directors adopted revisions to our Bylaws, putting into place balanced and market-standard proxy access provisions in step with other public companies that have adopted proxy access. We believe that these provisions provide meaningful, effective and accessible proxy access rights to our stockholders, and balances those benefits against the risk of misuse or abuse by stockholders with special interests that are not shared by all or a significant percentage of our stockholders. Our proxy access provisions permit a stockholder, or a group of up to 20 stockholders, owning continuously 3% or more of the Company’s outstanding common stock for at least three years to nominate and include in the Company’s proxy materials for an annual meeting of stockholders up to 20% of the Board (or if such amount is not a whole number, the closest whole number below 20%, but not less than two directors) if such nominating stockholder(s) and nominee(s) satisfy the requirements set forth in our Bylaws.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    26

 

 

Board Membership Criteria

 

The Board and the Governance and Nominating Committee believe there are general qualifications that all directors must exhibit and other key qualifications and experience that should be represented on the Board as a whole, but not necessarily by each individual director. In addition, the Board conducts interviews of potential director candidates to assess intangible qualities, including the individual’s ability to ask difficult questions and, simultaneously, to work collegially.

 

BOARD MEMBERSHIP CRITERIA
Independence
Integrity
Track record of success
Business Judgment
Innovative thinking
Diversity
Familiarity with and respect for corporate governance requirements and practices
Ability & willingness to commit sufficient time to the Board

 

Our Board is composed of a diverse group of leaders in their respective fields. Many of our current directors have leadership experience at major 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 financial services which brings unique perspectives to the Board. Further, each of the Company’s directors has other specific qualifications that make him or her a valuable member 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 does not have a specific diversity policy, but considers diversity of viewpoints, background, race, gender, ethnicity, experience, accomplishments, education and skills when identifying and evaluating nominees. Diversity is important because the Board believes that a variety of points of view that comes from a Board that is diverse contributes to a more effective decision-making process. When recommending director nominees for election by stockholders, the Board and the Governance and Nominating Committee focus on how the experience, skill set and diversity of each director nominee complements those of fellow director nominees to create a balanced Board with diverse backgrounds, viewpoints and deep expertise. The Board believes that directors should contribute positively to the existing chemistry and collaborative culture among 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. In determining whether an incumbent director should stand for reelection, the Governance and Nominating Committee considers, with respect to each nominee, the above factors, as well as that director’s personal and professional integrity, attendance record, preparedness, participation and candor, any additional criteria set forth in our Governance Guidelines and other relevant factors as determined by the Board. Periodically, the Governance and Nominating Committee reviews the Company’s short- and long-term business plans to gauge what additional current and future skills and experience should be represented on the Company’s Board. The Corporate Governance and Nominating Committee seeks to use the results of the assessment process as it identifies and recruits potential director candidates.

 

Director Independence

 

Having an independent board is a core element of our governance philosophy. Our Corporate Governance Guidelines provide that a substantial majority of our directors will be independent. Our Board has adopted director independence guidelines to assist in determining each director’s independence. These guidelines are available on our website on the investor relations page. The guidelines meet the independence requirements of Nasdaq.

 

Each year, the Board affirmatively determines a director has no relationship that would interfere with the exercise of independent judgment in carrying out his or her responsibilities as a director. Annually, each director completes a detailed questionnaire that provides information about relationships that might affect the determination of independence.

 

The Board analyzed the independence of each director and nominee and determined that Mses. Gambale, Jewett, McClure and Robb O’Hagan and Messrs. Baldanza, Boneparth, Sharma, Winkelmann, and Mr. Leduc meet the standards of independence under applicable Nasdaq listing standards, including that each member is free of any relationship that would interfere with his or her individual exercise of independent judgment. Robin Hayes, our CEO, is our only director that is not independent.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    27

 

 

Director Attendance

 

The Board held a total of six meetings during 2019. 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 2019. The Company has a policy encouraging all directors to attend each annual meeting of stockholders. All members of our Board attended our 2019 annual meeting of stockholders held on May 16, 2019.

 

2020 Director Nominees

 

There are currently twelve members of our Board of Directors and, 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. Peterson, our Board Chair and a director since 1999, and Mr. Sica, our Vice Chair and a director since 1998, are not standing for reelection. Mr. Gemkow resigned from the Board in March, following his nomination to the Board of a major business partner of JetBlue. The Company thanks Mr. Peterson, Mr. Sica and Mr. Gemkow for their years of exemplary service to JetBlue.

 

At the 2020 annual meeting, ten directors are to be elected to hold office until the 2021 annual meeting and until their successors have been elected and qualified. All nominees are current JetBlue Board members who were elected by stockholders at the 2019 annual meeting, except for Teri McClure, who was appointed to the Board in July 2019 and Vivek Sharma, who was appointed to the Board in November 2019, and Robert Leduc whose Board service would commence upon his election at the annual meeting. Based on the recommendation of the Governance and Nominating Committee, the Board has nominated each of B. Ben Baldanza, Peter Boneparth, Virginia Gambale, Robin Hayes, Ellen Jewett, Teri McClure, Sarah Robb O’Hagan, Vivek Sharma and Thomas Winkelmann, each a current director of the Company, and Robert Leduc, a nominee to the Board, to be elected as a director of the Company to serve on our Board until the 2021 annual meeting of stockholders and until such time as their respective successors have been duly elected and qualified or until his or her earlier death, disability, resignation, retirement, disqualification or removal from office.

 

The Board has no reason to believe that any of the nominees 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 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 will be elected by a majority of the votes cast at the annual meeting.

 

Included in each director nominee’s biography below is a description of select key qualifications and experience of such nominee based on the qualifications described above. The Board and the Governance and Nominating Committee believe that the combination of the various qualifications and experiences of the director nominees would contribute to an effective and well-functioning board and that, individually and as a whole, the director nominees possess the necessary qualifications to provide effective oversight of the business and quality advice and counsel to the Company’s management.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    28

 

 

MANAGEMENT PROPOSAL 1

 

TO ELECT DIRECTORS

 

What are you voting on?

 Stockholders are being asked to elect ten (10) director nominees for a one-year term.

 

Voting recommendation:

 FOR the election of each director nominee. The Board and the Governance and Nominating Committee believe that each of the ten director nominees possess the necessary qualifications and experiences to provide quality advice and counsel to the Company’s management and effectively oversee the long-term interests of the stockholders.

 

All nominees are current JetBlue board members who were elected by the stockholders, except for Teri McClure and Vivek Sharma, who were both appointed to the Board in 2019 and Mr. Leduc, a nominee for election. Messrs. Peterson and Sica will not be standing for re-election at this year’s Annual Meeting. Mr. Gemkow resigned from the Board in March, following his nomination to the Board of a major business partner of JetBlue. The Board and JetBlue thank Messrs. Gemkow, Peterson and Sica for their years of service to JetBlue.

 

YOUR BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL.

 

 

B. BEN
BALDANZA

Age 58

 

Director
since: 2018

 

INDEPENDENT

 

JETBLUE BOARD COMMITTEES:

 

 Audit

 Airline Safety

 Finance

EXPERIENCE:

 

Current Role:

 Owner and CEO of Diemacher, LLC, a consulting firm, an advisory firm helping businesses restructure, grow revenue, and reduce costs.

 

Current Public Company Board:

 JetBlue Airways Corporation

 Six Flags Entertainment Corporation

 

Prior Business and Other Experience:

 From 2006 to 2016, Mr. Baldanza was the CEO, President and a member of the Board of Directors of Spirit Airlines, Inc. and in 2005, its President and Chief Operating Officer. Prior to his role at Spirit, Mr. Baldanza held positions in Finance, Marketing and Operations at American Airlines, Northwest Airlines, Continental Airlines, Taca Airlines and U.S. Airways. He has more than 30 years of experience in the aviation industry.

 

Prior Public Company Board:

 Spirit Airlines, Inc.

 

Key Qualifications:

 As the former Chief Executive Officer of a domestic airline, Mr. Baldanza’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. Baldanza has extensive commercial and operational experience with expertise in revenue management and productivity.

 

       

 

PETER
BONEPARTH

Age 60

 

Director
since: 2008

 

INDEPENDENT

 

JETBLUE BOARD COMMITTEE:

 

 Audit, Chair

 Finance

EXPERIENCE:

 

Current Role:

 Senior advisor to a division of The Blackstone Group, LLP, advising on the retail industry.

 

Current Public Company Boards:

 JetBlue Airways Corporation

 Kohl’s Corporation

 

Prior Business and Other Experience:

 Mr. Boneparth is a former Senior Advisor of Irving Capital Partners, a private equity group, from February 2009 through 2014. He served as president and CEO of the Jones Apparel Group from 2002 to 2007.

 

 

Key Qualifications:

 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.

 

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    29

 

 

 

VIRGINIA
GAMBALE

Age 60

 

Director
since: 2006

 

INDEPENDENT

 

JETBLUE BOARD COMMITTEES:

 

 Audit

 Compensation, Chair

 

EXPERIENCE:

 

Current Role:

 Managing Partner of Azimuth Partners LLC, a technology advisory firm facilitating the growth and adoption of emerging technologies such as cloud, advance AI Analytics, VR and digital consumer engagement for financial services, consumer and technology companies.

 

Current Public Company Boards:

 JetBlue Airways Corporation

 Regis Corporation

 First Derivatives plc

 Virtu Financial, Inc.

 

Prior Business and Other Experience:

 Prior to starting Azimuth Partners, Ms. Gambale was an Investment Partner at Deutsche Bank Capital and ABS Ventures from 1999 to 2003. Prior to that, she held the position of Chief Information Officer at Bankers Trust Alex Brown and Merrill Lynch. Ms. Gambale serves on the NACD Risk Oversight Advisory Council. She also Chairs the Nutanix Advisory Board, and serves as an Adjunct Facility Member at Columbia University’s Master in Technology Leadership program.

 

Prior Public Company Board:

 Dundee Corporation

 

Key Qualifications:

 As a former Chief Information Officer and a Managing Partner at a firm involved with highly innovative technologies, 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 and businesses.

 

       

 

ROBIN
HAYES

Age 53

 

Director
since: 2015

 

INDEPENDENT

 

JETBLUE BOARD COMMITTEE:

 

 Airline Safety

 

EXPERIENCE:

 

Current Role:

 JetBlue CEO

 

Current Public Company Board:

 JetBlue Airways Corporation

 

Prior Business and Other Experience:

 Mr. Hayes has been JetBlue’s CEO since June 2018. He served as president and Chief Executive Officer from 2015-May 2018. From 2013 to 2015, 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. He served as JetBlue’s Executive Vice President and Chief Commercial Officer from August 2008 until December 2013. Prior to joining JetBlue, Mr. Hayes 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.

 

Key Qualifications:

 As a senior airline executive, Mr. Hayes’ qualifications include over 25 years of aviation experience, knowledge of the competitive landscape, brand enhancement and management.

 

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    30

 

 

 

ELLEN
JEWETT

Age 61

 

Director
since: 2011

 

INDEPENDENT

 

JETBLUE BOARD COMMITTEES:

 

 Governance &
Nominating, Chair

 Audit

 Finance

EXPERIENCE:

 

Current Role:

 Managing Partner of Canoe Point Capital, LLC, an investment firm focusing on early stage social ventures.

 

Current Public Company Board:

 JetBlue Airways Corporation

 Booz Allen Hamilton Holding Corporation

 

Prior Business and Other Experience:

 Ms. Jewett was the Managing Director Head of U.S. Government and Infrastructure for BMO Capital Markets covering airports and infrastructure banking from 2010-2015. 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 served as the President of the Board of the Brearley School through June 2018. She is a director for Fundamental Credit Opportunities (FCO) U.S. and Offshore Feeder Funds and a Trustee of Children’s Aid in New York City.

 

Key Qualifications:

 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.

 

       

 

ROBERT
LEDUC

Age 64

 

Nominee

 

INDEPENDENT

 

JETBLUE BOARD COMMITTEE:

 

 Audit (May 2020)

EXPERIENCE:

 

Current Role:

 Recently retired as President of UTC’s jet engine manufacturer Pratt & Whitney.

 Nominee, JetBlue Airways Corporation Board

 Nominee, Howmet Board (April vote)

 

Prior Business and Other Experience:

 Mr. Leduc served as President of Pratt & Whitney from 2016 until early 2020. He had led helicopter manufacturer Sikorsky Aircraft from 2015-2016, when UTC sold Sikorsky to defense contractor Lockheed Martin Corp. Previously, Mr. Leduc served in leadership positions at Hamilton Sundstrand and UTC Aerospace Systems.

 

Key Qualifications:

 As a senior aviation executive, Mr. Leduc’s qualifications include over 42 years of aviation experience, with significant maintenance and engine related experience, brand enhancement, finance and talent management.

 

       

 

TERI
MCCLURE

Age 56

 

Director
since: 2019

 

INDEPENDENT

 

JETBLUE BOARD COMMITTEE:

 

 Audit

EXPERIENCE:

 

Current Role:

 Recently retired as Chief Human Resources Officer of United Parcel Service.

 

Current Public Company Board:

 JetBlue Airways Corporation

 

Prior Business and Other Experience:

 Ms. McClure is an aviation executive with nearly 25 years of experience. From 1995 until her retirement in the summer of 2019, Ms. McClure worked at United Parcel Service (“UPS”), serving most recently as Chief Human Resources Officer. She has also held positions in UPS’s legal department, including General Counsel and Corporate Secretary.

 

Key Qualifications:

 As a CHRO and General Counsel as well as an aviation executive, Ms. McClure’s qualifications and experience include legal acumen, talent management, labor issues, aviation management, risk management oversight and international business experience.

 

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    31

 

 

 

SARAH ROBB
O’HAGAN

Age 47

 

Director
since: 2018

 

INDEPENDENT

 

JETBLUE BOARD COMMITTEE:

 

 Audit

EXPERIENCE:

 

Current Role:

 CEO of EXOS, the Human Performance Company, since February 2020.

 

Current Public Company Board:

 JetBlue Airways Corporation

 

Prior Business and Other Experience:

 Prior to EXOS, Ms. Robb O’Hagan served as the Chief Executive Officer of the indoor cycling company Flywheel Sports, and became the author and founder behind Extreme Living LLC - a content platform to unleash potential in diverse aspiring leaders. She previously served as global president of the sports nutrition business Gatorade, where she successfully led the business through a major repositioning and business turnaround, and global president of the luxury fitness company Equinox, where she led the upgrading of the offering through a significant technology transformation.

 

Key Qualifications:

 As a CEO, entrepreneur and author, Ms. Robb O’Hagan’s qualifications and experience include marketing and brand expertise, digital transformation, lifestyle brands, talent management, technology, risk management oversight and international business and operating company experience.

 

       

 

VIVEK
SHARMA

Age 45

 

Director
since: 2019

 

INDEPENDENT

 

JETBLUE BOARD COMMITTEE:

 

 Audit

EXPERIENCE:

 

Current Role:

 Founder and Chief Executive Officer of InStride, a strategic enterprise education company, since 2018.

 

Current Public Company Board:

 JetBlue Airways Corporation

 

Prior Business and Other Experience:

 Mr. Sharma previously served as Senior Vice President of eCommerce and Digital Guest Experience at The Walt Disney Company from 2013-2018, and is also an adjunct professor of data science at the University of Southern California’s Marshall School of Business. Earlier in his career, he was the General Manager of Yahoo Mail & Messenger, Vice President of Product Management of Yahoo Search, and Associate Partner with the Technology Practice of McKinsey & Company.

 

Key Qualifications:

 As a CEO, entrepreneur, author and professor, Mr. Sharma’s qualifications and experiences include digital transformation data science, ecommerce and digital guest experience, workforce online education and talent management.

 

       

 

THOMAS
WINKELMANN

Age 60

 

Director
since: 2013

 

INDEPENDENT

 

JETBLUE BOARD COMMITTEES:

 

 Airline Safety, Chair

 Compensation

 Governance &
Nominating

EXPERIENCE:

 

Current Role:

 Executive Chairman of Zeitfracht Group, a logistics company based in Berlin, Germany.

 

Current Public Company Board:

 JetBlue Airways Corporation

 

Prior Public Company Board:

 Lufthansa CityLine GmbH

 Air Dolomiti S.p.A. Linee Aeree Regionali Europee.

 

Prior Business and Other Experience:

 Before joining Zeitfracht, Mr. Winkelmann served as CEO of airberlin from February 1, 2017 to December 31, 2018. He previously served as the Chief Executive Officer of Lufthansa German Airlines (Hub Munich) since January 1, 2016 and was a member of the Group Executive Committee of Lufthansa Group. From September 2006 through December 2015, he served as Chief Executive Officer of Germanwings GmbH.

 

Key Qualifications:

 As a senior airline executive, Mr. Winkelmann’s qualifications and experience include sales, marketing, revenue management, airline operations, knowledge of North America, Latin America and the Caribbean as well as general airline industry knowledge.

 

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” EACH NOMINEE.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    32

 

 

Director Compensation

 

The Compensation Committee, with input from its independent compensation consultant, periodically reviews and evaluates Director compensation. Our objective is to pay non-employee directors over time at or near the median of the proxy peer group, to award a significant component in equity, and to adjust as needed. 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.

 

COMPENSATION STRUCTURE FOR DIRECTORS FOR 2019    
Annual base retainer (all independent directors)   $ 70,000
Annual equity award(1)   $ 125,000
Independent Board Chair supplemental fee   $ 50,000
Annual Audit Committee Chair supplemental fee   $ 20,000
Annual Compensation Committee Chair supplemental fee   $ 15,000
Annual G&N Committee Chair supplemental fee   $ 10,000
Annual Airline Safety Committee Chair supplemental fee   $ 10,000
Annual Committee membership fees:      
Audit   $ 15,000
Compensation, G&N, Airline Safety   $ 10,000
New directors DSU grant(2)   $ 35,000
(1) Director stock units vest after one year of service. Settlement is deferred until a director’s separation from the Board.
(2) New director stock unit grants vest ratably over three years of service. Settlement is deferred until a director’s separation from the Board.

 

The intended cash-to-equity allocation of this package is 50% to 50%, with the objective of paying annual compensation of approximately $220,000 per Board member to each Board member who is not a committee Chair, assuming attendance at all Board meetings and standing committee meetings on which the director serves. As is customary in the airline industry, all members of the Board and their immediate family may travel without charge on our flights.

 

We reimburse our directors, including our full-time crewmember director, for expenses incurred in attending meetings. We do not provide gross-up payments to members of our Board.

 

In March 2020, the Board of Directors agreed to forego 100% of its cash compensation for the first quarter of 2020 as the Company grapples with the effects of Covid-19 on aviation and JetBlue.

 

In 2019, Mr. Peterson donated $130,000, Mr. Sica donated $4,000, Mr. Baldanza donated $1,900 and Ms. Robb O’Hagan donated $900 of the cash portion of their respective Board compensation to the JetBlue Crewmember Crisis Fund, a non-profit organization that assists JetBlue crewmembers facing emergency hardship situations.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    33

 

 

Fiscal Year 2019 Director Compensation

 

The following table summarizes compensation earned by our non-employee directors for services rendered during the year ended December 31, 2019. The footnotes and narrative discussion following the table describe details of each form of compensation paid to, or earned by, our directors and other material factors relating to director compensation arrangements.

 

    Fees Earned
or Paid in Cash
($)
  Stock
Awards
($)
(1)  All Other
Compensation
($)
(2)  Total
($)
Robin Hayes(3)        
Ben Baldanza   95,000   124,994     219,994
Peter Boneparth   105,000   124,994   12,651   242,645
Virginia Gambale   110,000   124,994     234,994
Stephan Gemkow(6)   80,000   124,994     204,994
Ellen Jewett   105,000   124,994     229,994
Stanley McChrystal(4)   29,166   124,994     154,160
Teri McClure(5)   42,500   34,987     77,487
Joel Peterson   130,000   124,994     254,994
Sarah Robb O’Hagan   90,000   124,994     214,994
Vivek Sharma(5)   14,167   34,983     49,150
Frank Sica   85,000   124,994     209,994
Thomas Winkelmann   110,000   124,994     234,994
(1) Includes 7,246 deferred stock units granted on February 25, 2019 to the then-sitting directors. At December 31, 2019, 69,398 deferred stock units remained outstanding for each of Ms. Gambale, and Messrs. Gemkow, Peterson, and Sica, 62,398 for Mr. Boneparth, 50,496 for Ms. Jewett, 37,512 for Mr. Winkelmann, and 9,385 for each of Ms. Robb O’Hagan and Mr. Baldanza. Ms. Teri McClure joined the Board in July 2019 and received a grant of 2,046 deferred stock units. Mr. Sharma joined the Board in November 2019 and received a grant of 1,849 deferred stock units. 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”).
(2) Consists of the value of flight benefits for the listed directors over $10,000 in value.
(3) Mr. Hayes was employed by the Company in 2019. He did not receive any additional compensation for his director service to the Company. Mr. Hayes’ compensation is reported in the Summary Compensation Table on page 51 of this proxy statement.
(4) Gen. McChrystal served on our Board until May 16, 2019. As a result and in accordance with the terms of the DSU award agreement, his 2019 grant of deferred stock units was forfeited upon his departure from the Board.
(5) Ms. McClure joined the JetBlue Board in July 2019 and Mr. Sharma joined the JetBlue Board in November 2019.
(6) Mr. Gemkow served on our Board through March 2020. In accordance with the terms of the DSU award agreement, his 2020 grant of deferred stock units was forfeited upon his departure from the Board.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    34

 

 

Certain Relationships and Related Transactions

 

We established a written policy that requires 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 material interest (other than solely as a result of being a director or a less than 10% 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% 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 policy further provides that only disinterested directors are entitled to vote on any Interested Transaction presented for Audit Committee approval.

