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Allegiant Travel Company 10-K 2010

Documents found in this filing:

  1. 10-K/A
  2. Ex-31.1
  3. Ex-31.2
  4. Ex-32
  5. Ex-32

Table of Contents

 

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 10-K/A

 

(Amendment No. 1)

 

(Mark One)

 

x

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2009

 

OR

 

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                        to                        

 

Commission file number 001-33166

 

ALLEGIANT TRAVEL COMPANY

(Exact Name of Registrant as Specified in Its Charter)

 

Nevada

 

20-4745737

(State or Other Jurisdiction of
Incorporation or Organization)

 

(I.R.S. Employer
Identification No.)

 

 

 

8360 S. Durango Drive,
Las Vegas, Nevada

 

89113

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (702) 851-7300

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

 

Name of Each Exchange on Which Registered

Common Stock, $.001 par value per share

 

Nasdaq Global Select Market

 

Securities registered pursuant to Section 12(g) of the Act:

 

None
(Title of Class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x  No o

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o  No x

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer o

 

Accelerated filer x

 

 

 

Non-accelerated filer o

 

Smaller reporting company o

(Do not check if a smaller reporting company)

 

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No x

 

The aggregate market value of common equity held by non-affiliates of the registrant as of June 30, 2009, was approximately $605,000,000 computed by reference to the closing price at which the common stock was sold on the Nasdaq Global Select Market on that date. This figure has been calculated by excluding shares owned beneficially by directors and executive officers as a group from total outstanding shares solely for the purpose of this response.

 

The number of shares of the registrant’s Common Stock outstanding as of the close of business on March 1, 2010 was 19,909,655.

 

DOCUMENTS INCORPORATED BY REFERENCE:  None.

 

EXHIBIT INDEX IS LOCATED ON PAGE 20.

 

 

 



Table of Contents

 

EXPLANATORY NOTE

 

This Amendment No. 1 on Form 10-K/A (the “Amendment”) amends the Annual Report on Form 10-K of Allegiant Travel Company for the fiscal year ended December 31, 2009, originally filed with the Securities and Exchange Commission (“SEC”) on March 9, 2010 (the “Original Filing”). We are filing this Amendment to amend Part III of the Original Filing to include the information required by and not included in Part III of the Original Filing because we no longer intend to file our definitive proxy statement within 120 days of the end of our fiscal year ended December 31, 2009 and the cover page of the Amendment now reflects we will not be incorporating Part III disclosures by reference to our proxy statement. In connection with the filing of this Amendment and pursuant to the rules of the SEC, we are including with this Amendment certain new certifications by our principal executive officer and principal financial officer. Accordingly, Item 15 of Part IV has also been amended to reflect the filing of these new certifications.

 

Except as described above, no other changes have been made to the Original Filing. The Original Filing continues to speak as of the date of the Original Filing, and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Filing other than as expressly indicated in this Amendment. In this Amendment, unless the context indicates otherwise, the terms “Company,” “we,” “us,” and “our” refer to Allegiant Travel Company. Other defined terms used in this Amendment but not defined herein shall have the meaning specified for such terms in the Original Filing.

 

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PART III

 

Item 10.    Directors, Executive Officers and Corporate Governance.

 

The following table sets forth certain information with respect to our board of directors and executive officers as of April 30, 2010:

 

Name

 

Age

 

Position

 

Director
Since (1)

Maurice J. Gallagher, Jr.

 

60

 

Chief Executive Officer, Chairman of the Board

 

2001

 

 

 

 

 

 

 

Montie Brewer (2)(3)

 

52

 

Director

 

2009

 

 

 

 

 

 

 

Gary Ellmer (3)(4)

 

56

 

Director

 

2008

 

 

 

 

 

 

 

Timothy P. Flynn (2)(3)

 

59

 

Director

 

2006

 

 

 

 

 

 

 

Charles Pollard (4)

 

52

 

Director

 

2009

 

 

 

 

 

 

 

John Redmond (2)(4)

 

51

 

Director

 

2007

 

 

 

 

 

 

 

Andrew C. Levy

 

40

 

President, Chief Financial Officer

 

N/A

 

 

 

 

 

 

 

Scott Sheldon

 

32

 

Principal Accounting Officer

 

N/A

 


(1)                                  Each director serves for a one-year term with all directors being elected at each stockholders’ meeting.

(2)                                  Member of the Compensation Committee

(3)                                  Member of the Nominating Committee

(4)                                  Member of the Audit Committee

 

Maurice J. Gallagher, Jr. has been actively involved in the management of our company since he became our majority owner and joined our board of directors in 2001. He has served as our chief executive officer since 2003 and was designated Chairman of the Board in September 2006. Prior to his involvement with Allegiant, Mr. Gallagher devoted his time to his investment activities, including companies which he founded. One of these companies was Mpower Communications Corp., a telecommunications company, for which he served as acting chief executive officer from 1997 to 1999 and as chairman of the board from its inception in 1996 until 2002. Mr. Gallagher was one of the founders of ValuJet Airlines, Inc. (the predecessor of  AirTran Holdings, Inc.) and served as an officer and director of ValuJet from its inception in 1993 until 1997. From 1983 until 1992, Mr. Gallagher was a principal owner and executive of WestAir, a commuter airline.

 

Montie R. Brewer was elected to our board in October 2009.  Mr. Brewer was elected to the board  mid-term at the recommendation of our chief executive officer.  Mr. Brewer served in senior management roles for Air Canada from April 2002 until April 2009, serving as its president and chief executive officer from December 2004 until April 2009. Mr. Brewer served on the board of directors of Air Canada from April 2002 until April 2010.  Prior to Air Canada, Mr. Brewer served as senior vice president-planning for United Airlines and previously worked at Northwest Airlines, Republic Airlines, Braniff and TransWorld Airlines, beginning his employment in the airline industry in 1981.  Mr. Brewer has also served as a director of Aer Lingus, an airline, since January 2010.

 

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Mr. Brewer’s prior experience as chief executive officer of Air Canada for more than four years and his more than 28 years in management positions at multiple airlines provide the background for a conclusion that he is a valuable addition to our board.

 

Gary Ellmer was elected to our board in May 2008.  Mr. Ellmer served in senior management positions for ATA Airlines from September 2006 until February 2008, serving as chief operating officer from September 2007 until February 2008.  From April 2006 until August 2006, Mr. Ellmer served as vice president, business development for American Eagle Airlines and served as president and chief operating officer of Executive Airlines/American Eagle Caribbean from 2002 until April 2006.  From 1998 until 2002, he served in various officer positions for American Eagle Airlines, Business Express Airlines and WestAir Commuter Airlines.

 

Mr. Ellmer’s service as chief operating officer of three airlines and more than 26 years of experience in the airline industry provide significant experience with regard to airline operations to support a conclusion that he should continue to serve on our board.

 

Timothy P. Flynn was elected to our board in July 2006. Since 1992, Mr. Flynn has devoted his time to his private investments. Mr. Flynn was one of the founders of ValuJet Airlines, Inc. and served as a director from its inception in 1992 until 1997. From 1982 until 1992, he served as an executive officer and director of WestAir, a commuter airline, which he founded with Mr. Gallagher in 1982. From 1979 to 1982, he served as an executive officer of Pacific Express Holding, Inc., the parent company of WestAir Commuter Airlines, Inc.

