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. )
Filed
by the Registrant
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Filed
by a Party other than the Registrant
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Check the appropriate
box:
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Preliminary Proxy Statement
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CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to Section 240.14a-12
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JETBLUE
AIRWAYS CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (check
the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1) Title of each class of securities to
which transaction applies:
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(2) Aggregate number of securities to which
transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of
transaction:
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(5) Total fee
paid:
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Fee
paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date Filed:
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MESSAGE FROM OUR CHIEF EXECUTIVE OFFICER
JETBLUE AIRWAYS CORPORATION
27-01 Queens Plaza North
Long Island City, New York 11101
March 29, 2021
To our Stockholders:
I am pleased to invite you to the 2021 JetBlue
Airways Corporation annual meeting of stockholders, on Thursday, May 13, 2021 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. Stockholders of record as of March 18, 2021 will be able to attend virtually, submit questions during the meeting, and
vote your shares electronically during the meeting by logging in at www.virtualshareholdermeeting.com/jblu2021
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 are holding a virtual only meeting this
year for a few reasons. First, safety is an important value for JetBlue, in the air and on the ground. While we are encouraged
by the pace of COVID-19 vaccinations rolling out around the world, we do not know how many individuals will be vaccinated by May.
Accordingly, we are choosing the virtual format to keep our stockholders attending the meeting safe from COVID-19. We also value
innovation and we welcome expanded access, improved communication and cost savings for our stockholders and JetBlue afforded by
the virtual format. As we have learned in the past, hosting a virtual meeting enables increased stockholder attendance and participation
from locations around the world, which provides for a more meaningful forum. In addition, the virtual format allows us to communicate
more effectively via a pre-meeting portal that stockholders can enter by visiting www.proxyvote.com and logging
in with the control number. We encourage you to log on in advance and ask any questions you may have, which we will try to address
during the meeting. We recommend that you log in a few minutes before the scheduled meeting time on May 13, 2021 to ensure you
are logged in when the meeting starts.
The following notice of annual meeting of
stockholders outlines the business to be conducted at our 2021 virtual annual meeting of stockholders. Only stockholders of record
at the close of business on March 18, 2021 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 “notice and access” rules. As a result,
we are mailing to many of our stockholders a notice instead of a paper copy of the proxy statement and our 2020 Annual Report on
Form 10-K. The Notice of Internet Availability of the proxy materials contains instructions on how to access documents online.
The notice also contains instructions on how stockholders can receive a paper copy of our proxy materials, including the proxy
statement, our 2020 Annual Report on Form 10-K, 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 2021 virtual annual meeting, we hope you vote as soon as possible. You may vote 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 2021 virtual annual meeting, you may vote your shares at the meeting. Voting
online, by phone, or by mail ensures your representation at the 2021 virtual annual meeting regardless of whether you attend the
virtual meeting on May 13, 2021.
Very truly yours,
Robin Hayes
Chief Executive Officer and Director
On behalf of the Board of Directors of JetBlue
Airways Corporation
TABLE OF CONTENTS
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www.jetblue.com
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JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 2
TO
BE HELD ON MAY 13, 2021
9:00 a.m. (Eastern Daylight Time)
via the Internet at www.virtualshareholdermeeting.com/jblu2021.
JETBLUE AIRWAYS CORPORATION
27-01 Queens Plaza North
Long Island City, New York 11101
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NOTICE
of
Annual Meeting
of Stockholders
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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 March 29, 2021.
TIME AND DATE
9 a.m., Eastern Daylight Time, on Thursday,
May 13, 2021
PLACE
Online at www.virtualshareholdermeeting.com/jblu2021
ITEMS OF BUSINESS
1.
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To elect the ten directors named in this proxy statement;
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2.
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To approve, on an advisory basis, the compensation of our named executive
officers (“say-on-pay” vote);
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3.
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To ratify the selection of Ernst & Young LLP, as our independent
registered public accounting firm for the fiscal year ending December 31, 2021;
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4.
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To vote on a stockholder proposal to reduce the special meeting threshold,
if properly presented at the meeting; and
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5.
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Such other business as may properly come before the meeting.
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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 18, 2021.
By order of the Board of Directors
Brandon Nelson
General Counsel and Corporate Secretary
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 13, 2021
The notice of annual meeting, the proxy statement and our 2020 Annual Report
on Form 10-K are available on our website at http://investor.jetblue.com. Additionally, in accordance with the Securities
and Exchange Commission rules, you may access our proxy materials at www.proxyvote.com.
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VOTE
IN ADVANCE OF
THE MEETING:
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If your shares are held in the name of a broker, bank or other holder of record, follow
the voting instructions you receive from the holder of record to vote your shares.
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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.
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BY TELEPHONE
Call 1-800-690-6903 (toll-free)
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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.
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JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 3
VOTING
Your vote is very important. Regardless of whether you plan to attend the annual meeting virtually, 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 74 of the proxy statement.
VIRTUAL MEETING ADMISSION
Stockholders of record as of March 18,
2021, will be able to participate in the virtual annual meeting by visiting our annual meeting website www.virtualshareholdermeeting.com/jblu2021.
To participate in the 2021 virtual 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 2021 virtual 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
PORTAL
The online format used by JetBlue for the
2021 annual meeting also allows us to communicate more effectively with you. Stockholders can access our pre-meeting portal, 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 2020 Annual Report on Form 10-K at the annual meeting website.
JETBLUE AIRWAYS CORPORATION | 2021
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 3-4)
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Date
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Time
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Place
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May 13, 2021
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9:00 a.m. (Eastern Daylight Time)
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Via the Internet at
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www.virtualshareholdermeeting.com/jblu2021
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Record Date:
March 18, 2021
Mailing
Date: This proxy statement was first mailed to stockholders on or about March 29, 2021
Meeting
Agenda: The virtual annual 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
("JetBlue" or 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: 316,636,886
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
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Board
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Proposals
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Recommends
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Reasons for Recommendation
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See Page
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1. To elect ten directors named in the proxy statement
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Vote FOR
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The Board of Directors (the “Board“) and its Governance and
Nominating Committee believe each of the ten director nominees possesses the skills and experience to effectively monitor
performance, provide oversight and advise management on the Company’s long-term strategy.
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28
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2. To approve, on an advisory basis, the compensation of our named
executive officers (“say-on-pay” vote)
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Vote FOR
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Our executive compensation programs demonstrate our execution on our pay
for performance philosophy.
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35
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3. To ratify the selection of Ernst & Young LLP (“EY“)
as our independent registered public accounting firm for the fiscal year ending December 31, 2021
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Vote FOR
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Based on the Audit Committee’s assessment of EY’s qualifications
and performance, the Board and its Audit Committee believe EY’s retention for fiscal year 2021 is in the best interests
of the Company.
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66
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4. To vote on a stockholder proposal to reduce the special meeting
threshold, if properly presented at the meeting.
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Vote AGAINST
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The Company believes that the stockholder proposal is not in the best interests
of the Company.
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71
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JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 5
HOW DO I VOTE?
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BY INTERNET
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BY TELEPHONE
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BY MAIL
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AT THE MEETING
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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.
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Call
1-800-690-6903 (toll-free)
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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.
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Vote
online during the meeting
See p. 74 “Questions and Answers About the Annual Meeting” for details about voting at the meeting.
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Our Director Nominees
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Committee Memberships*
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Director
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Other Public
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Airline
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ESG
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Name
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Age
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since
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Independent
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Boards
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Audit
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Comp
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Safety
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G&N
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Subcommittee
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Finance
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B. Ben Baldanza
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59
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2018
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Y
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1
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Peter Boneparth
Independent Board Chair
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61
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2008
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Y
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1
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Monte Ford
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61
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2021
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Y
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3
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Robin Hayes
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54
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2015
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N
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1
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Ellen Jewett
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62
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2011
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Y
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1
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Robert Leduc
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65
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2020
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Y
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2
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Teri McClure
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57
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2019
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Y
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3
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Sarah Robb O’Hagan
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48
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2018
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Y
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0
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Vivek Sharma
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46
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2019
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Y
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0
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Thomas Winkelmann
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61
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2013
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Y
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0
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Chair
Member
Financial Expert
*
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Memberships as of the 2021 Annual Meeting.
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JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 6
BUSINESS OVERVIEW
How Did We Do in 2020?
2020 Financial and Operational Performance
The impact of the COVID-19 pandemic required
us to revisit our business priorities in light of drastic changes to our Company, our industry, and our world. We pivoted our
business to a cash preservation mode for most of 2020 as rolling quarantines took effect throughout the world, with spiking case
counts.
Our full year results were as follows:
(1)
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Excludes special items.
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(2)
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Liquidity is defined as cash, cash equivalents, and short-term investments.
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*
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Non-GAAP financial measure.
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Please refer to our ''Regulation G Reconciliation
of Non-GAAP Financial Measures" in Appendix A for more information on non-GAAP measures.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 7
2020 Highlights
In response to the COVID-19 pandemic, since
March 2020 we implemented measures to focus on the safety of our customers, our employees, whom we call crewmembers, and our business.
Customers and Crewmembers
The safety of our customers and crewmembers
continues to be a priority. As the COVID-19 pandemic has developed, we have taken steps to promote physical distancing and implemented
new procedures that reflect the recommendations of health experts, including the following:
■
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Introduced "Safety from the Ground
Up", an initiative with a multi-layer approach that encompasses enhanced safety and cleaning measures on our flights,
at our airports, and in our offices.
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Updated our sick leave policy to provide up to 14
days of paid sick leave for crewmembers who were diagnosed with COVID-19 or were otherwise required to quarantine.
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Partnered with Northwell Direct, a provider of employer
health services, to provide a comprehensive set of COVID-19 services and programs to support our crewmembers.
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Implemented a framework for internal contact tracing,
crewmember notification, and a return to work clearance process for all crewmembers, wherever they may be located.
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Required face coverings for all crewmembers while
boarding, in flight, and when physical distancing cannot be maintained.
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Enhanced daily and overnight cleaning of our aircraft
and all facilities, using electrostatic spraying of disinfectant in the cabins of aircraft parked overnight at selected focus
cities.
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Limited the number of seats sold on most flights.
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Provided enhanced flexibility to our customers by
waiving change and cancel fees for customers with existing bookings made through March 31, 2021, while also extending the
expiration date of travel credits issued between February 27, 2020 and June 30, 2020 for flight purchases to 24 months.
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Announced our partnership with Vault Health to provide
discounted at-home COVID-19 testing to customers with pending travel plans.
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Our Business
The COVID-19 pandemic drove a significant
decline in demand beginning in the second half of March 2020. As a result, we significantly reduced our capacity to a level that
maintains essential services to align with demand. We have implemented cost saving initiatives to reduce our overall level of
cash spend. Some of the initiatives we have undertaken include:
■
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Adjustments in flying capacity to align with the expected
demand.
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Temporary consolidations of our operations
in certain cities that contain multiple airport locations.
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Renegotiated service rates with business partners
and extended payment terms.
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Instituted a company-wide hiring freeze.
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Implemented salary reductions
for a portion of our crewmembers, including our officers, throughout 2020 and into 2021, and the Board of Directors
waived 100% of its cash compensation for the first quarter of 2020.
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Offered crewmembers voluntary time off and separation
programs, with most departures for the separation program occurring during the third quarter of 2020.
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Given this situation, we have taken
actions to increase liquidity, strengthen our financial position, and conserve cash. We also received government relief
pursuant to the CARES Act payroll support program grant and loan, as discussed later in this proxy statement. We lowered our
cash burn* from approximately $18 million per day at the end of March 2020 to an average of approximately
$6.7 million per day during the fourth quarter of 2020.
Preparing for Recovery
As the COVID-19 pandemic continues to persist,
we have taken a number of steps to position the Company for recovery when we expect demand for air travel to eventually return,
by adding routes and announcing a strategic partnership with American Airlines Group, Inc. and expansion plans for the west coast
over several years.
*
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Non-GAAP financial measure.
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JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 8
JETBLUE’S APPROACH TO ENVIRONMENTAL, SOCIAL AND GOVERNANCE
MATTERS
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 at https://www.jetblue.com/sustainability/reporting.
Governance
At the end of 2019, our Board formed an
ESG Subcommittee to the Governance and Nominating Committee to advise the Board on ESG matters and provide advice to management
as well. As part of its initiatives in 2020, the ESG subcommittee worked with the Board and management to develop a clearer framework
as to where the various pieces of ESG lie within the Board’s governance framework. We expect to continue to refine these
concepts over time but we also think it is important to inform our stockholders of our progress on this journey.
Board ESG Areas of Risk Oversight
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Full Board Responsibilities
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Awareness of the JetBlue ESG strategy
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Ensure ESG competency and fluency of Board
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JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 9
Environmental/Sustainability Initiatives and Reporting
We believe it is our responsibility to manage
our impact on the environment and communities around us and to explore associated environmental and social risks and opportunities
that may affect our business. JetBlue was recognized as one of Cowen Research's best ESG investment ideas, with a score of 60
from Truvalue Labs, a FactSet company, as of March 2021. A score above 50 is considered a positive score, and the score of 60
makes JetBlue a top ESG performer in the airline industry.
We employ a dedicated Sustainability and
ESG executive 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.
As part of our commitment to transparency,
we have shared our social and environmental efforts and impacts publicly since 2006. In 2016, we moved our standardized reporting
to follow Sustainability Accounting Standards Board (SASB) guidelines. These standards identify material sustainability factors
that are likely to impact financial performance. Designed to be cost-effective for companies and decision-useful for investors,
SASB provides both parties the ability to compare and benchmark performance. In 2017, we were among the first companies to introduce
voluntary climate-related disclosures recommended by the Task Force on Climate-related Financial Disclosures (TCFD). The TCFD
standards seek to improve market understanding and analysis of climate-related risks and opportunities by developing disclosure
recommendations that are useful to stakeholders in understanding material risks. We expect to continue to evolve our reporting
activities to provide what our investors are asking for – including climate risk scenario planning which demonstrates an
understanding of how climate-related risks and opportunities may impact JetBlue over time, and voluntarily report increasingly
granular and specific ESG metrics and targets.
To JetBlue, sustainability means leading
the way to a lower-carbon operation, preparing our business today for a changed future. In 2020, JetBlue became the first U.S.
airline to voluntarily offset all of the carbon dioxide emissions for all our domestic flights. JetBlue made this industry-changing
move to demonstrate real, immediate action toward reducing its contribution to global warming. As part of its offsetting program,
JetBlue selects projects around the globe that will balance the emissions from its jet fuel. All of JetBlue’s purchased
carbon offsets are audited, verified and retired on the airline’s behalf, and projects are sourced from three expert carbon
offsetting partners.
JetBlue views carbon offsetting as a bridge
as we build up lower-carbon technologies and innovations. Therefore, JetBlue is also investing in sustainable aviation fuel (SAF)
which will play a critical role in the aviation industry’s transition toward decarbonization. In July 2020, JetBlue partnered
with Neste to fuel flights from San Francisco International Airport (SFO) with sustainable aviation fuel. Neste’s MY Renewable
Jet Fuel™ is produced 100 percent from waste and residue raw materials and over the lifecycle and before being blended with
conventional fuel, reduces emission up to 80% when compared to fossil jet fuel.
As we look forward, we have committed to
achieve net zero carbon emissions across all our operations by 2040 at the latest, 10 years ahead of the Paris Agreement. We plan
to reach net zero by continuously increasing the fuel efficiency of our aircraft and operations, expanding the use of sustainable
aviation fuels, embracing and supporting alternative energy aircraft and technology, and offsetting any remaining and unavoidable
emissions.
We are committed to addressing the emission
of greenhouse gases (GHGs) from our flights and we strive to empower and inspire our customers and crewmembers to take measures
such as offsetting GHG emissions when they fly. Communities and their environments are inherently connected which is why we include
environmental programs in our community engagement efforts. GreenUp is JetBlue’s annual campaign to support local environmental
nonprofits and create customer engagement around preserving the environment.
In 2020, JetBlue’s customer-facing
environmental initiatives were adapted to adhere to pandemic protocols. The largest effort included partnership with Para la Naturaleza
in Puerto Rico, an organization which integrates society into the conservation of Puerto Rico's natural ecosystems.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 10
ESG Targets
To demonstrate our focus and commitment
toward advancing our ESG performance, we have set ambitious targets across the ESG areas we consider most material to our business.
Environmental
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Social
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Governance
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Emissions excluding offsets
■ Reduce aircraft
emissions 25% per available seat mile (ASM) by 2030 from 2015 levels, excluding offsets
Emissions with offsets
■ Achieve net zero carbon emissions by 2040, including
offsets
Renewable Energy
■ 10% of fuel to be from blended sustainable aviation fuel
(SAF) by 2030
■ 40% of 3 most common owned ground service equipment (GSE)
vehicle types to be converted to electric (eGSE) by 2025, and 50% by 2030
Waste
■ Maintain at least an 80% recycling rate for audited domestic
flights
■ Eliminate single use plastics within service ware where
possible. Where not possible, ensure plastic is recyclable
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Leadership Diversity
■ Double our race and ethnic minority representation at
the officer and director level, from 12.5% to 25% by 2025
■ Increase our female representation at the officer and
director level, from 32% to 40% by the end of 2025
Business Partner Engagement
■ Engage with 80% of top active business partners by spend
on ESG principles within the Business Partner Code of Conduct by 2023
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Board ESG Oversight
■ An ESG subcommittee of the Board, consisting of at least
3 members, meets 3 times a year by 2021
■ Board-level accountability and areas of ESG oversight
published by 2021
Board ESG Fluency
■ Integrate ESG and DEI into Board member selection process
by 2021
Executive Compensation
■ Establish ESG goals tied to senior leadership compensation
by 2021
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Social Impact Reporting
JetBlue produces an annual social impact
report using Global Reporting Initiative (GRI) Standards, the most widely adopted voluntary corporate responsibility reporting
framework in the world. Through this report, JetBlue focuses on its corporate responsibility and impact through transparent reporting
on its community partnerships; corporate giving; diversity, equity and inclusion; safety; and employment and relevant human resources
data. The combination of GRI’s standards with social impact reporting provides customers, crewmembers, business and community
partners and investors with context about JetBlue’s social impact strategy in the communities we serve.
