Sky Harbour Group Corp

For the years ended December 31, 2023 and 2022, our named executive officers consisted of Tal Keinan, our Chief Executive Officer, Francisco X. Gonzalez, our Chief Financial Officer, and Alexander Saltzman, our former Chief Operating Officer. The policies of the Company with respect to the compensation of its executive officers are administered by the Board in consultation with the Compensation Committee. We may also rely on data and analyses from third parties, such as compensation consultants, in connection with its compensation programs. We intend to design and implement programs to provide for compensation that is sufficient to attract, motivate and retain executives of the Company and potential other individuals and to establish an appropriate relationship between executive compensation and the creation of stockholder value.

Summary Compensation Table

The following table sets forth information concerning the compensation of the named executive officers for the years ended December 31, 2023 and 2022.

Narrative Disclosure to Summary Compensation Table

The annual base salary of each named executive officer, and such officer’s incentive bonus opportunity, are expected to be reviewed from time to time and adjusted when our Board or Compensation Committee determines an adjustment is appropriate. For 2023 and 2022, our compensation program consisted of base salary and incentive compensation delivered in the form of cash bonuses and RSUs.

Employment Arrangements with Executive Officers

Each of our named executive officers is an at-will employee. Except as set forth below, we have not entered into any employment agreements or offer letters with our named executive officers.

Employment Agreement with Tal Keinan

On March 24, 2022, we entered into an employment agreement with Tal Keinan, Chief Executive Officer of the Company, effective as of January 1, 2022, which superseded all previous compensatory arrangements with Mr. Keinan (the “Keinan Employment Agreement”).

Compensation Arrangements. The Keinan Employment Agreement has an initial term of one year, subject to automatic renewal unless either party provides 60 days’ written notice of non-renewal. The Keinan Employment Agreement provides for a base salary of $500,000, subject to periodic review and increase (but not decrease) by the Compensation Committee, and the Compensation Committee must review such base salary at least 90 days prior to the expiration of the Keinan Employment Agreement’s initial term. The Keinan Employment Agreement provides Mr. Keinan with a discretionary target annual incentive bonus equal to 100% of his base salary (the “Annual Bonus”) subject to certain performance metrics. Mr. Keinan’s actual Annual Bonus paid may be more or less than the target bonus. The Annual Bonus may be periodically reviewed and increased (but not decreased) at the discretion of the Company. The Keinan Employment Agreement further provides for (i) reasonable business expense reimbursements, (ii) reimbursement of Mr. Keinan’s reasonable tax preparation expenses and (iii) other standard employee benefits the Company makes available to similarly situated employees.

Equity Awards. Under the Keinan Employment Agreement, Mr. Keinan is entitled to a one-time, time-based restricted stock unit grant (the “RSU”) under our 2022 Incentive Award Plan (the “2022 Plan”). The RSU will vest over four years with 25% of the RSUs vesting on the first anniversary of the grant date and the remaining 75% of the RSUs will vest in equal monthly installments thereafter. Additionally, the RSUs will vest in full upon a Change in Control (as defined the 2022 Plan), provided Mr. Keinan executes a general release of claims and covenant not to sue. The RSUs will also be subject to vesting in full upon retirement if Mr. Keinan’s age plus years of service on his retirement date are equal to or greater than 65 (the “Rule of 65”). The RSUs will be subject to additional terms and conditions under the 2022 Plan.

Additionally, as discussed below, under the Keinan Employment Agreement, all stock options, restricted stock units and other equity-based incentive awards subject to time-based vesting criteria will vest in full (or become payable immediately, as the case may be) upon a termination of Mr. Keinan’s employment by us for any reason (i) other than “Cause;” (ii) other than death; (iii) other than “Disability”; or if Mr. Keinan resigns for “Good Reason” (as those terms are defined in the Keinan Employment Agreement).

*Obligations Upon Certain Termination Events.*Under the Keinan Employment Agreement, if we terminate Mr. Keinan’s employment for any reason (i) other than “Cause;” (ii) other than death; (iii) other than “Disability”; or if Mr. Keinan resigns for “Good Reason,” we will pay him, subject to the restrictions noted below, (i) a continuation of base salary for two years after the date of termination; (ii) an amount equal to the highest Annual Bonus paid to Mr. Keinan within the three years preceding termination, each of (i) and (ii) in accordance with our ordinary payroll practices, and (iii) full vesting of any then-unvested, time-based equity awards.

*Obligations in Connection with Death or Disability.*In the event of Mr. Keinan’s death or Disability (as defined in the Keinan Employment Agreement), we will pay Mr. Keinan, subject to the restrictions noted below, (i) a prorated portion of his Annual Bonus based upon the applicable year’s target Annual Bonus multiplied by the percentage of the calendar year completed before terminating and (ii) full vesting of any then-unvested, time-based equity awards.