 

Mr. Flynn is well suited to serve as a director due to his prior experience as an executive officer of WestAir and his role as a founder of ValuJet.  In addition, he has served as a director of ours for four years, providing valuable insight to us through our initial public offering and substantial growth since that time.

 

Charles W. Pollard was elected to our board in June 2009.  Mr. Pollard served in various executive positions for Omni Air International from 1997 until July 2009, including as its president and chief executive officer from January 2007 until September 2008. Prior to his employment with Omni Air International, Mr. Pollard served in various executive positions for World Airways from 1987 until 1997, including as president and chief executive officer from 1993 to 1997.  Mr. Pollard began his career as an attorney in the corporate practice group of Skadden, Arps, Slate, Meagher & Flom LLP from 1983 to 1987.  Mr. Pollard has also served as a director of Air Partner, PLC since June 2009.

 

Mr. Pollard’s experience as chief executive officer of both Omni Air International and World Airways and his corporate law background provide a skill set of particular value to our board.

 

John Redmond was elected to our board in October 2009.  Mr. Redmond served as president and chief executive officer of MGM Grand Resorts, LLC from March 2001 until August 2007.  Prior to that, he served as co-chief executive officer of MGM Mirage from December 1999 to March 2001.  He was president and chief operating officer of Primm Valley Resorts from March 1999 to December 1999 and senior vice president of MGM Grand Development, Inc. from August 1996 to February 1999.  He served as vice-chairman of MGM Grand Detroit, LLC from April 1998 to February 2000 and chairman from February 2000 until August 2007.  Prior to 1996, Mr. Redmond was senior vice president and chief financial officer of Caesars Palace and Sheraton Desert Inn, having served in various other senior operational and development positions with Caesars World, Inc.  Mr. Redmond has served as a director of Vail Resorts, Inc. since March 2008 and of Tropicana Las Vegas Hotel and Casino, Inc. since July 2009.

 

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Mr. Redmond’s prior experience as chief executive officer of MGM entities and extensive prior experience with other resorts provide a travel industry perspective not shared by the other members of our board.  With the importance of ancillary revenue to our profitability and with the sale of hotel rooms being the largest individual component of our third party ancillary revenue, Mr. Redmond’s input is particularly valuable to our board.

 

Andrew C. Levy has served as an officer of Allegiant since June 2001 and has served as our president since October 2009 and as our chief financial officer since October 2007. From 1998 to 2001, Mr. Levy held various management positions at Mpower Communications. From 1996 to 1998, Mr. Levy worked on airline advisory and transactional work as a vice president with Savoy Capital, an investment company focused on the aviation sector. From 1994 to 1996, Mr. Levy held various positions with ValuJet Airlines, including director of contracts with responsibilities for stations agreements, insurance, fuel purchasing and other related activities.

 

Scott Sheldon has served as our principal accounting officer since October 2007. Prior to that, Mr. Sheldon served as our director of accounting from May 2005 and as our accounting manager from January 2004 until May 2005. From November 2001 until January 2004, Mr. Sheldon worked as a certified public accountant for the Perry-Smith, LLP regional public accounting firm in Sacramento, California.

 

Scott Sheldon is the nephew of our board member, Timothy Flynn. None of our other executive officers or directors is related to any other executive officers or directors.

 

Audit Committee

 

We have a standing audit committee.  The audit committee is currently comprised of Messrs. Ellmer, Pollard and Redmond, each of whom is independent under the rules of the Securities and Exchange Commission and the Nasdaq Stock Market listing standards.  John Redmond has been identified as the audit committee financial expert.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Exchange Act requires our directors and executive officers and persons who own more than 10% of our equity securities to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission. Such persons are required by the Exchange Act to furnish us with copies of all Section 16(a) forms they file.

 

Based solely on our review of the copies of such forms received by us with respect to transactions during 2009, or written representations from certain reporting persons, we believe that all filing requirements applicable to our directors, executive officers and persons who own more than 10% of our equity securities have been complied with, except that stock options granted to our executive officers in January 2009 were reported three days late.

 

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Code of Ethics

 

We have adopted a Corporate Code of Conduct and Ethics (the “Code of Ethics”) that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, as well as to other directors, officers and employees of ours. The Code of Ethics is posted on our website (www.allegiant.com) and is available in print free of charge to any shareholder who requests a copy. Interested parties may address a written request for a printed copy of the Code of Ethics to our outside counsel: Robert B. Goldberg, Ellis Funk, P.C., 3490 Piedmont Road, Suite 400, Atlanta, Georgia 30305. We intend to satisfy the disclosure requirement regarding any amendment to, or a waiver of, a provision of the Code of Ethics for our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions by posting such information on our website.

 

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Item 11.    Executive Compensation.

 

Compensation Discussion and Analysis

 

The primary objectives of the compensation committee of our board of directors with respect to executive compensation of current management are to retain the executive team that has been in place for several years, to provide annual cash incentives upon achievement of measurable corporate performance objectives, and to assure executives’ incentives are aligned with stockholder value creation. To achieve these objectives, the compensation committee maintains compensation plans that tie a significant portion of executives’ total compensation to our financial performance (including our operating margin). Overall, the total compensation opportunity is intended to create an executive compensation program: (i) providing for base compensation at reasonable levels, and (ii) rewarding our named executive officers for profitable performance and increased share value.

 

Our chief executive officer, Maurice J. Gallagher, Jr., has a substantial equity position. Historically, he has chosen to serve without any base salary whatsoever and expects to continue to serve without base salary into the future. Prior to 2007, Mr. Gallagher did not participate in our annual cash bonuses or stock-based awards, but the compensation committee decided to have him participate in the cash bonus pool for 2007 and each subsequent year and grant him stock-based awards to reward him for our company’s industry leading profit margins in the face of extraordinarily volatile fuel costs and the recent economic downturn, factors which have resulted in substantial losses by other companies in the airline industry. Whether Mr. Gallagher will participate in future cash bonuses and equity grants will be determined in the discretion of the compensation committee and will depend, among other factors, on our profitability in relation to our expectations.

 

Mr. Gallagher makes recommendations to the compensation committee with respect to the portion of the cash bonus pool payable and granting of stock-based awards to the executive officers. The compensation committee typically asks Mr. Gallagher to participate in its deliberations concerning approval of cash bonuses payable to and stock awards granted to these executive officers.

 

Mr. Gallagher and Mr. Levy, our president and chief financial officer, participate in making recommendations to the compensation committee with respect to the total amount of cash bonuses to be paid, the allocation of the bonus pool among other officers and key employees of our company and the granting of stock-based awards to other officers and key employees.

 

The compensation committee members consider the recommendations from management and also draw on the committee members’ and the chief executive officer’s substantial experience in managing companies in approving bonus levels and stock-based awards.