Diversity, Equity and Inclusion
We cultivate and measure the diversity of
our workforce and leadership teams, recognizing that diversity supports enhanced organizational decision-making. Thematically,
diversity, equity and inclusion falls under the social focus of ESG. The work itself is done cross functionally over multiple
teams, including through our People Department (which is how we refer to human resources). We have ongoing programs to encourage
a diverse talent pipeline specifically for technical roles, such as pilots.
We are taking measured and organic steps
toward building a leadership pipeline that is reflective of our crewmember and customer base.
This philosophy also extends to our Board.
Our Board continued to bring in new perspectives in 2020. The Board in May, assuming all nominees are elected/reelected, will
have three female directors out of ten directors and three ethnically/racially diverse directors.
We are committed to fighting against racial
injustices and eliminating barriers through our diversity and inclusion equity action plan designed to support people of color
and women within the airline, with a concerted effort for increased leadership diversity.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 11
Some of our efforts in this context include:
■
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Reviewing
training modules for cultural sensitivity.
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■
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Identifying opportunities to reshape policies
and talent processes to reduce bias and demonstrate inclusivity.
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Expanding opportunities for minority and women-owned
business partners.
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Exploring marketing opportunities and partnerships.
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Committing to continue crewmember development opportunities.
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Investing in students from underrepresented communities
through the JetBlue Foundation to help increase access, reduce the barriers to entry and create educational and employment
opportunities in the aviation industry.
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Through JetBlue’s products, services,
branded words and actions, we strive to build emotional connections and make diverse crewmember and customer segments feel psychologically
safe, included and represented.
Corporate Social Responsibility
JetBlue For Good
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. During the pandemic, the team focused on assisting relief efforts.
*
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CSR initiatives during 2020.
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JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 12
Youth/Education & Community-Focused Initiatives
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 provides
books 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. JetBlue crewmembers
logged approximately 1.2 million volunteer hours in 2020.
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 Sustainability Accounting Standards Board (SASB) and Task Force on Climate-related Financial Disclosures (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 the investor relations page on 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 | 2021
PROXY STATEMENT 13
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 the external audit.
In addition, Board committees focus on the following:
Audit
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Financial reporting;
internal and external audit; cybersecurity, including in support of the Board’s role in oversight of cybersecurity risks;
certain other risks not otherwise assigned; legal, regulatory, compliance and business continuity matters
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Compensation
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Compensation and benefits; succession
planning at the officer level, including the CEO (together with the Governance and Nominating Committee)
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Governance and Nominating
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Board effectiveness; identifying
director nominees; director qualifications; onboarding and continuing education of directors; political contribution and PAC
matters; stockholder engagement; governance framework; CEO succession planning
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ESG Subcommittee
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Environmental and sustainability
initiatives; social and governance issues, including diversity, equity and inclusion
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Airline Safety
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Monitor promotion of operational
safety culture; flight operations safety and overview of aspects of airline safety
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Finance
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Oversight of the Company’s
financial condition, financing activities, capital plan, budget and related activities
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JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 14
The ESG Subcommittee is also working with the Board and its committees to integrate
oversight of ESG related risks into the various committees and their charters.
Management Drives Our Strategy and Operations
Led by the CEO, the senior leadership team is responsible
for leading the Company towards achieving our mission, establishing and delivering on our strategy, maintaining and inspiring our
culture and crewmembers, inspiring and creating an innovative and disruptive customer experience, 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. Members of the senior leadership team meet with the Board regularly,
with most attending a Board or committee session each quarter, and also interact with our 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 continuously 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.
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 CEO. Serving since the May 2020 Annual Meeting,
Mr. Peter Boneparth is our independent Chair of the Board. 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 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 current leadership structure is appropriate because it effectively allocates authority, responsibility,
and oversight between management and the independent members of our Board.
Independent Chair of the Board
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Independent Board
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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.
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■ 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, including, for directors serving on our Audit Committee and Compensation Committee,
with respect to enhanced independence requirements for members of such committees, as applicable.
■ 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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JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 15
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.
BOARD SKILLS AND EXPERIENCE MATRIX
BOARD MEMBER SKILLS AND EXPERIENCES
The skills and experience categories reflect self-identification by the directors.
Information in this chart is presented as of December 2020.
BOARD DIVERSITY
The gender and race/ethnicity categories reflect self-identification by the director-nominees
standing for election at the 2021 Annual Meeting.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 16
Board Structure: Committees
To support effective corporate governance, the Board delegates certain responsibilities
to its committees, who report on their activities to the Board.
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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 setting forth its specific responsibilities, which can be found on the 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 specifically Environmental, Social and Governance
issues pertinent to our business.
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■
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Committees are Independent – Our Audit Committee,
Compensation Committee, Governance and Nominating Committee and Finance Commitee are composed of independent directors. Our
CEO serves on the Airline Safety Committee. The ESG subcommmittee is also composed of independent directors.
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■
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Regular Committee Executive Sessions of Independent Directors –
Members of the Audit Committee, Compensation Committee and Governance and Nominating Committee regularly meet in executive
session.
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■
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Committees have authority to engage legal counsel or other advisors
or consultants – Each committee is authorized to retain advisors or consultants as it deems appropriate
to carry out its responsibilities.
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■
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Independent compensation consultant – The
Compensation Committee retains Pay Governance LLC (“Pay Governance”) to advise 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. The Compensation Committee consults with Pay Governance about the Compensation Committee’s recommendations
to the Board on CEO compensation. Pay Governance is directly accountable to the Compensation Committee. To maintain its independence,
Pay Governance does not provide any services for JetBlue other than those described above.
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■
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The Compensation Committee consultant maintains its independence –
Annually, the Compensation Committee assesses the independence of its compensation consultant considering the following
factors:
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–
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Is retained and terminated by, has its compensation fixed by, and
reports solely to, the Compensation Committee
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–
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Maintains and adheres to the consultant’s independence policy to prevent
conflicts of interest
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–
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Whether the consultant (or any individual employee of the consultant providing services)
owns JetBlue common stock
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–
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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
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–
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Whether the consultant provides any unrelated services or products to the Company,
its affiliates, or management, except for surveys purchased from the consultant firm
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–
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Whether the consultant (or any individual employee of the consultant providing
services) has any business or personal relationship with a Committee member or with an executive officer of JetBlue
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–
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The fees received for the JetBlue engagement, as a percentage of the consultant's annual revenues
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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. The Compensation Committee believes that Pay Governance has been independent during its engagement as a consultant to the Compensation Committee.
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“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 two are “audit committee financial experts” under Securities and Exchange Commission (“SEC”) rules (Ms. Jewett and Mr. Baldanza).
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JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 17
Responsibilities
AUDIT
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Members*:
Ben Baldanza (Chair)
Monte Ford
Ellen Jewett
Robert Leduc
Vivek Sharma
Meetings held in 2020: 9
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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 “Audit Committee Report” set forth elsewhere
in this proxy statement 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
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.
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.
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COMPENSATION
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Members*:
Teri McClure (Chair)
Peter Boneparth
Sarah Robb O’Hagan
Thomas Winkelmann
Meetings held in 2020: 8
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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 36 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 2020 Omnibus Equity Incentive
Plan (“Omnibus Plan“) and 2020 Crewmember Stock Purchase Plan and predecessor or successor plans, and
■ prepares and recommends to the full Board for inclusion in
this proxy statement a Compensation Committee report. See Compensation Committee Report set forth elsewhere in this proxy
statement.
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.
The charter of the Compensation Committee is available on our website
at http://investor.jetblue.com.
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*
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Memberships as of the
2021 Annual Meeting.
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JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 18
GOVERNANCE
AND NOMINATING
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Members*:
Ellen Jewett (Chair)
Peter Boneparth
Teri McClure
Thomas Winkelmann
Meetings held in 2020: 5
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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.
The charter of the Governance and Nominating Committee is available on our website
at http://investor.jetblue.com.
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AIRLINE SAFETY
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Members*:
Thomas Winkelmann (Chair)
Ben Baldanza
Robin Hayes
Robert Leduc
Meetings
held in 2020: 4
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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.
The charter of the Airline Safety Committee is available on our website at http://investor.jetblue.com.
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FINANCE
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Members*:
Peter Boneparth (Chair)
Ben Baldanza
Ellen Jewett
Robert Leduc
Meetings held in 2020: 17
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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.
The charter of the Finance
Committee is available on our website at http://investor.jetblue.com.
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ESG SUBCOMMITTEE
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Members*:
Ellen Jewett (Chair)
Teri McClure
Thomas Winkelmann
Meetings held in 2020: 3
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The ESG subcommittee is responsible for:
■ Providing
leadership to the Board and management on environmental and sustainability initiatives, social and governance issues,
including diversity, equity and inclusion.
The charter of the ESG subcommittee is available on our website at http://investor.jetblue.com.
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*
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Memberships as of 2021
Annual Meeting.
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JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 19
Compensation Committee Interlocks and Insider Participation
None of the current members of our Compensation Committee (whose names appear
under “Compensation Committee Report”) 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 leading the Company towards
achieving our mission, delivering on our strategy, creating our culture, inspiring and creating an innovative customer
experience, establishing accountability, and controlling risk. The Board and its committees work closely with management to
balance and align strategy, risk 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.
In the dynamic and volatile climate of 2020, the Board met often with leadership
to chart the Company’s course in the rapidly changing pandemic environment. The Finance Committee similarly met often with
leadership as the Company navigated a significantly changed revenue and financial environment, from a growth environment at the
beginning of 2020, to a cash priority environment through the CARES Act grants and loans to a successful equity offering.
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.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 20
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 and
diversity, equity and inclusion, environmental and sustainability risks.
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.
As 2020 developed, the Board, through
the Governance and Nominating Committee, reviewed the Board and its committees through an ESG lens and revisited Board
level responsibilities for different aspects of ESG. As provided above (See ”JetBlue’s Approach to ESG
Matters — Governance — Board ESG Areas of Risk Oversight”)the Board has designated certain ESG risks across
the ESG Subcommittee and Board committees, while retaining overall awareness, ESG fluency and strategy at the Board
level.
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 2021, the Compensation Committee
reviewed the 2020 cash and equity incentive programs for senior executives and concluded that certain aspects of the programs
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 (although no PSU awards were made in 2020 for the
2020-2022 performance period as discussed in the CD&A), (ii) our 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. In
addition, in 2020, the Company received federal pandemic support in the form of monies under the CARES Act, which limits
officer compensation based on 2019 levels.
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
We believe that directors and executive
officers should have a significant financial stake in JetBlue to further align their interests with the interests of our
stockholders, thus we have established robust stock ownership and retention guidelines for our directors and executive
officers. Our non-employee directors are required to hold 5x the annual cash retainer, or $400,000, in JetBlue equity until
their retirement or separation from our Board. Effective for 2020, directors were afforded the opportunity to select to
receive their annual equity compensation award as either restricted stock units (“RSUs“) with a one year vesting
period or as deferred stock units (“DSUs“) also with a one year vest. Director DSUs, once vested, are deferred
until the director’s
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 21
departure from JetBlue. These director
DSUs are settled as common stock six months following a director’s separation from the Board. The holding
requirements for non-employee directors may be satisfied by holding common stock, vested and unvested RSUs and vested and
unvested DSUs. As of December 2020, all of our non-employee directors met or exceeded our stock ownership guidelines, or were
within the requisite time period since first becoming a director to acquire the applicable level of ownership, in accordance
with our policy.
For 2020, 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. The holding requirements for executives may be satisfied
by holding common stock, and vested and unvested RSUs. As of December 2020, all of our NEOs met or exceeded our stock ownership
guidelines, or were within the requisite time period since first becoming subject to the guidelines to acquire the applicable level
of ownership, in accordance with our policy. We anticipate periodically reviewing, and may revise our director and executive stock
ownership guidelines from time to time.
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
all JetBlue insiders.
We Have Advanced Stockholder Rights
Majority Voting in Uncontested Director Elections
In an uncontested election, directors are elected by the majority of votes cast.
Pursuant to our Amended and Restated Bylaws (“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.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 22
Proxy Access
We have a market standard “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 stockholders who hold 20% ownership in
our Company’s common stock have the right to request the Company call a special meeting.
The 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
our 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 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.
Right to Act by Written Consent
Our stockholders who hold at least 25% of
outstanding shares of the Company’s stock may request that the Board set a record date to determine the stockholders entitled
to act by written consent. 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.
Director Onboarding and Education
Directors Receive Robust Orientation and Continuing
Education Resources
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■
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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.
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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.
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■
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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. 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.
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JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 23
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 2020, to continue to enhance its processes,
the Board performed a robust self-evaluation, involving individual interviews and feedback provided to the General Counsel. The
General Counsel provided the Board with themes and feedback for the Board to discuss and to consider in the future. This process
generated meaningful comments and engaged discussion at all levels of the Board, including with respect to Board composition, Board
meeting structure and content, Company internal controls and compliance and leadership succession planning and talent.
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.
Our
Corporate Governance Documents
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Amended and Restated Articles of Incorporation
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Audit Committee Charter
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Amended and Restated
Bylaws
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Compensation Committee Charter
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Corporate Governance Guidelines
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Governance and Nominating Committee Charter
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JetBlue Code of
Conduct
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Airline Safety Committee Charter
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JetBlue Business Partner Code of Conduct
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Finance Committee Charter
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JetBlue Code of
Ethics
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ESG Subcommittee Charter
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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 Corporate 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 | 2021
PROXY STATEMENT 24
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. Mr. Monte Ford
was appointed to the Board in January 2021. The Company used a search firm to identify Mr. Ford’s candidacy for membership
on our Board. He will be standing for election by the stockholders for the first time in May 2021.
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 and of the industry in which the Company operates
and such other factors as the Committee concludes are pertinent in light of the current needs of the Board based on the Company’s
short and longer term strategy. The Board considers diversity of viewpoints, background, race, gender, ethnicity, experience, accomplishments,
education and skills when evaluating nominees. The Governance and Nominating Committee engaged an external search firm to assist
it in identifying potential nominees in 2020. 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 overall commitment to enhancing stockholder value. Candidates may come to the attention
of the Corporate Governance and Nominating Committee through recommendations from a search firm, current Board members, stockholders,
officers, employees or other stakeholders. 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. We believe that these
provisions provide meaningful, effective and accessible proxy access rights to our stockholders, while balancing 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 | 2021
PROXY STATEMENT 25
Board Membership Criteria
The Board and
its 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
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Independence
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Integrity
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Track record of success
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Business judgment
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Innovative thinking
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Diversity
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Familiarity with and respect for corporate governance requirements and practices
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Ability & willingness to commit sufficient time to the Board
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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 or financial services institutions
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.
While the Board
does not have a specific diversity policy, it 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 its 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 Corporate 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, including within the meaning of the applicable independence requirements of Nasdaq. Our Board has adopted director
independence guidelines to assist in determining each director’s independence. These guidelines are available on the investor
relations page of our website.
Each year, in assessing director independence,
the Board affirmatively determines whether 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 with respect to his or her independence.
The Board analyzed
the independence of each director and nominee and determined that Mses. Jewett, Gambale (Ms. Gambale is not standing for re-election
at the 2021 Annual Meeting), McClure and Robb O’Hagan and Messrs. Baldanza, Boneparth, Ford, Leduc, Sharma and Winkelmann
meet the standards of independence under applicable Nasdaq listing standards, including, as applicable to members of those committees,
the enhanced standards for audit and compensation committee independence, and that each member is free of any relationship that
would interfere with her or his individual exercise of independent judgment. Robin Hayes, our CEO, is our only director who is
not deemed to be independent.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 26
Director Attendance
The Board held a total of 15 meetings during
2020. 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 2020. The Company has a policy encouraging all directors
to attend each annual meeting of stockholders. All members of our Board attended our 2020 annual meeting of stockholders held on
May 14, 2020.
2021 Director Nominees
There are currently eleven members of our
Board and, assuming the election of all nominees, immediately following the annual meeting the size of our Board will be set at
ten directors. Ms. Gambale, a director since 2006, is not standing for reelection as, pursuant to our Corporate Governance Guidelines,
her term is complete. The Company thanks Ms. Gambale for her exemplary service to JetBlue.
At the 2021 annual
meeting, ten directors are to be elected to hold office until the 2022 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 2020 annual meeting, except
for Monte Ford, who was appointed to the Board in January 2021. Based on the recommendation of the Governance and Nominating Committee,
the Board has nominated each of B. Ben Baldanza, Peter Boneparth, Monte Ford, Robin Hayes, Ellen Jewett, Robert Leduc, Teri McClure,
Sarah Robb O’Hagan, Vivek Sharma and Thomas Winkelmann, each a current director of the Company, to be elected as a director
of the Company to serve on our Board until the 2022 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. However, if before the annual meeting, any nominee is unable to serve or for good cause will not 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 substitute nominee for election to a position on the Board
will be elected by a majority of the votes cast at the annual meeting. Alternatively, 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.