 

Joanna Geraghty, the Company’s President and Chief Operating Officer, is married to a partner in the law firm of Holland & Knight LLP (HK). The Company has used multiple lawyers at HK, including on occasion Ms. Geraghty’s husband, to perform various legal services for many years, and which period significantly predates Ms. Geraghty’s joining the Company in February 2005. In 2019, Ms. Geraghty’s spouse did not have a material interest in HK’s relationship with the Company as he was no longer involved in providing or supervising services that HK performs for the Company, he does not receive any direct compensation from the fees the Company pays to HK, and those fees in the last fiscal year were less than .0025 percent of HK’s annual revenues. Under the Company’s related person transactions policy, the Audit Committee of the Company’s Board of Directors reviewed the Company’s relationship with HK. The Company has guidelines that require the Company’s General Counsel to review and pre-approve any future engagement of HK for legal services. The Company elected to voluntarily disclose its relationship with HK in this annual proxy statement.

 

Transactions with Related Persons since the Beginning of Fiscal Year 2019

 

The Company and its subsidiaries periodically enter into 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. There are no reportable transactions with related persons for 2019.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    35

 

 

MANAGEMENT PROPOSAL 2

 

TO APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

 

What am I voting on?
  Stockholders are being asked to approve, on an advisory basis, the compensation of the named executive officers as described in the Compensation Discussion and Analysis beginning on page 37.
Voting recommendation:
  FOR the resolution to approve compensation of the named executive officers, on an advisory basis. The Compensation Committee takes very seriously its role in the governance of the Company’s compensation programs and values thoughtful input from stockholders. The Compensation Committee will take into account the outcome of the advisory vote when considering future executive compensation decisions.

 

The Company seeks a non-binding advisory vote from its stockholders to approve the compensation of its named executive officers as described in the Compensation Discussion and Analysis beginning on page 37.

 

In deciding how to vote on this proposal, the Board encourages you to read the Compensation Discussion and Analysis and Compensation Tables sections of this proxy statement. Over the last several years, we have made enhancements to our compensation programs to continue to improve the link between compensation and the Company’s business as well as the long-term interests of our stockholders.

 

For the reasons outlined above and elsewhere in this proxy statement, we believe that our executive compensation program is well designed, appropriately aligns executive pay with Company performance and incentivizes desirable behavior.

 

The Board recommends that stockholders vote FOR the following resolution:

 

“RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the Company’s Named Executive Officers, as disclosed in this Proxy Statement, including the Compensation Discussion and Analysis, the Compensation Tables and the related narrative.”

 

Because your vote is advisory, it will not be binding upon the Board. However, the Board values stockholders’ opinions, and the Compensation Committee will take into account the outcome of the advisory vote when considering future executive compensation decisions. The Board has adopted a policy of providing for annual advisory votes from stockholders on executive compensation. The next such vote will occur at the 2021 Annual Meeting of Stockholders.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ADVISORY VOTE TO APPROVE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    36

 

 

NAMED EXECUTIVE OFFICER COMPENSATION DISCUSSION AND ANALYSIS

 

TABLE OF CONTENTS  
   
The content of this Compensation Discussion and Analysis is organized into four sections:  
   
COMPENSATION PHILOSOPHY AND GOVERNANCE 38
   
COMPENSATION PROGRAM DESIGN 42
   
FY 2019 COMPENSATION DECISIONS 44
   
OTHER COMPENSATION POLICIES AND INFORMATION 48

 

Executive Summary

 

This Compensation Discussion and Analysis provides information about our fiscal year 2019 compensation program for our named executive officers identified in the Summary Compensation Table as of December 31, 2019.

 

       
ROBIN HAYES   JOANNA GERAGHTY   STEPHEN PRIEST   EASWARAN SUNDARAM   BRANDON NELSON
Chief Executive Officer   President and Chief Operating Officer   Chief Financial Officer   Chief Digital & Technology Officer   General Counsel and Corporate Secretary

 

This Compensation Discussion and Analysis contains forward-looking statements that are based on our current plan, considerations, expectations and determinations regarding future compensation programs. The actual compensation programs that we adopt in the future may differ materially from the programs as summarized in this discussion.

 

Several years ago, our Compensation Committee and Board began to chart a course to transform our executive pay program to include significant performance attributes. They recognized it would be premature to move to business metric-based pay before Mr. Hayes established and the Board concurred with his vision for the Company and the strategy that would embody that vision. At our 2018 investor day, we announced a company goal of achieving an earnings per share goal of $2.50-3.00 by 2020.

 

Once our strategy was set, we began implementing changes to further increase the portion of pay that is performance-based. We established the 2019-2021 long term performance metrics in our pay for performance program to further reflect our commitment to our stockholders.

 

Our multi-year effort to transform our executive pay program is grounded in a compensation philosophy aimed at achieving strong alignment between the Company’s long-term strategic goals and our stockholders’ interests. We anticipate further engagement with our stockholders, seeking their input about features they value as we evolve the program design.

 

In response to the impact that the novel coronavirus (COVID-19) has had on our business, JetBlue’s named executive officers have, effective April 1, 2020, reduced their salaries in the second quarter by the following percentages: Mr. Hayes 50%, Ms. Geraghty 50%, Mr. Priest 35%, Mr Sundaram 20% and Mr. Nelson 20%. These salary reductions may be extended.

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    37

 

 

Compensation Philosophy and Governance

 

Compensation Philosophy & Principles

 

We strive to apply the following principles for compensating our crewmembers, including our named executive officers:

 

SUPPORT OUR STRATEGY AND
STAY TRUE TO OUR VALUES
  ATTRACT AND RETAIN TOP TALENT   PAY FOR PERFORMANCE
   
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.   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.   We hold our named executive officers accountable for their performance in light of Company goals, industry economics and individual performance.

 

Determining Executive Compensation

 

The Compensation Committee assists the Board with oversight and determination of compensation for the Company’s non-employee directors and executive officers. The Compensation Committee oversees the Company’s executive compensation policies and reviews and establishes, subject to approval by our Board, the compensation for our Chief Executive Officer. The Compensation Committee is charged with review of pay levels and policies related to salaries, annual cash incentive awards and grants of equity and non-equity incentive awards and oversight of our equity incentive plans. In determining base salary, annual cash incentive awards, restricted stock units (RSUs) and performance stock units (PSUs) equity awards, the Compensation Committee uses the relevant executive officer’s current level of total compensation as the starting point. The Compensation 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. Any variations in compensation among our executive officers reflect differences in these factors. The Compensation Committee may consider the effect of the global pandemic and other linked economic and environmental pressures that may negatively impact results.

 

The Compensation Committee used the following tools in determining named executive officers’ base salary, annual incentive cash targets, and equity awards in 2019:

 

Competitive Peer Group Survey;
Management Recommendations; and
Annual Performance Reviews.

 

In early 2019, the Compensation Committee approved target total direct compensation for the 2019 fiscal year, which is comprised of:

 

 

In the first quarter of 2020, the Compensation Committee reviewed the Company’s and the named executive officers’ performance for fiscal year 2019. After considering various data and input provided by management, the Compensation Committee determined the Company’s corporate performance factor, annual cash incentive awards and equity awards for the named executive officers.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    38

 

 

Compensation Consultant

 

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 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 the services of Pay Governance as its independent advisor on matters of executive compensation for 2019. The Compensation Committee’s consultant reports directly to the Committee and provides no other services to the Company or any of its affiliates. For 2019, the Compensation Committee assessed the independence of Pay Governance pursuant to the SEC and Nasdaq rules and concluded that no conflict of interest 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. Along with the other factors cited above, the Company used this data to develop its recommendations to the Compensation Committee for 2019 compensation levels for executives other than the CEO. The Compensation Committee and Pay Governance recommended CEO compensation changes to the Board. Pay Governance also provided suggestions on the design of the annual cash and long-term incentive awards that were used in 2019, and for the long-term performance based incentive program, including the performance measures and weighting, the factors for the Compensation Committee to review when determining whether to adjust the formulaic amount, and the general range of adjustments to apply. All services performed by Pay Governance were under the direction of the Committee.

 

Performance Based Pay

 

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 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. As noted elsewhere in this proxy statement, our equity compensation program includes a performance-based equity component, which pays out, if at all, upon the completion of three-year performance periods and Committee certification of results. As a result, the majority of our named executive officers’ total compensation is tied to performance and is “at risk.”

 

Our incentive compensation arrangements are tied to specific performance measures that aim to drive long-term performance and value creation. We have been steadily evolving our program to implement a design that incorporates performance elements directly linked to our mission, strategy and innovation. For fiscal year 2019:

 

71% of the annual target compensation opportunity for our named executive officers was performance-based, on average
47% of the annual cash incentive was tied to achieving pre-established financial targets
50% of the annual target equity opportunity for our named executive officers was delivered in the form of a performance-based stock award with payouts based on achievement against pre-established strategic performance objectives. We review and refine our metrics under our performance stock awards to reflect key strategies that drive long-term growth
At least 51% of the annual target compensation opportunity for our named executive officers is equity-based to incentivize a long-term focus and align their interests with those of our stockholders.

 

Long-Term Focus Through Multi-Year Vesting and Performance Requirements

 

All of the equity-based elements of our compensation program for our named executive officers either vest over a period of years or include long-term performance measures.

 

Discouragement of Unnecessary and Excessive Risk-Taking

 

We strive to meet our business objectives while maintaining executive compensation leading practices that discourage unnecessary and excessive risk taking.

 

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 2019 Willis Towers Watson U.S. CDB Executive Compensation Survey. Pay Governance used a combination of peer group proxy and general industry survey data to develop the competitive market. The current general industry reference group continues to place greater emphasis on consumer-oriented companies, reflecting the role of customer service in JetBlue’s success.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    39

 

 

Our competitor peer group consists of the following U.S. airlines:

 

Company FY 2019
Revenue ($)
(in millions)
  Competing in
our Market
American Airlines Group 45,768  
Delta Air Lines, Inc. 47,007  
United Continental Holdings, Inc. 43,259  
Southwest Airlines Co. 22,428  
Alaska Air Group, Inc. 8,781  
JetBlue Airways Corporation 8,094  
Spirit Airlines 3,831  
Hawaiian Holdings Inc. 2,832  

 

These companies, like JetBlue, are airlines 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 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 airline peer companies and the wide variation in size. As a result, the Compensation Committee uses the competitive data as a reference point to monitor the compensation practices of these competitors. This data was not the sole determining factor in executive compensation decisions. Instead, as described above, it was one of many factors reviewed by the Compensation Committee as part of their decision-making process. The Compensation Committee also considers our Northeast location, route network, cost structure, and size relative to other airlines. We do not rely on this information to target any specific pay percentile for our executive officers. The data is used primarily to ensure that our executive compensation program as a whole is competitive when the Company achieves targeted performance levels. While we do not target 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 aim to 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 Compensation Committee determined that the competitive positioning of our named executive officers’ total pay has strengthened in recent years, although room to improve remains. The Compensation Committee expects to continue to adjust relevant pay levels on a go forward, measured basis, contingent on corporate and individual performance in future years.

 

Competitive Peer Group Survey – Comparative CEO Target Compensation

 

Mr. Hayes’ target pay positioning is below most U.S. airlines’ CEOs.

 

The airline CEO survey data, shown below, is from 2019 proxies submitted to the SEC and reflects 2018 target compensation information. Airlines A-G are the airlines identified in our peer group. Mr. Hayes’ target total direct compensation is based on 2019 data.

 

Base salary below is the annual rate in effect at the end of 2018 for the peer airlines. Special/off-cycle awards (i.e., front-loaded, new hire, etc.) have been annualized over the vesting period.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    40

 

 

 

Best Practices in Compensation Governance

 

In addition to the core compensation program, the Company provides or has implemented the following:

 

WE DO   WE DO NOT
Emphasize performance-based, at risk pay   No tax gross ups for named executive officers
Apply rigorous, stockholder - aligned performance objectives for executive cash incentive award payments   No repricing without stockholder approval
Consider risk in our executive compensation program   No executive-only retirement benefits
Compensation Committee engages an independent consultant   No evergreen provisions in our compensation plans
Have executive stock ownership guidelines (including 6x base salary for CEO)   No excessive perquisites
Have director stock ownership requirements   No guaranteed bonuses or annual cash incentive awards
Grant equity awards with vesting schedules over at least one year and the majority over 3 years   No hedging or pledging JetBlue securities
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 transparent and just culture      
Review share utilization annually      
Devote significant time to management succession and leadership development efforts      
Limited executive perquisites; executive health and welfare benefits same as other salaried employees      
Have double-trigger change in control provisions in our equity plan      
Have our equity plans administered by an independent committee      
Cap our Incentive Plans at 200% of Target      
Use multiple metrics with little overlap to avoid “feast or famine” payout situations      

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    41

 

 

Annual Performance Review

 

Chief Executive Officer

 

Our Board evaluates our CEO’s performance and compensation on an annual basis. The CEO recuses himself from Board discussions relating to evaluations of his performance and his compensation package. The Compensation Committee conducts a performance review without the CEO’s participation and provides its recommendations to the full Board. The Board’s evaluation includes both objective and subjective criteria of the CEO’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 CEO’s compensation. The Compensation Committee uses the competitive market data discussed above to recommend total direct compensation for the CEO.

 

Other Named Executive Officers

 

The Compensation Committee, together with our CEO, evaluates the performance of the senior executive officers. The CEO 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 corporate performance objectives; advancement of strategic initiatives; leadership and talent development; individual business area responsibilities; and performance as an executive team member and overall executive team performance.

 

The Compensation Committee also reviews total direct compensation data from the competitive data with respect to other senior executive officers. The Compensation Committee makes final determinations regarding other named executive officers’ total compensation.

 

Compensation Program Design

 

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 cash incentive and equity compensation goals (discussed in more detail beginning on page 44) 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 is based on how the Compensation Committee views executive pay.

 

Overall 2019 Compensation Structure

 

JetBlue’s pay mix targets a higher percentage of equity and performance based compensation

 

 

*Mr. St. George stepped down as Chief Commercial Officer of JetBlue in June 2019.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    42

 

 

JetBlue’s long-term equity payouts are tied to performance targets aimed at moving the business forward.

 

 

Note: In light of the uncertainty and disruption in the aviation industry (among others), our Board and Compensation Committee have decided not to set PSU goals for the 2020-2022 period.

 

DESIGN COMPENSATION PLANS WITH PROVISIONS TO MITIGATE UNDUE RISK
Our executive compensation performance metrics drive longer term performance
Our short term metrics are diverse and include Controllable Costs, Customer Net Promoter Score (Customer NPS) and Pre-tax Margin
Our annual and long-term performance awards are based on different metrics, with little or no overlap, that we believe align with long-term business priorities
Our clawback policy serves as a risk mitigator
Our incentive compensation payments are capped at a maximum of 200% of target
   

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    43

 

 

FY 2019 Compensation Decisions

 

The following features of our 2019 compensation programs play a key role in further aligning our compensation practices with best practices in compensation governance and with our overall compensation philosophy:

 

Summary of Fiscal Year 2019 Compensation Program

 

    Reward
Element
  Objective   Key Features   How Award Value
is Calculated
  2019 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; compared against a group of comparably sized corporations and industry peers   Changes to base salary to maintain competitiveness
  Annual Cash Incentive Awards   To motivate and incentivize performance over a one-year period.   Award value and measures are reviewed annually to ensure they support our strategy.
Page 45
  Performance is measured against financial and non-financial corporate performance targets and individual goals .
Page 45
  Performance resulted in award at 87.8% of target for the corporate percentage. For the individual component, all NEOs met or exceeded target.
Page 45  
  Long-Term Incentive Equity Award RSUs     To incentivize performance and retention over the long-term; aligns Executive’s interests with our long-term interests of stockholders.   Performance is measured annually and equity vests ratably over three years, subject to forfeiture.
Page 46
  Based on achievement of metric driven operational and strategic goals.
Page 46
  All NEOs met or exceeded targets.
Page 46
  Long-Term Incentive Equity Award PSUs     To motivate and incentivize sustained performance over the long-term; aligns interests of our executives with long-term interests of stockholders.   Performance is measured at the end of a three year period. PSUs payout, if at all, in common stock.
Page 47
  Based on achievement of two performance metrics.
Page 47
  Performance periods in progress. 2017-2019 had been scheduled to be paid in early 2020; payments deferred due to industry impact of coronavirus. 2018-2020 to be paid in early 2021.
Page 47

 

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 severance 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.

 

Overview

 

In 2019, we experienced the persistent competitiveness of the airline industry and were challenged with unexpected revenue headwinds, particularly with an unusually volatile year in our Latin American and Caribbean markets. Even with these external factors, we managed to generate operating revenue growth of 5.7% year-over-year. We remain committed to delivering a safe and reliable JetBlue Experience for our customers and increasing returns for our shareholders. We believe our continued focus on cost discipline, product innovation and network enhancements, combined with our commitment to service excellence, will drive our future success.

 

Our compensation program aims to incentivize performance by rewarding goal achievement across the Company. As structured, the Compensation Committee may, upon consideration of factors in its judgment, adjust the final payout by +/- 35%, with the authority to reduce the payout to 0%.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    44

 

 

Although the Summary Compensation Table includes the PSU award amounts in the Stock Awards column, as required by the applicable rules and regulations, the amounts reflected for the 2018-2020 and 2019-2021 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. The Compensation Committee certified the results of the 2016-2018 performance period and those PSU awards, based on the performance period, reflect actual performance achieved and amounts paid out following the Compensation Committee’s certification of performance results in early 2019. The performance period for 2017-2019 is complete. In light of the global disruption due to Covid-19, and the impact to JetBlue, the Compensation Committee deferred the certification of the 2017-2019 performance results in March (except for Mr. St. George, due to contractual obligations.)

 

Base Salary

 

The Compensation Committee annually reviews the base salaries of the named executive officers, and adjusts them periodically as needed to maintain market position and consistency with evolving responsibilities for the relevant positions. Upon consideration of these factors and input from its independent compensation consultant, the Compensation Committee increased base salaries for the named executive officers as set forth in the below table, as compared to 2018.

 

Executive 2019 Salary 2018 Salary
Robin Hayes 600,000 580,000
Stephen Priest 475,000 450,000
Joanna Geraghty 540,000 490,000
Easwaran Sundaram 445,000 435,000
Brandon Nelson(1) 405,000 -
Martin St. George(2) 435,000 425,000
(1) Brandon Nelson became a named executive officer in 2019.
(2) Mr. St. George stepped down as Chief Commercial Officer in June 2019.

 

Annual Cash Incentive Awards

 

Effective for 2019, the Company modified its calculation of annual cash incentive awards. For 2019, for Messrs. Hayes, Priest, Sundaram and Ms. Geraghty, the annual cash incentive award was based 75% on our corporate performance factor (at 87.8% of target, as described below) and 25% on individual performance of goals set at the beginning of the year. Mr. Nelson’s annual cash incentive award was based 50% on our corporate performance factor and 50% on individual performance goals. In 2019, o ur program ha d a preliminary threshold of $1 of pre-tax income.

 

For 2019, the Compensation Committee approved the following target bonus opportunities for our named executive officers:

 

Executive Target
Incentive Award
Opportunity
(% of Salary)
Maximum
Incentive Award
Opportunity
(% of Salary)
Robin Hayes 125 250
Stephen Priest 80 160
Joanna Geraghty 90 180
Easwaran Sundaram 50 100
Brandon Nelson 50 100
Martin St. George(1) 50 100
(1) Mr. St. George stepped down as an executive officer of JetBlue in June 2019.

 

The Compensation Committee may adjust the formulaic funding upwards or downwards by up to 35%, including reduction of payout to 0%, based on qualitative and quantitative 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 versus our peer group, and our long-term strategic plan development and execution.

 

Corporate Performance Factor

 

Each year, we establish a set of metrics, which we label our Corporate Performance Factor or CPF. The CPF is the set of company initiatives we set for our officer and director group as a whole based on goals we want to substantially achieve within the year. Over the course of the year, our leaders track our collective performance against the CPF metrics and communicate on it

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    45

 

 

internally to drive alignment and performance. At year end, we reported on our achievement of the CPF to the Compensation Committee. The Compensation Committee relied on our performance assessment framework to evaluate our results on each metric and then performed a collective assessment across all goals to determine a corporate performance factor, which was then applied to our annual cash incentive bonus awards. For 2019, the corporate performance factor was determined as follows:

 

Measure Weight Target Performance
Achieved
Payout
Achieved as a
% of Target
Actual Payout
Approved as a
% of Target
Customer NPS(1) 33.33% 59.0 pts 54.3pts    
Controllable Cost(1) 33.33% 1.8% 0.8% 87.8% 87.8%
Pre-tax Margin(1) 33.33% 9.1% 9.5%    
(1) Customer Net Promoter Score, or 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. Controllable Cost is a financial measure to focus on 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. Pre-Tax margin is a financial measure calculated using generally accepted U.S. accounting principles.