 

Compensation Components

 

Compensation is broken out into the following components:

 

Base Salary.  Mr. Gallagher does not receive a base salary. In connection with his promotion to president in October 2009, Mr. Levy entered into a new employment agreement which established his new base salary for the term of the agreement through December 2012.  The base salary was negotiated between the Company and Mr. Levy.  Mr. Sheldon’s base salary was established upon the recommendation of executive management.

 

Annual Discretionary Incentive Cash Bonus Program.  We structure our annual cash bonus compensation program to reward named executive officers, other management employees (our vice presidents, director level employees and managers) and other employees for our successful performance and each individual’s contribution to that performance. For 2009, our pilots were also included in the

 

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annual cash bonuses per our agreement with them and we decided to pay bonuses to all employees employed prior to October 2009 in light of our industry leading profitability for the year. Depending on our profitability, cash bonuses may constitute a significant portion of our employees’ total compensation. No cash bonus is earned unless our operating income exceeds 5% of our revenue for the year and, in that event, the total bonus pool will not exceed 10% of operating income. The final annual bonus pool amount is determined by our compensation committee after consideration of management recommendations and after the completion of the audit of our financial statements. The allocation of the bonus pool among eligible employees is established by the compensation committee without regard to any objective, predetermined individual performance criteria. The compensation committee relies significantly on the recommendation of our chief executive officer with respect to the participation level of our president and on executive management recommendations with respect to the bonus allocations to other officers and managers.

 

For financial statement reporting purposes, the bonus is accrued throughout each year based on an estimated payment amount. Under our program, named executive officers are eligible to share in the bonus pool in amounts approved by the compensation committee after the end of each year. Payments under this cash bonus program are contingent upon continued employment through the actual date of payment.

 

Long-Term Incentive Program.  We believe that long-term performance is achieved through an equity ownership culture that encourages long-term performance by our executive officers. Prior to 2007, we had not provided any long-term incentive compensation to our chief executive officer or our most senior executive officers in light of their outright ownership of significant stock positions in our company. However, we recognize that some of our executive officers have sold shares through 10b5-1 trading plans for asset diversification and estate planning purposes and the compensation committee determined that stock-based awards to these executive officers would help continue to motivate them to increase the share value of our company. Although our chief executive officer continues to maintain a substantial equity stake in our company, the compensation committee has decided to provide him with modest grants of stock-based awards to reward him for the successful operating results of our company and to further incentivize him to seek additional stock price growth. The compensation committee intends to consider stock-based awards to our executive officers each year.

 

The stock-based awards, which include stock options, restricted stock and stock appreciation rights (SARs), granted in 2009 and 2010 vest over a three year period to encourage continuing employment by the executive officers and have a five year term to further encourage the officers to seek stock value appreciation over a period of time.

 

The awards were set at amounts determined by the compensation committee to achieve a balance between meaningful incentives to our executive officers and reasonable compensation expense for our company. The compensation committee considers the current value of prior and newly granted awards, but does not target any particular weighting in comparison with the total compensation of each executive officer. Nor do we have a policy or target for the allocation between either cash and non-cash compensation or short-term and long-term incentive compensation.

 

The compensation committee also considers the impact each equity grant will have on the future earnings of our company and dilution of our stockholders. The stock grants during the past two years have not been dilutive to our stockholders as the number of shares of stock repurchased by us in the open market under our stock repurchase plans have exceeded the number of shares subject to equity grants under our long-term incentive plan.

 

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Other Compensation.  Our officers participate in employee benefits generally available to our full-time employees. We have no current plans to make changes to the levels of benefits and perquisites provided for our named executive officers.

 

401(k) Plan.  In 2000, we established a 401(k) retirement plan that qualifies as a defined contribution plan under Internal Revenue Code section 401(a) and includes a cash or deferred arrangement that qualifies under Code Section 401(k). The plan was established and is maintained for the exclusive benefit of our eligible employees and their beneficiaries. We make matching contributions for active participants equal to 100% of their permitted contributions, up to a maximum of 3% of the participant’s annual salary plus 50% of their contributions between 3% and 5% of their annual salary. Eligible employees are immediately 100% vested in their individual contributions and “safe harbor” matching contributions after April 1, 2010.

 

Compensation Risk.  The compensation committee has determined that our compensation programs do not pose significant risk to our Company as management’s interests are aligned with those of our stockholders. All employees are eligible to participate in the cash bonus program such that employees in any group or function are not included to the exclusion of employees in any other group or function. Further, the bonus pool depends on Company-wide profitability such that rewards are based on the common goal of profitability. While the cash bonus program encourages short-term profitability, equity based grants to management employees under the long-term incentive plan encourage long-term success further reducing compensation risk.

 

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Compensation of Executive Officers and Other Information

 

The following table shows the cash compensation paid or to be paid by us, as well as certain other compensation paid or accrued, during the fiscal years ended December 31, 2009, 2008 and 2007 to our chief executive officer, president and chief financial officer, principal accounting officer, and one individual who served as an executive officer during a portion of the 2009 year, in all capacities in which they served.  We did not have any other executive officers in 2009.

 

SUMMARY COMPENSATION TABLE(1)

 

Name and Principal Position

 

Year

 

Salary

 

Bonus

 

Stock
Awards ($) (2)

 

Option/SAR
Awards ($) (3)

 

All Other
Compensation(4)

 

Total

 

Maurice J. Gallagher, Jr. (5)

 

2009

 

 

$

200,000

 

 

$

300,168

 

 

$

500,168

 

President and Chief Executive

 

2008

 

 

100,000

 

 

101,023

 

 

201,023

 

Officer

 

2007

 

 

100,000

 

 

 

 

100,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Andrew C. Levy (6)

 

2009

 

$

205,833

 

855,000

 

$

1,079,250

 

1,679,585

 

$

5,042

 

3,824,710

 

President, Chief Financial

 

2008

 

185,000

 

385,000

 

 

101,023

 

4,625

 

675,648

 

Officer, Managing Director —

 

2007

 

185,000

 

300,000

 

 

540,800

 

3,276

 

1,029,076

 

Planning

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Scott Sheldon (6)

 

2009

 

120,000

 

300,000

 

 

240,134

 

 

660,134

 

Principal Accounting Officer

 

2008

 

120,000

 

135,000

 

 

84,186

 

 

339,186

 

 

 

2007

 

97,500

 

70,000

 

31,060

 

 

 

198,560

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

M. Ponder Harrison

 

2009

 

167,292

 

150,000

 

 

600,335

 

 

917,627

 

Managing Director—

 

2008

 

185,000

 

385,000

 

 

101,023

 

 

671,023

 

Marketing and Sales

 

2007

 

185,000

 

300,000

 

 

540,800

 

 

1,025,800

 

 


(1)             The above tables do not include columns for non-equity incentive plan compensation or change in pension value and nonqualified deferred compensation earnings as none of the named executive officers received any such compensation in the years disclosed.

 

(2)             Represents the grant date fair value of restricted stock awards granted, as calculated in accordance with stock-based compensation accounting standards.  Please refer to Note 11 to our consolidated financial statements for further discussion related to valuation.  Although the table above indicates the full grant date value of the awards, the restricted stock granted vests over a three-year period.