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 | 2021
PROXY STATEMENT 27
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 its 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 Monte Ford, who was appointed to the Board in early 2021. Ms. Gambale is not standing for re-election
at this year’s Annual Meeting as she has reached the term limit provided in our Corporate Governance Guidelines.
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YOUR BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL.
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B. BEN
BALDANZA
Age 59
Director
since: 2018
INDEPENDENT
JETBLUE BOARD
COMMITTEES*:
■ Audit
(Chair)
■ Airline
Safety
■ Finance
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|
EXPERIENCE:
Current Role:
■ Owner and CEO of Diemacher, LLC, 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., a commercial passenger airline, 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 other
airlines, including 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.
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|
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.
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PETER
BONEPARTH
Age 62
Director
since: 2008
INDEPENDENT
INDEPENDENT BOARD CHAIR
JETBLUE BOARD
COMMITTEES*:
■ Finance (Chair)
■ Compensation
■ Governance & Nominating
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|
EXPERIENCE:
Current Role:
■ Senior advisor to a division of The Blackstone
Group, LLP, an investment management firm, advising on the retail industry.
Current Public Company Boards:
■ JetBlue Airways Corporation, Independent Board Chair
■ Kohl’s Corporation
Prior Business and Other Experience:
■ Mr. Boneparth was a 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, an apparel company, from 2002 to 2007.
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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.
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JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 28
MONTE FORD
Age 61
Director
since: 2021
INDEPENDENT
JETBLUE BOARD
COMMITTEES*:
■ Audit
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EXPERIENCE:
Current Role:
■ Principal Partner at the Chief Information Officer Strategy Exchange,
a membership program for technology executives, and Network Partner and Industry Advisor to Brightwood Capital Advisors, LLC, a
provider of growth capital to growing middle-market businesses.
Current Public Company Boards:
■ JetBlue Airways Corporation
■ Akamai Technologies, Inc.
■ The Michael’s Companies, Inc.
■ Iron Mountain Inc.
Prior Business and Other Experience:
■ Mr. Ford served as Executive Chair and Chief Executive Officer of
Aptean Software, an enterprise business software provider, from 2012 to 2013, and as Chief Information Officer of AMR
Corporation (now known as American Airlines Group), an airline holding company, from 2000 to 2011. Prior to that, Mr. Ford held
executive management positions with The Associates First Capital Corporation, Bank of Boston and Digital Equipment Corporation.
He has served as a director of several institutions, as well as on the Research Board and CIO Strategy Exchange.
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Key Qualifications:
■ As a thought leader and former technology executive, Mr. Ford’s
qualifications and experience include diverse leadership experiences and an extensive background in information technology, including
in the airline industry.
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ROBIN HAYES
Age 54
Director
since: 2015
JETBLUE BOARD
COMMITTEES*:
■ Airline
Safety
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EXPERIENCE:
Current Role:
■ JetBlue CEO
Current Public Company Board:
■ JetBlue Airways Corporation
■ KeyCorp
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 to May 2018. From 2014 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 the Executive Vice President for The Americas for British Airways, a commercial airline. 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. Mr. Hayes currently serves as the Board Chair of the IATA Board of
Governors.
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|
Key Qualifications:
■ As
a senior airline executive, Mr. Hayes’ qualifications include over 30 years of aviation experience, knowledge of the competitive
landscape, brand enhancement and management.
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JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 29
ELLEN
JEWETT
Age 62
Director
since: 2011
INDEPENDENT
JETBLUE BOARD
COMMITTEES*:
■ Governance & Nominating (Chair)
■ ESG subcommittee (Chair)
■ Audit
■ Finance
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|
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, a financial services institution, covering airports and infrastructure
banking from 2010 to 2015. Prior to that, Ms. Jewett spent more than 20 years at Goldman, Sachs & Co., a global financial institution,
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 Foundation Credit Opportunities (FCO) U.S. and Offshore Feeder Funds and a Trustee of Children’s
Aid in New York City.
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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.
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ROBERT
LEDUC
Age 65
Director
since: 2020
INDEPENDENT
JETBLUE BOARD
COMMITTEES*:
■ Airline
Safety
■ Audit
■ Finance
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EXPERIENCE:
Current Role:
■ Retired
as President of UTC’s jet engine manufacturer Pratt & Whitney in 2020.
Current Public Company Board:
■ JetBlue
Airways Corporation
■ Howmet
■ AAR
Prior Business and Other Experience:
■ Mr. Leduc served as President of Pratt & Whitney, an aerospace manufacturer, from 2016 until early 2020. He had led
helicopter manufacturer Sikorsky Aircraft, an aircraft manufacturer, 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, each
an aerospace company.
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Key Qualifications:
■ As a former 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.
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TERI
MCCLURE
Age 57
Director
since: 2019
INDEPENDENT
JETBLUE BOARD
COMMITTEES*:
■ Compensation (Chair)
■ ESG subcommittee
■ Governance
& Nominating
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EXPERIENCE:
Current Role:
■ Retired as Chief Human Resources Officer of United Parcel Service
(“UPS”), a package delivery and supply chain management company in 2019.
Current Public Company Board:
■ JetBlue
Airways Corporation
■ Fluor
Corporation
■ GMS,
Inc.
■ Lennar
Corp.
Prior Business and Other Experience:
■ From 1995 until her retirement in 2019, Ms. McClure worked at UPS, serving most recently as Chief Human Resources Officer.
She has also held additional positions and responsibilities on the UPS Executive Leadership Team, including General Counsel and
Corporate Secretary, and Audit and Global Ethics and Compliance, among other roles.
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Key Qualifications:
■ As a CHRO and General Counsel as well as an aviation executive with nearly 25 years of experience, Ms. McClure’s qualifications
and experience include legal acumen, talent management, labor issues, aviation management, risk management oversight and international
business experience.
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JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 30
SARAH ROBB
O’HAGAN
Age 48
Director
since: 2018
INDEPENDENT
JETBLUE BOARD
COMMITTEES*:
■ Compensation
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EXPERIENCE:
Current Role:
■ CEO of EXOS, the Human Performance Company
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 from 2016 to 2018, 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 Equinox,
a luxury fitness company, from 2012 to 2016, where she led the upgrading of the offering through a significant technology transformation,
and global president of Gatorade, a sports nutrition business, from 2008 to 2012, where she successfully led the business through
a major repositioning and business turnaround.
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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.
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VIVEK
SHARMA
Age 46
Director
since: 2019
INDEPENDENT
JETBLUE BOARD
COMMITTEES*:
■ Audit
|
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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, a worldwide entertainment 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, a web services provider, Vice President of Product Management of Yahoo
Search, and Associate Partner with the Technology Practice of McKinsey & Company, a management consulting firm.
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|
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 61
Director
since: 2013
INDEPENDENT
JETBLUE BOARD
COMMITTEES*:
■ Airline
Safety (Chair)
■ Compensation
■ ESG
subcommittee
■ Governance
& Nominating
|
|
EXPERIENCE:
Current Role:
■ Executive Chair 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,
a commercial airline, from 2017 through 2018. He previously served as the Chief Executive Officer of Lufthansa German Airlines
(Hub Munich), a commercial airline, since in 2016 and was a member of the Group Executive Committee of Lufthansa Group. From 2006
through 2015, he served as Chief Executive Officer of Germanwings GmbH, a commercial airline.
|
|
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.
|
*
|
Memberships as of the 2021 Annual Meeting.
|
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 31
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 2020
|
|
|
Annual base retainer (all non-employee directors)
|
|
$
|
80,000
|
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)
|
Directors annually elect DSUs or RSUs, each of which vest after one year of service. DSU 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.
|
As is customary in the airline industry,
all members of the Board and their immediate family may travel without charge on our flights. We also provide directors with post-service
travel benefits.
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 (including Board and committee fees) for the
first quarter of 2020 as the Company grappled with the effects of COVID-19 on the aviation industry and JetBlue.
In 2020, Mr. Peterson donated $23,333, Mr.
Leduc donated $3,501, Mr. Baldanza donated $1,842, Mr. Sica donated $1,000, and Ms. Robb O’Hagan donated $700 of the
cash portion of their respective Board compensation to the JetBlue Crewmember Crisis Fund, a non-profit organization that assists
JetBlue crewmembers facing emergency hardship situations.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 32
Fiscal Year 2020 Director Compensation
The following table summarizes compensation paid to our non-employee
directors for services rendered during the year ended December 31, 2020 (which excludes the cash compensation waived for the first
quarter of 2020). The footnotes to the table and narrative discussion preceding the table describe details of each form of compensation
paid to, or earned by, our directors and other material factors relating to director compensation arrangements.
|
|
Fees
Earned
or Paid in Cash
($)
|
|
|
Stock
Awards
($)
|
(1)
|
|
All
Other
Compensation
($)
|
(2)
|
|
Total
($)
|
|
Robin Hayes(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Ben Baldanza
|
|
|
92,083
|
|
|
|
124,994
|
|
|
|
—
|
|
|
|
217,077
|
|
Peter Boneparth
|
|
|
105,833
|
|
|
|
124,994
|
|
|
|
13,067
|
|
|
|
243,895
|
|
Virginia Gambale(4)
|
|
|
90,000
|
|
|
|
124,994
|
|
|
|
—
|
|
|
|
214,994
|
|
Stephan Gemkow(5)
|
|
|
15,000
|
|
|
|
124,994
|
|
|
|
—
|
|
|
|
139,994
|
|
Ellen Jewett
|
|
|
86,250
|
|
|
|
124,994
|
|
|
|
—
|
|
|
|
211,244
|
|
Robert Leduc(7)
|
|
|
70,000
|
|
|
|
34,995
|
|
|
|
—
|
|
|
|
104,995
|
|
Teri McClure
|
|
|
75,833
|
|
|
|
124,994
|
|
|
|
—
|
|
|
|
200,828
|
|
Joel Peterson(6)
|
|
|
23,333
|
|
|
|
124,994
|
|
|
|
—
|
|
|
|
148,328
|
|
Sarah Robb O’Hagan
|
|
|
70,000
|
|
|
|
124,994
|
|
|
|
—
|
|
|
|
194,994
|
|
Vivek Sharma
|
|
|
71,250
|
|
|
|
124,994
|
|
|
|
—
|
|
|
|
196,244
|
|
Frank Sica(6)
|
|
|
78,755
|
|
|
|
124,994
|
|
|
|
—
|
|
|
|
203,749
|
|
Thomas
Winkelmann
|
|
|
90,000
|
|
|
|
124,994
|
|
|
|
—
|
|
|
|
214,994
|
|
(1)
|
Includes 6,849 DSUs or RSUs granted on February 25, 2020
to the then-sitting directors. At December 31, 2020, 69,398 DSUs remained outstanding for Ms. Gambale, 62,398 for Mr. Boneparth,
50,496 for Ms. Jewett, 37,512 for Mr. Winkelmann, 16,234 for each of Ms. Robb O’Hagan and Mr. Baldanza, 8,895 for Ms.
McClure and 8,698 for Mr. Sharma. Mr. Robert Leduc joined the Board in May 2020 and received a grant of 3,086 DSUs. At December
31, 2020, 6,849 RSUs remained outstanding for each of Ms. Gambale and Ms. Jewett, and Messrs. Boneparth and Winkelmann. The
amount disclosed in this table for each director reflects the grant date fair value of the equity award based on JetBlue’s
stock price on the grant date as computed in accordance with Financial Accounting Standards Board Accounting Standards Codification
718, Compensation — Stock Compensation (“FASB ASC Topic 718”). Please refer to Note 8 of our consolidated
financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC, for further
discussion related to the assumptions used in our valuation. For information on the valuation assumptions with respect to
grants made prior to 2020, please refer to the notes to our financial statements in our applicable Annual Report on Form 10-K.
|
(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 2020. 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)
|
Ms. Gambale is not standing for re-election at the 2021 Annual Meeting
of Stockholders as she has reached the Company’s term limit for directors.
|
(5)
|
Mr. Gemkow resigned from the JetBlue Board on March 5, 2020 and was
paid a portion of the Board cash compensation for the first quarter. In accordance with the terms of the RSU award agreement,
his 2020 grant of equity was forfeited upon his departure from the Board prior to the vesting date of the grant.
|
(6)
|
Messrs. Peterson and Sica served on our Board until May 14, 2020 and
were paid a portion of the Board cash compensation for the second quarter. In accordance with the terms of the RSU award agreement,
their 2020 grants of RSUs were forfeited upon their departure from the Board. The fees reported above for Mr. Sica include
$62,088 in consulting fees received from the Company in 2020.
|
(7)
|
Mr. Leduc was elected to join the Board at the 2020 Annual Meeting of
Stockholders.
|
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 33
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 2020, 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 2020
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 may be directors, executive officers, or stockholders. There are no reportable
transactions with related persons for 2020.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 34
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 disclosed pursuant to the SEC’s compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the accompanying compensation tables and related narrative in this proxy statement).
|
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.
|
As required by Section 14A of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are providing stockholders with a
non-binding advisory vote to approve the compensation of the named executive officers as described in the Compensation
Discussion and Analysis, the accompanying compensation tables and related narrative in this proxy statement.
In deciding how to vote on this proposal,
the Board encourages you to read the Compensation Discussion and Analysis, the accompanying compensation tables and related narrative
in this proxy statement. 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 accompanying 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 2022 Annual
Meeting of Stockholders.
|
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
|
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 35
NAMED EXECUTIVE OFFICER COMPENSATION DISCUSSION
AND ANALYSIS
This Compensation Discussion and Analysis describes our compensation
philosophy, policies and plans as well as our compensation-setting process and the 2020 compensation of our named executive officers
(“NEOs”). In addition, we explain why we believe that our executive compensation program is in the best interests of
JetBlue and you, our stockholders.
Executive Summary
This Compensation Discussion and Analysis
provides information about our fiscal year 2020 compensation program for our NEOs identified in the Summary Compensation Table
as of December 31, 2020.
|
|
|
|
|
|
|
|
|
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.
The COVID-19 Pandemic, Federal Relief and the
Impact on Certain Employee Compensation
Our multi-year effort to transform our executive
pay program was well underway when, in March of 2020, the effects of COVID-19 began to be felt in the United States.
In 2020, JetBlue and the global aviation
industry were severely impacted by COVID-19 as the impacts of the global pandemic continued to intensify. In fact, Robin Hayes,
JetBlue’s CEO, sent a 2020 year-end note to crewmembers explaining when he first realized that the COVID-19 pandemic was
going to be the biggest crisis in modern aviation history.
In March 2020, we saw a significant drop
in demand for air travel and a related decline in revenue due to the spread of COVID-19, burgeoning quarantines and lockdowns.
By the end of March 2020, our front line crewmembers were seeing declines in their hours worked.
In light of the impact of COVID-19 on our
crewmembers and on our business operations, we immediately implemented the following changes to our 2020 executive compensation
program (which are discussed further below in “FY 2020 Compensation Decisions”):
■
|
Named executive officers took reductions in base salary from April through December 2020 and the Board of Directors waived 100% of its cash compensation for the first quarter of 2020;
|
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 36
■
|
Annual cash incentive awards were paid at approximately 33% below target due to the Corporate Performance Factor not being met while our NEOs performed above and beyond as they led JetBlue and its crewmembers through the pandemic and they met or exceeded their individual goals.
|
■
|
Due to the volatility
and inherent uncertainty caused by the pandemic and our focus on navigating through these
unprecedented times, no PSU awards were issued for the 2020-2022 performance period. There were no substitution awards or
adjustments to other elements of compensation to replace the value of the PSUs.
|
■
|
Overall, the compensation of our NEOs was below target due to the effects of the pandemic. The Compensation Committee expects that this situation, coupled with CARES Act compensation limitations, will create a challenging compensation and retention environment in the near future for JetBlue.
|
In the first quarter of 2021, the Company
assessed the year just completed. JetBlue’s crewmembers had gone above and beyond during extraordinary times to continue
operating, delivering a safe experience and enabling the airline to pivot from a growth mode to a survival mode. Some crewmembers
went remote as lockdowns were imposed by various government authorities and others continued to report to airports in our Blue
Cities as essential workers, helping to fly medical personnel and other essential workers and equipment to where they were needed
to be to combat the virus. The CARES Act, as discussed below, threw a lifeline to aviation workers through the end of September
2020 (and subsequent legislation extended that relief from December 2020 into 2021).
The CARES Act
On March 27, 2020, Congress passed The Coronavirus
Aid, Relief, and Economic Security (“CARES”) Act. Under the CARES Act, the federal government provided assistance to
the aviation industry in the form of direct payroll support and secured loans.
The bill provided a total of $2.2 trillion
in economic stimulus aimed at providing emergency assistance and health care response for individuals, families, and businesses,
affected by the COVID-19 pandemic. Certain of the CARES Act funds were made available to protect aviation jobs. Access to CARES
Act funds came with restrictions, including limits on employee and officer compensation.
Pursuant to a Payroll Support
Program (“PSP”) Agreement, JetBlue received PSP funds of $685 million in grants and $251 million in an unsecured
term loan. On September 30, 2020, the U.S. Treasury provided us an additional payment of $27 million, consisting of $19
million in grants and $8 million in an unsecured term loan under the PSP Agreement. In addition, subject to certain
conditions and pursuant to an extension, JetBlue is eligible for up to $1.95 billion in CARES Act loans through May 2021, of
which it accessed $115 million in CARES Act loan funding in 2020.JetBlue issued warrants to purchase common stock at set
exercise prices in exchange for CARES Act funding. In late December 2020, a second federal relief act was adopted, which
provided additional payroll support to passenger air carriers and contractors and extended the limits on certain employee
compensation to October 1, 2022.