 

In 2019, we narrowed our metrics to better focus on three metrics and set the weightings at two-thirds financial and one-third non-financial, to emphasize our continued financial focus. However, we retained one third of our CPF on the customer experience, as measured by Net Promoter Score (NPS). Our Controllable Cost target was set more aggressively in 2019, to take into account our continued emphasis on costs and the progression of our structural cost program. Our pre-tax margin was set at 9.1%, slightly below our 2018 year end achievement of 9.4%, to drive improvement in the face of operational challenges we anticipated at the end of 2018. Our NPS was set at 59 pts. for 2019, above our 2018 year end goal of 58.7 pts., As we know that our operational performance ties into our NPS, we wanted to reset our NPS in order to focus on our operational performance.

 

A “Met” target assessment would have resulted in a corporate performance factor of 100%, which would have resulted in a payout of 75% or 50%, depending on the officer of the annual cash incentive awards at the target level (for the corporate portion of the annual cash incentive award). After evaluating the Company’s performance, the Compensation Committee approved the 87.8% of target corporate performance payout percentage.

 

As noted, a named executive officer’s performance against individual goals counts for a portion (as discussed above 25% or 50%) of the annual incentive award. Our CEO evaluates the other named executive officer’s performance based on objective criteria, self-evaluations, and a subjective assessment based on perceived level of difficulty and enterprise impact of the goals. The Compensation Committee measures the CEO’s achievement, and the Compensation Committee makes a CEO compensation recommendation to the Board. Our CEO provides the entire assessment to the Compensation Committee. Each of our named executive officers met or exceeded his or her individual goals for the year. Where a named executive officer met his or her individual goals, the 25% or 50% bonus was calculated at target (100%); if the named executive officer exceeded his or her individual goals, his or her individual bonus percentage paid out above target (100-200% depending on goal achievement, degree of difficulty, enterprise impact and how the goals were achieved).

 

Long-Term Equity Awards

 

Equity grants directly align named executive officers’ interests with the interests of stockholders by rewarding achievement of long-term performance goals and 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 service-based vesting period, to retain and motivate our crewmembers, including our named executive officers. We also use a performance-based compensatory element, with PSUs as the relevant vehicle. In 2019, approximately 50% of the total equity award target opportunity for named executive officers was in the form of PSUs that are earned (or forfeited) based on the Company’s achievement of pre-established performance metrics. We believe this program is structured to ensure close alignment of the interests of our senior most officers and stockholders.

 

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 and vest in equal annual installments over the next three years and are forfeitable if the officer were to leave the Company before the awards are fully vested.

 

The actual RSU awards range from a maximum of 200% of target opportunity to a minimum of 50% of target opportunity. Performance under the minimum would earn 0%. The ranges were selected based on peer compensation data and in light of the Company’s internal pay equity considerations and its financial performance.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    46

 

 

Our named executive officers are evaluated annually on their achievement of individual goals, tailored to that executive’s responsibilities and the workgroups he or she supervises. All of our officers had culture goals, since we believe our strong and unique culture is integral to our success. Our officers also supported shared budget, safety and operational goals. In addition, our CEO had goals around safety, innovation and strategy, improving JetBlue’s IT performance, and effectively overseeing JetBlue’s business. Mr. Priest, Ms. Geraghty, Mr. Nelson, Mr. St. George and Mr. Sundaram 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 the Senior Leadership Team. Mr. Hayes, in performing his reviews, also used his judgment in evaluating the degree of difficulty of achieving the individual’s goals. Each of the named executive officers met or exceeded his or her individual performance goals, resulting in the equity awards shown in the applicable tables.

 

The Compensation Committee, in consultation with the Board, reviewed Mr. Hayes’ performance and leadership in 2019 in light of the Company’s overall performance and approved an award of $1,200,000 of RSUs to Mr. Hayes.

 

Based on the Committee’s, and, in connection with Mr. Hayes, the Board’s assessment of each senior executive officer’s individual performance in 2019, the following RSU awards were made on February 25, 2020:

 

Name and Title 2019 Target
Opportunity for RSUs ($)
2019 RSU Award
(Fair Market Value $)
Robin Hayes 800,000 1,200,000
Stephen Priest 500,000 750,000
Joanna Geraghty 575,000 718,750
Easwaran Sundaram 300,000 500,000
Brandon Nelson 250,000 312,500
Martin St. George 350,000 *
* Mr. St. George did not receive an RSU award in February 2020.

 

We believe this approach is consistent with our pay for performance philosophy whereby we link our corporate results and individual goal achievement to each named executive officer’s compensation.

 

Performance Stock Units (PSUs)

 

For the performance period 2019-2021, the Company’s long-term incentive metrics included an earnings per share (EPS) metric and an absolute Return on Invested Capital growth goal (ROIC), each equally weighted. We introduced an EPS target metric of $2.50, to align our executives’ rewards with stockholder performance, as we have informed our investors. We continue to use an ROIC metric. The 2019-2021 ROIC metric is absolute to aim for improvement. Our 2019 performance stock unit targets are tied to key metrics we use to manage our business. We feel that achieving these goals will improve stockholder value over time. The number of PSUs earned at the end of the three-year performance period will vary based on the actual performance over that period. 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 2019 PSU awards may range from 0 to 200% of the target award based on the Company’s performance measured against the EPS target and absolute ROIC growth.

 

The 2019 PSU opportunities, at target, are: CEO $1,350,000, CFO $700,000, President/COO $800,000, Mr. St. George $250,000 and Messrs. Sundaram and Nelson $150,000. The PSU maximum is 200% of target and the minimum is 50% of target. If performance were to come in below the minimum award opportunity for the PSU goals, the PSU would pay out at zero.

 

Actual amounts of 2019-2021 PSU awards granted in April 2019 are disclosed in the “Summary Compensation Table” and “Grants of Plan-Based Awards” table. The amounts paid out for the 2016-2018 performance period are reported in the “Options Exercised and Stock Vested” table.

 

Our long-term performance-based incentive plan covers three year forward looking performance periods. For the 2019-2021 performance period, our team is aiming for continued absolute 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. Maintaining management focus, through our long-term incentive program, is important to this goal.

 

We believe that the targets were designed to be challenging but attainable if we had what we considered to be successful years. We incorporate “confidence factors” into our goal setting. We expect that using such confidence factors will help us set and achieve better goals and avoid negative incentive effects, despite otherwise positive performance. We must meet or exceed the industry average to hit our target.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    47

 

 

VESTING OF 2017 LONG-TERM INCENTIVE PROGRAM (LTIP) PERFORMANCE STOCK UNIT GRANTS

 

In March 2017, the Compensation Committee approved grants of performance stock units, subject to a three-year performance period. The 2017-2019 performance cycle completed on December 31, 2019, but vesting remained subject to certification of performance results by the Compensation Committee.

 

The 2017 performance unit grants had two components. The performance goals were independent of each other and equally weighted for the relative ROIC growth goal and the relative pre-tax margin growth. Depending upon actual Company performance relative to these performance goals, the exact number of shares that could have vested ranged from 0 to 200% of the target award.

 

At 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 2017 performance unit grants.

 

During the performance period, we achieved a relative ROIC growth of -0.8% to a target of 0.2%, and resulted in a 77.3% payout. We achieved a -1.3% relative pre-tax margin growth, to a target of 0.1%, resulting in a 73.1% payout. With each achievement equally weighted, based on the Compensation Committee’s calculation of these performance measures, the 2017 PSU grants vested at 75.1%. The following table summarizes the performance results with respect to each of the performance measures applicable to the 2017 LTIP PSU grants.

 

Performance Measures - 2017-2019 Result Weight Vesting  
Relative ROIC Growth 77.3 50.0% 38.6  
Relative Pre-tax Margin Growth 73.1 50.0% 36.5  
    TOTAL 75.1 %

 

The following table summarizes the number of shares awarded for the 2017-2019 PSU grants and the number of shares that would have been paid out with respect to such grants for our named executive officers, based on the 75.1% vesting percentage, had the Compensation Committee certified the performance results.

 

Since these awards were subject to Compensation Committee certification at December 31, 2019, the awards are reflected as outstanding awards in the “Outstanding Equity Awards at Fiscal Year End” table.

 

In light of the global disruption due to Covid-19, and the impact to JetBlue, the Compensation Committee defer red certification of the 2017-2019 performance results in March (except for Mr. St. George, due to contractual obligations.)

 

  Vesting of 2017 Performance Unit Grants
Name Units at
Grant Date
(#)
Vesting
Percentage
(%)
Units Upon
Vesting
(#)
Robin Hayes 58,962 75.1 44,280
Stephen Priest 14,150 75.1 10,626
Joanna Geraghty 10,613 75.1 7,970
Easwaran Sundaram 7,075 75.1 5,313
Brandon Nelson(1)
Martin St. George 7,075 75.1 5,313
(1) Mr. Nelson was not an LTIP participant in 2017.

 

Other Compensation Policies and Information

 

Results of the 2019 Advisory Vote on Executive Compensation (“Say-on-Pay”)

 

At our 2019 annual meeting of stockholders, our stockholders were asked to approve, on an advisory basis, the Company’s fiscal 2018 named executive officers’ compensation (“say-on-pay”). Approximately 98.4% 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 continues to take into account stockholder feedback in making compensation decisions.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    48

 

 

All Other Compensation

 

Perquisites and Other Personal Benefits

 

We offer limited 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”), or our Amended and Restated 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” and “—Potential Payments Upon Termination or Change in Control” below.
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 three years. Our award agreements under the Amended and Restated 2011 Incentive Compensation Plan were amended in 2014 to include retirement provisions for retirement eligible crewmembers, which provide for continued vesting of RSUs and PSUs.

 

Tax Considerations

 

Starting in 2018, with exceptions only for compensation paid pursuant to certain binding contracts as described in Section 162(m) of the Code (Section 162(m)), the tax deduction for annual compensation of each of our named executive officers is limited to $1 million. Certain previously-available exceptions to the $1 million limitation for “performance-based pay” were eliminated for years after 2017. Although the Compensation Committee considers the impact of Section 162(m), it believes that stockholder interests are best served by not restricting the Compensation Committee’s discretion and flexibility in crafting the Company’s executive compensation program, even if non-deductible compensation expenses could result.

 

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.”

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    49

 

 

COMPENSATION COMMITTEE REPORT

 

The Compensation Committee has reviewed and discussed the “Compensation Discussion and Analysis” section with 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, 2019.

 

The Compensation Committee of JetBlue:

Virginia Gambale (Chair)

Sarah Robb O’Hagan

Thomas Winkelmann

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    50

 

 

SUMMARY COMPENSATION TABLE

 

The following table provides certain information concerning the compensation for services rendered to us during the years ended December 31, 2019, 2018 and 2017 by our named executive officers:

 

Name and
Principal Position
  Year   Salary
($)
  Bonus
($)(1)
  Stock Awards
($)(2)
  Non-Equity
Incentive
Compensation
($)(3)
  All Other
Compensation
($)(4)
  Total
($)
Robin Hayes   2019   598,333       2,549,990   787,200   20,000   3,955,523
Chief Executive Officer   2018   578,750       2,349,973   617,000   39,697   3,585,420
    2017   563,749   94,370   2,449,987   216,430   17,112   3,341,648
Stephen Priest   2019   472,917       1,174,982   434,500   22,858   2,105,257
Chief Financial Officer   2018   445,833       749,971   268,100   39,656   1,503,560
    2017   391,130   43,420   774,963   99,580   16,328   1,325,421
Joanna Geraghty   2019   535,833       1,424,979   510,100   17,257   2,488,169
President and Chief Operating Officer                            
  2018   470,417       1,124,966   304,100   34,239   1,933,722
Easwaran Sundaram   2019   444,167       549,979   254,400   25,262   1,273,808
Chief Digital and Technology Officer                            
  2018   434,166       499,976   185,100   35,925   1,155,167
Brandon Nelson(5)   2019   403,333       374,978   221,900   27,476   1,027,687
General Counsel and Corporate Secretary                            
                           
Martin St. George(6)   2019   434,167       599,979   146,850   24,714   1,205,710
Former Executive Vice President Chief Commercial Officer   2018   423,750       449,976   180,900   38,323   1,092,949
  2017   409,166   34,250   449,979   78,550   17,226   989,171

 

(1) Compensation reported under this column consists of signing bonuses and spot bonuses. Annual performance-based Cash Incentive Awards are reported above under the “Non-Equity Incentive Plan Compensation” column. Amounts reported for fiscal year 2017 represent discretionary adjustments of the non-equity incentive plan payouts for each named executive officer in excess of the performance achieved. See “Compensation Discussion and Analysis -- Annual Cash Incentive Awards” 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. The RSUs reported here, granted in 2019, are based on the Company’s performance in 2018. See the Company’s 2019 proxy statement filed with the SEC, at “Compensation Discussion and Analysis — Long-Term Equity Awards — Restricted Stock Units (RSUs),” beginning on p. 35 . With respect to the PSU award granted in 2019, which will be paid, if at all, based on the Company’s performance in years 2019-2021 and 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 2019 would be as follows: Mr. Hayes-$2,699,988, Mr. Priest-$1,399,972, Ms. Geraghty-$1,599,988, Mr. Sundaram-$299,972, Mr. Nelson-$299,972 and Mr. St. George-$499,988. Please refer to Note 7 on our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2019, 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 2019, 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 2019.
(3) Represents annual cash incentive bonus earned in 2019, 2018 and 2017, based upon each named executive officer’s achievement of certain specified annual performance targets. The amounts earned in 2019 were paid on February 20, 2020, the amount earned in 2018 were paid on February 20, 2019, and the amounts earned in 2017 were paid on February 20, 2018. See “Compensation Discussion and Analysis—Annual Incentive Bonuses” above.
(4) Represents Company 401(k) matching contributions under the JetBlue Airways Corporation Retirement Plan in which all of our crewmembers are eligible to participate, as well as life insurance premiums, positive space flights, Lift awards from our internal crewmember recognition program and executive physicals, if any. The 401(k) matching contribution for each of Mr. Hayes, Mr. Priest, Ms. Geraghty, Mr. Sundaram and Mr. Nelson and Mr. St. George was $14,000. See “Summary of Agreements with Other Named Executive Officers” at p.53.
(5) As previously announced by the Company, Mr. Nelson was appointed General Counsel and Corporate Secretary in November 2018; he was not a named executive officer prior to such appointment.
(6) Mr. St. George stepped down from his Executive Vice President and Chief Commercial Officer role on June 7, 2019. He transitioned to a senior advisor role through January 1, 2020.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    51

 

 

GRANTS OF PLAN-BASED AWARDS

 

The following table sets forth certain information, as of December 31, 2019, concerning individual grants of equity and non-equity plan-based awards made to the named executive officers during the fiscal year ended December 31, 2019:

 

        Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(1)
  Estimated Future Payouts Under
Equity Incentive Plan Awards(2)
  All Other
Stock
Awards:
Number of
  Closing
Market
  Grant Date
Fair Value
Name Grant Date   Threshold
($)
  Target
($)
  Maximum
($)
  Threshold
(#)
  Target
(#)
  Maximum
(#)
  Shares of
Stock or
Units
(#)(3)
  Price on
Date of
Grant
($/Sh)
  of Stock
and Option
Awards
($)(4)
(a)   (b)     (c)     (d)     (e)   (f)   (g)   (h)   (i)           (l)
Robin Hayes   2/25/2019                                 69,565   $ 17.25   $ 1,199,996
    4/12/2019                     39,612   79,225   158,450       $ 17.04   $ 1,349,994
        $ 375,000   $ 750,000   $ 1,500,000                            
Stephen   2/25/2019                                 27,536   $ 17.25   $ 474,996
Priest   4/12/2019                     20,539   41,079   82,158       $ 17.04   $ 699,986
        $ 190,000   $ 380,000   $ 760,000                            
Joanna   2/25/2019                                 36,231   $ 17.25   $ 624,985
Geraghty   4/12/2019                     23,474   46,948   93,896       $ 17.04   $ 799,994
        $ 243,000   $ 486,000   $ 972,000                            
Easwaran   2/25/2019                                 23,188   $ 17.25   $ 399,993
Sundaram   4/12/2019                     4,401   8,802   17,604       $ 17.04   $ 149,986
        $ 111,250   $ 222,500   $ 445,000                            
Brandon   2/25/2019                                 13,043   $ 17.25   $ 224,992
Nelson   4/12/2019                     4,401   8,802   17,604       $ 17.04   $ 149,986
        $ 101,250   $ 202,500   $ 405,000                            
Martin St.   2/25/2019                                 20,289   $ 17.25   $ 349,985
George   4/12/2019                     7,335   14,671   29,342       $ 17.04   $ 249,994
        $ 108,750   $ 217,500   $ 435,000                            

 

(1) Represents the annual cash incentive awards. The Threshold column reflects the minimum annual cash incentive award that would have been granted had we achieved minimum performance targets for 2019. The Target column reflects the award granted if we were to achieve all of our 2019 performance targets. See “Compensation Discussion and Analysis - Annual Cash Incentive Awards” above. The Maximum column reflects awards that would have been payable for our 2019 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 Cash Incentive Awards” above. Actual payouts are reported in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table.”
(2) Represents PSUs granted under our Amended and Restated 2011 Incentive Compensation Plan in 2019, which will be paid, if at all, based on the Company’s performance in years 2019-2021. 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. 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 3 of the “Outstanding Equity Awards at Fiscal Year-End” Table.
(3) Represents RSUs granted under our Amended and Restated 2011 Incentive Compensation Plan in 2019. 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 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 2019 Annual Report on Form 10-K for further discussion related to the assumptions used in our valuations of RSUs and PSUs.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    52

 

 

Summary of Employment Agreement with Mr. Hayes

 

On February 12, 2015, the Company and Mr. Hayes executed an employment agreement for Mr. Hayes as Chief Executive Officer and President of the Company. The agreement commenced on February 16, 2015, when Mr. Hayes became the Company’s CEO and President. On February 18, 2020, the Board announced that they had extended Mr. Hayes’ employment contract through July 31, 2022. The agreement, as amended, provides that, effective as of February 1, 2020, Mr. Hayes will be paid an annual salary at the rate of $625,000, an annual cash incentive awards as provided by the Company to its senior executives at a target of 150% of the base salary, both salary and bonus subject to the review and approval of the Board of Directors in its discretion. Mr. Hayes will continue to be eligible to receive an annual award of RSUs and an annual award of PSUs pursuant to his employment agreement, as amended, both pursuant to the Company’s equity compensation plans and related award agreements. The agreement provides for health, welfare and flight benefits as provided to other senior executive officers of the Company. The agreement provides for termination for cause, and for severance should Mr. Hayes be terminated during the term without cause. The agreement provides for 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.”

 

Effective April 1, 2020, Mr. Hayes agreed to a 50% reduction in his salary during the crisis as the Company grapples with the effects of Covid-19 on aviation and JetBlue.

 

Summary of Agreements with Other Named Executive Officers

 

In 2019, none of Mr. Priest, Ms. Geraghty, Mr. Sundaram or Mr. Nelson had employment agreements with the Company.

 

Mr. St. George stepped down as Executive Vice President and Chief Commercial Officer in June 2019. JetBlue and Mr. St. George entered into an agreement, dated July 15, 2019, under which Mr. St. George acted as a senior advisor through January 1, 2020. He was paid his annual salary for the senior advisor term. Mr. St. George will receive benefits under the JetBlue Airways severance plan, including salary continuation for 24 months and a pro-rated annual average bonus of $146,850. Mr. St. George’s equity awards continued to vest in accordance with their terms and conditions and he continued to receive all Company health and welfare benefits provided to crewmembers. Subject to the terms and conditions of the Company’s pass travel programs as may be amended from time to time, he and his eligible dependents received flight benefits on JetBlue.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    53

 

 

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, 2019:

 

        Stock Awards
Name   Grant Date   Number of Shares
or Units of Stock
That Have Not
Vested
(#)
  Market Value of
Shares or Units of
Stock That Have Not
Vested
($)
  Equity incentive plan
awards: number of
unearned shares, units
or other rights that have
not vested
(#)
  Equity incentive
plan awards: market
or payout value of
unearned shares, units
or other rights that
have not vested
($)
(a)   (1)   (g)   (h)(2)   (i)(3)   (j)
Robin Hayes   02/24/2017   20,440   $ 382,637          
    04/12/2017             58,962   $  1,103,769
    02/22/2018   31,974   $ 598,553          
    04/12/2018             69,053   $  1,292,672
    02/25/2019   69,565   $ 1,302,257          
    04/12/2019             79,225   $  1,483,092
Stephen Priest   02/24/2017   4,258   $ 79,710          
    04/12/2017   3,538   $ 66,231   14,150   $  264,888
    02/22/2018   12,790   $ 239,429          
    04/12/2018             17,902   $  335,125
    02/25/2019   27,536   $ 515,474          
    04/12/2019             41,079   $  768,999
Joanna Geraghty   02/24/2017   8,517   $ 159,438          
    04/12/2017             10,613   $  198,675
    02/22/2018   15,987   $ 299,277          
    04/12/2018             26,854   $  502,707
    08/24/2018   3,578   $ 66,980          
    02/25/2019   36,231   $ 678,244          
    04/12/2019             46,948   $  878,867
Easwaran Sundaram   02/24/2017   6,813   $ 127,539          
    04/12/2017             7,075   $  132,444
    02/22/2018   11,191   $ 209,496          
    04/12/2018             7,672   $  143,620
    02/25/2019   23,188   $ 434,079          
    04/12/2019             8,802   $  164,773

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    54

 

 

        Stock Awards
Name   Grant Date   Number of Shares
or Units of Stock
That Have Not
Vested
(#)
  Market Value of
Shares or Units of
Stock That Have Not
Vested
($)
  Equity incentive plan
awards: number of
unearned shares, units
or other rights that have
not vested
(#)
  Equity incentive
plan awards: market
or payout value of
unearned shares, units
or other rights that
have not vested
($)
(a)   (1)   (g)   (h)(2)   (i)(3)   (j)
Brandon Nelson   02/24/2017   2,555   $ 47,830          
    06/22/2017   224   $ 4,193          
    02/22/2018   5,756   $ 107,752          
    06/22/2018   878   $ 16,436          
    12/12/2018   3,148   $ 58,931          
    02/25/2019   13,043   $ 244,165          
    04/12/2019             8,802   $ 164,773
Martin St. George   02/24/2017   4,934   $ 92,364          
    04/12/2017             7,075   $ 132,444
    02/22/2018   9,262   $ 173,385          
    04/12/2018             7,672   $ 143,620
    02/25/2019   19,591   $ 366,744          
    04/12/2019             14,671   $ 274,641

 

(1) Please refer to the table below for the applicable vesting schedules of outstanding option, RSU and PSU awards.

