Alaska Airlines and Horizon Air 2007 Annual Report Download - page 32

adjustment in the event of certain
reorganizations, mergers, combinations,
recapitalizations, stock splits, stock dividends,
or other similar events that change the number
or kind of shares outstanding, and extraordinary
dividends or distributions of property to the
stockholders.
No Limit on Other Authority
Except as expressly provided with respect to
the termination of the authority to grant new
awards under the 2004 Plan if stockholders
approve the 2008 Plan, the 2008 Plan does not
limit the authority of the Board of Directors or
any committee to grant awards or authorize any
other compensation, with or without reference to
the Company’s common stock, under any other
plan or authority.
Termination of or Changes to the 2008
Plan
The Board of Directors may amend or
terminate the 2008 Plan at any time and in any
manner. Stockholder approval for an amendment
will be required only to the extent then required
by applicable law or any applicable listing agency
or required under Sections 162, 422 or 424 of
the U.S. Internal Revenue Code to preserve the
intended tax consequences of the plan. For
example, stockholder approval will be required
for any amendment that proposes to increase
the maximum number of shares that may be
delivered with respect to awards granted under
the 2008 Plan. (Adjustments as a result of stock
splits or similar events will not, however, be
considered an amendment requiring stockholder
approval.) Unless terminated earlier by the Board
of Directors, the authority to grant new awards
under the 2008 Plan will terminate on March 12,
2018. Outstanding awards, as well as the
Administrator’s authority with respect thereto,
generally will continue following the expiration or
termination of the plan. Generally speaking,
outstanding awards may be amended by the
Administrator (except for a repricing), but the
consent of the award holder is required if the
amendment (or any plan amendment) materially
and adversely affects the holder.
Federal Income Tax Consequences of
Awards under the 2008 Plan
The U.S. federal income tax consequences
of the 2008 Plan under current federal law,
which is subject to change, are summarized in
the following discussion of the general tax
principles applicable to the 2008 Plan. This
summary is not intended to be exhaustive and,
among other considerations, does not describe
the deferred compensation provisions of
Section 409A of the U.S. Internal Revenue Code
to the extent an award is subject to and does not
satisfy those rules, nor does it describe state,
local, or international tax consequences.
With respect to nonqualified stock options,
the Company is generally entitled to deduct and
the participant recognizes taxable income in an
amount equal to the difference between the
option exercise price and the fair market value of
the shares at the time of exercise. With respect
to incentive stock options, the company is
generally not entitled to a deduction nor does the
participant recognize income at the time of
exercise, although the participant may be subject
to the U.S. federal alternative minimum tax.
The current federal income tax
consequences of other awards authorized under
the 2008 Plan generally follow certain basic
patterns: nontransferable restricted stock
subject to a substantial risk of forfeiture results
in income recognition equal to the excess of the
fair market value over the price paid (if any) only
at the time the restrictions lapse (unless the
recipient elects to accelerate recognition as of
the date of grant); bonuses, stock appreciation
rights, cash and stock-based performance
awards, dividend equivalents, stock units, and
other types of awards are generally subject to tax
at the time of payment; and compensation
otherwise effectively deferred is taxed when paid.
In each of the foregoing cases, the Company will
generally have a corresponding deduction at the
time the participant recognizes income.
If an award is accelerated under the 2008
Plan in connection with a “change in control” (as
this term is used under the U.S. Internal
Revenue Code), the Company may not be
permitted to deduct the portion of the
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