The compensation limits under the federal
support programs apply to any officer or employee of JetBlue whose total compensation exceeded $425,000 in 2019. Those officers
or employees may not receive total compensation during the life of the loan and an additional one-year period thereafter that exceeds,
during any 12 consecutive months, the total compensation received by the officer or employee in 2019. Any officer or employee of
JetBlue whose total compensation exceeded $3,000,000 in 2019 may not receive total compensation that exceeds, during any 12 consecutive
months of such period, $3,000,000 plus 50% of the excess over $3,000,000 of the total compensation received by the officer or employee
in 2019. These limits applied to the compensation of our NEOs in 2020 following our receipt of funds, and will continue to apply
through one year after the date on which the loans we received under the federal support programs are no longer outstanding.
Compensation Philosophy and Governance
Compensation Philosophy & Principles
During the pandemic, we have aimed to continue
to lead with our values, by promoting a safe environment for our customers and crewmembers with our Safety From the Ground Up Program.
In addition, as we have adapted to a changed revenue environment, we moved into a cash preservation mode for most of 2020.
We continue to:
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 targeted at conserving cash in the current demand restricted environment, with the goal of returning to long-term value creation for our stockholders as the demand for travel returns.
|
|
We value our crewleaders, and we anticipate some will leave the aviation industry due to the impact of COVID-19. Our goal is to aim to retain our talented leaders by treating them fairly.
|
|
We hold our NEOs accountable for their performance in light of drastically revised Company goals, emphasizing leadership and accountability during the pandemic.
|
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 37
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 the compensation for our CEO
(subject to approval by our Board) and the other NEOs. 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, RSU and PSU 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 relied on the
following tools in determining the base salary, annual incentive cash targets, and equity awards for the NEOs in 2020:
■
|
Competitive Peer Group Survey;
|
■
|
Management Recommendations; and
|
■
|
Annual Performance Reviews.
|
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 2020. Pay Governance also evaluates compensation
for non-employee directors, the next levels of senior management, and equity compensation programs generally. For 2020, 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 2020 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 2020, 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. Pay Governance reports directly to the Compensation
Committee and all services performed by Pay Governance were under the direction of the Compensation Committee.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 38
Performance Based Pay
Our compensation program is designed to
reward our NEOs for the Company’s continued success. Consistent with our compensation philosophy, the Compensation
Committee sets the compensation of our executive officers, including our NEOs, based in part 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. The majority of our NEOs’ total compensation is tied to performance and is “at
risk.”
2020 TARGET COMPENSATION CEO
|
|
2020 TARGET COMPENSATION NEOs
(excluding CEO)
|
|
|
|
|
|
|
Competitive Peer Group Survey – Market
Assessment
In order to set 2020 compensation, in September 2019, 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. Given the impact of the pandemic on the aviation industry, the below chart shows both 2019 and
2020 revenue.
Our competitor peer group consists of the following U.S. airlines:
|
FY2019
|
|
FY 2020
|
|
|
|
Revenue ($)
|
|
Revenue ($)
|
|
Competing in
|
Company
|
(in
millions)
|
|
(in
millions)
|
|
our
Market
|
American Airlines Group
|
45,768
|
|
17,337
|
|
|
Delta Air Lines, Inc.
|
47,007
|
|
17,095
|
|
|
United Continental Holdings, Inc.
|
43,259
|
|
15,333
|
|
|
Southwest Airlines Co.
|
22,428
|
|
9,048
|
|
|
Alaska Air Group, Inc.
|
8,781
|
|
3,556
|
|
|
JetBlue Airways Corporation
|
8,094
|
|
2,957
|
|
|
Spirit Airlines
|
3,831
|
|
1,810
|
|
|
Hawaiian Holdings Inc.
|
2,832
|
|
845
|
|
|
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 39
These companies, like JetBlue, are airlines
with significant revenue (over $1 billion, pre-COVID-19) and with significant operations employing a large number of individuals
and operating a large number of 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. While we do not target a particular level of compensation within
the peer group, the data is used primarily to ensure that our executive compensation program as a whole is competitive when the
Company achieves its 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 NEOs' 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 2020 proxies submitted to the SEC and reflects 2019 target compensation information. The airlines below match the airlines
identified in our peer group. Mr. Hayes’ target total direct compensation is based on 2020 data.
Base salary below is the annual rate in effect
at the end of 2019 for the peer airlines. Special/off-cycle awards (such as front-loaded, new hire and others) have been annualized
over the vesting period.
JETBLUE AIRWAYS CORPORATION | 2021
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 in plans or arrangements entered into since 2013
|
|
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 | 2021
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 executive officers. The CEO provides a performance assessment and compensation recommendation
to the Compensation Committee for the other NEOs 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 NEOs’ 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 45) 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 2020 Compensation Structure
In early 2020, the Compensation Committee
approved target total direct compensation for the 2020 fiscal year, which is comprised of:
JetBlue’s pay mix targets a higher percentage of equity
and performance based compensation.
*
|
Compensation mix reflects salary and bonus reductions and no PSU grant.
|
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 42
JetBlue’s long-term equity payouts
are tied to performance targets aimed at moving the business forward. Our 2020 RSU awards were made in our normal course of business,
before the scope of the pandemic became clear. By March 2020, that had changed and our Board and Compensation Committee decided
not to set PSU goals for the 2020-2022 period due to the uncertainty and volatility caused by the pandemic. Thus, no PSUs were
granted in 2020.
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 Index 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.
|
■
|
Due to CARES Act restrictions, as noted elsewhere, there are additional limits on our named executive officer compensation through at least 2022 and potentially through 2026.
|
*
|
For more information on the non-GAAP measures and how we calculate ROIC for purposes of our long-term performance awards, please refer to Appendix A “Regulation G Reconciliation of Non-GAAP Financial Measures” and Appendix B “ROIC Formula for PSUs.”
|
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 43
FY 2020 Compensation Decisions
The following is a timeline laying out the progression
of FY 2020 compensation decisions against the backdrop of the pandemic and federal support program relief.
Summary of Fiscal Year 2020 Compensation Program
|
|
Reward
Element
|
|
Objective
|
|
Key
Features
|
|
How
Award Value
is Calculated
|
|
2020
Decisions
|
FIXED
|
|
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
|
|
Although increases to 2020 base salaries
were approved prior to the pandemic to maintain competitiveness, our NEOs consented to base salary cuts on April 1, 2020 to
help the airline manage costs in light of the drop in demand due to the pandemic.
|
AT
RISK
|
|
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.
|
|
Performance
is measured against financial and non-financial corporate performance targets and individual goals.
|
|
The portion
of the award tied to corporate performance paid out at 0%. For the individual component, all NEOs met or exceeded target.
Overall impact resulted in payouts at approximately 33% below target for most of the NEOs.
|
|
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.
|
|
Based on achievement of metric
driven operational and strategic goals.
|
|
All NEOs met or exceeded targets.
|
|
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.
|
|
Based on achievement of two
performance metrics.
|
|
2018-2020 is scheduled to
be paid in 2021. 2019-2021 is payable if at all in 2022. No PSU targets were set (and no PSUs were granted) for 2020-2022
due to COVID-19 uncertainty and volatility.
|
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 44
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.
Base Salary
KEY HIGHLIGHTS:
■
|
Prior to COVID-19, the Compensation Committee
approved regular annual salary increases to the NEOs.
|
■
|
Realizing the impact of COVID-19, our NEOs took a voluntary
reduction in salaries effective April 1, 2020.
|
The Compensation Committee annually reviews the base
salaries of the NEOs, 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 NEOs as set forth in the below table, as compared to 2019. As noted elsewhere, due to
the impact of the pandemic, the NEOs voluntarily took pay reductions from April through December 2020 to help the airline retain
cash and lower costs. From April through September 2020, Mr. Hayes and Ms. Geraghty took 50% salary reductions, Mr. Priest 35%
and Mr. Sundaram and Mr. Nelson 20%. For the end of 2020 (October through December), the voluntary pay reductions were adjusted
to 20% for Mr. Hayes and Ms. Geraghty, 15% for Mr. Priest and 10% for each of Mr. Sundaram and Mr. Nelson.
Executive
|
2019 Salary
($)
|
2020
Unadjusted
Salary
($)
|
Reduced
Salary Paid
in 2020*
($)
|
Robin Hayes
|
600,000
|
625,000
|
435,417
|
Stephen Priest
|
475,000
|
520,000
|
405,750
|
Joanna Geraghty
|
540,000
|
565,000
|
393,417
|
Easwaran Sundaram
|
445,000
|
460,000
|
401,250
|
Brandon Nelson
|
405,000
|
450,000
|
390,000
|
*
|
As noted above, amounts reflect COVID-19-related pay reductions.
|
Annual Cash Incentive Awards
KEY HIGHLIGHTS:
■
|
The Company set rigorous goals for the 2020
annual cash incentive awards.
|
■
|
Due to COVID-19’s significant impact on the aviation
industry, we did not achieve $1 of pre-tax income and, as such, had a 0% payout for our corporate performance factor.
|
■
|
While leading JetBlue through the unprecedented crisis,
each of our NEOs received an annual cash incentive award based on their individual performance. In aggregate, the annual award
averaged 33% below target.
|
For 2020, for Messrs. Hayes, Priest, Sundaram and Ms.
Geraghty, the annual cash incentive award was based 75% on our corporate performance factor 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 (“CPF”) and 50% on individual performance goals.
For 2020, the Compensation Committee approved the following
target and maximum bonus opportunities for our NEOs:
Executive
|
Target
Incentive Award
Opportunity
(% of Salary)
|
Maximum
Incentive Award
Opportunity
(% of Salary)
|
Robin Hayes
|
150
|
300
|
Stephen Priest
|
90
|
180
|
Joanna Geraghty
|
100
|
200
|
Easwaran Sundaram
|
50
|
100
|
Brandon Nelson
|
60
|
120
|
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 45
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.
Corporate Performance Factor
In early 2020, we established the 2020
CPF which included a threshold of $1 of pre-tax income. The CPF is the set of company initiatives we set for management as a
whole based on goals we want to substantially achieve within the year. In 2020, we used three metrics and set the weightings
at one third each (two financial and one non-financial), to emphasize our continued focus areas. However, our plans were
disrupted by the industry stressors introduced by COVID-19. While the customers who chose to fly overwhelmingly had a good
experience (as demonstrated by our Customer Index score), since we did not produce a profit in 2020, the CPF paid out 0%.
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 CPF, which was then applied to our annual
cash incentive bonus awards. For 2020, the CPF was determined as follows:
Measure
|
Weight
|
Target
|
Performance
Achieved
|
Payout
Achieved as a
% of Target
|
Actual Payout
Approved as a
% of Target
|
Pre-Tax Margin
|
33.33%
|
10.6%
|
-73.6%
|
0%
|
|
Controllable Cost(1)
|
33.33%
|
-0.5%
|
55.4%
|
0%
|
0%(2)
|
Customer Index(3)
|
33.33%
|
45.3/74.3
|
47.8/85.9
|
200%
|
|
(1)
|
Pre-Tax margin is a financial measure calculated
using generally accepted U.S. accounting principles. 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.
|
(2)
|
As the Company failed to produce a pre-tax income in
2020, the CPF is zero.
|
(3)
|
Customer Index is a combined score for controllable
service delivery and on time performance, which are customer satisfaction drivers.
|
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 NEO, of the annual
cash incentive awards at the target level (for the corporate portion of the annual cash incentive award).
As noted, a NEO’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 NEOs’ 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. At the beginning
of 2020, financial and operating goals were established similar to prior years. Pivoting as a response to COVID-19, we established
new goals. Each of our NEOs met or exceeded his or her individual goals for the year, which included:
■
|
Ensuring JetBlue’s financial stability, with
a focus on preserving liquidity;
|
■
|
Safely managing our operation during COVID-19, with a
focus on crewmember and customer health, safety and satisfaction; and
|
■
|
Maintaining a strong company culture, with a focus on
strong leadership and effective communication during unprecedented times.
|
Long-Term Equity Awards
KEY HIGHLIGHTS:
■
|
Prior to COVID-19 in February 2020, the Company
awarded RSUs consistent with its typical annual equity grant practices.
|
■
|
The PSU awards were initially planned to be approved in
March 2020 with rigorous metrics and a design similar to previous three-year cycles.
|
■
|
As we started to recognize the effects of COVID-19 on
the aviation industry, JetBlue paused the approval of its PSU program.
|
■
|
Upon realization of the significant and protracted impact
of COVID-19 on our industry and our business, along with the uncertainty around the timing of recovery, we decided not to
issue 2020-2022 PSU awards and there were no substitution awards or adjustments to other elements of compensation to replace
the value of the PSUs.
|
All of the equity-based elements of our compensation
program for our NEOs either vest over a multi-year period or include long-term performance measures.
Equity grants directly align NEOs’ 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 use RSUs, based on the achievement of individual
goals set the previous year, and with a three year service-based vesting period, to retain and motivate our crewmembers, including
our NEOs. We have also used PSUs which vest based on company performance as an equity vehicle. Historically, approximately 50%
of the total equity award target opportunity for NEOs was in the form of PSUs that are earned (or forfeited) based on the Company’s
achievement of pre-established performance metrics. In 2020,
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 46
the Compensation Committee paused the PSU program due
to the uncertainty and volatility created by COVID-19, therefore no PSUs were granted to our NEOs.
Restricted Stock Units
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.
Based on the NEO’s role, we determine the NEO’s target
opportunity. Individuals may receive between 50 to 200% of target based on their performance, as assessed by the Compensation
Committee and Mr. Hayes. Actual awards are issued following the end of the performance year and are shown below.
The ranges were selected based on peer compensation
data and in light of the Company’s internal pay equity considerations and its financial performance. This year, our NEOs
had goals to support the Company’s financial security, ensure the safety of customers and crewmembers and maintain our culture,
exhibiting leadership through the pandemic.
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 NEOs 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 2020 in light of the Company’s overall performance and approved
an award of $1,325,000 of RSUs to Mr. Hayes.
Based on the Compensation Committee’s, and, in
connection with Mr. Hayes, the Board’s assessment of each NEO’s individual performance in 2020, the following RSU awards
were made on February 25, 2021:
Name and Title
|
2020 Target
Opportunity for RSUs ($)
|
2020 RSU
Award
(Fair Market Value $)
|
Robin Hayes
|
850,000
|
1,325,000
|
Stephen Priest
|
650,000
|
850,000
|
Joanna Geraghty
|
675,000
|
900,000
|
Easwaran Sundaram(1)
|
450,000
|
0
|
Brandon Nelson
|
400,000
|
220,000
|
(1)
|
Mr. Sundaram gave notice that he was departing
JetBlue, and stepping down from his position as Chief Digital and Technology Officer, effective February 1, 2021. Accordingly,
he did not receive an RSU award in February 2021.
|
We believe this approach is consistent with our pay
for performance philosophy whereby we link our corporate results and individual goal achievement to each NEO’s compensation.
These awards were carefully calibrated so the individuals
would not exceed the CARES Act compensation limits.
Performance Stock Units
Due to the significant impact of the COVID-19 pandemic
on the aviation industry in general and on our business in particular, the Compensation Committee did not adopt performance metrics
for the 2020-2022 performance period and no PSUs were granted in 2020. There were no substitution awards or other adjustments
to other elements of compensation to replace the value of the PSUs. As JetBlue’s leadership gets a clearer view towards
recovery from the pandemic, the Compensation Committee expects to provide retention grants to JetBlue’s NEOs, to ensure
leadership continuity through JetBlue’s recovery efforts from the COVID-19 pandemic. All such awards would be subject to
the federal support programs compensation restrictions discussed above.
VESTING OF 2018 LONG-TERM INCENTIVE PROGRAM (“LTIP”)
PERFORMANCE STOCK UNIT GRANTS
In March 2018, the Compensation Committee
approved grants of PSUs, subject to a three-year performance period. The 2018-2020 performance cycle completed on December 31,
2020, but vesting remained subject to certification of performance results by the Compensation Committee.
The 2018 performance unit grants had two components.
The performance goals were independent of each other and equally weighted for relative ROIC growth and 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 2018 performance unit grants. Our 2018-2020 PSU metrics were both relative. To measure our performance
in both ROIC growth and pre-tax margin growth, we compared our change in ROIC growth and pre-tax margin growth to that of our
peers. In order to earn payouts of 100% or more (target or higher), we needed to outperform our peers on these metrics. During
the performance period, in the case of relative ROIC, our average ROIC was 0.7% higher than that of our peers which resulted in
a 63.9% vesting for the metric. For pre-tax margin growth, we were below our peers (-3.3% growth) and this metric paid out at
0%.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 47
With each achievement equally weighted, based on the
Compensation Committee’s calculation of these performance measures, the 2018 PSU grants vested at 63.9%. The following table
summarizes the performance results with respect to each of the performance measures applicable to the 2018 LTIP PSU grants.