 

  Grant Date   Vesting Schedule
  2/24/2017   One-third in three equal annual installments beginning on February 24, 2018
  4/12/2017   For Performance Awards, 3 year cliff vesting beginning on April 12, 2017 and subject to meeting certain performance goals for fiscal years 2017, 2018, 2019, payable in 2020. For Restricted Stock Unit awards, One-third in three equal annual installments beginning on April 12, 2018
  6/22/2017   One-third in three equal annual installments beginning on June 22, 2018
  2/22/2018   One-third in three equal annual installments beginning on February 22, 2019
  4/12/2018   3 year cliff vesting beginning on April 12, 2018 and subject to meeting certain performance goals for fiscal years 2018, 2019, 2020, payable in 2021
  6/22/2018   One-third in three equal annual installments beginning on June 22, 2019
  8/24/2018   One-third in three equal annual installments beginning on August 24, 2019
  12/12/2018   One-third in three equal annual installments beginning on December 12, 2019
  2/25/2019   One-third in three equal annual installments beginning on February 25, 2020
  4/12/2019   3 year cliff vesting beginning on April 12, 2019 and subject to meeting certain performance goals for fiscal years 2019, 2020, 2021 payable in 2022

 

(2) The amount listed in this column, Market Value of Shares or Units of Stock that have not vested, represents the product of the closing market price of the Company’s stock as of December 31, 2019 ($18.72) multiplied by the number of shares of stock subject to the award.
(3) For PSU awards granted in 2017 under our equity incentive plan, the actual number of shares earned will be based on achievement of performance metrics (Relative ROIC Growth and Relative Pre-tax Margin Growth) at the end of the applicable performance period, December 31, 2019, and as certified and approved by our Compensation Committee, see “Performance Stock Units (PSUs) -- Vesting of 2017 Long-Term Incentive Program Performance Unit Grants at p.48. The number of shares reported for the 2017 PSU awards (and the payout value) is based on achieving the target (100%) performance because as of December 31, 2019, the 2017 PSUs were tracking at between threshold and target performance. The actual number of shares earned will be payable in common stock in a range of 0% to 200% as certified and approved by our Compensation Committee, except for Mr. St. George, who will receive common stock based on performance achievement at 75.1% as certified by the Compensation Committee in March 2020 due to contractual obligations. For PSU awards granted in 2018 and 2019 under our equity incentive plan, the actual number of shares earned (if any) will be based on achievement of performance metrics (Relative ROIC Growth and Relative Pre-tax Margin Growth) at the end of the applicable performance period, December 31, 2020 for the 2018 PSUs and December 31, 2021 for the 2019 PSUs. The number of shares reported for the 2018 and 2019 PSU awards under our equity incentive plan (and the payout value) is based on achieving the target (100%) performance because as of December 31, 2019, the 2018 and 2019 PSUs were tracking at between threshold and target performance. Upon performance certification by our Compensation Committee at the end of the applicable performance period, the 2018 and 2019 PSUs will be payable in common stock, in a range of 0% to 200%.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    55

 

 

OPTION EXERCISES AND STOCK VESTED

 

The following table provides information concerning option exercises and vesting of performance stock unit awards and restricted stock unit awards during 2019 for each named executive officer:

 

    STOCK AWARDS(1) (2)
Name   Number of Shares
Acquired on
Vesting
(#)
Value Realized on
Vesting
($)
Robin Hayes   109,772 1,879,536
Stephen Priest   15,616 268,271
Joanna Geraghty   32,231 553,729
Easwaran Sundaram   25,271 433,878
Brandon Nelson   9,808 172,476
Martin St. George   23,260 402,307

 

(1) Shares vested consist of (1) vested RSUs and (2) PSUs for the 2016-2018 performance period that vested following the Compensation Committee’s certification of performance results in March 2019, at a performance level of 91.2%. We determined the value realized for the vesting of these shares using the fair market value of our common stock on the vesting date.
(2) No stock options were exercised in 2019.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    56

 

 

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

 

Each of our named executive officers may receive various payments if his or her 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 beginning on page 61, we provide estimates of the payments that our named executive officers would have received had their employment been terminated as of December 31, 2019, and a description of the separation payments payable to Mr. St. George, who stepped down in June 2019.

 

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. The Company has a severance plan that would govern the compensation payable upon the termination of our executives. As of December 31, 2019, none of Mr. Priest, Ms. Geraghty, Mr. Sundaram or Mr. Nelson had employment agreements with the Company.

 

Agreements Governing Termination

 

Potential Payments to Mr. Hayes upon Termination

 

We have an employment agreement, as amended, with Mr. Hayes, our President and Chief Executive Officer, until July 31, 2022. Under Mr. Hayes’s employment agreement, the agreement provides that, if Mr. Hayes were terminated without Cause, he would be paid as if eligible for severance under the Severance Plan (as defined below). Under Mr. Hayes’ employment agreement, if the Company were to terminate Mr. Hayes’ employment for Cause (as defined in the Severance Plan), or if Mr. Hayes were to resign from the Company, 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, 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 agreement, he would forfeit, as of the date of such breach, all of the payments and benefits described in this paragraph. If Mr. Hayes’ employment were terminated by reason of his death or Disability (as defined below),the Company would pay 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 the employment agreement, “Cause” means a conviction of or a plea of no contest to any felony or a crime involving moral turpitude or dishonesty; fraud or breach of Company policies that materially adversely affects JetBlue; intentional damage to JetBlue property or business; gross insubordination or incompetence; habitual neglect of his duties with JetBlue; or conduct that demonstrates gross unfitness to serve, including alcoholism or substance abuse. “Disability” means that Mr. Hayes is 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.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    57

 

 

Potential Payments to Other Named Executive Officers

 

As of December 31, 2019, 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).

 

For details of the payments made to Mr. St. George, see “Summary of Agreements with Other Named Executive Officers” at page 53.

 

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, 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.

 

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 in control date). For purposes of the Executive Plan, “cause” means a conviction of or a plea of no contest 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.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    58

 

 

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.”

 

Potential Payments in Connection with our Amended and Restated 2011 Incentive Compensation Plan

 

Under the Amended and Restated 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.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    59

 

 

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 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: (a) 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, (b) certain changes in the majority of the members of our Board of Directors, (c) 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 (d) 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. St. George, who ceased serving as a named executive officer in June 2019, 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, 2019. For Mr. St. George, actual amounts paid to him in connection with his separation are described below in the narrative immediately following this table. Potential payments to each of Ms. Geraghty, Messrs. Priest, Sundaram and Nelson 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 Executive Plan and 2011 Incentive Compensation Plan. None of Ms. Geraghty, Messrs. Priest, Sundaram and Nelson have an employment agreement with the Company. Values for restricted stock unit grants are based on our common stock closing price of $18.72 on the Nasdaq Global Select Market on December 31, 2019. 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.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    60

 

 

POTENTIAL POST-EMPLOYMENT COMPENSATION

 

    Multiple of
Base Salary
and Target
Bonus ($)(1)
  Pro-Rata
Annual
Cash
Incentive
Award(2)
  Continued or
Accelerated
Vesting of
RSUs
($)
  Continued or
Accelerated
Vesting of
PSUs
($)
  All Other
Compensation
($)
  Estimated
Tax Gross-Up
($)(3)
  Total
($)
Robin Hayes                            
Termination by the Company without “cause” or by the Crewmember for good reason under Severance Plan(4)   1,200,000   463,900   1,115,999   -   142,028       2,921,927
Termination for reasons of Death or Disability(5)       750,000   946,451   3,256,761           4,953,212
Termination for reasons of Retirement(6)                           -
Qualifying Termination after Change of Control (double trigger)(7)   2,700,000   750,000   2,283,447   3,879,533   86,336       9,699,316
Stephen Priest                            
Termination by the Company without “cause” or by the Crewmember for good reason under Severance Plan(4)   554,167   205,550   437,480   -   76,428       1,273,625
Termination for reasons of Death or Disability(5)           362,517   944,022           1,306,539
Termination for reasons of Retirement(6)                           -
Qualifying Termination after Change of Control (double trigger)(7)   1,710,000   380,000   900,844   1,369,012   86,207   1,626,172   6,072,235
Joanna Geraghty                            
Termination by the Company without “cause” or by the Crewmember for good reason under Severance Plan(4)   1,080,000   223,850   568,648   -   140,339       2,012,837
Termination for reasons of Death or Disability(5)           465,676   826,196           1,291,872
Termination for reasons of Retirement(6)                           -
Qualifying Termination after Change of Control (double trigger)(7)   2,052,000   486,000   1,203,939   1,580,249   85,271       5,407, 459
Easwaran Sundaram                            
Termination by the Company without “cause” or by the Crewmember for good reason under Severance Plan(4)   890,000   151,000   376,980   -   140,339       1,558,319
Termination for reasons of Death or Disability(5)           319,736   374,915           694,65 1
Termination for reasons of Retirement(6)                           -
Qualifying Termination after Change of Control (double trigger)(7)   1,335,000   222,500   771,114   440,837   85,271       2,854,72 2
Brandon Nelson                            
Termination by the Company without “cause” or by the Crewmember for good reason under Severance Plan(4)   742,500   129,100   195,505   -   130,339       1,197,44 4
Termination for reasons of Death or Disability(5)           163,335   54,874           218,209
Termination for reasons of Retirement(6)                           -
Qualifying Termination after Change of Control (double trigger)(7)   1,215,000   202,500   479,307   164,773   75,271       2,136,85 1

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    61

 

 

(1) As of December 31, 2019, 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, and based on titles and years of service, the named executive officers would be entitled to the following salary continuation amounts: Messrs. Hayes, Sundaram and Ms. Geraghty two (2) years; Mr. Nelson twenty-two (22) months and Mr. Priest fourteen (14) months. Mr. Hayes’ written employment agreement provides that, if terminated by the Company, he would receive compensation as provided for in the Severance Plan.
(2) As the assumed termination date for this table is December 31, 2019, the amounts listed do not reflect pro-ration. The Severance Plan provides for payment of an average annual cash incentive award equal to the average of the last two annual bonuses. If termination were to occur for reasons of death or disability, the payment represents target annual bonus for the year in which termination occurs for Mr. Hayes only, as outlined in his employment agreement. Under a change in control scenario, the payment represents a target annual cash incentive award for the year in which termination occurs, which is payable under the Executive Plan.
(3) 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 payments received by the individuals 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.
(4) As the assumed termination date for this table is December 31, 2019, the amounts listed do not reflect pro-ration. Under the terms of the Severance Plan, based on titles and years of service, the named executive officers would be entitled to the following salary continuation amounts: Messrs. Hayes, Sundaram and Ms. Geraghty two (2) years, Mr. Nelson twenty-two (22) months and Mr Priest fourteen (14) months and a bonus equal to the average of the last two annual bonuses pro-rated by the number of months completed in the calendar year of termination. Based on the RSU Agreement for terminations, each named executive officer would be entitled to the continued vesting of RSUs following the date of termination: 59,615 RSUs for Mr. Hayes, 23,270 RSUs for Mr. Priest, 30,377 for Ms. Geraghty, 20,138 for Mr. Sundaram and 10,444 RSUs for Mr. Nelson, all valued for the purpose of this table at the closing stock price on the last fiscal day of 2019 under the 2011 Incentive Compensation Plan. All other compensation assumes (1) $40,000 in outplacement services for Messrs. Hayes, Priest, Sundaram and Ms. Geraghty, and $30,000 in outplacement services for Mr. Nelson; (2) $82,000 assumed value of lifetime flights for: Messrs. Hayes, Sundaram, Nelson and Ms. Geraghty and $16,400 in flight benefits for Priest for 4 years (3) Employer costs for Medical, Dental, & Vision coverage in the amount of $20,028 for Messrs. Hayes and Priest and $18,339 for Messers. Sundaram, Nelson and Ms. Geraghty.
 (5) Assumes pro-rated vesting in the event of a termination due to death or disability with a termination date of December 31, 2019. Mr. Hayes would already have been paid his full annual salary; however, he would be entitled to any other accrued compensation which would be his annual bonus related to performance year 2019. Pursuant to the respective RSU and PSU Award Agreement death or disability provisions, each of Messrs. Hayes, Priest, Sundaram, Nelson and Ms., Geraghty, would receive pro-rated vesting of PSUs based on the Company’s performance metrics achieved through December 31, 2019 and prorated RSUs from the grant date through termination date due to death or disability: 50,558 RSUs and 173,972 PSUs for Mr. Hayes, 19,365 RSUs and 50,429 PSUs for Mr. Priest, 24,876 RSUs and 44,134 PSUs for Ms. Geraghty, 17,080 RSUs and 20,028 PSUs for Mr. Sundaram, and 8,725 RSUs and 2,931 PSUs for Mr. Nelson valued using the closing stock price on the last fiscal day of 2019 under the 2011 Incentive Compensation Plan.
(6) Assumes continued vesting in the event of a termination due to retirement with a termination date of December 31, 2019. There are no named executive officers who are retirement eligible as of December 31, 2019.
(7) Potential payments to each of Messrs. Hayes, Priest, Sundaram, Nelson and Ms. Geraghty, 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 Plan and 2011 Incentive Compensation Plan. None of Messrs. Priest, Sundaram, Nelson or Ms. Geraghty, have employment agreements with the Company. This table assumes accelerated vesting of all outstanding equity at the closing stock price on the last fiscal day of 2019: 121,979 RSUs and 207,240 PSUs for Mr. Hayes; 48,122 RSUs and 73,131 PSUs for Mr. Priest; 64,313 RSUs and 84,415 PSUs for Ms. Geraghty; 41,192 RSUs and 23,549 PSUs for Mr. Sundaram; and 25,604 RSUs and 8,802 PSUs for Mr. Nelson per the Change in Control provisions under the 2011 Incentive Compensation Plan. Under the Executive Plan, Messrs. Hayes, Priest, Sundaram, Nelson and Ms. Geraghty would be entitled to receive: (i) two (2) years of salary and two times (2x) target bonus for the year in which termination of employment occurs (ii) payment of accrued but unused paid time off as of the date of termination; (iii) a pro-rated portion of annual bonus for the year in which termination occurs, at the target level of achievement; (iv) payment for certain unreimbursed relocation expenses incurred (if any); and (v) reimbursement for all costs incurred in procuring health and dental care coverage for the named executive officer and their eligible dependents under COBRA for 18 months. During the reimbursement period, if an eligible employee were to become 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 would be eliminated. All other compensation assumes (1) $40,000 in outplacement services for Messrs. Hayes, Priest, Sundaram and Ms. Geraghty, and $30,000 in outplacement services for Mr. Nelson; (2) $8,200 in assumed value flight benefits for 2 years for each of the named executive officers.

 

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 except for those provided pursuant to a plan, policy or arrangement applicable to management employees generally, 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. St. George stepped down as an officer of JetBlue in June 2019. In connection with his resignation, JetBlue and Mr. St. George entered into an agreement, dated July 15, 2019, under which Mr. St. George acted as a senior advisor through January 1, 2020, being compensated at an annual salary rate of $435,000.

 

Mr. St. George was paid a pro-rated annual non-equity incentive bonus of $146,850 on February 20, 2020. Upon Mr. St. George’s departure, 33,787 unvested restricted stock units became subject to continued vesting per the terms in the applicable RSU agreement for retirement eligible crewmembers. Additionally, 29,418 PSUs were prorated in accordance with the retirement eligible terms of the applicable PSU award agreements and are subject to continued vesting and payable after certification of the performance metrics by the Board of Directors after the performance periods have lapsed. Mr. St. George is eligible for lifetime travel privileges on our flights for his years of service as an officer of the Company. The agreement with Mr. St. George included non-compete and similar restrictive covenants. The payments are reflected in the “All Other Compensation” column of the Summary Compensation Table.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    62

 

 

PAY RATIO OF CHIEF EXECUTIVE OFFICER COMPENSATION TO MEDIAN EMPLOYEE COMPENSATION

 

As required under the rules the SEC adopted under the Dodd-Frank Act, we are providing the following disclosure about the ratio of the annual total compensation of our Chief Executive Officer to the annual total compensation of our estimated median employee:

 

The total annual compensation of our estimated median employee who was employed on December 31, 2019 was $59,647
The total annual compensation of our Chief Executive Officer was $3,955,52 3
Based on this information, the ratio of the annual total compensation is reasonably estimated to be 66.3 to 1

 

The Company calculated the 2019 compensation for the median Employee using the same methodology used to calculate the total annual compensation of the Company’s CEO, as reported in the Summary Compensation Table. There were no material changes to the Company’s employee population or compensation programs for 2019 that the Company believed would significantly impact the pay ratio disclosure for 2019, as compared to 2018. Therefore, as permitted by the SEC’s rules, for purposes of determining the 2019 Pay Ratio, the Company used the same median employee who was identified for purposes of the Company’s fiscal 2018 disclosure.

 

To identify the median employee as of December 31, 2018, we used a consistently applied compensation measure (“CACM”). We utilized information from Box 5 of Form W-2. We performed our calculations as of December 31, 2018 which is our measurement date, because employee census and compensation information are readily available on that date. We did not annualize the total cash compensation paid to permanent employees who commenced work with us during 2018. No cost of living adjustments were applied. We excluded approximately 617 non-U.S. employees, as permitted under the de minimus exception to the rules. The countries from which the excluded employees come are: Dominican Republic (111), Antigua (5), Aruba (6), Bermuda (3), Colombia (11), Barbados (5), Cancun (1), St. Maarten (5), Costa Rica (20), Curacao (1), Cayman Islands (1), Grenada (1), Jamaica (35), Liberia (4), Peru (2), Mexico (4), Bahamas (3), Trinidad (4), Haiti (8), Turks and Caicos (1), Ecuador (2), St. Croix (2), St. Thomas (2), St. Lucia (1), Puerto Rico (379).

 

The total number of U.S. employees and non-U.S. employees were 23,683 and 617, respectively, before taking into account such exclusions and for purposes of calculating the total compensation of that employee as we alculate total compensation for our named executive officers in the Summary Compensation Table.

 

Our Compensation practices and programs ensure compensation programs are fair and equitable and are aligned with our business objectives. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, exclusions and assumptions that reflect their compensation practices. As such, the pay ratio reported above may not be comparable to the pay ratio reported by other companies, even those in a related industry or of a similar size and scope. Other companies may have different employment practices, regional demographics or may utilize different methodologies and assumptions in calculating their pay ratios.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    63

 

 

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 19, 2020, 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 19, 2020, 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.”

