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30
10. Stock Awards and Options
Under the 1998 Long Term Incentive Plan, as amended, officers and key employees of AMR and its subsidiaries may be
granted stock options, stock appreciation rights (SARs), restricted stock, deferred stock, stock purchase rights, other stock-based
awards and/or performance-related awards, including cash bonuses. The total number of common shares authorized for
distribution under the 1998 Long Term Incentive Plan is 23,700,000 shares. The 1998 Long Term Incentive Plan, the successor
to the 1988 Long Term Incentive Plan, which expired May 18, 1998, will terminate no later than May 21, 2008. Options granted
under the 1988 and 1998 Long Term Incentive Plans (collectively, the Plans) are awarded with an exercise price equal to the fair
market value of the stock on date of grant, become exercisable in equal annual installments over five years following the date of
grant and expire 10 years from the date of grant. SARs may be granted in tandem with options awarded; however, no SARs have
been granted. As of December 31, 2001, approximately 3.5 million shares were available for future grant under the Plans.
As a result of the Sabre spin-off in March 2000, AMR’s stock price was adjusted from $60 9/16 to $25 9/16 by the New
York Stock Exchange. Accordingly, all outstanding stock options and other stock-based awards, including the related exercise
prices, were adjusted to preserve the intrinsic value of the stock options and awards. See Note 14 for information regarding the
Sabre spin-off.
In 2001, 2000 and 1999, the total charge for stock compensation expense included in wages, salaries and benefits expense,
primarily related to the Company’s performance share plan, was $21 million, $52 million and $53 million, respectively. No
compensation expense was recognized for stock option grants under the Plans since the exercise price was the fair market value
of the underlying stock on the date of grant.
Stock option activity was:
Year Ended December 31,
2001 2000 1999
Options
Weighted
Average
Exercise
Price
Options
Weighted
Average
Exercise
Price
Options
Weighted
Average
Exercise
Price
Outstanding at January 1 16,568,907 $ 25.42 5,219,634 $ 52.06 4,147,124 $ 46.60
Sabre adjustment - - 7,150,899 - - -
Granted 4,180,595 28.35 6,003,111 30.21 1,539,585 63.19
Exercised (951,191) 38.34 (1,557,034) 32.85 (258,875) 68.17
Canceled (286,025) 23.04 (247,703) 23.38 (208,200) 49.96
Outstanding at
December 31 19,512,286 $ 26.46 16,568,907 $ 25.42 5,219,634 $ 52.06
Exercisable options
outstanding at
December 31 7,161,346 $ 22.95 5,334,444 $ 19.79 2,012,889 $ 40.63
The following table summarizes information about the stock options outstanding at December 31, 2001:
Range of
Exercise
Prices
Number of
Options
Outstanding
Weighted
Average
Remaining
Life (years)
Weighted
Average
Exercise Price
Number of
Options
Exercisable
Weighted
Average
Exercise Price
Under $20 2,403,770 3.60 $ 15.16 2,368,838 $ 15.14
$20 – $30 9,945,874 7.74 24.16 3,172,758 24.19
Over $30 7,162,642 8.51 33.45 1,619,750 31.92
19,512,286 7.51 $ 26.46 7,161,346 $ 22.95