 

(3)             Represents the grant date fair value of option and SAR awards granted, as calculated in accordance with stock-based accounting standards.  Please refer to Note 11 to our consolidated financial statements for further discussion related to the assumptions used in our valuation.  Although the table above indicates the full grant date value of the awards, the options and SARS granted vest over a three-year period or longer.

 

(4)             All Other Compensation consists of our matching contributions under the 401(k) plan for all officers.

 

(5)             Mr. Gallagher served as chief executive officer during all years presented and as president until October 2009.

 

(6)             Mr. Levy served as managing director through October 2009, was elected chief financial officer in October 2007 and was elected president in October 2009.  Mr. Levy was granted restricted stock and SARs as part of the employment agreement entered in October 2009 in connection with his promotion to president.  The grants of restricted stock and SARs are subject to a three-year vesting schedule.  Under recently changed SEC reporting rules, the entire fair value of such grants (including amounts that as of the date of grant were unvested) are included as compensation in the year of grant.  The compensation committee views the amounts shown for Mr. Levy in 2009 as properly allocable over the three year vesting period.

 

(7)          Mr. Sheldon has served as our principal accounting officer since October 2007.  He served as our director of accounting prior to that.

 

Mr. Gallagher serves without base compensation as a result of his substantial equity interest.  Mr. Gallagher has received equity grants and an allocation under our annual bonus program as a reward for our profitability achievements.  Mr. Levy entered into a new employment agreement in October 2009 which established his base salary at $275,000 per year, provides for his participation in our annual bonus

 

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program, provided for grants of restricted stock and stock appreciation rights reflected in the table of plan-based awards below and provides for his eligibility to participate in future equity grants.  The agreement has a three-year term ending on December 31, 2012 and provides for a 12-month noncompete upon termination of employment.

 

The base salaries for Mr. Levy prior to this new agreement, and for Mr. Harrison, were established under employment agreements entered into prior to our initial public offering in 2006.  Mr. Sheldon’s base salary was established upon the recommendation of executive management.

 

In August 2009, Mr. Harrison resigned from his position as an executive officer of the Company and remains an employee of the Company in a strategic advisory capacity.  Mr. Harrison’s base salary as an employee subsequent to his resignation as an executive officer was established upon the recommendation of executive management.

 

For 2009, each executive officer received bonuses under our annual discretionary incentive cash bonus program.  No cash bonus is earned unless our operating income exceeds 5% of our revenue for the year and, in that event, the bonus pool will not exceed 10% of operating income.  The final bonus pool amount is determined by our compensation committee after review of the year-end financial statements and after consideration of management recommendations.  Each executive officer’s allocation of the cash bonus pool is determined by the compensation committee without regard to any objective, predetermined individual performance criteria.  The bonus allocation for any executive officer is not targeted at or limited to any particular percentage of base salary.

 

Other compensation generally consists only of matching contributions under our 401(k) plan.  The amount paid for each executive officer depends on his salary reductions, and is subject to the plan’s compliance with the annual testing rules for 401(k) plans.

 

No executive officer’s salary and bonus is tied to any particular percentage of total compensation, but rather, bonus allocations are made based on our profitability and a subjective evaluation of each officer’s performance.

 

Grants of Plan-Based Awards in 2009

 

The following table describes grants of plan-based awards to our named executive officers during 2009.

 

Name

 

Grant date

 

Stock awards:
number of shares
of stock (#)

 

Option/SAR awards:
number of securities
underlying options (#)

 

Exercise or
base price of
option/SAR
awards ($/Sh)

 

Grant date fair
value (1) of stock
and option/SAR
awards

 

Maurice J. Gallagher, Jr.

 

1/23/2009

 

 

25,000

(2)

$

38.32

 

$

300,168

 

Andrew C. Levy

 

10/16/2009

 

 

75,000

 

$

38.65

 

$

1,079,250

 

Andrew C. Levy

 

10/16/2009

 

27,926

(3)

 

 

$

1,079,340

 

Andrew C. Levy

 

1/23/2009

 

 

50,000

(2)

$

38.32

 

$

600,335

 

Scott Sheldon

 

1/23/2009

 

 

 

20,000

(2)

$

38.32

 

$

240,134

 

M. Ponder Harrison

 

1/23/2009

 

 

 

50,000

(2)

$

38.32

 

$

600,335

 

 


(1)          As determined as set forth in Note 11 to our consolidated financial statements.

 

(2)          Considered as part of 2008 compensation package.

 

(3)          Restricted stock grant under employment agreement dated October 2009.

 

Our compensation committee considers grants of restricted stock, stock option and stock appreciation rights (“SAR”) to our executive officers annually.  The number of shares granted is not based on any particular percentage of the total compensation of the executive officer.  Our compensation committee determines the amount of equity grants in an attempt to provide meaningful incentives for the officers, but with consideration to the financial impact on our operating results.

 

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The restricted stock, options and SARs granted in 2009 have a three-year vesting schedule to encourage continued employment by the executive officers and the options and SARs have a five-year term to provide incentives to create stock price appreciation over that period.

 

Stock Option Holdings

 

The following table summarizes the number of shares underlying outstanding equity incentive plan awards for each named executive officer as of December 31, 2009.

 

Name

 

Exercisable
(#)

 

Unexercisable
(#)

 

Option/SAR
Exercise
Price

 

Option/SAR
Expiration
Date

 

Number of Shares
of Stock That
Have Not Vested
(#)

 

Market Value
of Shares of
Stock That
Have Not
Vested ($)

 

Maurice J. Gallagher, Jr.

 

 

 

25,000

(1)

$

38.32

 

1/23/2014

 

 

 

 

 

 

 

6,000

(2)

12,000

(2)

$

20.42

 

4/24/2013

 

 

 

 

 

Andrew C. Levy

 

20,000

(3)

20,000

(3)

$

36.97

 

10/25/2017

 

 

 

 

 

 

 

 

 

75,000

(4)

$

38.65

 

10/16/2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,926

(5)

$

1,317,269

(6)

 

 

 

 

50,000

(1)

$

38.32

 

1/23/2014

 

 

 

 

 

 

 

6,000

(2)

12,000

(2)

$

20.42

 

4/24/2013

 

 

 

 

 

Scott Sheldon

 

 

 

20,000

(1)

$

38.32

 

1/23/2014

 

 

 

 

 

 

 

5,000

(2)

10,000

(2)

$

20.42

 

4/24/2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

333

(7)

$

15,708

(6)

M. Ponder Harrison

 

20,000

(3)

20,000

(3)

$

36.97

 

10/25/2017

 

 

 

 

 

 

 

 

 

50,000

(1)

$

38.32

 

1/23/2014

 

 

 

 

 

 

 

6,000

(2)

12,000

(2)

$

20.42

 

4/24/2013

 

 

 

 

 

 


(1)          These options vest one-third on each of January 23, 2010, 2011 and 2012.

(2)          The option grants of which these awards are a part provide for vesting one-third on each of April 24, 2009, 2010 and 2011.

(3)          The option grants of which these awards are a part provide for vesting one-fourth on each of October 25, 2008, 2009, 2010 and 2011.

(4)          Stock appreciation rights.  These SARs vest one-third on each of October 16, 2010, 2011 and 2012.