 

Executive Officers and Directors Name of Beneficial Owner   Common Stock Beneficially
Owned and Shares
Individuals Have the Right
to Acquire within 60 Days(1)
  Total(2)   Percentage of Class
Robin Hayes   488,295   823,652   *
Stephen Priest   33,916   172,895   *
Joanna Geraghty   163,898   323,422   *
Easwaran Sundaram   117,127   189,128   *
Brandon Nelson   6,441   48,190    
Basil Ben Baldanza       16,234   *
Peter Boneparth       69,247   *
Virginia Gambale       76,247   *
Ellen Jewett       57,345   *
Teri McClure       8,895    
Joel Peterson   451,008   527,255   *
Sarah Robb O’Hagan       16,234   *
Vivek Sharma       8,698    
Frank Sica   38,644   114,891   *
Thomas Winkelmann       44,361   *
All executive officers and directors as a group   1,311,312   2,513,428   .49% .93%
5% Stockholders Name of Beneficial Owner            
BlackRock Inc.(3)        25,515,554   9.46%
PRIMECAP Management Company(4)        22,475,275   8.33%
The Vanguard Group(5)        29,837,136   11.06%

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    64

 

 

* 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 19, 2020 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. 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 19, 2020, .49% of the outstanding common stock. A total of 269,707,459 shares of common stock were outstanding on March 19, 2020, pursuant to rule 13d-3(d)(1) under 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 19, 2020. In light of the global disruption due to Covid-19 and the impact to JetBlue, in March, the Compensation Committee determined to defer certifying the 2017-2019 performance results. As such the 2017-2019 performance stock units are reflected at target. 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 0.93% of the outstanding common stock.
(3) The information reported is based on a Schedule 13G/A, as filed with the SEC on February 5, 2020, in which BlackRock, Inc. and certain of its subsidiaries reported that it had sole voting power 24,550,039 shares and sole dispositive power over 25,515,554 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, 2020, in which PRIMECAP Management Company reported that it held sole voting power over 21,574,572 shares and sole dispositive power over 22,475,275 shares. The principal business address of PRIMECAP Management Company is 177 East Colorado Blvd., 11th fl. Pasadena, CA 91105.
(5) The information reported is based on a Schedule 13G/A, as filed with the SEC on February 10, 2020, in which The Vanguard Group reported that it held sole voting power over 113,836 shares and sole dispositive power over 29,725,218 shares and shared dispositive power over 111,918 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 111,918 shares of common stock of the Company as a result of its serving as investment manager of collective trust accounts. According to the Schedule 13G/A, Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 1,918 shares of the Company as a result of its serving as investment manager of Australian investment offerings. The principal business address of The Vanguard Group is 100 Vanguard Boulevard, Malvern, PA 19355.

 

Section 16 (a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the rules promulgated thereunder require our executive officers, directors and persons who beneficially own more than 10% 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, three forms 4 were filed late during the year ended December 31, 2019 due to administrative error.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    65

 

 

MANAGEMENT PROPOSAL 3

TO APPROVE THE JETBLUE AIRWAYS CORPORATION 2020 OMNIBUS EQUITY INCENTIVE PLAN

 

We currently provide stock-based compensation to non-employee directors, employees (whom we call crewmembers) and consultants under the Amended and Restated JetBlue Airways Corporation 2011 Incentive Compensation Plan, which we refer to as the 2011 ICP. As of March 19, 2020, there were 8,923,684 shares of our common stock remaining available for future grants under the 2011 ICP. As of that date, there were no shares subject to outstanding option awards, and 3,252,782 shares subject to outstanding restricted unit awards under the 2011 ICP. By its terms, the 2011 ICP expires on May 26, 2021. Consistent with good governance practices, we are seeking approval now for the expiring plan. JetBlue only has the 2011 Plan and the 2011 JetBlue Crewmember Stock Purchase Plan.

 

Our Board of Directors believes that the 2011 ICP has contributed significantly to our success by enabling us to attract and retain the services of highly qualified non-employee directors, crewmembers and consultants. Because our success is largely dependent upon the judgment, interest and special efforts of these individuals, we want to continue to provide stock-based incentive awards to recruit, motivate and retain these individuals. Accordingly, on March 23, 2020, the Board of Directors adopted, subject to stockholder approval, the JetBlue Airways Corporation 2020 Omnibus Equity Incentive Plan, which we refer to as the 2020 Incentive Plan. If our stockholders approve the 2020 Incentive Plan, no additional grants or awards will be made under the 2011 ICP on or after the date of the annual meeting, but the awards outstanding under the 2011 ICP will remain in effect in accordance with their terms. We are seeking stockholder approval for the 2020 Incentive Plan to issue up to 10,500,000 shares of our common stock, consisting of approximately 1,600,000 new shares and shares from the 2011 Plan.

 

The 2020 Incentive Plan is intended to promote our long-term success and increase stockholder value by attracting, motivating and retaining directors, crewmembers and consultants. To achieve this purpose, the 2020 Incentive Plan allows the flexibility to grant or award stock options, stock appreciation rights, restricted stock awards, restricted stock units, deferred stock units, performance stock awards, performance stock unit awards, other stock-based awards, dividend equivalents and cash-based awards to eligible individuals. No awards have been made under the 2020 Incentive Plan. The 2020 Incentive Plan will become effective on the date it is approved by the affirmative vote of the holders of a majority of the shares of common stock present in person or represented by proxy at the annual meeting. Shares held by brokers who do not have discretionary authority to vote on this proposal and who have not received voting instructions from the beneficial owners are not counted or deemed to be present or represented for the purpose of determining whether this proposal has been approved. Abstentions are treated as shares present or represented and are counted in the tabulations of the votes cast on this proposal. Abstentions have the same effect as voting against this proposal. If our stockholders do not approve the 2020 Incentive Plan within 12 months of the date the Board of Directors approves the 2020 Incentive Plan, the 2020 Incentive Plan will terminate.

 

Some of the terms of the 2020 Incentive Plan that are intended to protect and promote the interests of the Company’s stockholders are:

 

Limit on total shares available for future awards – The maximum number of new shares of common stock that would be available for awards under the 2020 Incentive Plan, 1,600,000 shares, would represent approximately 0.59 percent of the Company’s outstanding shares of common stock on March 19, 2020;
Certain shares not available for future awards – Any shares used by a participant to pay the exercise price or required tax withholding for an award may not be available for future awards under the 2020 Incentive Plan;
No discounted options or stock appreciation rights – All stock options and stock appreciation rights must be granted with an exercise price or base price of not less than the fair market value of the common stock on the grant date; as a result, the 2020 Incentive Plan will prohibit discounted options or stock appreciation rights;
Prohibition on repricing – The 2020 Incentive Plan prohibits the repricing of stock options and stock appreciation rights (and other actions that have the effect of repricing) without stockholder approval;
Plan administration – The Compensation Committee, comprised solely of non-employee directors, will administer the 2020 Incentive Plan;
Double trigger change in control provisions – Generally speaking, if outstanding awards under the 2020 Incentive Plan are assumed or substituted by an acquirer or related corporation in a change in control of the Company, those awards will not immediately vest on a “single trigger” basis, but would only accelerate if the holder is terminated without cause or quits for good reason (as those terms are defined in the 2020 Incentive Plan) within 18 months following the change in control;

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    66

 

 

Awards will have a minimum vesting requirement of at least one year – The 2020 Incentive Plan provides that awards granted under the 2020 Incentive Plan restricted stock and restricted stock units awarded to crewmembers will vest over a period not shorter than one year (or, in the case of those awards that vest upon the achievement of performance goals, a minimum performance period of one year), with limited exceptions; our restricted stock unit awards generally vest in three equal installments over a three year period.
Forfeiture provisions – The 2020 Incentive Plan has forfeiture provisions, whereby participants who engage in activity contrary to the interests of the Company or benefit from financial results that are subsequently restated under defined circumstances can be required to forfeit their awards under the 2020 Incentive Plan; and
Limits on transferability of awards – The 2020 Incentive Plan does not permit options or other awards to be transferred to third parties for value or other consideration unless approved by our stockholders.

 

Description of the 2020 Incentive Plan

 

The principal features of the 2020 Incentive Plan are summarized below. We encourage you to read the entire proposed 2020 Incentive Plan, which is attached as Appendix B to this Proxy Statement, for a full statement of its legal terms and conditions. If there is any conflict or inconsistency between this summary and the provisions of the 2020 Incentive Plan, the provisions of the 2020 Incentive Plan will govern.

 

Administration

 

The Compensation Committee will have discretionary authority to operate, manage and administer the 2020 Incentive Plan in accordance with its terms. The Compensation Committee will determine the non-employee directors, crewmembers, and consultants who will be granted awards under the 2020 Incentive Plan, the size and types of awards, the terms and conditions of awards and the form and content of the award agreements representing awards. The Compensation Committee will be authorized to establish, administer and waive terms, conditions and performance goals of outstanding awards and to accelerate the vesting or exercisability of awards, in each case, subject to limitations contained in the 2020 Incentive Plan. The Compensation Committee will interpret the 2020 Incentive Plan and award agreements and will have authority to correct any defects, supply any omissions and reconcile any inconsistencies in the 2020 Incentive Plan and/or any award agreements. The Compensation Committee’s decisions and actions concerning the 2020 Incentive Plan will be final, binding and conclusive. Within the limitations of the 2020 Incentive Plan and applicable law, the Compensation Committee may delegate its responsibilities under the 2020 Incentive Plan to persons selected by it, and the Board of Directors will be permitted to exercise all of the Compensation Committee’s powers under the 2020 Incentive Plan.

 

The Compensation Committee is comprised of at least two members of the Board of Directors, each of whom is selected by the Board of Directors and will satisfy independence criteria established by the Board of Directors and additional regulatory requirements, including the listing standards of the Nasdaq Stock Exchange. We currently expect that members of the Compensation Committee who will act as the Plan Administrator in May 2020 will be: Virginia Gambale (Chair), Teri McClure, Sarah Robb O’Hagan and Thomas Winkelmann, each of whom is a non-employee director of the Company.

 

Shares Subject to the 2020 Incentive Plan

 

A total of 10,500,000 shares of our common stock will be available for issuance under the 2020 Incentive Plan subject to adjustment for certain changes in our capital structure, as described below under “Adjustment Provisions.” The shares of common stock that may be issued under the 2020 Incentive Plan will be authorized and unissued shares, shares held in treasury by the Company, shares purchased on the open market or by private purchase or any combination of the foregoing. Shares underlying awards that are forfeited, cancelled, expire unexercised or settled for cash would be available for future awards under the 2020 Incentive Plan. Any shares used to pay the option price of an option or other purchase price of an award will not be available for future awards. If shares subject to an award are not delivered to a participant because the shares are withheld to pay the option price, purchase price or tax withholding obligations of the award, or a payment upon the exercise of a stock appreciation right is made in shares, the number of shares that are not delivered to the participant will not be available for future awards. If we acquire or combine with another company, any awards that may be granted under the 2020 Incentive Plan in substitution or exchange for outstanding stock options or other awards of that other company will not reduce the shares available for issuance under the 2020 Incentive Plan, but the shares available for any incentive stock options granted under the 2020 Incentive Plan will be limited to 1,000,000 shares of common stock, adjusted as otherwise stated above. On March 19, 2020, the closing price of our common stock on the Nasdaq Global Select Market was $7.60.

 

Participation

 

The Compensation Committee may grant awards under the 2020 Incentive Plan to (a) crewmembers and consultants of us and our affiliates, (b) those individuals who have accepted an offer of employment or consultancy from us or our affiliates, and (c) our non-employee directors. However, only crewmembers of the Company or its subsidiaries will be eligible to receive “incentive stock options” under the 2020 Incentive Plan.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    67

 

 

Stock Options

 

A stock option is the right to purchase a specified number of shares of common stock in the future at a specified exercise price and subject to the other terms and conditions specified in the option agreement and the 2020 Incentive Plan. Stock options granted under the 2020 Incentive Plan will be either “incentive stock options,” which may be eligible for special tax treatment under the Internal Revenue Code, or options other than incentive stock options, referred to as “nonqualified stock options,” as determined by the Compensation Committee and stated in the option agreement. The number of shares covered by each option will be determined by the Compensation Committee, but no participant may be granted in any fiscal year options for more than 2,500,000 shares of common stock. The exercise price of each option is set by the Compensation Committee but cannot be less than 100% of the fair market value of the common stock at the time of grant (or, in the case of an incentive stock option granted to a 10% or more stockholder of the Company, 110% of that fair market value). Options granted under the 2020 Incentive Plan in substitution or exchange for options or awards of another company involved in a corporate transaction with the Company will have an exercise price that is intended to preserve the economic value of the award that is replaced. The fair market value of our common stock generally means the closing price of the common stock on the Nasdaq Stock Exchange on the trading day immediately preceding the option grant date. The exercise price of any stock options granted under the 2020 Incentive Plan may be paid by check, or, with the Compensation Committee’s approval, shares of our common stock already owned by the option holder, a cashless broker-assisted exercise that complies with law, withholding of shares otherwise deliverable to the option holder upon exercise of the option, or any other legal method approved or accepted by the Compensation Committee in its discretion.

 

Options will become exercisable and expire at the times and on the terms established by the Compensation Committee. In its discretion, the Committee may allow a participant to exercise an option that is not otherwise exercisable and receive unvested shares of restricted stock having a period of restriction analogous to the exercisability provisions of the option. In no event may an option, whether or not an incentive stock option, be exercised later than the tenth anniversary of the grant date. However, if the exercise of an option (other than an incentive stock option) on its scheduled expiration date would violate applicable law, the option may be extended until its exercise would not violate law. Options generally terminate when the holder’s employment or service with us terminates. However, the Compensation Committee may determine in its discretion that an option may be exercised following the holder’s termination, whether or not the option is exercisable at the time of such termination. In no event may an option be exercised after the original term of the option as set forth in the award agreement, unless the participant’s exercise of an option (other than an incentive stock option) on its expiration date would violate applicable law, in which case the exercise period may be extended up to thirty days. The Compensation Committee has the full power and authority to determine the terms and conditions that will apply to any options upon a termination of service.

 

Stock Appreciation Rights

 

Stock appreciation rights, or SARs, may be granted under the 2020 Incentive Plan alone or contemporaneously with stock options granted under the plan. SARs are awards that, upon their exercise, give the holder a right to receive from us an amount equal to (1) the number of shares for which the SAR is exercised, multiplied by (2) the excess of the fair market value of a share of our common stock on the exercise date over the grant price of the SAR. The grant price of a SAR cannot be less than 100% of the fair market value of our common stock on the grant date of such SAR. Payment of the amount due upon the exercise of a SAR will be made in shares or cash having a fair market value, as of the date of the exercise, equal to such amount. SARs will become exercisable and expire at the times and on the terms established by the Compensation Committee, subject to the same maximum time limits as are applicable to options granted under the 2020 Incentive Plan. The number of shares covered by each SAR will be determined by the Compensation Committee, but no participant may be granted in any fiscal year SARs covering more than 2,500,000 shares of our common stock.

 

Restricted Stock and Restricted Stock Units

 

Restricted stock awards are shares of our common stock that are awarded to a participant subject to the satisfaction of the terms and conditions established by the Compensation Committee. Restricted stock awards may be made with or without the requirement that the participant make a cash payment in exchange for, or as a condition precedent to, the completion of the award and the issuance of shares of restricted stock. Until the applicable restrictions lapse (referred to as the period of restriction), shares of restricted stock are subject to forfeiture and may not be sold, assigned, pledged or otherwise disposed of by the participant who holds those shares. Restricted stock units are denominated in units of shares of our common stock, except that no shares are actually issued to the participant on the grant date. When a restricted stock unit award vests upon expiration of the period of restriction, the participant is entitled to receive a share of our common stock. Vesting of restricted stock awards and restricted stock units may be based on continued employment or service and/or satisfaction of performance goals or other conditions established by the Compensation Committee. An award of restricted stock or restricted stock units may vest over a period of time, but not less than one year, during which the participant must remain in employment or service, except that the award may vest earlier in cases of retirement, death or disability, as the Compensation Committee determines, or on a change in control, as provided in the 2020 Incentive Plan. The Compensation Committee is generally not permitted otherwise to accelerate the vesting of restricted stock or restricted stock units. However, the 2020 Incentive Plan permits the Compensation Committee to make awards of restricted stock and/or restricted stock units that have vesting conditions of less than one year with respect an aggregate of no more than 5% of the maximum number of shares authorized to be issued under the 2020 Incentive Plan. A recipient of restricted stock will have the rights of a stockholder during the period of restriction, including the right to receive any dividends,

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    68

 

 

which may be subject to the same restrictions as the restricted stock. A recipient of restricted stock units will have the rights of a stockholder only as to shares that are actually issued to the participant upon expiration of the period of restriction, and not as to shares subject to the restricted stock units that are not actually issued to the participant. The number of shares of restricted stock and/or restricted stock units granted to a participant will be determined by the Compensation Committee, but no participant may be granted in any fiscal year shares of restricted stock and/ or restricted stock units covering more than 2,000,000 shares of our common stock. The Compensation Committee has the full power and authority to determine the terms and conditions that will apply to any unvested shares of restricted stock and unvested restricted stock units upon a termination of service.

 

Deferred Stock Units

 

Deferred stock units are denominated in units of shares of our common stock, except that no shares are actually issued to the participant on the grant date. When a deferred stock unit award vests upon expiration of the period of restriction, the participant is entitled to receive a share of our common stock. Vesting of deferred stock units may be based on continued service and/or satisfaction of performance goals or other conditions established by the Compensation Committee. An award of deferred stock units may vest over a period of time, not less than one year, that is six months following the month in which the participant departs from our board, except that the award may vest earlier on a change in control, as provided in the 2020 Incentive Plan. The Compensation Committee is generally not permitted otherwise to accelerate the vesting of deferred stock units. However, the 2020 Incentive Plan permits the Compensation Committee to make awards of deferred stock units that have vesting conditions of less than one year with respect an aggregate of no more than 5% of the maximum number of shares authorized to be issued under the 2020 Incentive Plan. Following the end of the restricted period, a deferred stock unit may be paid in cash, shares, other securities or other property, as determined in the sole discretion of the Compensation Committee. A recipient of deferred stock units may be entitled to dividend equivalent rights for deferred stock units that have vested, otherwise the dividend equivalents will accumulate and be paid upon vesting of the deferred stock units. A recipient of deferred stock units have the rights of a stockholder only as to shares that are actually issued to the participant upon delivery of the underlying shares, and not as to shares subject to the deferred stock units that are not actually issued to the participant. The number of deferred stock units granted to a participant will be determined by the Compensation Committee, and if the participant is a non-employee director, the number of deferred stock units granted in any fiscal year, together with any cash-based retainer, meeting, and other fees paid to such participant during the calendar year may not exceed $750,000.

 

Other Stock-Based Awards

 

The Compensation Committee may grant to participants other stock-based awards under the 2020 Incentive Plan, which are valued in whole or in part by reference to, or otherwise based on, shares of our common stock. The number of shares and form of any other stock-based award will be determined by the Compensation Committee. Other stock-based awards will be paid in shares of our common stock. The terms and conditions, including vesting conditions, of these awards will be established by the Compensation Committee when the award is made. The Compensation Committee will determine the effect of a termination of employment or service on a participant’s other stock-based awards.

 

Cash-based Awards

 

The Compensation Committee may grant cash-based awards to participants under the 2020 Incentive Plan. A cash-based award entitles a participant to receive a payment in cash upon the attainment of applicable performance goals, and/or satisfaction of other terms and conditions, determined by the Compensation Committee. The aggregate amount of any cash-based award in any calendar year may not exceed $5,000,000, determined as of the date of the grant. The Compensation Committee will determine the terms and conditions, including the effect of a termination of employment or service of the participant’s cash-based award.

 

Performance Compensation Awards

 

In the Compensation Committee’s discretion, restricted stock awards, restricted stock units, other stock-based awards and cash-based awards may be subject to performance conditions (referred to in this summary as performance compensation awards). These performance compensation awards will be conditioned on the achievement by the Company or its affiliates, divisions or operational units, or any combination of the foregoing, of objectively determinable performance goals, based on one or more performance measures over a specified performance period. The performance measures may be used on an absolute or relative basis, as compared to the performance of a selected group of peer companies, a published or special index or various stock market indices, each as determined in the sole discretion of the Compensation Committee.

 

After the end of the performance period, the Compensation Committee will determine and certify in writing the extent to which the performance goals have been achieved and the amount of the performance compensation award earned by the participant. The Compensation Committee may, in its discretion, reduce or eliminate, but may not increase, the amount of a performance compensation award otherwise payable to a participant. The Compensation Committee may not waive the achievement of performance goals applicable to these awards (except in the case of the participant’s death, disability or a change in control of the Company). Any earned portion of a performance compensation award may be paid in the form of cash, shares, or a combination of the two.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    69

 

 

The Compensation Committee may, to the extent permitted by law, require or allow participants to defer receipt of all or part of any cash or shares subject to their performance compensation awards in accordance with the procedures established by the Compensation Committee.

 

Transferability of Awards

 

Options, SARs, unvested restricted stock and other awards under the 2020 Incentive Plan may not be sold or otherwise transferred except in the event of a participant’s death to his or her designated beneficiary or by will or the laws of descent and distribution, unless otherwise determined by the Compensation Committee. The Compensation Committee may permit awards other than incentive stock options and any related SARs to be transferred for no consideration. Options and other awards under the 2020 Incentive Plan may not be transferred to third parties for value or other consideration unless approved by the stockholders.