Performance Measures - 2018-2020
|
Result
|
Weight
|
Vesting
|
Relative ROIC Growth
|
0.7%
|
50.0%
|
63.9%
|
Relative Pre-tax Margin Growth
|
-3.3%
|
50.0%
|
0.0%
|
|
|
TOTAL
|
63.9%
|
The following table summarizes the number of units awarded
for the 2018-2020 PSU grants and the number of units to be paid out with respect to such grants for our NEOs, based on the 63.9%
vesting percentage. Since these awards were subject to Compensation Committee certification at December 31, 2020, the awards are
reflected as outstanding awards in the “Outstanding Equity Awards at Fiscal Year End” table.
|
Vesting
of 2018 Performance Unit Grants
|
Name
|
Units at
Grant Date
(#)
|
Vesting
Percentage
(%)
|
Units Upon
Vesting
(#)
|
Robin Hayes
|
69,053
|
63.9%
|
44,124
|
Stephen Priest
|
17,902
|
63.9%
|
11,439
|
Joanna Geraghty
|
26,854
|
63.9%
|
17,159
|
Easwaran Sundaram
|
7,672
|
63.9%
|
4,902
|
Brandon Nelson(1)
|
—
|
—
|
—
|
(1)
|
Mr. Nelson was not an LTIP participant
in 2018.
|
2020 Compensation compared to 2019 Compensation
Due to the effects of the COVID-19 pandemic on JetBlue
and the aviation industry and travel behavior in general and the limiting effect of the federal support programs, our NEOs saw
a decrease in their compensation from 2019 to 2020. The below table compares the compensation reported in the Summary Compensation
Table for 2019 and 2020.
Name
|
2019
|
2020
|
Difference
|
Difference
%
|
Robin Hayes
|
3,955,523
|
2,063,189
|
(1,892,334)
|
-48%
|
Stephen Priest
|
2,105,257
|
1,408,147
|
(697,110)
|
-33%
|
Joanna Geraghty
|
2,488,169
|
1,411,687
|
(1,076,482)
|
-43%
|
Easwaran Sundaram
|
1,273,808
|
1,171,329
|
(102,479)
|
-8%
|
Brandon Nelson
|
1,027,687
|
944,176
|
(83,511)
|
-8%
|
Other Compensation Policies and Information
Results of the 2020 Advisory Vote on Executive Compensation
(“Say-on-Pay”)
At our 2020 annual meeting of stockholders, our stockholders
were asked to approve, on an advisory basis, the Company’s fiscal 2019 NEOs’ compensation (“say-on-pay”).
Approximately 95.9% 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 | 2021
PROXY STATEMENT 48
All Other Compensation
Perquisites and Other Personal Benefits
We offer limited perquisites and other personal benefits
to our NEOs. 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 NEOs. 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 NEOs are provided through our Executive Change in Control
Severance Plan (the “Executive Plan”) or our Amended and Restated 2011 Incentive Compensation Plan (the “2011
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 NEOs, 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 3 years. Our award agreements under the 2011 Plan were amended in 2014 to include retirement provisions
for retirement eligible crewmembers, which provide for continued vesting of RSUs and PSUs. Our stockholders approved the Omnibus
Plan in May 2020, to replace the expring 2011 Plan; retirement benefits are the same.
|
Tax Considerations
With exceptions only for compensation paid pursuant
to certain binding contracts as described in Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”),
the tax deduction for annual compensation of each of our named executive officers is limited to $1 million. 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
in connection with a change in control if the payments received by them equal or exceed an amount generally approximating three
times their average annual compensation. The excise tax may be imposed on all such payments generally exceeding one time an individual’s
average annual compensation. A company will also lose its tax deduction for such “excess parachute payments.” In approving
the compensation arrangements for our NEOs, the Compensation Committee will consider all elements of the cost to the Company of
providing such compensation, including the potential impact of Section 280G of the Code. However, the Compensation Committee may,
in its judgment, authorize compensation arrangements that could give rise to loss of deductibility under Section 280G of the Code
and the imposition of excise taxes under Section 4999 of the Code when it believes that such arrangements are appropriate to attract
and retain executive talent.
JETBLUE AIRWAYS CORPORATION | 2021
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, 2020.
The Compensation Committee of JetBlue:
Virginia Gambale (Chair)
Teri McClure
Sarah Robb O’Hagan
Thomas Winkelmann
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 50
SUMMARY COMPENSATION TABLE
The following table provides certain information concerning
the compensation to our NEOs for services rendered to us during the years ended December 31, 2020, 2019 and 2018:
Name and
Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Stock Awards
($)(1)
|
|
|
Non-Equity
Incentive
Compensation
($)(2)
|
|
|
All Other
Compensation
($)(3)
|
|
|
Total
($)
|
|
Robin Hayes
|
|
|
2020
|
|
|
|
435,417
|
|
|
|
1,199,992
|
|
|
|
410,200
|
|
|
|
17,580
|
|
|
|
2,063,189
|
|
Chief Executive Officer
|
|
|
2019
|
|
|
|
598,333
|
|
|
|
2,549,990
|
|
|
|
787,200
|
|
|
|
20,000
|
|
|
|
3,955,523
|
|
|
|
|
2018
|
|
|
|
578,750
|
|
|
|
2,349,973
|
|
|
|
617,000
|
|
|
|
39,697
|
|
|
|
3,585,420
|
|
Stephen Priest
|
|
|
2020
|
|
|
|
405,750
|
|
|
|
749,984
|
|
|
|
234,000
|
|
|
|
18,413
|
|
|
|
1,408,147
|
|
Chief Financial Officer
|
|
|
2019
|
|
|
|
472,917
|
|
|
|
1,174,982
|
|
|
|
434,500
|
|
|
|
22,858
|
|
|
|
2,105,257
|
|
|
|
|
2018
|
|
|
|
445,833
|
|
|
|
749,971
|
|
|
|
268,100
|
|
|
|
39,656
|
|
|
|
1,503,560
|
|
Joanna Geraghty
|
|
|
2020
|
|
|
|
393,417
|
|
|
|
718,740
|
|
|
|
282,500
|
|
|
|
17,030
|
|
|
|
1,411,687
|
|
President and Chief Operating Officer
|
|
|
2019
|
|
|
|
535,833
|
|
|
|
1,424,979
|
|
|
|
510,100
|
|
|
|
17,257
|
|
|
|
2,488,169
|
|
|
|
|
2018
|
|
|
|
470,417
|
|
|
|
1,124,966
|
|
|
|
304,100
|
|
|
|
34,239
|
|
|
|
1,933,722
|
|
Easwaran Sundaram
|
|
|
2020
|
|
|
|
401,250
|
|
|
|
499,995
|
|
|
|
250,000
|
|
|
|
20,084
|
|
|
|
1,171,329
|
|
Chief Digital and Technology Officer
|
|
|
2019
|
|
|
|
444,167
|
|
|
|
549,979
|
|
|
|
254,400
|
|
|
|
25,262
|
|
|
|
1,273,808
|
|
|
|
|
2018
|
|
|
|
434,166
|
|
|
|
499,976
|
|
|
|
185,100
|
|
|
|
35,925
|
|
|
|
1,155,167
|
|
Brandon Nelson
|
|
|
2020
|
|
|
|
390,000
|
|
|
|
312,495
|
|
|
|
220,000
|
|
|
|
21,681
|
|
|
|
944,176
|
|
General Counsel and Corporate Secretary
|
|
|
2019
|
|
|
|
403,333
|
|
|
|
374,978
|
|
|
|
221,900
|
|
|
|
27,476
|
|
|
|
1,027,687
|
|
(1)
|
Represents the grant date fair value of
the RSUs granted in 2020 based on JetBlue’s stock price on the grant date. The RSUs reported here, granted in 2020 are
based on the individual’s and Company’s performance in 2019. Please refer to Note 8 on our consolidated financial statements
in our Annual Report on Form 10-K for the year ended December 31, 2020, 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. The amounts reported
in 2018 and 2019 include PSUs granted in connection with the adoption of the applicable three-year LTIP. No PSUs were granted
in 2020. For information on the valuation assumptions with respect to grants made prior to 2020, 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.
|
(2)
|
Represents annual cash incentive award earned in 2020,
2019 and 2018, based upon each NEO’s achievement of certain specified annual performance targets. The amounts earned in 2020
were paid on February 19, 2021, the amount earned in 2019 were paid on February 20, 2020, and the amounts earned in 2018 were
paid on February 20, 2019. See “Compensation Discussion and Analysis—Annual Incentive Bonuses” above.
|
(3)
|
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 was
$14,250.
|
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 51
GRANTS OF PLAN-BASED AWARDS
The following table sets forth certain information,
as of December 31, 2020, concerning individual grants of equity and non-equity plan-based awards made to the NEOs during the fiscal
year ended December 31, 2020:
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(1)
|
|
Estimated Future Payouts Under
Equity Incentive Plan Awards(2)
|
|
All Other
Stock
Awards:
Number of
|
|
Closing
Market
|
|
Grant Date
Fair Value
|
Name
|
|
Grant Date
|
|
Threshold ($)
|
|
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
|
|
2/25/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,753
|
|
18.25
|
|
1,199,992
|
|
|
|
468,750
|
|
937,500
|
|
1,875,000
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
Stephen Priest
|
|
2/25/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,095
|
|
18.25
|
|
749,984
|
|
|
|
234,000
|
|
468,000
|
|
936,000
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
Joanna Geraghty
|
|
2/25/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,383
|
|
18.25
|
|
718,740
|
|
|
|
282,500
|
|
565,000
|
|
1,130,000
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
Easwaran Sundaram
|
|
2/25/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,397
|
|
18.25
|
|
499,995
|
|
|
|
115,000
|
|
230,000
|
|
460,000
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
Brandon Nelson
|
|
2/25/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,123
|
|
18.25
|
|
312,495
|
|
|
|
135,000
|
|
270,000
|
|
540,000
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
(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 2020. The Target column reflects the award granted if we were to achieve all of our 2020 performance
targets. The Maximum column reflects awards that would have been payable for our 2020 performance had we exceeded all of our
performance targets and achieved maximum performance 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)
|
The PSU program was paused for the 2020-2022 performance
period due to the effects of COVID-19 on the travel industry.
|
(3)
|
Represents RSUs granted in 2020. Subject to the NEOs’
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 as determined
in accordance with FASB ASC Topic 718. Please refer to Note 8 of our consolidated financial statements in our 2020 Annual
Report on Form 10-K for further discussion related to the assumptions used in our valuations of RSUs.
|
JETBLUE AIRWAYS CORPORATION | 2021
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 $625,000 and annual cash incentive awards as provided
by the Company to its senior executives at a target of 150% of the base salary, both salary and bonus subject to the review and
approval of the Board of Directors in its discretion. Mr. Hayes will continue to be eligible to receive an annual award of RSUs
and an annual award of PSUs pursuant to his employment agreement, as amended, both pursuant to the Company’s equity compensation
plans and related award agreements. The agreement provides for health, welfare and flight benefits as provided to other senior
executive officers of the Company. The agreement provides for termination for cause, and for severance should Mr. Hayes be terminated
during the term without cause. The agreement provides for customary confidentiality, non-competition, non-solicitation and non-disparagement
provisions. The agreement is terminable by Mr. Hayes or by the Company, in each case as more fully described below under “Potential
Payments upon Termination or Change In Control.” See “— Agreements Governing Termination.”
Effective April 1, 2020, Mr. Hayes agreed to a 50% reduction
in his salary during the crisis as the Company grappled with the effects of COVID-19 on the aviation industry and JetBlue. The
50% salary reduction was in place through September 2020, and then reduced to 20% through the end of 2020.
Summary of Agreements with Other Named Executive Officers
In 2020, none of Mr. Priest, Ms. Geraghty, Mr. Sundaram
or Mr. Nelson had employment agreements with the Company.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 53
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth information concerning
all outstanding equity awards for each NEO at December 31, 2020:
|
|
|
|
Stock Awards
|
|
Name
|
|
Grant Date(1)
|
|
Number of Shares
or Units of Stock
That Have Not
Vested
(#)
|
|
|
Market Value of
Shares or Units of
Stock That Have Not
Vested
($)(2)
|
|
|
Equity incentive plan
awards: number of
unearned shares, units
or other rights that have
not vested
(#)(3)
|
|
|
Equity incentive
plan awards: market
or payout value of
unearned shares, units
or other rights that
have not vested
($)
|
|
Robin Hayes
|
|
02/22/2018
|
|
|
15,987
|
|
|
$
|
232,451
|
|
|
|
|
|
|
|
|
|
|
|
04/12/2018
|
|
|
|
|
|
|
|
|
|
|
69,053
|
|
|
$
|
1,004,031
|
|
|
|
02/25/2019
|
|
|
46,377
|
|
|
$
|
674,322
|
|
|
|
|
|
|
|
|
|
|
|
04/12/2019
|
|
|
|
|
|
|
|
|
|
|
79,225
|
|
|
$
|
1,151,932
|
|
|
|
02/25/2020
|
|
|
65,753
|
|
|
$
|
956,049
|
|
|
|
|
|
|
|
|
|
Stephen Priest
|
|
02/22/2018
|
|
|
6,395
|
|
|
$
|
92,983
|
|
|
|
|
|
|
|
|
|
|
04/12/2018
|
|
|
|
|
|
|
|
|
|
|
17,902
|
|
|
$
|
260,295
|
|
|
|
02/25/2019
|
|
|
18,358
|
|
|
$
|
266,925
|
|
|
|
|
|
|
|
|
|
|
|
04/12/2019
|
|
|
|
|
|
|
|
|
|
|
41,079
|
|
|
$
|
597,289
|
|
|
|
02/25/2020
|
|
|
41,095
|
|
|
$
|
597,521
|
|
|
|
|
|
|
|
|
|
Joanna Geraghty
|
|
02/22/2018
|
|
|
7,994
|
|
|
$
|
116,233
|
|
|
|
|
|
|
|
|
|
|
04/12/2018
|
|
|
|
|
|
|
|
|
|
|
26,854
|
|
|
$
|
390,457
|
|
|
|
08/24/2018
|
|
|
1,789
|
|
|
$
|
26,012
|
|
|
|
|
|
|
|
|
|
|
|
02/25/2019
|
|
|
24,154
|
|
|
$
|
351,199
|
|
|
|
|
|
|
|
|
|
|
|
04/12/2019
|
|
|
|
|
|
|
|
|
|
|
46,948
|
|
|
$
|
682,624
|
|
|
|
02/25/2020
|
|
|
39,383
|
|
|
$
|
572,629
|
|
|
|
|
|
|
|
|
|
Easwaran Sundaram
|
|
02/22/2018
|
|
|
5,596
|
|
|
$
|
81,366
|
|
|
|
|
|
|
|
|
|
|
04/12/2018
|
|
|
|
|
|
|
|
|
|
|
7,672
|
|
|
$
|
111,551
|
|
|
|
02/25/2019
|
|
|
15,459
|
|
|
$
|
224,774
|
|
|
|
|
|
|
|
|
|
|
|
04/12/2019
|
|
|
|
|
|
|
|
|
|
|
8,802
|
|
|
$
|
127,981
|
|
|
|
02/25/2020
|
|
|
27,397
|
|
|
$
|
398,352
|
|
|
|
|
|
|
|
|
|
Brandon Nelson
|
|
02/22/2018
|
|
|
2,878
|
|
|
$
|
41,486
|
|
|
|
|
|
|
|
|
|
|
06/22/2018
|
|
|
439
|
|
|
$
|
6,383
|
|
|
|
|
|
|
|
|
|
|
|
12/12/2018
|
|
|
1,574
|
|
|
$
|
22,886
|
|
|
|
|
|
|
|
|
|
|
|
02/25/2019
|
|
|
8,696
|
|
|
$
|
126,440
|
|
|
|
|
|
|
|
|
|
|
|
04/12/2019
|
|
|
|
|
|
|
|
|
|
|
8,802
|
|
|
$
|
127,981
|
|
|
|
02/25/2020
|
|
|
17,123
|
|
|
$
|
248,968
|
|
|
|
|
|
|
|
|
|
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 54
(1)
|
Please refer to the table below for the applicable vesting schedules
of outstanding RSU and PSU awards.
|
|
|
|
Grant Date
|
Vesting Schedule
|
|
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
|
|
2/25/2020
|
One-third in three equal annual installments
beginning on February 25, 2021
|
(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, 2020 ($14.54) multiplied by the number of shares of stock subject to the award.
|
(3)
|
For PSU awards granted in 2018 under our equity incentive
plan, the actual number of shares earned was 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, and as certified and approved by
our Compensation Committee, see “Performance Stock Units - - Vesting of 2018 Long-Term Incentive Program Performance
Unit Grants at p. 47. The number of shares reported for the 2018 PSU awards (and the payout value) was based on achieving
the target (100%) performance because as of December 31, 2020, the 2018 PSUs were tracking at between threshold and target
performance. The actual number of shares earned would be payable in common stock in a range of 0% to 200% as certified and
approved by our Compensation Committee. The Compensation Committee certified the performance results for these awards in March
2021, resulting in vesting of 63.9% of the PSUs granted in 2018. For PSU awards granted in 2019 under our equity incentive
plan, the actual number of shares earned (if any) will be based on achievement of performance metrics (ROIC and EPS) at the
end of the applicable performance period, December 31, 2021 for the 2019 PSUs. The number of shares reported for the 2019
PSU awards (and the payout value) is based on achieving the target (100%) performance. As of December 31, 2020, due to the
effects of COVID-19 the 2019 PSUs were tracking below threshold performance. However, the previous fiscal year had the 2019
PSUs tracking at target, and we are uncertain about the effects of how 2021’s performance will impact the payout at
this time. Upon performance certification by our Compensation Committee at the end of the applicable performance period, the
2019 PSUs will be payable in common stock, in a range of 0% to 200%. No PSUs were awarded for the 2020-2022 performance period,
due to the impact of the COVID-19 pandemic.
|
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 55
OPTION EXERCISES AND STOCK VESTED
The following table provides information concerning
the vesting of PSU awards and RSU awards during 2020 for each NEO:
|
|
STOCK AWARDS(1)(2)
|
Name
|
|
Number of
Shares
Acquired on
Vesting
(#)
|
Value Realized
on
Vesting
($)
|
Robin Hayes
|
|
103,895
|
1,602,892
|
Stephen Priest
|
|
33,995
|
524,400
|
Joanna Geraghty
|
|
38,346
|
652,381
|
Easwaran Sundaram
|
|
25,450
|
442,888
|
Brandon Nelson
|
|
12,017
|
218,892
|
(1)
|
Shares vested consist of (1) vested RSUs
and (2) PSUs for the 2017-2019 performance period that vested following the Compensation Committee’s certification of performance
results in May 2020, at a performance level of 75.1%. 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 2020.
|
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 56
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Each of our NEOs 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
NEO (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 NEO; 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 NEOs would have received had their employment been terminated as of December 31, 2020.