(5)          Restricted stock grant vesting on October 16, 2010, 2011 and 2012.

(6)          Based on our closing stock price of $47.17 on December 31, 2009.

(7)          Restricted stock grant to vest on October 1, 2010.

 

The following table summarizes the number of options exercised by our named executive officers in 2009 and the value realized on exercise:

 

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2009 OPTION EXERCISES AND STOCK VESTED

 

 

 

Option Awards

 

Stock Awards

 

 

 

Number of
Shares
Acquired on
Exercise (#)

 

Value Realized
on Exercise ($)

 

Number of
Shares
Acquired on
Vesting (#)

 

Value Realized
on Vesting ($)

 

Maurice J. Gallagher, Jr.

 

 

 

 

 

Andrew C. Levy

 

 

 

 

 

Scott Sheldon

 

 

 

333

 

12,221

(1)

M. Ponder Harrison

 

 

 

 

 

 


(1)          Based on our closing stock price of $36.70 on October 1, 2009, the date of vesting.

 

Employee Benefit Plans

 

Long-Term Incentive Plan

 

Our Long-Term Incentive Plan (the “2006 Plan”) was adopted by our board of directors and approved by the stockholders in April 2006. All outstanding options under the predecessor Allegiant Air 2004 Share Option Plan have been transferred to our 2006 Plan, and no further stock-based awards will be made under that predecessor plan. The transferred options continue to be governed by their existing terms, unless our compensation committee elects to extend one or more features of our 2006 Plan to those options. Except as otherwise noted below, the transferred options have substantially the same terms as will be in effect for grants made under our 2006 Plan.

 

We have reserved 3,000,000 shares of our common stock for issuance under our 2006 Plan. Such share reserve consists of 500,000 shares that will be carried over from our predecessor plan, including the shares subject to outstanding options thereunder. In addition, no participant in our 2006 Plan may be granted stock-based awards for more than 100,000 shares of our common stock per calendar year.

 

The individuals eligible to participate in our 2006 Plan include our officers and other employees, our non-employee board members and any consultants we engage.

 

Our 2006 Plan is administered by the compensation committee. This committee determines which eligible individuals are to receive stock-based awards, the time or times when such stock-based awards are to be made, the number of shares subject to each such grant, the status of any granted option as either an incentive stock option or a non-statutory stock option under the federal tax laws, and the terms and conditions of each award including, without limitation, the vesting schedule to be in effect for the option grant or stock issuance and the maximum term for which any granted option is to remain outstanding, provided that no option term may exceed ten years measured from the date of grant.

 

Vesting of any option grant is contingent on continued service with us. Upon the cessation of an optionee’s service, any unvested options will terminate and will be forfeited. Any vested, but unexercised options (i) will terminate immediately if the optionee is terminated for misconduct, or (ii) if the cessation of service is other than for misconduct, will remain exercisable for such period of time as determined by the compensation committee at the time of grant and set forth in the documents evidencing the option. The compensation committee has the discretion, however, at any time while the option remains outstanding to (i) extend the period of time that the option may be exercisable following the cessation of an optionee’s service (but not beyond the term of the option) and (ii) permit the optionee to exercise following a cessation of service options that were not vested at the time of the cessation of service.

 

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The exercise price for the shares of the common stock subject to option grants made under our 2006 plan may be paid in cash or in shares of common stock valued at fair market value on the exercise date.

 

The compensation committee has the authority to cancel outstanding options under our option plan, in return for the grant of new options for the same or a different number of option shares with an exercise price per share based upon the fair market value of our common stock on the new grant date.

 

In the event we are acquired by a merger, a sale by our stockholders of more than 50% of our outstanding voting stock or a sale of all or substantially all of our assets, each outstanding option under our option plan which will not be assumed by the successor corporation or otherwise continued in effect may accelerate in full to the extent provided in the applicable stock option agreement. However, the compensation committee has complete discretion to structure any or all of the options under the option plan so those options will immediately vest in the event we are acquired, whether or not those options are assumed by the successor corporation or otherwise continued in effect. Alternatively, the compensation committee may condition such accelerated vesting upon the subsequent termination of the optionee’s service with us or the acquiring entity.

 

We intend that any compensation deemed paid by us in connection with the exercise of options granted under our option plan for the disposition of the shares purchased under those options will be regarded as “performance-based”, within the meaning of Section 162(m) of the Internal Revenue Code and that such compensation will not be subject to the annual $1 million limitation on the deductibility of compensation paid to covered executive officers which otherwise would be imposed pursuant to Section 162(m).

 

For accounting purposes, compensation expense related to equity based awards under the 2006 Plan are measured and recognized in accordance with stock-based compensation accounting standards.

 

Our board may amend or modify the 2006 Plan at any time, subject to any required stockholder approval, or participant consent. The 2006 Plan will terminate no later than March 31, 2016.

 

Director Compensation

 

The members of our board of directors receive compensation of $5,000 per quarter for their service on our board of directors or any committee of our board, and will also be reimbursed for their out-of-pocket expenses. Any new director will receive an initial grant of 1,000 shares of restricted stock on the date such individual joins the board. The restricted stock will vest over a period of two years upon the director’s completion of each year of board service over the two-year period measured from the grant date. In addition, on the date of each annual stockholders meeting, each board member (other than executive officers) who is to continue to serve as a board member will automatically be granted 1,000 shares of restricted stock, provided such individual has served on our board for at least six months. The restricted shares subject to each annual automatic grant will vest upon the director’s completion of one year of board service measured from the grant date.

 

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Table of Contents

 

The following table illustrates the compensation earned or paid to our non-management directors during 2009:

 

DIRECTOR COMPENSATION

 

Name

 

Fees Earned or
Paid in Cash ($)

 

Stock Awards (1)
($)

 

All Other
Compensation ($)

 

Total ($)

 

Montie Brewer

 

5,000

 

38,650

 

 

 

43,650

 

Gary Ellmer

 

26,348

 

35,870

 

 

62,218

 

Timothy P. Flynn

 

20,000

 

35,870

 

 

55,870

 

Charles Pollard

 

20,177

 

35,870

 

 

56,047

 

John Redmond

 

20,000

 

35,870

 

 

55,870

 

 


(1)          Represents the grant date fair value of restricted stock awards granted to each director in 2009, as calculated in accordance with stock-based compensation accounting standards.  Please refer to Note 11 to our consolidated financial statements for further discussion related to the assumptions used in our valuation.

 

As of December 31, 2009, each non-employee director held the following number of shares of restricted stock that have not vested:

 

Director Compensation Table – Outstanding Stock Awards

 

Name

 

Award Grant Dates

 

Number of Shares
Not Vested

 

Grant Date Fair
Value ($) (1)

 

Montie Brewer

 

10/16/2009

 

1,000

 

38,650

 

Gary Ellmer

 

5/16/2008

 

500

 

11,940

 

 

 

6/26/2009

 

1,000

 

35,870

 

Timothy P. Flynn

 

6/26/2009

 

1,000

 

35,870

 

Charles Pollard

 

6/26/2009

 

1,000

 

35,870

 

John Redmond

 

6/26/2009

 

1,000

 

35,870

 

 


(1)          Based on closing stock price on date of grant.