 

Change in Control

 

If within one year following a change in control, a participant’s employment or service with the Company terminates by reason of death, disability, retirement, without cause, or for good reason, all outstanding awards will vest and become immediately exercisable and payable, with all restrictions lifted. The Compensation Committee may provide in any award agreement, or, in the event of a change in control, take actions as it deems appropriate, to provide for the acceleration of the exercisability, vesting and/or settlement in connection with such change in control of each or any outstanding award (or a portion thereof). In the event of a change in control, without any participant consent, the Compensation Committee may provide that:

 

(1) With respect to all awards, it be assumed or substituted by the surviving entity;
(2) with respect to options and SARs, for a period of at least 15 days prior to the change in control, any options or SARs be exercisable as to all shares subject to the option or SAR, and that upon the occurrence of the change in control, such option or SAR will terminate and be of no further force and effect;  
(3) with respect to awards not previously exercised or settled, it be cancelled in exchange for a payment in cash, stock or other property, in an amount equal to the fair market value of the consideration to be paid per share in the change in control, reduced by the exercise or purchase price per share under the applicable award; and  
(4) with respect to performance compensation awards, (1) those relating to performance periods ending prior to the change in control that have been earned but not paid be immediately payable, (2) all then-in-progress performance periods for end, and either (A) the participants be deemed to have earned an award equal to their target award opportunity for the performance period in question, or (B) at the Compensation Committee’s discretion, the Compensation Committee will determine the extent to which performance criteria have been met with respect to each performance compensation award, if at all, (3) the Company pay to each participant their partial or full performance compensation award in cash, shares or other property as determined by the Compensation Committee within 30 days of the change in control based on the change in control consideration, or (4) it be terminated and canceled for no consideration.  

 

The Compensation Committee may vary the treatment of awards among participants, and among awards granted to a participant, in exercising its discretion upon a change in control, subject to applicable laws and regulations.

 

Adjustments

 

In the event that the Compensation Committee determines that any dividend or other distribution, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split- up, spin-off, combination, repurchase or exchange of shares or other securities of the Company, issuance of warrants or other rights to purchase shares or other securities of the Company, or other similar corporate transaction or event affects the shares, then the Compensation Committee will, in an equitable and proportionate manner: (1) adjust the aggregate number of shares that may be granted under the 2020 Incentive Plan, and the number of shares subject to outstanding awards, (2) adjust the grant or exercise price of any awards, and the limits on the number of shares or awards that may be granted to participants in any calendar year, (3) provide for an equivalent award in respect of securities of the successor of any merger, consolidation or other transaction or event having a similar effect, or (4) make a cash payment to participants in respect of an outstanding award.

 

Amendment and Termination

 

The Board of Directors may amend, alter, suspend or terminate the 2020 Incentive Plan. However, no amendment, alteration, suspension or termination of the 2020 Incentive Plan may be made without the approval of the Company’s stockholders to the extent such approval is required by any applicable law, tax rules, stock exchange rules or accounting rules.

 

The Compensation Committee may unilaterally amend or alter the terms of any outstanding award, but no amendment may be inconsistent with the terms of the 2020 Incentive Plan and no amendment or alteration of an award may materially impair the previously accrued rights of the participant to whom the award was granted without the participant’s consent, except any amendment to comply with applicable law, tax rules, stock exchange rules or accounting rules. The Compensation Committee may make equitable and proportionate adjustments in the terms and conditions of, and the criteria included in, awards in recognition of unusual or nonrecurring events affecting the Company and any of its subsidiaries or affiliates, or the financial statements of the Company or any of its subsidiaries or affiliates, or the changes in applicable laws, regulations or accounting principles.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    70

 

 

Duration of 2020 Incentive Plan

 

If the 2020 Incentive Plan is approved by our stockholders, the 2020 Incentive Plan will become effective as of the date of the annual meeting and will continue in effect until all shares of our common stock available under the 2020 Incentive Plan are delivered and all restrictions on those shares have lapsed, unless the 2020 Incentive Plan is terminated earlier by the Board of Directors. No awards may be granted under the 2020 Incentive Plan on or after the 10th anniversary of the date the 2020 Incentive Plan is approved by our stockholders.

 

Recoupment of Awards

 

All awards granted and any payments made under the 2020 Incentive Plan will be subject to clawback or recoupment as permitted or mandated by applicable laws, rules, regulations or Company policy as enacted, adopted or modified from time to time.

 

Non-United States Participants

 

The Compensation Committee may grant awards to, and establish modifications, amendments, procedures and subplans for, eligible individuals who are non-United States nationals, reside outside the United States, are compensated from a payroll maintained outside the United States, or are subject to non-United States legal or regulatory provisions, on terms and conditions different from those otherwise specified in the 2020 Incentive Plan to foster and promote achievement of the plan’s purposes and comply with those non-United States legal or regulatory provisions.

 

Tax Withholding Obligations

 

The 2020 Incentive Plan authorizes us and our affiliates to withhold all applicable taxes from any award or payment under the 2020 Incentive Plan and to take other actions necessary or appropriate to satisfy those tax obligations. Subject to applicable law, a participant may (unless disallowed by the Compensation Committee) elect to satisfy these tax obligations by: (1) electing to have the Company withhold shares otherwise deliverable under the award or (2) tendering shares of our common stock that the participant already owns and either purchased in the open market or has held for at least 6 months, in each case based on the fair market value of those shares on a date determined by the Compensation Committee.

 

Certain Federal Income Tax Consequences

 

The following is a brief summary of certain significant United States Federal income tax consequences under the Internal Revenue Code, as in effect on the date of this summary, applicable to the Company and plan participants in connection with awards under the 2020 Incentive Plan. This summary assumes that all awards will be exempt from, or comply with, the rules under Section 409A of the Internal Revenue Code regarding nonqualified deferred compensation. If an award constitutes nonqualified deferred compensation and fails to comply with Section 409A, the award will be subject to immediate taxation and tax penalties in the year the award vests. This summary is not intended to be exhaustive, and, among other things, does not describe state, local or non-United States tax consequences, or the effect of gift, estate or inheritance taxes. References to “the Company” in this summary of tax consequences mean JetBlue Airways Corporation, or any affiliate of JetBlue Airways Corporation that employs or receives the services of a recipient of an award under the 2020 Incentive Plan, as the case may be.

 

The grant of options under the 2020 Incentive Plan will not result in taxable income to the recipient of the options or an income tax deduction for the Company. However, the transfer of our common stock to an option holder upon exercise of his or her option may or may not give rise to taxable income to the option holder and a tax deduction for the Company depending upon whether such option is a nonqualified stock option or an incentive stock option.

 

The exercise of a nonqualified stock option by an option holder generally results in immediate recognition of taxable ordinary income by the option holder and a corresponding tax deduction for the Company in an amount equal to the fair market value of the shares of our common stock purchased, on the date of such exercise, exceeds the aggregate exercise price paid. Any appreciation or depreciation in the fair market value of those shares after the exercise date will generally result in a capital gain or loss to the holder at the time he or she disposes of those shares.

 

The exercise of an incentive stock option by the option holder is exempt from income tax, although not from the alternative minimum tax, and does not result in a tax deduction for the Company if the holder has been an crewmember of the Company at all times beginning with the option grant date and ending three months before the date the holder exercises the option (or twelve months in the case of termination of employment due to disability). If the option holder has not been so employed during that time, the holder will be taxed as described above for nonqualified stock options. If the option holder disposes of the shares purchased more than two years after the option was granted and more than one year after the option was exercised, then the option holder will recognize any gain or loss upon disposition of those shares as capital gain or loss. However, if the option holder disposes of the shares prior to satisfying these holding periods (known as a “disqualifying disposition”), the option holder will be obligated to report as taxable ordinary income for the year in which that disposition occurs the excess, with certain adjustments, of the fair market value of the shares disposed of, on the date the incentive stock option was exercised, over the exercise price paid for those shares. The Company would be entitled to a tax deduction equal to that amount of ordinary income reported by the option holder. Any additional gain realized by the option holder on the disqualifying disposition would be capital gain. If the total amount realized in a disqualifying disposition is less than the exercise price of the incentive stock option, the difference would be a capital loss for the holder.

 

The grant of SARs does not result in taxable income to the recipient of a SAR or a tax deduction for the Company. Upon exercise of a SAR, the amount of any cash the participant receives (before applicable tax withholdings) and the fair market value as of the exercise date of any common stock received are taxable to the participant as ordinary income and deductible by the Company.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    71

 

 

A participant will not recognize any taxable income upon the award of shares of restricted stock which are not transferable and are subject to a substantial risk of forfeiture. Dividends paid with respect to restricted stock prior to the lapse of restrictions applicable to that stock will be taxable as compensation income to the participant. Generally, the participant will recognize taxable ordinary income at the first time those shares become transferable or are no longer subject to a substantial risk of forfeiture, in an amount equal to the fair market value of those shares when the restrictions lapse. However, a participant may elect to recognize taxable ordinary income upon the award date of restricted stock based on the fair market value of the shares of common stock subject to the award on the award date. If a participant makes that election, any dividends paid with respect to that restricted stock will not be treated as compensation income, but rather as dividend income, and the participant will not recognize additional taxable income when the restrictions applicable to his or her restricted stock award lapse. Assuming compliance with the applicable tax withholding and reporting requirements, the Company will be entitled to a tax deduction equal to the amount of ordinary income recognized by a participant in connection with his or her restricted stock award in the Company’s taxable year in which that participant recognizes that ordinary income.

 

The grant of restricted stock units or deferred stock units does not result in taxable income to the recipient or a tax deduction for the Company. The amount of cash paid (before applicable tax withholdings) or the then-current fair market value of the common stock received upon settlement of the restricted stock units or deferred stock units is taxable to the recipient as ordinary income and deductible by the Company.

 

The grant of a cash-based award, other stock-based award or dividend equivalent right generally should not result in the recognition of taxable income by the recipient or a tax deduction by the Company. The payment or settlement of a cash-based award, other stock-based award or dividend equivalent right should generally result in immediate recognition of taxable ordinary income by the recipient equal to the amount of any cash paid (before applicable tax withholding) or the then- current fair market value of the shares of common stock received, and a corresponding tax deduction by the Company.

 

If the shares covered by the award are not transferable and subject to a substantial risk of forfeiture, the tax consequences to the participant and the Company will be similar to the tax consequences of restricted stock awards, described above. If any other stock-based award consists of unrestricted shares of common stock, the recipient of those shares will immediately recognize as taxable ordinary income the fair market value of those shares on the date of the award, and the Company will be entitled to a corresponding tax deduction.

 

The 2020 Incentive Plan allows the Compensation Committee discretion to award restricted stock, restricted stock units, deferred stock units, cash-based awards and other stock-based awards in the form of performance compensation awards that are intended to be qualified performance-based compensation.

 

Under certain circumstances, accelerated vesting, exercise or payment of awards under the 2020 Incentive Plan in connection with a “change of control” of us might be deemed an “excess parachute payment” for purposes of the golden parachute payment provisions of section 280G of the Internal Revenue Code. To the extent it is so considered, the participant holding the award would be subject to an excise tax equal to 20% of the amount of the excess parachute payment, and the Company would be denied a tax deduction for the excess parachute payment.

 

New Plan Benefits

 

As of March 19, 2020, there were approximately eleven non-employee directors and approximately 1200 crewmembers who would be eligible to receive awards under the 2020 Incentive Plan. No awards will be granted under the 2020 Incentive Plan unless the plan is approved by our stockholders. Because it will be within the Compensation Committee’s discretion to determine which non-employee directors and crewmembers will receive awards under the 2020 Incentive Plan and the types and amounts of those awards, it is not possible at present to specify the benefits that would be received under the 2020 Incentive Plan by non-employee directors and crewmembers if the 2020 Incentive Plan is approved by the stockholders. In addition, the benefits or amounts that would have been received by, or allocated to, those persons for the last completed fiscal year if the 2020 Incentive Plan had been in effect cannot be determined.

 

The table below provides information relating to our equity compensation plans, including individual compensation arrangements, under which our common stock is authorized for issuance as of December 31, 2019, as adjusted for stock splits:

 

As of the Record Date, March 19, 2020, the number of shares to be issued upon vesting, or settlement of outstanding awards under all of our equity-based plans was as follows:

 

Total Stock Options Outstanding:     0  
Unvested Restricted Stock Units Outstanding:     2,326,329  
Unvested Performance Stock Units Outstanding:     531,815  
Unvested/Vested Deferred Stock Units Outstanding:(1)     484,908  
Total Outstanding Awards:     3,343,052  
Shares Available for Future Grant:(2)     14,045,645  

 

Total number of common shares outstanding as of March 19, 2020 was 269,707,459.

 

(1) This total includes 90,270 vested Deferred Stock Stock Units outstanding under the JetBlue 2002 Stock Incentive Plan.
(2) This total includes 5,121,961 available shares under the 2011 CSPP, JetBlue’s Section 423 Qualified Employee Stock Purchase Plan.

 

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE JETBLUE AIRWAYS CORPORATION 2020 OMNIBUS EQUITY INCENTIVE PLAN.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    72

 

 

MANAGEMENT PROPOSAL 4

TO APPROVE THE JETBLUE AIRWAYS CORPORATION 2020 CREWMEMBER STOCK PURCHASE PLAN

 

We currently allow our eligible crewmembers and the eligible crewmembers of our participating affiliates to purchase shares of our common stock under the 2011 JetBlue Airways Corporation Crewmember Stock Purchase Plan, which we refer to as the 2011 Stock Purchase Plan. As of March 19, 2020, there were 5,121,961 shares of our common stock remaining available for purchase under the 2011 Stock Purchase Plan. By its terms, the 2011 Stock Purchase Plan expires on the last business day of April 2021. Consistent with good governance practices, we are seeking approval now for the expiring plan.

 

We believe that encouraging additional JetBlue stock ownership by our crewmembers has been and continues to be an effective method of further aligning the interests of our crewmembers and stockholders. We intend to continue to encourage crewmember stock ownership by adopting the JetBlue Airways Corporation 2020 Crewmember Stock Purchase Plan, which we refer to as the 2020 Stock Purchase Plan, subject to the approval of our stockholders. The 2020 Stock Purchase Plan is being submitted for stockholder approval in order to ensure that the Section 423 Component of the 2020 Stock Purchase Plan (as described below) meets the requirements of Section 423 of the Code. The 2020 Stock Purchase Plan will become effective on the date it is approved by the affirmative vote of a majority of the shares of common stock present in person or represented by proxy at the annual meeting. Shares held by brokers who do not have discretionary authority to vote on this proposal and who have not received voting instructions from the beneficial owners are not counted or deemed to be present or represented for the purpose of determining whether this proposal has been approved. Abstentions are treated as shares present or represented and are counted in the tabulations of the votes cast on this proposal. Abstentions have the same effect as voting against this proposal. If our stockholders approve the 2020 Stock Purchase Plan, no additional grants will be made under the 2011 Stock Purchase Plan on or after the date of the annual meeting, but any purchase rights outstanding under the 2011 Stock Purchase Plan will remain in effect in accordance with their terms. If the stockholders approve the 2020 Stock Purchase Plan at the upcoming annual meeting of stockholders, the CSPP participants’ enrollment from the 2011 Stock Purchase Plan will be automatically transferred into the 2020 Stock Purchase Plan. If our stockholders do not approve the 2020 Stock Purchase Plan within 12 months of the date the Board of Directors approves the 2020 Stock Purchase Plan, the 2020 Stock Purchase Plan will terminate, will no longer be effective, and all outstanding purchase rights granted under the then-current offering period will terminate and we will refund any participant contributions.

 

Description of the 2020 Stock Purchase Plan

 

The principal features of the 2020 Stock Purchase Plan are summarized below. We encourage you to read the entire proposed 2020 Stock Purchase Plan, which is attached as Appendix C to this Proxy Statement, for the full statement of its legal terms and conditions. If there is any conflict or inconsistency between this summary and the provisions of the 2020 Stock Purchase Plan, the provisions of the 2020 Stock Purchase Plan will govern.

 

Eligibility

 

The 2020 Stock Purchase Plan is a broad-based plan that offers all of our crewmembers and the crewmembers of our participating subsidiaries the opportunity to buy shares of our common stock at a 15% discount from the prevailing fair market value. The 2020 Stock Purchase Plan is designed with two components in order to give the Company increased flexibility in the granting of purchase rights to U.S. and to non-U.S. crewmembers. Specifically, the 2020 Stock Purchase Plan authorizes the grant of options that are intended to qualify for favorable U.S. federal tax treatment under Section 423 of the Internal Revenue Code (the “Section 423 Component”). To facilitate participation for employees located outside the U.S. in light of non-U.S. law and other considerations, the 2020 Stock Purchase Plan also provides for the grant of options that are not intended to be tax-qualified under Section 423 of the Internal Revenue Code (the “Non-Section 423 Component”). The plan administrator will designate offerings made under the two components and, except as otherwise noted below or provided in the 2020 Stock Purchase Plan, the Section 423 Component and the Non-Section 423 Component will generally be operated and administered in the same way. Each individual who is an eligible crewmember on the start date of an offering period may enter that offering period on such start date. An eligible crewmember may participate in only one offering period at a time.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    73

 

 

Shares Authorized for Issuance

 

The 2020 Stock Purchase Plan authorizes the issuance of 17,530,985 shares of our common stock, which would represent approximately 6.5% of our outstanding common stock on March 19, 2020. The authorized shares may be issued under the Section 423 Component or the Non-Section 423 Component. The shares to be issued under the 2020 Stock Purchase Plan may be authorized but unissued shares or may be reacquired shares, including shares of common stock purchased on the open market. Upon the occurrence of certain events that affect our capitalization, appropriate adjustments will be made to the number and class of securities that may be issued under the 2020 Stock Purchase Plan in the future and to the number and class of securities and price per share under all outstanding stock purchase rights granted before the event. We are seeking the number of common shares identified here due both our Company’s high degree of CSPP crewmember participation (52.8% at December 2019) and the significant volatility our stock (and others) have experience due to the Covid-19 pandemic.

 

Administration

 

The 2020 Stock Purchase Plan generally will be administered by a committee (called the “Plan Administrator”) of two or more members of the Board of Directors appointed by the Board of Directors to administer the 2020 Stock Purchase Plan. All decisions of the Plan Administrator will be final, binding and conclusive on all parties having an interest in the 2020 Stock Purchase Plan. Subject to limitations of applicable laws or rules, the Plan Administrator may delegate its administrative responsibilities and powers under the 2020 Stock Purchase Plan to any of our crewmembers or group of crewmembers. We currently expect that the members of the Compensation Committee who will act as the Plan Administrator in May 2020 will be: Virginia Gambale, Teri McClure, Sarah Robb O’Hagan and Thomas Winkelmann. The Plan Administrator may designate separate offerings under the 2020 Stock Purchase Plan, the terms of which need not be identical, in which eligible crewmembers of one or more participating subsidiaries will participate, even if the dates of the applicable offering periods in each such offering are identical, provided that the terms of participation are the same within each separate offering as determined under Section 423 of the Code. The Plan Administrator may also adopt sub-plans, appendices, rules and procedures relating to the operation and administration of the 2020 Stock Purchase Plan to facilitate participation in the 2020 Stock Purchase Plan by crewmembers who are foreign nationals or employed outside the U.S. To the extent any sub-plan is inconsistent with the requirements of Section 423 of the Code, it will be considered part of the Non-Section 423 Component. The provisions of the 2020 Stock Purchase Plan will govern any sub-plan unless superseded by the terms of such sub-plan.

 

Purchase Price for the Shares

 

Under the 2020 Stock Purchase Plan, participating crewmembers are granted rights to purchase shares of common stock at a price equal to 85% of the stock’s fair market value on the purchase date (unless and until such percentage is changed by the Plan Administrator prior to the commencement of the enrollment process for the applicable purchase interval). The 2020 Stock Purchase Plan generally defines “fair market value” as the closing price reported for our common stock on the Nasdaq Global Select Market on the immediately preceding trading day for which fair market value is being determined. On March 19, 2020, the closing price of our common stock on the Nasdaq Global Select Market was $7.60.

 

Contributions

 

An eligible crewmember may elect to participate in an offering period under the 2020 Stock Purchase Plan by authorizing after- tax payroll deductions from gross wages on or before the start date of such offering period or such other payments as may be permitted. Offering periods commence at semi-annual intervals on the first trading day of May and November each year, and have a maximum duration of 6 months unless otherwise determined by the Plan Administrator prior to the start of such offer period (but in no event may an offering period exceed 24 months). Crewmembers may generally authorize contributions in multiples of 1%, up to a maximum of 10%, of gross wages to purchase shares under the 2020 Stock Purchase Plan. Contributions will be credited to the participant’s book account during each offering period. These accounts will not bear interest. A participant may, at any time during the offering period, reduce the rate of contributions, but no more than once per purchase interval. A participant may also, prior to the commencement of any new purchase interval within the offering period, increase the rate of contributions (up to the maximum 10%) for such new purchase interval. Additionally, a crewmember may withdraw from an offering period by (1) giving notice at any time 10 days prior to the commencement of the next offering period or (2) electing a 0% deduction to be administratively withdrawn from the 2020 Stock Purchase Plan. Any contribution collected from the crewmember during the purchase interval in which a withdrawal occurs will be refunded as soon as administratively possible, or, at the crewmember’s election, be held for the purchase of shares on the next purchase date. A participant’s withdrawal from a particular offering period is irrevocable, and the participant may not subsequently rejoin that offering period. Additionally, the Board of Directors may at any time terminate an offering period, in which case the participants’ outstanding contributions will be promptly refunded.

