Air Canada 2006 Annual Report Download - page 103

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2006 Outstanding Options 2006 Exercisable Options
Range of
Exercise Prices
Expiry
Dates
Number of
Options
Outstanding
Weighted Average
Remaining Life
(Years)
Weighted Average
Exercise
Price/Share
Number of
Exercisable
Options
Weighted Average
Exercise
Price/Share
$18.70 2011 1,085,803 5 $18.70 210,742 $18.70
$31.89 - $38.91 2012 339,604 6 38.52 80,220 38.91
$30.61 - $33.89 2013 184,734 7 32.14 - -
1,610,141 $24.42 290,962 $24.27
2005 Outstanding Options 2005 Exercisable Options
Range of
Exercise Prices
Expiry
Dates
Number of
Options
Outstanding
Weighted Average
Remaining Life
(Years)
Weighted Average
Exercise
Price/Share
Number of
Exercisable
Options
Weighted Average
Exercise
Price/Share
$20.00 2011 1,229,622 6 $20.00 201,372 $20.00
$34.11 - $41.62 2012 320,000 7 41.15 31,250 41.62
1,549,622 $24.37 232,622 $22.90
Air Canada Long-Term Incentive Plan
As approved by the Board of Directors, concurrent with the Air Canada IPO described in Note 1, certain of the
Corporation’s employees participate in the Air Canada Long-term Incentive Plan (the “Long-term Incentive
Plan”) administered by the Board of Directors of Air Canada. The Long-term Incentive Plan provides for the
grant of options and performance share units to senior management and officers of Air Canada.
The options to purchase shares granted under the Long-term Incentive Plan have a maximum term of 10 years
and an exercise price based on the fair market value of the shares at the time of the grant of the options.
Options granted under the Long-term Incentive Plan will vest over four years and will incorporate performance
vesting features. The performance vesting conditions are based on net income targets established by the Air
Canada Board over the same time period. The terms of the Long-term Incentive Plan specify that upon the
retirement of the employee, options granted may be exercised as the rights to exercise accrue within three
years from the retirement date.
The number of Air Canada stock options granted to employees, the related compensation expense recorded
and the assumptions used to determine stock-based compensation expense, using the Black-Scholes option
valuation model were as follows:
2006
2005
Compensation expense ($ millions) $ 3 $ -
Number of stock options granted 1,699,678 -
Weighted average fair value per option granted ($) $ 5.40 $ -
Aggregated fair value of options granted ($ millions) $ 9 $ -
Weighted average assumptions:
Risk-free interest rate 4.07% -
Expected volatility 35% -
Dividend yield 0% -
Expected option life (years) 4.5 -
103
Combined Consolidated Financial Statements 2006