 

Compensation Committee Interlocks and Insider Participation

 

No member of our compensation committee serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as members of our board of directors or compensation committee.

 

Potential Payments Upon Termination of Employment and Change in Control

 

We have entered into an employment agreement with Andrew C. Levy. Under the agreement, Mr. Levy would receive twelve months severance pay in the event of termination without cause, resignation for good reason or a change in control. In the event of a change in control, the severance would be paid in a lump sum,  In the event of a termination without cause or resignation for good reason, the severance would be payable over the ensuing 12 months along with the fringe benefits to which he is entitled under the agreement,  In addition, any unvested equity grants, including restricted stock, stock options and SARs, would vest immediately upon a termination without cause, resignation for good reason or change in control except that the vesting of only a proportionate part of the October 2009 grants would accelerate if a change of control transaction is entered into prior to October 16, 2010.  If such a termination, resignation or change of control had occurred on December 31, 2009, Mr. Levy would have realized approximately $1,102,000 from an acceleration of vesting of his theretofore unvested stock options (82,000 shares), restricted  stock (27,926 shares) and SARs (75,000 shares) held as of December 31, 2009, based on the $47.17 closing stock price on that date.

 

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Table of Contents

 

REPORT OF THE COMPENSATION COMMITTEE

 

The compensation committee is responsible for, among other things, reviewing and approving salary, bonus and other compensation for our executive officers, and setting the overall compensation principles that guide the committee’s decision-making.  The compensation committee has reviewed the Compensation Discussion and Analysis (“CD&A”) included in this proxy statement and discussed it with management.  Based on the review and discussions with management, the compensation committee recommended to our board of directors that the CD&A be included in this proxy statement.

 

COMPENSATION COMMITTEE

 

Montie R. Brewer           Timothy P. Flynn           John Redmond

 

The foregoing report shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such Acts.

 

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Table of Contents

 

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

STOCK OWNERSHIP

 

The following table shows information known to us with respect to beneficial ownership of our common stock as of April 15, 2010, by (A) each director, (B) each of the executive officers named in the Summary Compensation Table in Item 11 of this annual report on Form 10-K, (C) all executive officers and directors as a group and (D) each person known by us to be a beneficial owner of more than 5% of our outstanding common stock.

 

Each stockholder’s percentage ownership in the following table is based on 19,927,322 shares of common stock outstanding as of April 15, 2010 and treating as outstanding all options held by that stockholder and exercisable within 60 days of April 15, 2010.

 

Except as otherwise indicated, 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 held by them.

 

 

 

Shares Beneficially Owned

 

Name of Beneficial Owner

 

Number

 

Percentage

 

5% Stockholders:

 

 

 

 

 

Maurice J. Gallagher, Jr. (1)

 

4,223,116

 

21.17

%

PAR Investment Partners, L.P. (2)

 

1,506,550

 

7.56

%

William Blair & Company, LLC (3)

 

1,229,496

 

6.17

%

Franklin Resources, Inc. (4)

 

1,189,055

 

5.97

%

BlackRock, Inc. (5)

 

1,165,578

 

5.85

%

Citadel Investment Partners II, LP (6)

 

1,112,300

 

5.58

%

 

 

 

 

 

 

Executive Officers and Directors:

 

 

 

 

 

Maurice J. Gallagher, Jr. (1)

 

4,223,116

 

21.17

%

Montie Brewer (7)

 

3,000

 

*

 

Gary Ellmer (8)

 

2,150

 

*

 

Timothy P. Flynn (9)

 

52,000

 

*

 

Charles W. Pollard (10)

 

2,000

 

*

 

John Redmond (11)

 

26,750

 

*

 

Andrew C. Levy (12)

 

227,593

 

1.14

%

Scott Sheldon (13)

 

11,000

 

*

 

M. Ponder Harrison (14)

 

184,307

 

*

 

All executive officers and directors as a group (9 persons) (15)

 

4,731,916

 

23.60

%

 


*                    Represents ownership of less than one percent.

 

(1)             The address of Maurice J. Gallagher, Jr., is 8360 S. Durango Drive, Las Vegas, Nevada 89113. These shares include 181,200 shares of common stock held by two entities controlled by Mr. Gallagher. The shares also include 10,000 shares of restricted stock not yet vested and options to purchase 20,333 shares which are presently exercisable.

 

(2)   Information is based on a Schedule 13G/Amendment #5 filed with the Securities and Exchange Commission on February 12, 2010.  The shares are held directly by PAR Investment Partners, L.P. (“PAR”). PAR Capital Management, Inc. (“PCM”), as the general partner of PAR Group, L.P., which is the general partner of PAR, has investment discretion and voting control over shares held by PAR. No stockholder, director, officer or employee of PCM has beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of any shares held by PAR. The address of PAR is One International Place, Suite 2401, Boston, Massachusetts 02110.

 

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(3)          Information is based on a Schedule 13G/Amendment #2 filed with the Securities and Exchange Commission on February 3, 2010, by William Blair & Company, LLC. The address of this beneficial owner is 222 W. Adams, Chicago, Illinois 60606.

 

(4)             Information is based on a Schedule 13G filed with the Securities and Exchange Commission on January 28, 2010, by Franklin Resources, Inc.  (“FRI), Charles B. Johnson and Rupert H. Johnson, Jr. The shares reported are beneficially owned by investment companies or other managed accounts that are investment management clients of investment managers that are direct or indirect subsidiaries of FRI. Each of Charles B. Johnson and Rupert H. Johnson, Jr. (the “Principal Stockholders”) owns in excess of 10% of the common stock of FRI and they are the principal stockholders of FRI. Under the rules of the Securities and Exchange Commission, FRI and the Principal Stockholders may be deemed to be the beneficial owners of securities held by persons for whom FRI subsidiaries provide investment management services. None of these entities owns more than 5% of our outstanding common stock. FRI and the Principal Stockholders  disclaim any pecuniary interest in the securities reported as beneficially owned by them. The address of this beneficial owner is One Franklin Parkway, San Mateo, California 94403.

 

(5)          Information is based on a Schedule 13G filed with the Securities and Exchange Commission on January 29, 2010, by BlackRock, Inc.  BlackRock, Inc. has sole voting and dispositive power over the shares indicated which are owned by various subsidiaries of BlackRock, Inc. with no subsidiary owning more than 5% of our outstanding common stock. The address of this beneficial owner is 40 East 52nd Street, New York, NY 10022.

 

(6)             Information is based on a Schedule 13G/Amendment #1 filed with the Securities and Exchange Commission on February 16, 2010 by Citadel Advisors LLC (“Citadel Advisors”), Citadel Holdings II LP (“CH-II”), Citadel Global Equities Master Fund Ltd. (“CG”), Citadel Investment Group II, L.L.C. (“CIG-II”), and Mr. Kenneth Griffin. Citadel Advisors is the investment manager for CG. CH-II is the managing member of Citadel Advisors. CIG-II is the general partner of CH-II. Mr. Griffin is the president and chief executive officer and owns a controlling interest in CIG-II. CIG-II and Mr. Griffin have shared voting and dispositive power with respect to 1,112,300 shares. Of these shares, Citadel Advisors and CH-II have shared voting and dispositive power over 1,051,726 shares and CG has shared voting and dispositive power with respect to 1,010,805 shares..  The address of this beneficial owner is 131 S. Dearborn Street, 32nd Floor, Chicago, Illinois 60603.