 

Purchase of Shares

 

On the start date of each offering period in which a participant is enrolled, the participant will be granted a separate purchase right for such offering period. The purchase right will provide the participant with the right to purchase shares under the 2020 Stock Purchase Plan on the last trading day of a 6-month purchase interval, which we refer to as the “purchase date.” Purchase intervals run from the first trading day in May to the last trading day in October each year, and from the first trading day in November each year to the last trading day in April in the following year. Each purchase right will be automatically exercised on each successive purchase date within the offering period, and the purchase will be effected by applying the participant’s contribution collected during the purchase interval to the purchase of the maximum number of whole shares of common stock that can be purchased with such contribution. However, a participant may not purchase

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    74

 

 

more than 4,000 shares on any one purchase date. Further, no crewmember may purchase more than $25,000 of common stock (using the fair market value of the common stock on the date the purchase rights are granted) under the 2020 Stock Purchase Plan (and any other crewmember stock purchase plan of the Company or an affiliate) per calendar year. Any contribution not applied to the purchase of shares on any purchase date because (1) they are not sufficient to purchase a whole share of common stock or (2) they exceed the accrual limitation that precludes the participants from purchasing additional shares will be refunded as soon as administratively possible. However, any contribution under the 2020 Stock Purchase Plan not applied to the purchase of common stock by reason of the limitation on the maximum number of shares purchasable per participant or in total by all participants on the purchase date or any other reason will be promptly refunded.

 

Termination of Employment

 

Generally, if a participant’s employment terminates for any reason (including death, disability or change in status), his or her right to purchase shares of common stock during the current offering period will immediately terminate and all of his or her contributions for the purchase interval in which the purchase right so terminates will be immediately refunded. However, if a participant ceases to remain in active service by reason of an approved unpaid leave of absence, then the participant will have the right, exercisable up until 10 days before the next purchase date, to withdraw all the contributions collected to date on his or her behalf for that purchase interval. Should the participant not exercise this right, such funds shall be held for the purchase of shares on his or her behalf on the next scheduled purchase date. Contributions shall continue with respect to any gross wages received by a participant while he or she is on an unpaid leave of absence, unless the participant elects to withdraw from the offering period. Upon the participant’s return to active service (x) within 3 months following the commencement of such leave or (y) prior to the expiration of any longer period for which such participant has reemployment rights provided by statute or contract, his or her contributions under the 2020 Stock Purchase Plan will automatically resume at the rate in effect at the time the leave began, unless the participant withdraws from the 2020 Stock Purchase Plan prior to his or her return. If such period of a participant’s leave of absence exceeds the applicable time period described in clauses (x) and (y) described above, then the Plan Administrator may at any time prior to the next purchase date cause such participant’s outstanding purchase rights to terminate and all of the participant’s contributions for the purchase interval in which such purchase rights so terminate to be immediately refunded. An individual who returns to active employment following a leave of absence that exceeds in duration the applicable (x) or (y) time period described above must re-enroll in the 2020 Stock Purchase Plan as a new participant.

 

If a participant transfers employment from the Company or any participating subsidiary for the Section 423 Component to a participating subsidiary for the Non-Section 423 Component, he or she will immediately cease to participate in the Section 423 Component. However, any contributions made for the offering period in which such transfer occurs will be transferred to the Non- Section 423 Component, and such participant will immediately join the then-current offering under the Non-Section 423 Component upon the same terms and conditions in effect for his or her participation in the 2020 Stock Purchase Plan. A participant who transfers employment from a participating subsidiary in the Non-Section 423 Component to the Company or any participating subsidiary in the Section 423 Component will remain a participant in the Non-Section 423 Component until the earlier of (1) the end of the then-current offering period under the Non-Section 423 Component, or (2) the first trading day of the first offering period in which he or she participates following such transfer. The Plan Administrator may establish different rules to govern transfers of employment between subsidiaries participating in the Section 423 Component and the Non-Section 423 Component, consistent with the applicable requirements of Section 423 of the Code.

 

Change in Control

 

If a change in control of the Company (as defined in the 2020 Stock Purchase Plan) occurs, each outstanding purchase right will automatically be exercised immediately prior to the effective date of such change in control. The purchase price applicable for the purchase interval in which such change in control occurs will be equal to 85% of the fair market value per share of our common stock immediately prior to the effective date of such change in control. However, participants will, following the receipt of notice from us of a change in control, have the right to terminate their outstanding purchase rights prior to the effective date of such change in control. Further, the Plan Administrator may terminate any outstanding purchase rights prior the effective date of a change in control, in which case all payroll deductions for the purchase interval in which such contributions are terminated will be promptly refunded.

 

Amendment and Termination of the 2020 Stock Purchase Plan

 

The Board of Directors may terminate, suspend or amend the 2020 Stock Purchase Plan at any time, generally to become effective immediately following the close of any purchase interval. Stockholder approval is required for any amendment that would (a) increase the number of shares available for issuance under the 2020 Stock Purchase Plan, (b) change the purchase price formula so as to reduce the purchase price payable for shares purchasable under the 2020 Stock Purchase Plan, (c) change the eligibility requirements for participation in the 2020 Stock Purchase Plan, or (d) otherwise require stockholder approval under any relevant law, regulation or rule. Unless sooner terminated by the Board of Directors, the 2020 Stock Purchase Plan will terminate upon the earliest of (1) May 30, 2030, (2) the date on which all shares available for issuance under the 2020 Stock Purchase Plan has been sold pursuant to purchase rights exercised under the 2020 Stock Purchase Plan, or (3) the date on which all purchase rights are exercised in connection with a change in control of the Company.

 

Certain U.S. Federal Income Tax Consequences

 

The following is a brief summary of certain significant United States Federal income tax consequences under the Internal

 

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Revenue Code, as in effect on the date of this summary, applicable to the Company and crewmembers in connection with participation and purchase of shares of common stock under the 2020 Stock Purchase Plan. This summary is not intended to be exhaustive and, among other things, does not describe state, local or non-U.S. tax consequences, or the effect of gift, estate or inheritance taxes. This summary is also not intended or written to be used, and cannot be used, for the purposes of avoiding taxpayer penalties. Tax consequences are subject to change, and a taxpayer’s particular situation may be such that some variation in application of the described rules is applicable.

 

Accordingly, participants are advised to consult their own tax advisors with respect to the tax consequences of participating in the 2020 Stock Purchase Plan.

 

As described above, the 2020 Stock Purchase Plan has a Section 423 Component and a Non-Section 423 Component. The tax consequences for a U.S. taxpayer will depend on whether he or she participates in the Section 423 Component or the Non- Section 423 Component.

 

Tax Consequences to U.S. Participants in the Section 423 Component

 

The right of participants to make purchases under the Section 423 Component are intended to qualify under the provisions of Section 423 of the Code. Upon the grant of a common stock purchase right under the Section 423 Component, there will not be any U.S. federal income consequences to either the crewmember or the Company or any of its affiliates. The purchase of common stock under the 2020 Stock Purchase Plan also will not have any immediate U.S. federal income tax consequences to the crewmember. Any determination of U.S. federal income tax consequences will depend on whether the shares purchased are disposed of after the expiration of (1) one year after the date those shares are transferred to the crewmember and (2) two years after the date of grant of the common stock purchase right (referred to below as the “holding periods”). If the holding periods are met, or if the participant dies while holding the shares, the participant will recognize ordinary income with respect to a portion of the value from the disposition. The portion that will recognize ordinary income is the lesser of (1) the excess of the fair market value of the shares at the time of the disposition or death over the total purchase price of the shares or (2) 15% of the fair market value of the shares of common stock on the first day of the offering period, disposition or death over the total purchase price of the shares. Any additional gain will be treated as long-term capital gain. If the holding period of these shares meet or exceed the holding periods described above but are sold for a price that is less than the purchase price, there is no ordinary income and the participant will recognize a long-term capital loss for the difference between the sale price and the purchase price. Neither the Company nor any affiliate employing the participant will be entitled to any U.S. federal income tax deduction with respect to the amount treated as long-term capital gain or as ordinary income as a result of the rules described above for shares disposed of after expiration of the holding periods. If the shares are disposed of prior to the expiration of the holding periods (a “disqualifying disposition”), generally the participant will recognize ordinary income on the excess of the fair market value of those shares on the purchase date over the aggregate purchase price and the Company will be entitled to a U.S. federal tax deduction in a like amount.

 

Tax Consequences to U.S. Participants in the Non-Section 423 Component

 

A U.S. participant in the Non-Section 423 Component will recognize ordinary income on the value of the common stock on the purchase date less the purchase price. Upon a sale or disposition of the common stock the participant purchased under the Non-Section 423 Component of the 2020 Stock Purchase Plan, the participant also will have a capital gain or loss on the difference between the sales proceeds and the value of the common stock on the purchase date. This capital gain or loss will be long-term if the participant held the common stock for more than one year and short-term if the participant held the common stock for less than one year.

 

Any ordinary income that a participant receives upon the purchase of shares of common stock under the Non-Section 423 Component of the 2020 Stock Purchase Plan is subject to withholding for income, Medicare and social security taxes, as applicable. In addition, this income is required to be reported as ordinary income to the participant on the participant’s annual Form W-2, and the participant is responsible for ensuring that this income is reported on his or her individual income tax return. With respect to U.S. participants, we are entitled to a U.S. federal tax deduction for amounts taxed as ordinary income for a participant who recognized ordinary income upon a purchase made under the Non-Section 423 Component.

 

New Plan Benefits

 

As of March 19, 2020, there were approximately 23,000 crewmembers who would be eligible to participate in the 2020 Stock Purchase Plan. No awards will be granted under the 2020 Stock Purchase Plan unless the plan is approved by our stockholders. The actual amount of benefits provided to executives and our other crewmembers under the 2020 Stock Purchase Plan will vary depending upon the actual purchase prices established under the 2020 Stock Purchase Plan, the fair market value of the common stock at various future dates, and the extent to which crewmembers choose to participate in the 2020 Stock Purchase Plan through future payroll contributions. Therefore, it is not possible to determine currently the total dollar amount of benefits that would be received by participants in the 2020 Stock Purchase Plan if the 2020 Stock Purchase Plan is approved by the stockholders. In addition, the benefits or amounts that would have been received by, or allocated to, those persons for the last completed fiscal year if the 2020 Stock Purchase Plan had been in effect cannot be determined.

 

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE JETBLUE AIRWAYS CORPORATION 2020 CREWMEMBER STOCK PURCHASE PLAN.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    76

 

 

MANAGEMENT PROPOSAL 5

TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

What am I voting on?

  Stockholders are being asked to ratify the selection of Ernst & Young LLP, a registered public accounting firm, to serve as the Company’s independent auditors for the fiscal year ending December 31, 2020. Although the Audit Committee has the sole authority to appoint the Independent Auditors, as a matter of good corporate governance, the Board submits its selection of the independent registered public accounting firm to our stockholders for ratification. If the stockholders should not ratify the appointment of Ernst & Young LLP, the Audit Committee will reconsider the appointment.

 

Voting recommendation:

  FOR the ratification of the selection of Ernst & Young LLP as independent registered public accounting firm .

 

The Audit Committee has the sole authority and responsibility to hire, evaluate and, where appropriate, replace the Company’s independent auditors and, in its capacity as a committee of the Board, is directly responsible for the appointment, compensation and general oversight of the work of the independent auditors.

 

The Audit Committee has appointed Ernst & Young LLP (“EY”) to serve 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, 2020. EY has served as the Company’s independent auditors since 2001.

 

We expect that representatives of EY will be present at the annual meeting to respond to appropriate questions from stockholders and make a statement if desired.

 

Audit Committee Matters

 

Annual Evaluation and Appointment of Independent Auditors

 

In executing its responsibilities, the Audit Committee engages in an annual evaluation of EY’s qualifications, performance and independence, and considers whether continued retention of EY as the Company’s independent registered public accounting firm is in the best interest of the Company. The Audit Committee is also involved in the selection of EY’s lead engagement partner. While EY has been retained as the Company’s independent registered public accounting firm continuously since 2001, in accordance with SEC rules and EY’s policies, the firm’s lead engagement partner rotates every five years. In assessing EY’s qualifications, performance and independence in 2019, the Audit Committee considered, among other things:

 

EY’s global capabilities;
EY’s significant institutional knowledge and deep expertise of the Company’s business, accounting policies and practices and internal control over financial reporting enhance audit quality;
EY’s capability, expertise and efficiency in handling the breadth and complexity of the Company’s global operations, including of the lead audit partner and other key engagement partners;
the quality and candor of EY’s communications with the Audit Committee and management;
EY’s independence policies and its processes for maintaining its independence;
the quality and efficiency of the services provided by EY, including input from management on EY’s performance and how effectively EY demonstrated its independent judgment, objectivity and professional skepticism;
external data on audit quality and performance, including recent Public Company Accounting Oversight Board (PCAOB) reports on EY and its peer firms;
the appropriateness of EY’s fees, including those related to non-audit services;
EY’s tenure as the Company’s independent auditor and its depth of understanding of the Company’s global business, operations and systems, accounting policies and practices, including the potential effect on the financial statements of the major risks and exposures facing the Company, and internal control over financial reporting;

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    77

 

 

an analysis of EY’s known legal risks and significant proceedings that may impair its ability to perform the Company’s annual audit;
EY’s demonstrated professional integrity and objectivity, including through rotation of the lead audit partner and other key engagement partners;
any material issues raised by the most recent internal quality control review, or peer review; and
the advisability and potential impact of selecting a different independent public accounting firm.

 

Benefits of Longer Tenure   Independence Controls

Enhanced audit quality – We believe EY’s significant institutional knowledge and deep expertise of the Company’s global business, accounting policies and practices and internal control over financial reporting enhance audit quality.

 

Competitive fees – Because of EY’s familiarity with the Company, audit and other fees are competitive with peer companies.

 

Avoid costs associated with new auditor – We believe bringing on new independent auditors would be costly and require a significant time commitment, which could lead to management distractions.

 

 

Audit Committee oversight – Oversight includes regular private sessions with EY, discussion with EY about the scope of audit and business imperatives, a comprehensive annual evaluation when determining whether to reengage EY and direct involvement by the Audit Committee and its Chair in the selection of the new lead assurance engagement partner in connection with the mandated rotation of that position. A new lead engagement partner was appointed commencing with the 2019 audit.

 

Limits on non-audit services – The Audit Committee pre-approves audit and permissible non-audit services provided by EY in accordance with its pre-approval policy.

 

EY’s internal independence process – EY conducts periodic internal reviews of its audit and other work, assesses the adequacy of partners and other personnel working on the Company’s account and rotates the engagement partners, consistent with independence requirements. A new lead assurance engagement partner was appointed in 2018.

 

Strong regulatory framework – EY, as an independent registered public accounting firm, is subject to PCAOB inspections, “Big 4” peer reviews and PCAOB and SEC oversight.

 

Based on this evaluation, the Audit Committee and the Board determined that retaining EY to serve as independent auditors for the fiscal year ending December 31, 2020 is in the best interests of the Company and its stockholders. While the Audit Committee is responsible for the appointment, compensation, retention and oversight of EY as our independent registered public accounting firm, the Board of Directors is submitting the selection of EY 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 appointment of EY as our independent registered public accounting firm for the year ending December 31, 2020. If the appointment of EY is not ratified by the stockholders, the Audit Committee will reconsider the matter. Even if the appointment of EY 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 the Company’s best interests.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    78

 

 

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, 2019 and 2018, respectively, and fees billed for other services rendered by Ernst & Young LLP during those periods.

 

    2019     2018  
Audit fees(1)   $ 2,300,000     $ 2,099,000  
Audit-related fees(2)   $ 50,000     $ 193,000  
Tax fees(3)   $ 174,000     $ 553,000  
All other fees(4)   $     $ 20,000  
TOTAL   $ 2,524,000     $ 2,865,000  

 

(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; (d) consultations concerning financial accounting and reporting standards and (e) services related to IT system changes affecting the financial systems such as upgrades and data center migrations impacting the 2019 audit.
(2) Audit-related services principally include fees for audit and attest services that are not required by statute or regulation and also include consultations related to the adoption of new accounting standards such as ASC 326, Financial Instruments—Credit Losses and ASC 842, Leases in 2019 and 2018, respectively.
(3) Includes fees for tax services, including tax compliance, tax advice and tax planning.
(4) All other fees include various non-audit services, principally risk assessment advisory services.

 

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 appointment of the independent registered public accounting firm.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2020.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    79

 

 

AUDIT COMMITTEE REPORT

 

The Audit Committee of the JetBlue Board of Directors is comprised of seven 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, 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 their audit; as well as expressing an opinion on (i) management’s assessment of the effectiveness of internal control over financial reporting and (ii) the effectiveness of internal control over financial reporting. In fulfilling its responsibilities, the Audit Committee held meetings throughout 2019 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 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 controls, 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, 2019 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, 2020.

 

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

B. Ben Baldanza

Virginia Gambale

Ellen Jewett

Teri McClure

Sarah Robb O’Hagan

Vivek Sharma

 

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 Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates the Audit Committee Report by reference therein.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    80

 

 

MANAGEMENT PROPOSAL 6

TO APPROVE AN AMENDMENT TO THE COMPANY’S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO PROVIDE STOCKHOLDERS WITH THE RIGHT TO REQUEST THAT THE COMPANY CALL A SPECIAL MEETING

 

 

The Board recommends that the Company’s stockholders approve and adopt an amendment to Article VII of the Company’s Amended and Restated Certificate of Incorporation to provide stockholders who comply with the requirements of the Company’s Amended and Restated Certificate of Incorporation and the Amended and Restated Bylaws with the right to request that the Company call a special meeting of stockholders (the “Special Meeting Amendment”). Our Board has recommended that stockholders vote in favor of the Special Meeting Amendment and has approved corresponding changes to our Amended and Restated Bylaws which outline the notice, information and other requirements related to the right to call a special meeting (the “Special Meeting Bylaw Amendments”) that will become effective upon the effectiveness of the Special Meeting Amendment.

 

The text of the Special Meeting Amendment is contained in Appendix E. The Board has also approved, subject to the effectiveness of the Special Meeting Amendment, corresponding Special Meeting Bylaw Amendments. The proposed Bylaw Amendments are contained in Appendix B. Stockholders should review both Appendices E and B, together with the Company’s existing Amended and Restated Certificate of Incorporation, which is included as an exhibit to the Company’s Annual Report on Form 10-K filed with the SEC.

 

The Board believes that permitting stockholders who have held at least a 20% voting power in our outstanding Common Stock to request that the Company call a special meeting of stockholders is in the best interests of our stockholders. The Governance and Nominating Committee of the Board, which is composed entirely of independent directors, regularly considers and evaluates a broad range of corporate governance issues affecting the Company and has recommended the Amendments to the Board.

 

The Board and the Governance and Nominating Committee have carefully considered the implications of the Special Meeting Amendment and the Special Meeting Bylaw Amendments to allow stockholders to request that the Company call a special meeting of stockholders. The ability of stockholders to call special meetings is increasingly considered by some investors to be an important aspect of good corporate governance. The Board is strongly committed to good corporate governance and supports the practice of permitting stockholders to request that the Company call special meetings, provided that the request is made by stockholders owning (in an economic sense) a significant percentage of the shares of the Company. Organizing and preparing for a special meeting involves a significant commitment of management time and attention that may disrupt focus on other corporate priorities, and imposes substantial legal, administrative and distribution costs on the Company. The Board believes that a special meeting of stockholders should only be held in special or extraordinary circumstances, dictated by fiduciary, strategic, significant transactional or similar considerations that should be addressed immediately and not delayed until the next annual meeting and that are of interest to a broad base of stockholders. The Board believes that establishing a 20% ownership threshold to request that the Company call a special meeting strikes a reasonable balance between enhancing stockholder rights and protecting against the risk that a small minority of stockholders, including stockholders with special interests which may not be shared by the majority of the Company’s stockholders, could request that the Company call one or more special meetings that could result in unnecessary financial expense and disruption to our business. Likewise, the Board believes that only stockholders with a true economic and non-transitory interest in the Company should be entitled to utilize the special meeting mechanism and, after reviewing a number of factors, has determined that a threshold of 20% is appropriate.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    81

 

 

The Board also considered that the power to call a special meeting of stockholders has historically been a tool for acquirers in the hostile merger and acquisition context. Potential acquirers seeking to take over the Company for an inadequate price could threaten to call a a special meeting of stockholders to replace members of the Board to increase their negotiating leverage or to avoid negotiating at all with the Board, which has the legal duty to protect the interests of all stockholders.

 

Additionally, the Company has an established process by which stockholders may communicate directly with the Board of Directors throughout the year on any topics of interest to stockholders. The Board and the Company will continue to maintain existing governance mechanisms that afford management and the Board the ability to respond to the concerns of all stockholders regardless of the level of share ownership.

 

In light of these considerations, establishing a 20% threshold for the right of stockholders to request that the Company call a special meeting provides stockholders with a meaningful ability to request that the Company call a special meeting while helping protect the long-term interests of the Company and its stockholders. The Board believes that an ownership threshold of 20% is appropriate based on the Company’s current size and stockholder composition, as it would provide the Company’s stockholders with a meaningful right to request a special meeting, while mitigating the risk that corporate resources are wasted to serve the narrow self-interests of a few minority stockholders. In addition, a 20% special meeting ownership threshold is in line with current market practice.