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 (as defined below) that would govern the compensation payable
upon the termination of our executives, including our NEOs. As of December 31, 2020, none of Mr. Priest, Ms. Geraghty, Mr. Sundaram
or Mr. Nelson had employment agreements with the Company.
Agreements Governing Termination (not in Connection with a Change
in Control)
Potential Payments to Mr. Hayes upon Termination
We have an employment agreement, as amended, with Mr.
Hayes, our President and CEO, until July 31, 2022. Under Mr. Hayes’s employment agreement, the agreement provides that,
if Mr. Hayes were terminated without Cause (as defined in the Severance Plan), he would be paid as if eligible for severance under
the Severance Plan. Under Mr. Hayes’ employment agreement, if the Company were to terminate Mr. Hayes’ employment
for Cause which is defined below 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 in
the employment agreement), 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.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 57
Potential Payments to Other Named Executive Officers
As of December 31, 2020, we had no contractual obligations
to make severance payments to any of our NEOs other than Mr. Hayes (except as provided in the Severance Plan described below).
Severance Plan Summary
On May 22, 2014, upon recommendation of the Compensation
Committee, the Board of Directors approved and adopted the JetBlue Airways Corporation Severance Plan (the “Severance Plan”).
Capitalized terms used in this summary and not otherwise defined have the meanings ascribed to them in 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 and years of service. The Severance Plan also provides for payment of pro-rated average annual bonus,
and either forfeiture, or continued vesting 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 in its sole and absolute discretion, and such determination
shall be conclusive and binding on the affected Participant. Although the Severance Plan was amended in 2020 to add certain type
of opt outs to the list of Severance Events; NEOs were not included in the amendment.
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 | 2021
PROXY STATEMENT 58
A NEO 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 NEOs, 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.
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.
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 Equity Incentive
Plan
Under the 2011 Plan, a Change in Control of the Company
(as defined in the 2011 Plan) 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 (as
defined in the 2011 Plan) or resignation without Good Reason (as defined in the 2011 Plan), 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 | 2021
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 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
NEO would be entitled to receive upon termination of employment under the various circumstances outlined above. The amounts shown
in the table are the amounts that would have been payable under existing plans and arrangements if the NEO’s employment had terminated
on December 31, 2020. 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 the 2011 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 $14.54 on Nasdaq on December
31, 2020. The table below does not include amounts to which the NEOs would be entitled that are already described in the other
compensation tables appearing earlier in this proxy statement, including the value of equity awards that have already vested.
The actual amounts that would be payable in these circumstances can only be determined at the time of the executive’s termination
or a change in control and accordingly, may differ from the estimated amounts set forth in the table below.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 60
POTENTIAL POST-EMPLOYMENT COMPENSATION
|
Multiple of
Base Salary
and Target
Bonus ($)(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)
|
1,250,000
|
702,100
|
888,295
|
|
133,356
|
|
2,973,751
|
Termination for reasons of death or Disability(5)
|
|
937,500
|
754,933
|
1,772,335
|
|
|
3,464,768
|
Termination for reasons of Retirement(6)
|
|
|
|
|
|
|
|
Qualifying Termination after Change of Control (double trigger)(7)
|
3,125,000
|
937,500
|
1,862,821
|
2,155,962
|
78,686
|
|
8,159,969
|
Stephen Priest
|
|
|
|
|
|
|
|
Termination by the Company without Cause or by the Crewmember for Good Reason
under Severance Plan(4)
|
736,667
|
351,300
|
425,620
|
|
70,265
|
|
1,583,852
|
Termination for reasons of death or Disability(5)
|
|
|
361,634
|
658,669
|
|
|
1,020,303
|
Termination for reasons of Retirement(6)
|
|
|
|
|
|
|
|
Qualifying Termination after Change of Control (double trigger)(7)
|
1,976,000
|
468,000
|
957,430
|
857,584
|
77,340
|
1,427,629
|
5,763,983
|
Joanna Geraghty
|
|
|
|
|
|
|
|
Termination by the Company without Cause or by the Crewmember for Good Reason
under Severance Plan(4)
|
1,130,000
|
407,100
|
508,721
|
|
131,765
|
|
2,177,586
|
Termination for reasons of death or Disability(5)
|
|
|
419,390
|
845,747
|
|
|
1,265,137
|
Termination for reasons of Retirement(6)
|
|
|
|
|
|
|
—
|
Qualifying Termination after Change of Control (double trigger)(7)
|
2,260,000
|
565,000
|
1,066,073
|
1,073,081
|
77,695
|
|
5,041,849
|
Easwaran Sundaram
|
|
|
|
|
|
|
|
Termination by the Company without Cause or by the Crewmember for Good Reason
under Severance Plan(4)
|
920,000
|
219,750
|
326,537
|
|
131,765
|
|
1,598,052
|
Termination for reasons of death or Disability(5)
|
|
|
277,501
|
196,911
|
|
|
474,412
|
Termination for reasons of Retirement(6)
|
|
|
|
|
|
|
—
|
Qualifying Termination after Change of Control (double trigger)(7)
|
1,380,000
|
230,000
|
704,492
|
239,532
|
77,695
|
|
2,631,719
|
Brandon Nelson
|
|
|
|
|
|
|
|
Termination by the Company without Cause or by the Crewmember for Good Reason
under Severance Plan(4)
|
900,000
|
185,400
|
194,439
|
|
121,765
|
|
1,401,604
|
Termination for reasons of death or Disability(5)
|
|
|
164,365
|
85,360
|
|
|
249,725
|
Termination for reasons of Retirement(6)
|
|
|
|
|
|
|
|
Qualifying Termination after Change of Control (double trigger)(7)
|
1,440,000
|
270,000
|
446,523
|
127,981
|
67,695
|
|
2,352,199
|
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 61
(1)
|
As of December 31, 2020, we had no contractual
obligations to make any severance payments to our NEOs, other than Mr. Hayes, under the terms of his employment agreement.
Should any of the NEOs be terminated without Cause or Good Reason, under our Severance Plan, and based on titles and years
of service, the NEOs would be entitled to the following salary continuation amounts: Messrs. Hayes, Sundaram and Nelson and
Ms. Geraghty two (2) years; and Mr. Priest seventeen (17) 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, 2020, 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, 2020, the amounts listed do not reflect pro-ration. Under the terms of the Severance Plan, based on titles and years of
service, the NEOs would be entitled to the following salary continuation amounts: Messrs. Hayes, Sundaram and Nelson and Ms.
Geraghty two (2) years, and Mr. Priest seventeen (17) 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 NEO would be entitled to the continued vesting of RSUs following the date of termination: 61,093 RSUs for Mr. Hayes,
29,272 RSUs for Mr. Priest, 34,988 for Ms. Geraghty, 22,458 for Mr. Sundaram and 13,373 RSUs for Mr. Nelson, all valued for
the purpose of this table at the closing stock price on the last fiscal day of 2020 under the 2011 Plan. All other compensation
assumes (1) $30,000 in outplacement services for Messrs. Hayes, Priest, Sundaram and Ms. Geraghty, and $20,000 in outplacement
services for Mr. Nelson; (2) $82,000 assumed value of lifetime flights for: Messrs. Hayes, Sundaram, Nelson and Ms. Geraghty
and $20,500 in flight benefits for Priest for 5 years (3) Employer costs for Medical, Dental, & Vision coverage in
the amount of $21,356 for Mr. Hayes and $19,765 for Messrs. Priest, 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, 2020. 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 2020. 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, 2020 and prorated RSUs from the grant date through termination date due to death or disability:
51,921 RSUs and 121,894 PSUs for Mr. Hayes, 24,872 RSUs and 45,300 PSUs for Mr. Priest, 28,844 RSUs and 58,167 PSUs for Ms.
Geraghty, 19,085 RSUs and 13,543 PSUs for Mr. Sundaram, and 11,304 RSUs and 5,871 PSUs for Mr. Nelson valued using the closing
stock price on the last fiscal day of 2020.
|
(6)
|
Assumes continued vesting in the event of a termination
due to retirement with a termination date of December 31, 2020. There are no NEOs who are retirement eligible as of December
31, 2020.
|
(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 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 2020: 128,177 RSUs and 148,278 PSUs for Mr.
Hayes; 65,848 RSUs and 58,981 PSUs for Mr. Priest; 73,320 RSUs and 73,802 PSUs for Ms. Geraghty; 48,452 RSUs and 16,474 PSUs
for Mr. Sundaram; and 30,710 RSUs and 8,802 PSUs for Mr. Nelson per the change in control provisions under the 2011 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) $30,000 in outplacement services for Messrs. Hayes, Priest, Sundaram and Ms. Geraghty, and $20,000
in outplacement services for Mr. Nelson; (2) $8,200 in assumed value flight benefits for 2 years for each of the NEOs.
|
JETBLUE AIRWAYS CORPORATION | 2021
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 CEO 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, 2020 was $42,901
|
■
|
The total annual compensation of our CEO was $2,063,189
|
■
|
Based on this information, the ratio of the annual total compensation
is reasonably estimated to be 48 to 1 (which reflects Mr. Hayes’ voluntary reduction in base salary due to the financial
concerns caused by COVID-19)
|
The Company calculated the 2020 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.
2020 was an unprecedented year for the airline industry
given the pandemic. Our flight schedule and operations were significantly reduced, with crewmembers taking voluntary time off
and working fewer hours, impacting the median employee’s wages. For these reasons, the Company identified a new median employee
for 2020.
To identify the median employee as of December 31, 2020,
we used a consistently applied compensation measure. We utilized information from Box 5 of Form W-2. We performed our calculations
as of December 31, 2020, 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 2020.
No cost of living adjustments were applied. We excluded approximately 494 non-U.S. employees, as permitted under the de minimus
exception to the rules. The countries from which the excluded employees come are: Antigua (1), Aruba (3), Bahamas (23), Barbados
(4), Bermuda (2), Colombia (8), Costa Rica (4), Dominican Republic (69), Ecuador (4), Grand Cayman (1), Grenada (1), Guyana (1),
Haiti (5), Jamaica (8), Mexico (5), Peru (4), Puerto Rico (343), St. Lucia (1), St. Maarten (2), St. Thomas (1), Trinidad &
Tobago (2), Turks & Caicos (2).
The total number of U.S. employees and non-U.S. employees
were 19,438 and 494, respectively, before taking into account such exclusions and for purposes of calculating the total compensation
of that employee as we calculate total compensation for our NEOs 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 | 2021
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 18, 2021, 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 NEOs and (iv) all of our executive officers and directors serving as of March 18, 2021, 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
|
589,051
|
804,527
|
*
|
Stephen Priest
|
66,378
|
188,442
|
*
|
Joanna Geraghty
|
207,415
|
341,506
|
*
|
Easwaran Sundaram
|
109,824
|
144,621
|
|
Brandon Nelson
|
6,811
|
44,884
|
|
B. Ben Baldanza
|
—
|
22,764
|
*
|
Peter Boneparth
|
6,849
|
75,777
|
*
|
Monte Ford
|
—
|
8,358
|
*
|
Virginia Gambale
|
—
|
75,928
|
*
|
Ellen Jewett
|
6,849
|
63,875
|
|
Robert Leduc
|
7,500
|
17,116
|
|
Teri McClure
|
500
|
15,925
|
*
|
Sarah Robb O’Hagan
|
—
|
22,764
|
*
|
Vivek Sharma
|
—
|
15,228
|
|
Thomas Winkelmann
|
6,849
|
50,891
|
*
|
All executive officers and directors as a group
|
1,026,814
|
1,939,499
|
.32% .61%
|
5% Stockholders Name of Beneficial Owner
|
|
|
|
BlackRock Inc.(3)
|
|
25,855,250
|
8.17%
|
FMR, LLC(4)
|
|
37,926,718
|
11.98%
|
PRIMECAP Management Company(5)
|
|
17,426,825
|
5.50%
|
The Vanguard Group(6)
|
|
27,182,928
|
8.58%
|
JETBLUE AIRWAYS CORPORATION | 2021
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 18, 2021 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 18, 2021, 0.32% of the outstanding common stock.
A total of 316,636,886 shares of common stock were outstanding on March 18, 2021, 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, DSUs, PSUs and RSUs which will not vest or become exercisable within 60 days of March 18, 2021. 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 0.61% of the outstanding common stock.
|
(3)
|
The information reported is based on a Schedule 13G/A,
as filed with the SEC on January 29, 2021, in which BlackRock, Inc. and certain of its subsidiaries reported that it had sole
voting power over 24,793,085 shares and sole dispositive power over 25,855,250 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 8, 2021, in which FMR, LLC reported that it held sole voting power over 13,099,889 shares
and shared dispositive power over 37,926,718 shares. The principal business address of FMR, LLC is 245 Summer Street, Boston,
Massachusetts 02210.
|
(5)
|
The information reported is based on a Schedule 13G/A,
as filed with the SEC on February 12, 2021, in which PRIMECAP Management Company reported that it held sole voting power over
16,661,722 shares and sole dispositive power over 17,426,825 shares. The principal business address of PRIMECAP Management
Company is 177 East Colorado Blvd., 11th fl. Pasadena, CA 91105.
|
(6)
|
The information reported is based on a Schedule 13G/A,
as filed with the SEC on February 10, 2021, in which The Vanguard Group reported that it held sole voting power over 0 shares
and sole dispositive power over 26,903,207 shares and shared voting power over 128,146 shares and shared dispositive power
over 279,091 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 27,182,298 shares of common stock of the Company as a result of its serving as investment
manager of collective trust accounts. The principal business address of The Vanguard Group is 100 Vanguard Boulevard, Malvern,
PA 19355.
|
Section 16 (a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act and the rules promulgated
thereunder require our executive officers, directors and persons who beneficially own more than 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, one Form 3 for Mr. Laurence, one Form 4 for Mr. Nelson and one Form 5 for Mr. Sundaram were inadvertently
filed late during the year ended December 31, 2020 due to administrative error.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 65
MANAGEMENT
PROPOSAL 3
TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL
YEAR ENDING DECEMBER 31, 2021
|
|
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, 2021. 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 our independent registered public accounting firm for the year
ending December 31, 2021.
|
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, 2021. 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 2020,
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;
|
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 66
■
|
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;
|
■
|
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 engagement partner was appointed commencing with the 2019 audit.
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, 2021 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, 2021. 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 | 2021
PROXY STATEMENT 67
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, 2020 and 2019, respectively, and fees billed for other
services rendered by Ernst & Young LLP during those periods.
|
|
2020
|
|
2019
|
Audit fees(1)
|
$
|
2,337,000
|
$
|
2,300,000
|
Audit-related fees(2)
|
$
|
39,000
|
$
|
50,000
|
Tax fees(3)
|
$
|
244,000
|
$
|
174,000
|
TOTAL
|
$
|
2,620,000
|
$
|
2,524,000
|
(1)
|
Audit fees include fees for services associated
with the annual audits of JetBlue’s consolidated financial statements and internal controls over financial reporting,
reviews of JetBlue’s quarterly reports on Form 10-Q, accounting consultations pertaining to matters related to the audits
or interim reviews, registration statements filed with the SEC and statutory audit requirements.
|
(2)
|
Audit-related fees include fees for services that are
reasonably related to the performance of the audit or interim financial statement review and are not reported under Audit
fees. These services include other audit services requested by management, which are in addition to the scope of the financial
statement audits.
|
(3)
|
Tax fees include fees for services primarily related
to preparation of JetBlue’s income tax and non-income tax returns (e.g., VAT), within the U.S., Puerto Rico, and other
jurisdictions in the Caribbean.
|
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 OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2021.
|
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 68
AUDIT COMMITTEE REPORT
As of February 25, 2021, the date of this report, the Audit Committee
consisted of six members: B. Ben Baldanza, who serves as the Chair of the Committee, Monte Ford, Virginia Gambale, Ellen Jewett,
Robert Leduc, and Vivek Sharma. Each member is an independent director under Nasdaq and SEC rules, including the enhanced independence
requirements applicable to audit committee members, and meets the standards for committee independence as set forth in JetBlue’s
Corporate Governance Guidelines. The Audit Committee has the duties and powers described in its written charter adopted by the
Board. A copy of the charter is available on JetBlue’s website at http://investor.jetblue.com. The Committee assists
the Board’s oversight and monitoring of:
■
|
JetBlue’s financial statements and other financial information provided by JetBlue to its stockholders
and others;
|
■
|
compliance with legal, regulatory, and public disclosure requirements;
|
■
|
the independent auditors, including their qualifications and independence;
|
■
|
JetBlue’s system of internal controls, including the internal audit function;
|
■
|
enterprise risk management, privacy, and data security; and
|
■
|
the auditing, accounting, and financial reporting process generally.
|
The Audit Committee does not itself prepare financial statements
or perform audits, and its members are not auditors or certifiers of JetBlue’s financial statements.