 

(7)             Includes 1,000 shares of restricted stock not yet vested.

 

(8)             Includes 1,500 shares of restricted stock not yet vested.

 

(9)             Includes 1,000 shares of restricted stock not yet vested.

 

(10)       Includes 1,000 shares of restricted stock not yet vested.

 

(11)       Includes 1,000 shares of restricted stock not yet vested.

 

(12)       Includes 37,926 shares of restricted stock not yet vested and options to purchase 48,667 shares which are presently exercisable.

 

(13)       Includes 5,333 shares of restricted stock not yet vested and options to purchase 5,000 shares which are presently exercisable.

 

(14)       Mr. Harrison was Managing Director — Marketing and Sales until his resignation as an executive officer in August 2009.  Mr. Harrison remains an employee of the Company in a strategic advisory capacity.  His beneficial ownership includes options to purchase 48,667 shares which are presently exercisable.

 

(15) See footnotes 1, 7, 8, 9, 10, 11, 12, 13 and 14.

 

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Table of Contents

 

Securities Authorized for Issuance under Equity Compensation Plans

 

The following table provides information regarding options, stock-settled stock appreciation rights (“SARs”), warrants or other rights to acquire equity securities under our equity compensation plans as of December 31, 2009:

 

 

 

Number of Securities to be
Issued upon Exercise of
Outstanding Options, SARs,
Warrants and Rights

 

Weighted-Average
Exercise Price of
Outstanding Options,
SARs,
Warrants and Rights

 

Number of Securities
Remaining Available for
Future Issuance under
Equity Compensation
Plans

 

Equity compensation plans approved by security holders (a)

 

745,000

 

$

32.07

 

1,628,742

 

Equity compensation plans not approved by security holders (b)

 

162,500

 

$

4.40

 

N/A

 

Total

 

907,500

 

$

27.12

 

1,628,742

 

 


(a)             The shares shown as being issuable under equity compensation plans approved by our security holders excludes restricted stock awards issued. In addition to the above, there are 42,076 shares of nonvested restricted stock as of December 31, 2009.

 

(b)            The shares shown as being issuable under equity compensation plans not approved by our security holders consist of warrants granted to the placement agent in our private placement completed in May 2005.

 

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Item 13.    Certain Relationships and Related Transactions, and Director Independence.

 

Since January 1, 2009, we have been a party to the following transactions in which the amount involved exceeded $120,000 and in which any of our directors or executive officers, any holder of more than 5% of our capital stock or any member of their immediate families had a direct or indirect material interest.

 

The building in which we maintain our headquarters is under a lease agreement with an entity owned by a limited partnership in which certain of our directors and one former officer (Maurice J. Gallagher, Jr., Timothy P. Flynn, John Redmond and M. Ponder Harrison) own a 57% interest as limited partners. In June 2008, we obtained additional office space in the leased building through an amendment to the existing lease agreement with the landlord. The amended lease agreement has a ten year term. In June 2008, we entered into a lease agreement for office space to be used as our training facility which is located in a building adjacent to the location of our headquarters. The second building is also owned by an entity owned by the same limited partnership. The lease agreement for the second building is for a ten year term. During 2009, we paid approximately $1,940,000 to the landlords under those arrangements.  The disinterested members of our board and audit committee have determined that the terms for the lease agreements are at least as favorable as we could receive in arms’ length transactions.

 

All future transactions, including loans, if any, between us and our officers, directors and principal stockholders and their affiliates and any transactions between us and any entity with which our officers, directors or five percent stockholders are affiliated, will be approved by a majority of the board of directors, including a majority of the independent and disinterested outside directors, and will be on terms no less favorable to us than could be obtained from unaffiliated third parties.

 

Director Independence

 

Our board of directors has determined that all of our directors other than Maurice J. Gallagher, Jr., are independent under the rules of the Nasdaq Stock Market.  As Mr. Gallagher does not serve on any of the board’s committees, all committee members are independent under the rules of the Nasdaq Stock Market.

 

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Item 14.    Principal Accounting Fees and Services.

 

Audit Fees

 

The aggregate fees billed by Ernst & Young, LLP for the audit of our annual financial statements and services that are normally provided by the accounting firm in connection with statutory and regulatory filings were approximately $524,000 for the year ended December 31, 2009 and $500,000 for the year ended December 31, 2008.

 

Audit-Related Fees

 

No fees were billed by Ernst & Young, LLP for assurance and related services that were reasonably related to the performance of the audit referred to above during 2009 or 2008.

 

Tax Fees

 

The aggregate fees rendered by Ernst & Young, LLP for tax compliance, tax advice or tax planning services were approximately $105,000 during 2009. No tax services were rendered by Ernst & Young, LLP during 2008.

 

All Other Fees

 

Ernst & Young, LLP did not provide any professional services during 2009 other than those described under the caption “Audit Fees” and “Tax Fees” above.  Approximately $51,000 in fees were billed for non-audit services rendered by Ernst & Young, LLP in 2008 which consisted of information technology professional services.

 

All non-audit services require an engagement letter to be signed prior to commencing any services. The engagement letter must detail the fee estimates and the scope of services to be provided. The current policy of our audit committee requires pre-approval from our audit committee of the non-audit services in advance of the engagement and the audit committee’s responsibilities in this regard may not be delegated to management. No non-audit services were rendered that were not in compliance with this policy.

 

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Table of Contents

 

PART IV.

 

Item 15.    Exhibits, Financial Statement and Schedules.

 

The following exhibits were filed with the Original Filing of this report:

 

1.

Financial Statements and Supplementary Data. The following consolidated financial statements of the Company are included in Item 8  of this report:

 

 

Reports of Independent Registered Public Accounting Firm

48

 

Consolidated Balance Sheets

50

 

Consolidated Statements of Income

51

 

Consolidated Statements of Stockholders’ Equity and Comprehensive Income

52

 

Consolidated Statements of Cash Flows

54

 

Notes to Consolidated Financial Statements

56

2.

Financial Statement Schedules. Schedules are not submitted because they are not required or are not applicable, or the required information is shown in the consolidated financial statements or notes thereto.

 

3.

Exhibits. The Exhibits listed below are filed or incorporated by reference as part of this Form 10-K. Where so indicated by footnote, exhibits which were previously filed are incorporated by reference.

 

 

Exhibit
Number

 

Description

3.1

*

Articles of Incorporation of Allegiant Travel Company.

3.2

 

Bylaws of Allegiant Travel Company (Incorporated by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, filed with the Commission on November 9, 2009).

3.3

 

Specimen Stock Certificate (incorporated by reference to Exhibit 3.3 to the Form 8-A filed with the Commission on November 22, 2006).

10.1

*

Form of Tax Indemnification Agreement between Allegiant Travel Company and members of Allegiant Travel Company, LLC.