*General Release and Restrictive Covenants.*In addition, the payment of all severance benefits to Mr. Keinan is subject to him delivering an executed and irrevocable confidential separation agreement and general release of claims and his compliance with the following restrictive covenants:

Employment Agreement with Will Whitesell

The Company entered into an employment agreement with Mr. Whitesell, dated as of January 3, 2024 (the “Whitesell Employment Agreement”), setting forth Mr. Whitesell’s compensation, certain other terms, and the commencement of his employment on January 3, 2024 (the “Commencement Date”).

Pursuant to the Whitesell Employment Agreement, Mr. Whitesell will be paid an annual base salary of $500,000. Mr. Whitesell will be eligible to receive (1) an annual cash bonus with a target equal to 100% of his annual base salary and (2) an annual bonus consisting of RSUs with a target equal to 200% of his annual base salary, in each case at the discretion of the Compensation Committee upon achievement of performance goals to be established by the Compensation Committee and the Company’s Chief Executive Officer.

The Whitesell Employment Agreement also provides for an initial one-time grant of restricted stock units (the “Initial RSU Grant”) under the Plan to Mr. Whitesell in connection with the commencement of his employment. The Initial RSU Grant was granted in February 2024 and consisted of 94,210 RSUs (which was equal to $1.1 million divided by the trading average of the Company’s common stock on the NYSE American for the ten trading days preceding the grant date). The Initial RSU Grant vest over four years, with 25% of the RSUs vesting on the first anniversary of the grant date and the remaining 75% of the RSUs vesting in equal monthly installments thereafter, subject to Mr. Whitesell’s continued employment with the Company.

Compensation Arrangements. The Whitesell Employment Agreement provides that Mr. Whitesell’s base salary is subject to periodic review and increase (but not decrease) by the Chief Executive Officer and the Compensation Committee. The Whitesell Employment Agreement further provides for performance metrics with respect to Mr. Whitesell’s annual bonus, and that such performance metrics will be established annually by the Chief Executive Officer and the Compensation Committee. The Whitesell Employment Agreement further provides for (i) reasonable business expense reimbursements; (ii) reimbursement of Mr. Whitesell’s reasonable tax preparation expenses and (iii) other standard employee benefits we make available to similarly situated employees.

Obligations Upon Certain Termination Events. Under the Whitesell Employment Agreement, if the Company terminates Mr. Whitesell’s employment without “Cause,” or Mr. Whitesell resigns for “Good Reason” (as those terms are defined in the Whitesell Employment Agreement), any RSUs previously granted to Mr. Whitesell will continue to vest pursuant to the terms of the respective grants.

*General Release and Restrictive Covenants.*The payment of all severance benefits to Mr. Whitesell is subject to each delivering an executed and irrevocable confidential separation agreement and general release of claims.

Employment Agreement with Francisco X. Gonzalez

On December 22, 2021, Sky entered into an amended and restated employment agreement with Mr. Gonzalez (the “A&R Gonzalez Employment Agreement”). Beginning in January 2022, Mr. Gonzalez is also eligible to receive a one-time per square foot incentive bonus, paid quarterly without duplication, which is to be determined based on the amount of new square footage of indoor space available for leasing by Sky or its subsidiaries to tenants in any given quarter. Mr. Gonzalez has entered into Sky’s standard employee covenants agreement containing customary restrictive covenants. On March 24, 2022, we entered into an amendment to the A&R Gonzalez Employment Agreement in connection with his appointment as Chief Financial Officer. On May 17, 2022, Sky entered into an amendment to the Gonzalez Employment Agreement (the “Second Gonzalez Amendment”, and together with the A&R Gonzalez Employee Agreement, the “Gonzalez Employment Agreement”.)

Compensation Arrangements. The Gonzalez Employment Agreement provides that Mr. Gonzalez’s base salary is subject to periodic review and increase (but not decrease) by the Compensation Committee. The Gonzalez Employment Agreement further provides for performance metrics with respect to Mr. Gonzalez’s annual bonus and provides for (i) reasonable business expense reimbursements; (ii) reimbursement of Mr. Gonzalez’s reasonable tax preparation expenses and (iii) other standard employee benefits we make available to similarly situated employees. Existing compensation arrangements remain otherwise unaltered.

Obligations Upon Certain Termination Events. Under the Gonzalez Employment Agreement, if we terminate Mr. Gonzalez’s employment without “Cause,” or Mr. Gonzalez resigns for “Good Reason” (as those terms are defined in the Gonzalez Employment Agreement), we will pay Mr. Gonzalez, subject to the restrictions noted below, a continuation of base salary equal to 24 months, paid in equal installments in accordance with our ordinary payroll practices. If we waive the restrictions in (i) and (ii) below in full or in part, the number of months of base salary paid as severance shall be adjusted to match such restriction period. For example, we may opt to require only a 12-month restriction period, in which case, Mr. Gonzalez shall receive payment equal to that 12-month period.