The Audit Committee is responsible for
the appointment, compensation, retention, and oversight of the work performed by JetBlue’s independent registered
public accounting firm, Ernst & Young LLP. In fulfilling its oversight responsibility, the Audit Committee carefully
reviews the policies and procedures for the engagement of the independent registered public accounting firm, including the
scope of the audit, audit fees, auditor independence matters, performance of the independent auditors, and the extent to
which the independent registered public accounting firm may be retained to perform non-audit services. In fulfilling its
responsibilities, the Audit Committee held meetings throughout 2020 with Ernst & Young in private without members of
management present.
Ernst & Young LLP is responsible for performing an independent
audit of JetBlue’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. 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. 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.
JetBlue maintains an auditor independence policy that, among other
things, prohibits JetBlue’s independent registered public accounting firm from performing non-financial consulting services,
such as information technology consulting and internal audit services. This policy mandates that the Audit Committee approve in
advance the audit and permissible non-audit services to be performed by the independent registered public accounting firm and the
related budget, and that the Audit Committee be provided with quarterly reporting on actual spending. This policy also mandates
that JetBlue may not enter into engagements with JetBlue’s independent registered public accounting firm for non-audit services
without the express pre-approval of the Audit and Finance Committee.
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.
The Audit Committee has reviewed and discussed the audited financial
statements for the year ended December 31, 2020 with JetBlue’s management and Ernst & Young. The Audit Committee
has also discussed with Ernst & Young the matters required to be discussed by the applicable requirements of the Public
Company Accounting Oversight Board (“PCAOB”) and the SEC.
The Audit Committee also has received and reviewed the written
disclosures and the letter from Ernst & Young required by applicable requirements of the PCAOB regarding Ernst &
Young’s communications with the Audit Committee concerning independence, and has discussed with Ernst & Young its
independence.
Based on the reviews and discussions referred to above, in the
exercise of its business judgment the Audit Committee recommended to the Board that the financial statements referred to above
be included in JetBlue’s Annual Report on
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 69
Form 10-K for the year ended December 31, 2020 for filing with
the SEC. In addition, the Audit Committee has selected, and the Board has approved, 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, 2021.
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 as it may deem necessary or appropriate.
Audit Committee of JetBlue
B. Ben Baldanza, Chair
Monte Ford
Virginia Gambale
Ellen Jewett
Robert Leduc
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 Exchange Act, except to the extent that the Company specifically incorporates the Audit Committee Report by
reference therein.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 70
PROPOSAL 4
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 100 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 4 - Special Shareholder Meeting
Shareholders ask our board to take the steps necessary
to amend the appropriate company governing documents to give the owners of a combined 10% of our outstanding common stock
the power to call a special shareholder meeting. The Board of Directors would continue to have its existing power to call a
special meeting.
JetBlue shareholder need the right to call a special shareholder
meeting due to their current lame right to act by written consent.
Currently it takes the formal backing 30% of all shares that normally
cast ballots at the annual meeting to do so little ask for a record date for written consent. Requiring the formal backing 30%
of shares to do so little as to ask for a record date cuts shareholders off at the knees.
Plus any action taken by written consent would still need
62% supermajority approval from the shares that normally cast ballots at the annual meeting. This 62% vote requirement gives
overwhelming supermajority protection to management.
In 2020 there has been a dramatic development that makes
shareholder meetings so much easier for management with substantial cost reduction. A special shareholder meeting can now be
an online shareholder meeting which is so much easier for management. The 2020 pandemic has resulted in an avalanche of
online shareholder meetings - more than 2000 such meetings.
Management accountability is so well defended at online meetings
that shareholders should at least have the option to call for a special shareholder meeting.
Management now has the option of screening out constructive criticism
of management at a special online shareholder meeting. Thus the core purpose of such a meeting can simply be the announcement of
the vote on an important issue that occurs between annual meetings such as the election of a director.
The Goodyear online shareholder meeting was spoiled by a
trigger-happy management mute button for shareholders that was used to quash constructive criticism. AT&T would
not even allow shareholders to speak at its online shareholder meeting. Shareholders are so restricted at online
meetings that management will never want a return to the more transparent in-person shareholder meeting format.
Please see:
Goodyear’s virtual meeting creates
issues with shareholder
https://www.crainscleveland.com/manufacturing/
goodyears-virtual-meeting-creates-issues-shareholder
AT&T
investors denied a dial-in as annual meeting goes online
https://whbl.com/2020/04/17/att-investors-denied-a-dial-
in-as-annual-meeting-goes-online/1007928/
Please vote yes:
Special Shareholder Meeting- Proposal 4
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 71
Board of Directors’ Statement in Opposition to Proposal
4
The Board recommends that you vote against the proposal to
lower the threshold required for stockholders to call a special meeting.
The Board has carefully considered the proposal and believes that
lowering the thresholder necessary for stockholders to call a special meeting is not necessary given the potential for abuse of
such a right and our strong corporate governance practices.
The Board recommends that you vote against this stockholder’s
proposal.
Facts Regarding the Existing Right to Call a Special Meeting
and Governance Practices
The proposal contains a number of statements that misrepresent
the rights that stockholders of the Company currently have with respect to calling a special meeting and a number of other related
stockholder governance matters.
The proposal incorrectly asserts that stockholders of the Company
do not have a right to call a special meeting. The Company’s governance documents plainly allow stockholders to call special
meetings upon written request from holders representing at least 20% of the voting power of the Company. At the Company’s
last annual meeting of stockholders, the Board submitted a proposal to stockholders to amend the Company’s governance documents
to provide for this right and it was approved by 86% of the stockholders who voted on this proposal.
The proposal also incorrectly
asserts that the Company’s governance documents require stockholders representing at least 30% voting power to request
that the Company set a record date for an action by written consent. The Company’s governance documents only require
holders representing at least 25% of voting power of the Company to request that the Company set a record date for a written
consent. This right was also presented by the Board at Company’s last annual meeting of stockholders for approval, and
it was approved by 86% of the stock holders who voted on this proposal.
The proposal also incorrectly asserts that a 62% approval by stockholders
is required to take action by written consent. There is no such supermajority approval requirement in the Company’s governance
documents. Any action by written consent only needs the same votes in favor as would be necessary for the same action to be approved
at a meeting of stockholders.
Stockholders should not be misled or confused by these erroneous
statements regarding rights to call special meetings or its other governance rights.
The Board maintains strong corporate governance practices and
regularly reviews them. The Board believes that the strong corporate governance practices and stockholder rights provide the appropriate
means to advance stockholders’ interest without the potential risk of abuse that would come with lowering the threshold to
call a special meeting. Our corporate governance program includes the following leading practices:
■
|
Independent Chair of the Board (Chair and CEO positions have been separated since 2008)
|
■
|
Nine of ten director nominees are independent, with our CEO, as our sole non-independent director nominee
|
■
|
30% of all director nominees are female and 30% of all director nominees are ethnically
diverse
|
■
|
Independent directors regularly meet in executive session
|
■
|
Robust orientation program for new directors and ongoing training for continuing directors.
|
■
|
All Audit Committee members are financially literate, and two are audit committee financial experts
|
■
|
Compensation Committee uses an independent compensation consultant
|
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A majority vote standard in annual director elections
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Thoughtful approach to board composition and refreshment
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Annual board and committee evaluations
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Limitation on the number of public company boards on which Directors may serve
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Stockholders’ right to call a special meeting
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Stockholders’ right to act by written consent
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Proxy access
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Lowering the Threshold to Call a Special Meeting is Not
in the Best Interests of Stockholders
The Board has carefully considered the implications of allowing
stockholders to request that the Company call a special meeting of stockholders. The Board recognized that this right is increasingly
considered to be an important aspect of good corporate governance. 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. Additionally, the Board
reflected on the significant commitment of management time and attention that is necessary to organize and prepare for a special
meeting, which can take focus away from important corporate priorities. The Board also considered the substantial legal, administrative
and distribution costs on the Company.
As the Board is strongly committed to
good corporate governance, it supported providing stockholders with the right 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. After due consideration, the Board presented a special meeting proposal for consideration by
stockholders in connection with the 2020 Annual Meeting with a 20% ownership threshold. The Board believed a special
meeting should only be held in extraordinary circumstances that must be addressed immediately, and not delayed until the
next annual meeting, and that, importantly, are of interest to a broad base of stockholders.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 72
In selecting the 20% threshold for
the right of stockholders to request that the Company call a special meeting, the Board was striking a balance between
the competing goals of providing stockholders with a true economic and non-transitory interest in the Company with the
ability to call a special meeting and protecting against the risk that a small minority of stockholders with special
interests, which may not be shared by the majority of the Company’s stockholders, could require that the Company call
one or more special meetings resulting in unnecessary financial expense and disruption to our business. The Board continues
to believe that the premises on which the stockholders voted at the 2020 Annual Meeting in favor of
the right to call a special meeting remain true today.
The proposal seeks to reduce the threshold for the right of stockholders
to request that the Company call a special meeting to 10%. The Board does not believe that reducing the threshold is warranted
in light of the risks to which the Company would be exposed if the threshold were lowered. The Board continues to believe that
a special meeting should only be held to address special or extraordinary events when fiduciary, strategic, significant transactional
or similar considerations dictate that the matter cannot wait until the next annual meeting. The Board believes that setting the
threshold too low would carry a risk of meeting requests promoting agenda items relevant to particular constituencies as opposed
to stockholders generally, while generating significant cost and management distraction. Additionally, potential acquirers seeking
to take over the Company for an inadequate price could more easily threaten to call 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.
Pre COVID, we discussed the implementation of the special meeting
right with a number of our stockholders. While our stockholders had differing views on the special meeting right and the proposed
threshold for the right of stockholders to request that the Company call a special meeting, there was a general consensus that
a 20% threshold was appropriate, which was shown in the support the proposal received at the 2020 Annual Meeting.
In light of these considerations, maintaining 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.
In summary, we believe that our current threshold for the right
of stockholders to request that the Company call a special meeting is consistent with existing best practices and continue to reflect
the governance framework that best protects stockholder rights Accordingly, the Board believes that adoption of the stockholder
proposal is not appropriate and is not in the best interests of our stockholders.
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FOR THE REASONS STATED ABOVE, JETBLUE’S
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “AGAINST”
THE PROPOSAL TO DECREASE THE THRESHOLD TO CALL A SPECIAL MEETING.
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JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 73
QUESTIONS AND ANSWERS ABOUT
THE ANNUAL MEETING AND VOTING
What is the record date?
The record date (the “Record Date”) for the 2021 virtual
annual meeting is March 18, 2021. On the Record Date, there were 316,636,886 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:
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By Internet: go to www.proxyvote.com;
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By telephone: call 1-800-690-6903 (toll-free); or
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By mail (if you received a paper copy of the proxy materials by mail): mark,
sign, date and promptly mail the enclosed proxy card in the postage-paid envelope.
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If your shares are held in the name of a broker, bank or other holder
of record, follow the voting instructions you receive from the holder of record to vote your shares.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 74
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:
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FOR the election of each of the ten director candidates
nominated by the Board of Directors;
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FOR approval, on an advisory basis, of the compensation of our named
executive officers;
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FOR the ratification of the selection of Ernst & Young LLP as our
independent registered public accounting firm for the fiscal year ending December 31, 2021;
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AGAINST approval of the stockholder proposal to reduce the special meeting
threshold, if properly presented at the meeting; and
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in accordance with the best judgment of the named proxies on any other matters properly brought before the 2021 virtual
annual meeting and any postponement(s) or adjournment(s) thereof.
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If you are a beneficial owner of shares and do not specify how you
want your shares to be voted, your shares may not be voted by the recordholder (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
Daylight Time, on May 12, 2021; or (iv) attending and voting via the Internet at the 2021 virtual annual meeting. Attendance
at the 2021 virtual 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 2021 virtual 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 2021 virtual 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 2021 virtual annual meeting.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 75
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. 3), 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), and the stockholder proposal
(Proposal No. 4). Your broker does not have discretionary authority to vote on non-routine matters without instructions from
you, in which case a “broker non-vote” will occur and your shares will not be voted on these matters.
What vote is required to adopt each of the proposals?
Proposal 1: Election of Directors
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: Ratification of selection of Ernst & Young LLP
as our independent registered public accounting firm for the fiscal year ending December 31, 2021
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.
Proposal 4: To vote on a stockholder proposal to reduce the special
meeting threshold, if properly presented at the annual 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 the proposal reduce
the special meeting threshold. 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 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
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 76
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 Actor 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.
How can I attend the 2021 virtual annual meeting?
The 2021 virtual 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/jblu2021 and providing your control
number. This control 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 2021 virtual annual meeting, but will not be
able to ask questions or vote at the meeting.
The audio broadcast of the 2021 virtual annual
meeting will be archived at www.virtualshareholdermeeting.com/jblu2021 for at least one year.
Why is this annual meeting virtual only?
We are holding a virtual only meeting this year
for a few reasons. First, safety is an important value for JetBlue, in the air and on the ground. While we are encouraged by the
pace of COVID-19 vaccinations rolling out around the world, we do not know how many individuals will be vaccinated by May. Accordingly,
we are choosing the virtual route to keep our stockholders attending the meeting safe from COVID-19. We also value innovation
and we welcome expanded access, improved communication and cost savings for our stockholders and the Company afforded by the virtual
format. As we have learned in the past, hosting a virtual meeting enables increased stockholder attendance and participation from
locations around the world, which provides for a more meaningful forum. In addition, the virtual format allows us to communicate
more effectively via a pre-meeting portal that stockholders can enter by visiting www.proxyvote.com and logging
in with control number. We encourage you to log on in advance and ask any questions you may have, which we will try to answer
during the meeting. We recommend that you log in to the Virtual Shareholder Meeting at www.virtualshareholdermeeting.com/jblu2021
a few minutes before the scheduled meeting time on May 13, 2021 to ensure you are logged in when the meeting starts.
What if during the check-in time or during the annual
meeting I have technical difficulties or trouble accessing the virtual meeting website?
We will have technicians ready to assist you with any technical difficulties
you may have accessing the virtual meeting website. If you encounter any difficulties accessing the virtual meeting during the
checking or meeting dime, please call the technical support number that will be posted on the Virtual Shareholder Meeting webpage.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 77
Will there be a question and answer session during
the annual meeting?
As part of the virtual annual meeting, we will hold a live Q&A
session, during which we intend to answer questions submitted online during or prior to the meeting that are pertinent to JetBlue
and the meeting matters, as time permits. Only stockholders that have accessed the annual meeting as a stockholder by following
the procedures outlined above in “How can I attend the annual meeting?” will be permitted to submit questions during
the annual 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). Each stockholder is limited to no more than two questions. Questions should be succinct and
only cover a single topic. We will not address questions that are, among other things:
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irrelevant to the business of the Company or to the business of the annual meeting;
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related to material non-public information of the Company, including the status or results of our business since our last
earnings release;
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related to any pending, threatened or ongoing litigation;
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related to personal grievances;
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derogatory references to individuals or that are otherwise in bad taste;
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substantially repetitious of questions already made by another stockholder;
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in excess of the two question limit;
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in furtherance of the stockholder’s personal or business interests; or
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out of order or not otherwise suitable for the conduct of the annual meeting as determined by the Chair or Secretary in
their reasonable judgment.
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Additional information regarding the Q&A session will be available
in the “Rules of Conduct” available on the Virtual Shareholder Meeting webpage for stockholders that have accessed
the annual meeting as a stockholder by following the procedures outlined above in “How can I attend the annual meeting?”
What is “householding” and how does it
affect me?
The SEC has adopted rules that permit companies and intermediaries
such as brokers to satisfy delivery requirements for proxy statements with respect to two or more stockholders sharing the same
address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as
“householding,” potentially provides extra convenience for stockholders and cost savings for companies. We and some
brokers household proxy materials, delivering a single proxy statement or annual report to multiple stockholders sharing an address,
unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker
or us that they or we will be householding materials to your address, householding will continue until you are notified otherwise
or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive
a separate proxy statement or annual report, please notify us by sending a written request to Investor Relations, JetBlue Airways
Corporation, 27-01 Queens Plaza North, Long Island City, New York 11101 or by calling us at (718) 286-7900. You may also notify
us to request delivery of a single copy of our annual report or proxy statement if you currently share an address with another
stockholder and are receiving multiple copies of our annual report or proxy statement.
Is there a list of stockholders entitled to vote
at the annual meeting?
The names of stockholders entitled to vote at the virtual annual
meeting will be available at the annual meeting and for ten days prior to the annual meeting for any purpose germane to the
annual meeting, between the hours of 9:00 a.m. and 4:30 p.m. (Eastern Time), at our principal executive offices at 27-01
Queens Plaza North, Long Island City, New York 11101, by contacting our General Counsel, Brandon Nelson. The list of these
stockholders will also be available for examination by our stockholders during the virtual annual meeting on the Virtual
Shareholder Meeting webpage for stockholders that have accessed the annual meeting as a stockholder by following the
procedures outlined above in “How can I attend the annual meeting?”
When will the voting results be announced?
We will announce preliminary voting results
at the annual meeting. We will report final results on our website at www.jetblue.com and in a filing with
the SEC on a Form 8-K.
JETBLUE AIRWAYS CORPORATION | 2021
PROXY STATEMENT 78
OTHER MATTERS
As of the date of this proxy statement, we do not know of any other
matters that may be presented for consideration at the annual meeting other than the items set forth in the notice of annual meeting
above. If any other matter is properly brought before the annual meeting for action by stockholders, proxies in the enclosed form
returned to the Company will be voted in accordance with the recommendation of the Board or, in the absence of such a recommendation,
in accordance with the judgment of the proxy holder.