10.2

 

2006 Long-Term Incentive Plan, as amended on July 19, 2009.(1) (Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, filed with the Commission on November 9, 2009.)

10.3

 

Form of Stock Option Agreement used for officers of the Company.(1) (Incorporated by reference to Exhibit 10.3 to the Annual Report on Form 10-K for the year ended December 31, 2008, filed with the Commission on March 3, 2009).

10.4

 

Form of Restricted Stock Agreement used for Directors of the Company.(1) (Incorporated by reference to Exhibit 10.4 to the Annual Report on Form 10-K for the year ended December 31, 2008, filed with the Commission on March 3, 2009).

10.5

*

Allegiant Air 401(k) Retirement Plan.(1)

10.6

*

Form of Indemnification Agreement.

10.7

*

Airport Operating Permit between Allegiant Air, Inc. and Clark County Department of Aviation dated April 14, 2003.

10.8

*

Memorandum of Understanding between Allegiant Air, LLC and Sanford Airport Authority dated March 4, 2005.

10.9

*

Maintenance General Terms Agreement dated March 2006 between Allegiant Air, LLC and American Airlines, Inc.(2)

10.10

 

Lease dated May 1, 2007, between Allegiant Air, LLC and Windmill Durango Office, LLC (Incorporated by reference to Exhibit 10.22 to the Form S-1 registration statement filed with the Commission on May 16, 2007).

10.11

 

Terminalling Agreement between AFH, Inc. and Kinder Morgan Liquids Terminals, LLC (Incorporated by reference to Exhibit 10.23 to the Post-Effective Amendment No. 1 to Form S-1 registration statement filed with the Commission on June 25, 2007).

 

20



Table of Contents

 

10.12

 

Shipper’s Agreement between AFH, Inc. and Central Florida Pipeline, LLC (Incorporated by reference to Exhibit 10.24 to the Post-Effective Amendment No. 1 to Form S-1 registration statement filed with the Commission on June 25, 2007).

10.13

 

Master Loan Agreement dated as of April 11, 2008 between Bank of Nevada and Allegiant Air, LLC(3) (Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, filed with the Commission on August 8, 2008)

10.14

 

Amendment to Lease dated as of June 23, 2008 between Windmill Durango Office, LLC and Allegiant Air, LLC. (Incorporated by reference to Exhibit 10.17 to the Annual Report on Form 10-K for the year ended December 31, 2008, filed with the Commission on March 3, 2009.)

10.15

 

Lease dated June 23, 2008 between Windmill Durango Office II, LLC and Allegiant Air, LLC. (Incorporated by reference to Exhibit 10.18 to the Annual Report on Form 10-K for the year ended December 31, 2008, filed with the Commission on March 3, 2009.)

10.16

 

Air Transportation Charter Agreement dated as of October 31, 2008 between Harrah’s Operating Company, Inc. and Allegiant Air, LLC.(2) (Incorporated by reference to Exhibit 10.19 to the Annual Report on Form 10-K for the year ended December 31, 2008, filed with the Commission on March 3, 2009.)

10.17

 

Agreement and Plan of Merger dated as of March 15, 2009, by and among the Company, Allegiant Information Systems, Inc., RPW Consolidated Information Systems Incorporated and Robert P. Wilson, III. (Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 filed with the Commission on May 4, 2009.)

10.18

 

Perpetual Software License Agreement dated as of March 15, 2009, among CMS Solutions, Inc., RPW Consolidated Information Systems Incorporated and Mitchell Allee. (Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 filed with the Commission on May 4, 2009.)

10.19

 

Addendum to Lease between Windmill Durango Office II, LLC and Allegiant Air, LLC signed on June 17, 2009. (Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 filed with the Commission on August 7, 2009.)

10.20

**

Amendment No. 1 to Air Transportation Charter Agreement dated April 30, 2009, between Allegiant Air, LLC and Harrah’s Operating Company, Inc.(3)

10.21

**

Amendment No. 2 to Air Transportation Agreement Charter Agreement dated November 6, 2009 between Allegiant Air, LLC and Harrah’s Operating Company, Inc.(3)

10.22

**

Employment Agreement dated as of October 16, 2009, between the Company and Andrew C. Levy.(1)

10.23

**

Restricted Stock Agreement dated October 16, 2009 between the Company and Andrew C. Levy.(1)

10.24

**

Stock Appreciation Rights Agreement dated October 16, 2009, between the Company and Andrew C. Levy.(1)

10.25

**

Aircraft Sale and Purchase Agreement dated as of December 30, 2009 between the Company and Scandinavian Airlines System, Denmark—Norway—Sweden.(3)

21.1

**

List of Subsidiaries

23.1

**

Consent of Ernst & Young LLP.

24.1

 

Powers of Attorney (on signature page of Original Filing)

31.1

 

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

31.2

 

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

32

 

Section 1350 Certifications

 


*       Incorporated by reference to Exhibits filed with Registration Statement #333-134145 filed by Allegiant Travel Company with the Commission and amendments thereto.

**     Previously filed as part of the Original Filing.

 

(1)     Management contract or compensation plan or agreement required to be filed as an Exhibit to this Report on Form 10-K pursuant to Item 15(b) of Form 10-K.

(2)     Portions of the indicated document have been omitted pursuant to the grant of confidential treatment and the documents indicated have been filed separately with the Commission as required by Rule 406 under the Securities Act of 1933, as amended, or Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

(3)     Portions of the indicated document have been omitted pursuant to a request for confidential treatment and the document indicated has been filed separately with the Commission as required by Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

21



Table of Contents

 

Signatures

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Las Vegas, State of Nevada on April 30, 2010.

 

 

 

ALLEGIANT TRAVEL COMPANY

 

 

 

 

By:

/s/ ANDREW C. LEVY

 

 

 

 

 

 

 

ANDREW C. LEVY

 

 

 

President and Chief Financial Officer

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, Amendment No. 1 to this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

Signature

 

Title

 

Date

 

 

 

 

 

/s/ MAURICE J. GALLAGHER, JR.

 

Chief Executive Officer and Director

 

April 30, 2010

Maurice J. Gallagher, Jr.

 

(Principal Executive Officer)

 

 

 

 

 

 

 

/s/ ANDREW C. LEVY

 

Chief Financial Officer

 

April 30, 2010

Andrew C. Levy

 

(Principal Financial Officer)

 

 

 

 

 

 

 

/s/ SCOTT SHELDON

 

Principal Accounting Officer

 

April 30, 2010

Scott Sheldon

 

 

 

 

 

 

 

 

 

 

 

Director

 

April     , 2010

Montie Brewer

 

 

 

 

 

 

 

 

 

*

 

Director

 

April 30, 2010

Gary Ellmer

 

 

 

 

 

 

 

 

 

 

 

Director

 

April     , 2010

Timothy P. Flynn

 

 

 

 

 

 

 

 

 

*

 

Director

 

April 30, 2010

Charles W. Pollard

 

 

 

 

 

 

 

 

 

*

 

Director

 

April 30, 2010

John Redmond

 

 

 

 

 

*By:  

/s/ Andrew C. Levy

Andrew C. Levy, Attorney in Fact

 

22


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