*General Release and Restrictive Covenants.*In addition, the payment of all severance benefits to Mr. Gonzalez is subject to each delivering an executed and irrevocable confidential separation agreement and general release of claims and Mr. Gonzalez’s compliance with the following restrictive covenants:

Obligations in Connection with Death or Disability. Under the Gonzalez Employment Agreement, in the event of Mr. Gonzalez’s death or Disability (as defined in the Gonzalez Employment Agreement), the Company will provide Mr. Gonzalez with full vesting of any then-unvested, time-based equity awards, subject to the same general release and restrictive covenants provisions in the Gonzalez Employment Agreement for all other severance benefits.

Separation Agreement with Alexander Saltzman

On December 31, 2023, the Company and Sky reached a mutual agreement with Alexander Saltzman, former Chief Operating Officer of the Company and Sky, that Mr. Saltzman would step down from such positions, effective December 31, 2023 (the “Separation Date”). In connection with Mr. Saltzman’s departure, Sky and Mr. Saltzman entered into a Confidential Separation Agreement and General Release, effective December 31, 2023 (the “Separation Agreement”). As a result of his separation, all unvested incentive units of Sky previously granted to Mr. Saltzman will accelerate and vest in full. Mr. Saltzman’s unvested RSUs have been forfeited in accordance with the terms of the 2022 Plan. In consideration for, among other things, his compliance with certain customary restrictive covenants and a typical mutual release of claims, (1) Sky will waive the non-competition provisions contained in Mr. Saltzman’s employment agreement, and (2) Sky will pay Mr. Saltzman’s COBRA premiums for two months. Additionally, Sky will not be obligated to pay any continuation of Mr. Saltzman’s annual base salary following the Separation Date.

Mr. Saltzman’s departure is not the result of any disagreement with Sky or the Company on any matter related to Sky’s or the Company’s operations, policies or procedures.

Annual Equity Awards

The Keinan Employment Agreement, the Gonzalez Employment Agreement, and the Whitesell Employment Agreement each provide for additional equity grants may be provided at the discretion of our Board or Compensation Committee. Such equity grants, if any, are subject to the Rule of 65 and additional terms and conditions as determined by our Board or Compensation Committee at time of grant.

Claw-Back

The Keinan Employment Agreement, the Gonzalez Employment Agreement, and the Whitesell Employment Agreement each provide that any amounts payable under the employment agreements are subject to claw-back or disgorgement, to the extent applicable, under (i) the policies or any claw-back policy adopted by us, (ii) the Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended, and rules, regulations, and binding, published guidance thereunder and (iii) the Sarbanes-Oxley Act of 2002.

Bonuses

On February 14, 2023, the Compensation Committee approved the payment of discretionary performance bonuses with respect to 2022 to Messrs. Keinan, Saltzman, and Gonzalez equal to $500,000, $125,000, and $350,000, respectively. Such bonuses were paid in early March 2023. In February 2024 the Compensation Committee approved performance bonuses with respect to 2023 to Messrs. Keinan and Gonzalez of $792,000 and $450,000, respectively. Such bonuses were paid in late February 2024.

Pension Benefits and Nonqualified Deferred Compensation

Our named executive officers did not participate in, or otherwise receive any benefits under, any pension or retirement plan or non-qualified deferred compensation plan sponsored by us during the years ended December 31, 2023 or 2022.

Outstanding Equity Awards at 2023 Year End

The following table presents information on all outstanding equity awards held by the Company’s named executive officers as of December 31, 2023.

DIRECTOR COMPENSATION

The following table sets forth information concerning the compensation of our non-employee directors for the year ended December 31, 2023. The compensation of Mr. Keinan, who is an employee of the Company, is fully reflected in the Summary Compensation Table and related discussion above. Mr. Keinan does not receive additional compensation for his service as a director.

Our director compensation plan provides that the non-executive directors of the Board receive annual compensation comprised of a cash retainer of $50,000 and an RSU award with an approximate grant date fair value of $70,000, subject to vesting conditions pursuant to the 2022 Plan. Non-executive directors are required to own $150,000 of our common stock by the third anniversary of their tenure. Further, these non-executive directors receive additional annual cash compensation for committee and Lead Independent Director service as follows:

The director compensation plan, including equity awards, retainer fees, as well as committee, chair, and meeting fees, is designed to attract and retain the most qualified individuals to serve on the Board and we believe is in line with that of other public companies of a similar size. The Board, on the recommendation of our compensation committee, is responsible for reviewing and approving any changes to the directors’ compensation arrangements.

Emerging Growth Company Status

As an emerging growth company, the Company will be exempt from certain requirements related to executive compensation, including the requirements to hold a nonbinding advisory vote on executive compensation and to provide information relating to the ratio of total compensation of the Company’s chief executive officer to the median of the annual total compensation of all of the Company’s employees, each as required by the Investor Protection and Securities Reform Act of 2010, which is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.