 

The proposed right of stockholders to request that the Company call special meetings is also subject to the notice, information and other requirements and limitations set forth in the amendments to the Company’s Amended and Restated Bylaws. If a requesting stockholder does not comply with the requirements and conditions provided in the Bylaws, a special meeting request by that stockholder will be invalid. Likewise requests to call a special meeting to vote on matters recently voted on by stockholders or that will considered by stockholders imminently at an upcoming meeting of stockholders will not be permitted. The Board believes that the requirements described above are important to, among other things, avoid duplicative and unnecessary special meetings regarding matters recently considered by stockholders or that stockholders will imminently consider at an upcoming stockholder meeting.

 

This description of the proposed Special Meeting Amendment and the Special Meeting Bylaw Amendments is a summary and is qualified by and subject to the full text of the Special Meeting Amendment and the Special Meeting Bylaw Amendments, which are attached to this proxy statement as Appendices E and B, respectively. Additions of text are indicated by underlining, and deletions of text are indicated by strike-outs.

 

Approval and adoption of the proposed Amendments require the affirmative vote of the holders of at least a majority in voting power of the stock entitled to vote on the subject matter. If the Amendment is approved and adopted by our stockholders, the Company will file a certificate of amendment setting forth the Special Meeting Amendment with the Secretary of State of the State of Delaware, which will become effective upon its filing. Effective upon the effectiveness of the Special Meeting Amendment, the Special Meeting Bylaw Amendments will become effective. If the Special Meeting Amendment is not approved and adopted by the stockholders, stockholders will not be permitted to request that the Company call a special meeting of stockholders and the related Special Meeting Bylaw Amendments will not become effective.

 

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE AMENDMENTS TO THE COMPANY’S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO PROVIDE STOCKHOLDERS WITH THE RIGHT TO REQUEST THAT THE COMPANY CALL A SPECIAL MEETING OF STOCKHOLDERS, WHICH IS DESIGNATED AS PROPOSAL NO. 6.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    82

 

 

MANAGEMENT PROPOSAL 7

TO APPROVE AN AMENDMENT OF THE COMPANY’S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO PROVIDE STOCKHOLDERS WITH THE RIGHT TO ACT BY WRITTEN CONSENT

 

The Board is submitting for stockholder approval and adoption a proposal to amend Article VII of our Amended and Restated Certificate of Incorporation to allow stockholders who comply with the requirements set forth in our Amended and Restated Certificate of Incorporation to take certain actions they could take at a meeting of stockholders by written consent (the “Written Consent Amendment”). Our Board has recommended that stockholders vote in favor of the Written Consent Amendment, and has approved conforming changes to our Amended and Restated Bylaws (the “Consent Bylaw Amendments”) that will become effective upon the effectiveness of the Written Consent Amendment.

 

The text of the Written Consent Amendment is contained in Appendix B. The Board has also approved, subject to the effectiveness of the Written Consent Amendment, the Written Consent Bylaw Amendments. The proposed Written Consent Bylaw Amendments are contained in Appendix B. Stockholders should review both Appendices B and E, together with the Company’s existing Amended and Restated Certificate of Incorporation, which is included as an exhibit to the Company’s Annual Report on Form 10-K filed with the SEC.

 

At our 2019 annual meeting, we received a stockholder proposal requesting that the Board take the necessary steps to allow stockholders to act by written consent. The stockholder proposal was approved by more than 50% of the shares present and entitled to vote on the proposal, which constituted approximately 48.4% of our shares outstanding.

 

We seek out and highly value the perspectives of our stockholders and have a strong record of responsiveness to stockholder concerns. Consistent with these practices, as part of our ongoing engagement efforts and in response to the vote, following the 2019 annual meeting, we conducted stockholder outreach and sought their input on the desirability of a stockholder right to act by written consent. Many of these stockholders expressed the view that the Company should be responsive to the majority-supported proposal and, therefore, should provide stockholders with the right to act by written consent.

 

After careful consideration of the feedback we heard from our stockholders, the Board is proposing the Written Consent Amendment to permit stockholders who comply with certain procedural and other requirements to act by written consent. The Board believes the procedural and other requirements included in the Written Consent amendments are necessary to protect the Company and its stockholders against potential risks associated with permitting stockholders to act by written consent and therefor are in the best interests of the Company and its stockholders:

 

To reduce the risk that a small group of short-term, special interest or self-interested stockholders initiate actions that are not in the best interests of the Company or its stockholders and to reduce the financial and administrative burdens on the Company, the proposed Written Consent Amendment requires that holders of at least 25% of outstanding shares of the Company’s stock request that the Board set a record date to determine the stockholders entitled to act by written consent. The Board believes the 25% threshold strikes the right balance between enhancing the ability of stockholders to initiate stockholder action and limiting the risk of subjecting stockholders and the Company to numerous requests for actions by written consent that may only be relevant to particular constituencies and of imposing significant costs of both time and money on the Company. The stockholders with whom we engaged on this topic were supportive of such a threshold.
   
To provide transparency, stockholders requesting action by written consent must provide the Company with certain information and representations including, but not limited to, the applicable information and representations currently required of any Company stockholder seeking to bring a nomination or other business before a meeting of stockholders pursuant to the advance notice provisions contained in the Company’s Bylaws.

 

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    83

 

 

To provide the Board with a reasonable timeframe to properly evaluate and respond to a stockholder request, the proposed Written Consent Amendments requires that the Board must act, with respect to a valid request, to set a record date by the later of (i) 20 days after delivery of a valid request to set a record date and (ii) 5 days after delivery by the stockholder(s) of any information requested by the Company to determine the validity of the request for a record date or to determine whether the action to which the request relates may be effected by written consent. The record date must be no more than 10 days after the Board action to set a record date.
   
To ensure that stockholders have sufficient time to consider the proposal, as well as to provide the Board the opportunity to present its views regarding the proposed action, delivery of executed consents cannot begin until 60 days after the delivery of a valid request to set a record date.
   
To ensure that the written consent is in compliance with applicable laws and is not duplicative, the written consent process would not be available in a limited number of circumstances, including:

 

  for matters that are not a proper subject for stockholder action under applicable law,
     
  if the record date request was made in a manner that involved a violation of Regulation 14A under the Exchange Act or other applicable law,
     
  if the request to set a record date is delivered to the Company during the period beginning 120 days prior to the first anniversary of the date of the most recent annual meeting and ending on the earlier of (x) the date of the next annual meeting and (y) 30 calendar days after the first anniversary of the date of the immediately preceding annual meeting,
     
  if an annual or special meeting of stockholders that included an item of business identical or substantially similar to the proposed action was held within 12 months before the Company received the request for a record date, or
     
  if an identical or substantially similar item is included in our notice for a meeting of stockholders that has been called but not yet held.

 

This description of the proposed Written Consent Amendment and the Written Consent Bylaws Amendments is a summary and is qualified by and subject to the full text of such amendments, which are attached to this proxy statement as Appendices E and B, respectively. Additions of text are indicated by underlining and deletions of text are indicated by strike-outs.

 

An affirmative vote of the holders of a majority of the shares of common stock outstanding is required to adopt the Written Consent Amendment, which, if approved by the stockholders, will become effective upon filing of a Certificate of Amendment setting forth the Written Consent Amendment with the Delaware Secretary of State, which filing will be completed promptly after the Annual Meeting. The Written Consent Bylaw Amendments will become effective upon the effectiveness of the Written Consent Amendment. If the Written Consent Amendment is not approved and adopted by the stockholders, stockholders will not be permitted to act by written consent and the Written Consent Bylaws Amendments will not become effective.

 

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE AMENDMENTS TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO PROVIDE STOCKHOLDER S WITH THE RIGHT TO ACT BY WRITTEN CONSENT, WHICH IS DESIGNATED AS PROPOSAL NO. 7.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    84

 

 

PROPOSAL 8

STOCKHOLDER PROPOSAL

 

The Company has been advised that John Chevedden, 2215 Nelson Avenue, No. 205 Redondo Beach, CA 90278, who advises that he holds at least 200 shares of stock in the Company, intends to submit the following proposal at the Annual Meeting.

 

If the following proposal is properly presented at the Annual Meeting, the Board of Directors unanimously recommends a vote AGAINST the proposal.

 

Proposal 8 Let Shareholders Vote on Bylaw Amendments

 

Shareholders request that the Board of Directors take the steps necessary to adopt a bylaw that requires any amendment to the bylaws, that is approved by the board, shall be subject to a non-binding shareholder vote as soon as practicable unless such amendment is already subject to a binding vote.

 

The Board of Directors would have the discretion to determine whether a bylaw amendment is a housekeeping amendment and thus omit housekeeping bylaw amendments from the application of this proposal.

 

It is important that bylaw amendments take into consideration the impact that such amendments can have on limiting the rights of shareholders and/or reducing the the accountability of directors and managers. For example, Directors could adopt a narrowly crafted exclusive forum bylaw to suit the unique circumstances facing our directors.

 

A proxy advisor recently adopted a policy to vote against directors who unilaterally adopt bylaw provisions or amendments to the articles of incorporation that materially diminish shareholder rights.

 

The time is right to improve the governance of the company. For instance the 2019 news release on the appointment of Teri McClure to the Board of Directors was sparse on information of interest to shareholders.

 

The news release can give the impression that Ms. McClure left United Parcel Service under unknown circumstances and that Ms. McClure no longer has a day job. It can also give the impression that Ms. McClure has no significant director experience at a large company.

 

Our directors could be neutral on this proposal to obtain feedback from shareholders without interference. If our directors are opposed to this form of shareholder engagement then it would be useful for our directors to give recent examples of companies whose directors took the initiative and adopted bylaws that primarily benefitted shareholders.

 

Please vote yes:

 

Let Shareholders Vote on Bylaw Amendments - Proposal 8 .

 

Board of Directors’ Statement in Opposition to Proposal  8

 

The Board recommends that you vote against the proposal to require stockholders to vote to approve bylaw amendments for the following reasons:

 

The Board’s ability to amend the bylaws without stockholder approval enables it to promote and protect the best interests of JetBlue and our stockholders.

 

Under Delaware law, a Delaware corporation may, in its certificate of incorporation, confer the power to adopt, amend or repeal bylaws upon the board of directors. We believe that the overwhelming majority of large, publicly-traded corporations that are incorporated in Delaware confer the right to amend bylaws to the boards of directors, and JetBlue has provided its Board this power. In considering and implementing amendments to the bylaws, the Board, however, must act in a manner consistent with its fiduciary duties of care and loyalty owed to the company and our stockholders. Stockholders, however, always retain the right to amend the bylaws by stockholder action. The authority granted to the Board does not abrogate this right in any way.

 

Our existing governance framework serves our stockholders well. It preserves flexibility by allowing the Board to respond quickly to unforeseen contingencies and circumstances; and it does not alter or limit the right of stockholders to amend the bylaws. The flexibility provided by the Board’s ability to amend the bylaws is crucial. The Board, without this authority, would have to propose bylaw amendments at the next annual meeting of stockholders, or convene a special stockholders’ meeting, to make an amendment effective. As a result, it may be expensive, time-consuming

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    85

 

 

and impracticable, if not impossible, to obtain the stockholder approval for a necessary amendment to the bylaws within the time frame necessary to serve the best interests of JetBlue and our stockholders.

 

JetBlue’s strong and independent Board of Directors effectively oversees our management and provides vigorous oversight of JetBlue’s business and affairs.

 

The Board of Directors is composed of independent, active and effective directors. Eleven out of our twelve directors are independent, meeting the independence requirements of the Nasdaq Global Stock Exchange and the Securities and Exchange Commission and JetBlue’s standards for director independence. Robin Hayes, our Chief Executive Officer, is the only director who is also a member of executive management. We also have an independent Chairman of our Board of Directors in Joel Peterson and an independent Vice-Chairman in Frank Sica. Together, they provide significant oversight and accountability for our stockholders.

 

Our corporate governance policies also help ensure that the Board of Directors is held accountable.

 

The Board is accountable to JetBlue’s stockholders through meaningful stockholder rights that are embedded in our governing documents. For example:

 

All directors are held accountable through annual elections;
   
Our bylaws provide stockholders a meaningful proxy access right, which allows stockholders to propose nominees to be considered for election to the Board at the next Annual Meeting of Stockholders;
   
We have a robust stockholder engagement program that encourages our stockholders to express their views to us at any time;
   
Our bylaws require that we use a majority-voting standard in uncontested director elections and include a resignation requirement for directors who fail to receive the required majority vote;
   
All supermajority stockholder voting requirements in our certificate of incorporation and bylaws have been eliminated;
   
Stockholders will have the right to act by written consent, if the proposal is approved by the stockholders; and
   
Stockholders are allowed to call a special stockholders’ meeting, subject to the conditions set forth in our bylaws.

 

We believe that our existing corporate governance policies provide the appropriate balance between ensuring Board accountability to stockholders and enabling the Board to effectively oversee JetBlue’s business and affairs for the long-term benefit of stockholders.

 

Delaware law provides our stockholders with the unfettered ability to amend our bylaws.

 

Under Delaware law JetBlue stockholders have the power to adopt, amend and repeal the company’s bylaws, which may not be limited by the Board. This right also extends to the ability to reverse or otherwise alter amendments specifically implemented by the Board.

 

Requiring all “non-housekeeping” bylaw amendments to go to a non-binding stockholder vote would impose an unnecessary administrative burden and expense on JetBlue.

 

JetBlue is a widely held public company. As a result, preparing for and conducting a special stockholders’ meeting in the event one was required, including the distribution of a proxy statement, would impose a significant administrative burden and expense on the company with limited, if any, benefit to our stockholders.

 

In summary, we believe that our current bylaw amendment procedures, which already grant our stockholders the right to amend our bylaws, are consistent with existing best practices and continue to reflect the governance framework that best protects stockholder rights without inappropriately restricting our Board’s ability to exercise its business judgment as needs require. Adopting the proposal would result in a costly and unnecessary stockholder approval process that we believe does not protect the interests of our stockholders, especially given our Board’s commitment to strong governance practices and responsiveness to our stockholders. Accordingly, the Board believes that adoption of the stockholder proposal is not appropriate and is not in the best interests of our stockholders.

 

FOR THE REASONS STATED ABOVE, JETBLUE’S BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST THE PROPOSAL TO REQUIRE STOCKHOLDERS TO VOTE TO APPROVE BYLAW AMENDMENTS .

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    86

 

 

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 19, 2020. On the Record Date, there were 269,707,459 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 a 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 through a bank, broker or other nominee.

 

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”). 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 via the Internet at the annual meeting. Whether or not you plan to attend the annual meeting via the Internet, 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 of the annual meeting is being forwarded to you by that organization, which 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 via the Internet at the annual meeting unless you receive a valid proxy from your brokerage firm, bank, broker-dealer or other nominee holder. To obtain such proxy, you must make a special request to 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 during the annual meeting.

 

How do I vote?

 

Registered holders may vote:

 

By Internet: go to www.proxyvote.com;
By telephone: call 1-800-690-6903 (toll free); or
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.

 

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.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    87

 

 

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 SEC, the Company has elected to provide access to its proxy materials over the Internet. Accordingly, the Company is sending its Notice of the Internet Availability of proxy materials for the 2020 annual meeting of stockholders (the “Notice”) to the Company’s stockholders of record. 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 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:

 

FOR the election of each of the ten director candidates nominated by the Board of Directors;
FOR approval, on an advisory basis, of the compensation of our named executive officers;
FOR approval of the JetBlue Airways Corporation 2020 Omnibus Equity Incentive Plan;
FOR approval of the JetBlue Airways Corporation 2020 Crewmember Stock Purchase Plan;
FOR the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020;
FOR approval of amendment of the Company’s certificate of incorporation to provide stockholders with the right to request the Company call a special meeting;
FOR approval amendment of the Company’s certificate of incorporation to allow stockholders to act by written consent;
AGAINST approval of the shareholder proposal relating to stockholder approval of bylaw amendments , if properly presented;  and
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.

 

If you are a beneficial owner of shares and do not specify how you want your shares to be voted, your shares may not be voted by the record holder (such as your bank, broker or other nominee) 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 bank, broker, or other nominee, we urge you to give instructions to such record holder 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 13, 2020; or (iv) attending and voting via the Internet 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 broker, bank, or other nominee, you may revoke any prior voting instructions by contacting that firm or by voting online during the annual meeting.

 

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 as of the Record Date present in person or represented by proxy. Abstentions and “broker non- votes” (which are explained under “What are broker non-votes?”) are counted as present to determine whether there is a quorum for the annual meeting.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    88

 

 

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 such record holder with voting instructions on any non-routine matters brought to a vote at the annual meeting. 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 appointment of our independent registered public accounting firm (Proposal No. 5), 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. 2), approval of the JetBlue Airways Corporation 2020 Omnibus Equity Incentive Plan (Proposal No. 3), approval of the JetBlue Airways Corporation 2020 Crewmember Stock Purchase Plan (Proposal No. 4), approval of amendment of the Company’s certificate of incorporation to allow stockholders to call a special meeting (Proposal No. 6), approval of amendment of the Company’s certificate of incorporation to allow stockholders to act by written consent (Proposal No. 7) and the stockholder proposal (Proposal No. 8). 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

 

Directors will be elected by a majority of the votes cast at the annual meeting. If a quorum is present, a nominee for election to a position on the Board of Directors will be elected if the number of shares voted “for” that nominee exceeds 50 percent of the number of votes cast with respect to the election of that 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 and therefore will have no effect on determining whether the required majority vote has been attained.

 

Proposal 2: 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. 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 3: Approval of JetBlue Airways Corporation 2020 Omnibus Equity Incentive Plan

 

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 JetBlue Airways Corporation 2020 Omnibus Equity Incentive Plan. Abstentions and broker non-votes will be counted as present for the purposes of this vote, and therefore will have the same effect as a vote against the proposal.

 

Proposal 4: Approval of JetBlue Airways Corporation 2020 Crewmember Stock Purchase Plan

 

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 JetBlue Airways Corporation 2020 Crewmember Stock Purchase Plan. Abstentions and broker non-votes will be counted as present for the purposes of this vote, and therefore will have the same effect as a vote against the proposal.

 

Proposal 5: Ratification of selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020

 

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 appointment of the independent registered public accounting firm. Abstentions and broker non-votes will be counted as present for the purposes of this vote, and therefore will have the same effect as a vote against the proposal.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    89

 

 

Proposal 6: Approval of an amendment to the Company’s certificate of incorporation to provide stockholders with the right to request that the Company call a special meeting

 

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 and adopt the amendments to the Company’s Amended and Restated Certificate of Incorporation to provide Stockholders with the right to request the Company call a special meeting of stockholders. Abstentions and broker non-votes will be counted as present for the purposes of this vote, and therefore will have the same effect as a vote against the proposal.

 

Proposal 7: Approval of an amendment of the Company’s Certificate of Incorporation to provide stockholders with the right to act by written consent

 

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 an amendment of the Company’s amended and restated Certificate of Incorporation to provide stockholders with the right to act by written consent. Abstentions and broker non-votes will be counted as present for the purposes of this vote, and therefore will have the same effect as a vote against the proposal.

 

Proposal 8: To vote on a Stockholder Proposal to Let Shareholders Vote on Bylaw Amendments

 

The affirmative vote of a majority of the votes represented at the meeting, either in person or by proxy, and entitled to vote on this proposal, is required to approve the proposal to let shareholders vote on bylaw amendments. 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.

 

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 will 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 the cost of soliciting the proxies. We have retained Morrow Sodali 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 proxy solicitation fees for Morrow Sodali to be $7,500. In addition, our directors, officers and associates may, without additional compensation, also solicit proxies by mail, telephone, email, personal contact, facsimile 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.

 

Stockholders who have any questions regarding voting procedures can contact Morrow Sodali at (800)662-5200.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    90

 

 

How can I attend the annual meeting?

 

The annual meeting is being held as a virtual only meeting this year. If you are a stockholder of record as of the Record Date, you may attend, vote and ask questions virtually at the meeting by logging in at www.virtualshareholdermeeting.com/jblu 2020 and providing your control number. This number is included in the Notice or on your proxy card.

 

If you are a stockholder holding your shares in “street name” as of the Record Date, you may gain access to the meeting by following the instructions in the voting instruction card provided by your broker, bank or other nominee. You may not vote your shares via the Internet at the annual meeting unless you receive a valid proxy from your brokerage firm, bank, broker-dealer or other nominee holder. If you were not a stockholder as of the Record Date, you may still listen to the annual meeting, but will not be able to ask questions or vote at the meeting.

 

If you have questions, you may type them into the dialog box provided at any point during the meeting (until the floor is closed to questions). The audio broadcast of the annual meeting will be archived at www.virtualshareholdermeeting.com/jblu2020 for at least one year.

 

Why is this annual meeting virtual only?

 

We are excited to embrace the latest technology to provide expanded access, improved communication and cost savings for our stockholders and us. We believe that hosting a virtual meeting will enable increased stockholder attendance and participation since stockholders can participate from any location around the world, while saving the Company and investors time and money. A virtual meeting is also environmentally friendly and sustainable over the long-term. Stockholders can submit questions ahead of the meeting through an online portal and during the meeting while attending the annual meeting online. Our virtual meeting also enables us to provide non-stockholders the opportunity to listen to our meeting.

 

In addition, in light of the environment surrounding the Covid-19 coronavirus, we are retaining a virtual-only format for our annual meeting.

 

What is “householding” and how does it affect me?

 

The SEC has adopt