ADDITIONAL INFORMATION
Stockholder Proposals for the 2022 Annual Meeting
Pursuant to our Bylaws, no business may
be brought before an annual meeting unless it is specified in the notice of the meeting or is otherwise brought before
the meeting by or at the direction of the Board of Directors or by a stockholder entitled to vote at the meeting, who
has delivered written notice to our Corporate Secretary at our principal executive offices (containing certain
information specified in the Bylaws about the stockholder and the proposed action). To be timely, the notice must not be
received earlier than January 13, 2022 (120 days prior to May 13, 2022, the one year anniversary of the annual
meeting), nor later than February 12, 2022 (90 days prior to May 13, 2022). The notice must contain the information required
by our Bylaws. The foregoing Bylaw provisions do not affect a stockholder’s ability to request inclusion of a proposal
in our proxy statement within the procedures and deadlines set forth in Rule 14a-8 of the SEC’s proxy rules. Pursuant
to Rule 14a-8, stockholder proposals intended to be included in our proxy statement and voted on at our 2022 annual meeting
must be received at our offices at Corporate Secretary, JetBlue Airways Corporation, 27-01 Queens Plaza North, Long Island
City, New York 11101, on or before November 29, 2021 (120 days prior to March 29, 2022, the one year anniversary of the 2021
proxy mailing).
In January 2018, the Board adopted
revisions to our Bylaws, putting into place proxy access provisions. These 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 stockholder meeting 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. To be timely, the notice must not be
received earlier than December 14, 2021 (150 days prior to May 13, 2022, the one year anniversary of the annual meeting), nor
later than January 13, 2022 (120 days prior to May 13, 2022). The notice must contain the information required by our
Bylaws.
A copy of our Bylaws is available upon request to: Corporate Secretary,
JetBlue Airways Corporation, 27-01 Queens Plaza North, Long Island City, NY 11101. The officer presiding at the meeting may exclude
matters that are not properly presented in accordance with these requirements.
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PROXY STATEMENT 79
Annual Report to Stockholders
The 2020 Annual Report to Stockholders (which is not a part of our
proxy soliciting materials), is being mailed with this proxy statement to those stockholders that received a copy of the proxy
materials in the mail. For those stockholders that received the Notice of Internet Availability of proxy materials, this proxy
statement and our 2019 Annual Report to Stockholders are available on our website at www.jetblue.com. Additionally,
and in accordance with SEC rules, you may access our proxy statement at www.proxyvote.com, a “cookie-free”
website that does not identify visitors to the site. A copy of the Company’s Annual Report on Form 10-K filed with the SEC
will be provided to stockholders without charge upon written request directed to our General Counsel, JetBlue Airways Corporation,
27-01 Queens Plaza North, Long Island City, NY 11101. The Company’s copying costs will be charged if exhibits to the 2020
Annual Report on Form 10-K are requested. The Company makes available on or through our website free of charge our Annual Report
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to such reports filed pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after filing.
By Order of the Board of Directors,
Brandon Nelson
General Counsel and Corporate Secretary
March 29, 2021
Long Island City, New York
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PROXY STATEMENT 80
APPENDIX A
REGULATION G RECONCILIATION OF
NON-GAAP FINANCIAL
MEASURES
We sometimes use non-GAAP financial measures in this report. Non-GAAP
financial measures are financial measures that are derived from the consolidated financial statements, but that are not presented
in accordance with generally accepted accounting principles in the United States, or GAAP. We believe these non-GAAP financial
measures provide a meaningful comparison of our results to others in the airline industry and our prior year results. Investors
should consider these non-GAAP financial measures in addition to, and not as a substitute for, our financial performance measures
prepared in accordance with GAAP. Further, our non-GAAP information may be different from the non-GAAP information provided by
other companies. The information below provides an explanation of each non-GAAP financial measure and shows a reconciliation of
non-GAAP financial measures used in this filing to the most directly comparable GAAP financial measures.
Operating Expense per Available Seat Mile, excluding
fuel and related taxes, other non-airline operating expenses, and special items (“CASM Ex-Fuel”)
Operating expenses per available seat mile, or CASM, is a common metric
used in the airline industry. We exclude aircraft fuel and related taxes, operating expenses related to other non-airline businesses,
such as our subsidiaries, JetBlue Technology Ventures and JetBlue Travel Products, and special items from operating expenses to
determine CASM ex-fuel, which is a non-GAAP financial measure.
In 2020, special items include contra-expenses recognized on the utilization
of payroll support grants received under the CARES Act, contra-expenses recognized on the Employee Retention Credits provided by
the CARES Act, impairment charges of our Embraer E190 fleet, losses generated from certain sale-leaseback transactions, and one-time
costs associated with our voluntary crewmember separation programs.
Special items for 2019 and 2018 include an impairment charge
and one-time costs related to the Embraer E190 fleet transition as well as one-time costs related to the ratification and
implementation of our pilots’ collective bargaining agreement.
We believe that CASM ex-fuel is useful for investors because it provides
investors the ability to measure financial performance excluding items beyond our control, such as fuel costs, which are subject
to many economic and political factors, or not related to the generation of an available seat mile, such as operating expense related
to other non-airline businesses. We believe this non-GAAP measure is more indicative of our ability to manage airline costs and
is more comparable to measures reported by other major airlines.
NON-GAAP FINANCIAL MEASURE RECONCILIATION OF OPERATING
EXPENSE PER ASM, EXCLUDING FUEL
|
|
|
|
|
|
|
2020
|
|
|
|
|
|
|
|
2019
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
|
|
2017
|
|
|
|
|
|
|
|
2016(1)
|
(in
millions; per ASM data in cents)
|
|
|
$
|
|
per ASM
|
|
|
|
$
|
|
per ASM
|
|
|
|
$
|
|
per ASM
|
|
|
|
$
|
|
per ASM
|
|
|
|
$
|
|
per ASM
|
|
Total operating expenses
|
|
$
|
4,671
|
|
|
|
14.29
|
|
|
$
|
7,294
|
|
|
|
11.43
|
|
|
$
|
7,392
|
|
|
|
12.34
|
|
|
$
|
6,039
|
|
|
|
10.78
|
|
|
$
|
5,324
|
|
|
|
9.93
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft fuel and related taxes
|
|
|
631
|
|
|
|
1.93
|
|
|
|
1,847
|
|
|
|
2.89
|
|
|
|
1,899
|
|
|
|
3.17
|
|
|
|
1,363
|
|
|
|
2.43
|
|
|
|
1,074
|
|
|
|
2.00
|
|
Other non-airline expenses(2)
|
|
|
35
|
|
|
|
0.10
|
|
|
|
46
|
|
|
|
0.08
|
|
|
|
44
|
|
|
|
0.07
|
|
|
|
35
|
|
|
|
0.06
|
|
|
|
26
|
|
|
|
0.05
|
|
Special items
|
|
|
(283
|
)
|
|
|
(0.86
|
)
|
|
|
14
|
|
|
|
0.02
|
|
|
|
435
|
|
|
|
0.73
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Operating expenses,
excluding fuel
|
|
$
|
4,288
|
|
|
|
13.12
|
|
|
$
|
5,387
|
|
|
|
8.44
|
|
|
$
|
5,014
|
|
|
|
8.37
|
|
|
$
|
4,641
|
|
|
|
8.29
|
|
|
$
|
4,224
|
|
|
|
7.88
|
|
(1)
|
Amounts prior to 2017 do not reflect the impact of the adoption of ASU 2016-02, Leases (Topic 842)
of the Codification, adopted as of January 1, 2019.
|
|
|
(2)
|
Other non-airline expenses for 2016 includes operating expenses related to JetBlue Technology Ventures only.
|
JETBLUE AIRWAYS CORPORATION | 2021 PROXY
STATEMENT A-1
Reconciliation of Operating Expense, Income before
Taxes, Net Income and Earnings per Share, excluding special items, gain on equity method investments, and impact of tax reform
Our GAAP results in the applicable periods were impacted by charges
that are deemed special items and a one-time gain on an equity method investment.
In 2020, special items include contra-expenses recognized on the utilization
of payroll support grants received under the CARES Act, impairment charges of our Embraer E190 fleet, losses generated from certain
sale-leaseback transactions, and one-time costs associated with our voluntary crew member separation programs.
Special items for 2019 and 2018 include an
impairment charge and one-time costs related to the Embraer E190 fleet transition as well as one-time costs related to the
ratification and implementation of our pilots’ collective bargaining agreement. In 2019, we also recognized a one-time
gain on an equity method investment. Our GAAP results in 2018 also included the impact from the 2017 reform under the Tax
Cuts and Jobs Act.
We believe the impact of these items distort our overall trends and
that our metrics are more comparable with the presentation of our results excluding the impact of these items. The table below
provides a reconciliation of our GAAP reported amounts to the non-GAAP amounts excluding the impacts of these items.
NON-GAAP FINANCIAL MEASURE RECONCILIATION OF OPERATING
EXPENSE, INCOME BEFORE TAXES, NET INCOME AND EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS, GAIN ON EQUITY METHOD INVESTMENT, AND
IMPACT OF TAX REFORM
|
|
Year Ended December 31,
|
(in millions except per share amounts)
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
Total operating revenues
|
|
$
|
2,957
|
|
|
$
|
8,094
|
|
|
$
|
7,658
|
|
|
Total operating expenses
|
|
$
|
4,671
|
|
|
$
|
7,294
|
|
|
$
|
7,392
|
|
|
Less: Special items
|
|
|
(283
|
)
|
|
|
14
|
|
|
|
435
|
|
|
Total operating expenses excluding special items
|
|
$
|
4,954
|
|
|
$
|
7,280
|
|
|
$
|
6,957
|
|
|
Year-over-year change in total operating expense excluding special items
|
|
|
(32
|
)%
|
|
|
5
|
%
|
|
|
15
|
%
|
|
Operating (loss) income
|
|
$
|
(1,714
|
)
|
|
$
|
800
|
|
|
$
|
266
|
|
|
Add back: Special items
|
|
|
(283
|
)
|
|
|
14
|
|
|
|
435
|
|
|
Operating (loss) income excluding special items
|
|
$
|
(1,997
|
)
|
|
$
|
814
|
|
|
$
|
701
|
|
|
Operating margin excluding special items
|
|
|
(67.5
|
)%
|
|
|
10.1
|
%
|
|
|
9.2
|
%
|
|
(Loss) income before income taxes
|
|
$
|
(1,893
|
)
|
|
$
|
768
|
|
|
$
|
219
|
|
|
Add back: Special items
|
|
|
(283
|
)
|
|
|
14
|
|
|
|
435
|
|
|
Less: Gain on equity method investment
|
|
|
—
|
|
|
|
15
|
|
|
|
—
|
|
|
(Loss) income before income taxes excluding special items and gain on equity method investment
|
|
$
|
(2,176
|
)
|
|
$
|
767
|
|
|
$
|
654
|
|
|
Pre-tax margin excluding special items and gain on equity method investment
|
|
|
(73.6
|
)%
|
|
|
9.5
|
%
|
|
|
8.5
|
%
|
|
Net (loss) income
|
|
$
|
(1,354
|
)
|
|
$
|
569
|
|
|
$
|
189
|
|
|
Add back: Special items
|
|
|
(283
|
)
|
|
|
14
|
|
|
|
435
|
|
|
Less: Income tax (expense) benefit related to special items
|
|
|
(69
|
)
|
|
|
4
|
|
|
|
108
|
|
|
Less: Gain on equity method investments
|
|
|
—
|
|
|
|
15
|
|
|
|
—
|
|
|
Less: Income tax (expense) related to gain on equity method investments
|
|
|
|
|
|
|
(4
|
)
|
|
|
—
|
|
|
Less: Income tax benefit related to tax reform
|
|
|
—
|
|
|
|
—
|
|
|
|
28
|
|
|
Net (loss) income excluding special items, gain on equity method investment, and tax reform impact
|
|
$
|
(1,568
|
)
|
|
$
|
568
|
|
|
$
|
488
|
|
|
JETBLUE AIRWAYS CORPORATION | 2021 PROXY
STATEMENT A-2
|
Year Ended December 31,
|
(in millions except per share amounts)
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
(Loss) earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(4.88
|
)
|
|
$
|
1.92
|
|
|
$
|
0.60
|
|
Add back: Special items, net of tax
|
|
|
(0.77
|
)
|
|
|
0.04
|
|
|
|
1.05
|
|
Less: Gain on equity method investment, net of tax
|
|
|
—
|
|
|
|
0.04
|
|
|
|
—
|
|
Less: Tax reform impact
|
|
|
—
|
|
|
|
—
|
|
|
|
0.09
|
|
Basic excluding special items, gain on equity method investment, and tax reform impact
|
|
$
|
(5.65
|
)
|
|
$
|
1.92
|
|
|
$
|
1.56
|
|
Diluted
|
|
$
|
(4.88
|
)
|
|
$
|
1.91
|
|
|
$
|
0.60
|
|
Add back: Special items, net of tax
|
|
|
(0.77
|
)
|
|
|
0.03
|
|
|
|
1.04
|
|
Less: Gain on equity method investments, net of tax
|
|
|
—
|
|
|
|
0.04
|
|
|
|
—
|
|
Less: Tax reform impact
|
|
|
—
|
|
|
|
—
|
|
|
|
0.09
|
|
Diluted excluding special items, gain on equity method investments, and tax reform impact
|
|
$
|
(5.65
|
)
|
|
$
|
1.90
|
|
|
$
|
1.55
|
|
Daily Cash Burn
We present cash burn because we believe this metric is helpful to
investors to evaluate our ability to maintain liquidity and evaluate cash flows from our core operating performance. Our cash burn
is calculated as net cash used in operating activities, net cash used in investing activities, and net cash provided by financing
activities adjusted for: cash payments associated with our voluntary separation programs, net purchases of investment securities,
and net proceeds from our common stock offering completed in December 2020.
NON-GAAP FINANCIAL MEASURE DAILY CASH BURN
|
|
Three Months Ended
|
|
(in millions, except for days in period)
|
|
December 31, 2020
|
|
Net cash (used in) operating activities
|
|
$
|
(459
|
)
|
Net cash (used in) investing activities
|
|
|
(765
|
)
|
Net cash provided by financing activities
|
|
|
614
|
|
(Decrease) in cash, cash equivalents, and restricted cash
|
|
|
(610
|
)
|
Adjustments
|
|
|
|
|
Voluntary separation programs
|
|
|
5
|
|
Net purchases of investment securities
|
|
|
570
|
|
Proceeds from issuance of common stock
|
|
|
(583
|
)
|
Total adjustments
|
|
|
(8
|
)
|
Adjusted (decrease) in cash
|
|
|
(618
|
)
|
Days in period
|
|
|
92
|
|
Daily cash burn
|
|
$
|
(6.7
|
)
|
JETBLUE AIRWAYS CORPORATION | 2021 PROXY
STATEMENT A-3
Adjusted Debt to Capitalization Ratio
Adjusted debt to capitalization ratio is a non-GAAP financial measure
which we believe is relevant in assessing the Company’s overall debt profile. Adjusted debt includes aircraft operating lease
liabilities, in addition to total debt and finance lease obligations. Adjusted capitalization represents total equity plus adjusted
debt. Investors should consider this non-GAAP financial measure in addition to, and not as a substitute for, our financial measures
prepared in accordance with GAAP.
NON-GAAP FINANCIAL MEASURE ADJUSTED DEBT TO CAPITALIZATION
RATIO
|
December 31,
|
(in millions)
|
|
2020
|
|
|
2019
|
|
Long-term debt and finance lease obligations
|
|
$
|
4,413
|
|
|
$
|
1,990
|
|
Current maturities of long-term debt and finance lease obligations
|
|
|
450
|
|
|
|
344
|
|
Operating lease liabilities — aircraft
|
|
|
273
|
|
|
|
183
|
|
Adjusted debt
|
|
$
|
5,136
|
|
|
$
|
2,517
|
|
Long-term debt and finance lease obligations
|
|
$
|
4,413
|
|
|
$
|
1,990
|
|
Current maturities of long-term debt and finance lease obligations
|
|
|
450
|
|
|
|
344
|
|
Operating lease liabilities — aircraft
|
|
|
273
|
|
|
|
183
|
|
Stockholders’ equity
|
|
|
3,951
|
|
|
|
4,799
|
|
Adjusted capitalization
|
|
$
|
9,087
|
|
|
$
|
7,316
|
|
Adjusted debt to capitalization ratio
|
|
|
57
|
%
|
|
|
34
|
%
|
JETBLUE AIRWAYS CORPORATION | 2021 PROXY
STATEMENT A-4
APPENDIX B
ROIC FORMULA FOR PSUs
We calculate ROIC for purposes of PSU grants as operating income (loss)
after tax, as adjusted over invested capital, as illustrated below.
Return On Invested Capital (ROIC)
|
Numerator
|
|
Operating income (loss)
|
|
Add: Interest income (expense) and other
|
|
Add: Interest component of capitalized aircraft rent(1)
|
|
Add: Special items
|
|
Subtotal
|
|
Less: Income tax expense (benefit) impact
|
|
Operating income (loss) after tax, adjusted
|
|
|
|
Denominator
|
|
Average stockholders’ equity
|
|
Average total debt
|
|
Capitalized aircraft rent(2)
|
|
Invested capital
|
|
|
|
Return on invested capital
|
(1)
|
Interest component of capitalized aircraft rent is calculated at an imputed interest of 7.5%
|
(2)
|
Capitalized aircraft rent is calculated as 7X reported aircraft rent
|
JETBLUE AIRWAYS CORPORATION | 2021 PROXY
STATEMENT B-1
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