Delta Airlines 2003 Annual Report Download - page 118

Table of Contents
Note 12. Common and Preferred Stock
Stock Option and Other Stock-Based Award Plans
To more closely align the interests of directors, officers and other employees with the interests of our shareowners, we maintain certain plans which provide
for the issuance of common stock in connection with the exercise of stock options and for other stock-based awards. Stock options awarded under these plans
(1) have an exercise price equal to the fair value of the common stock on the grant date; (2) become exercisable one to five years after the grant date; and
(3) expire up to 10 years after the grant date. The following table includes additional information about these plans as of December 31, 2003:
Shares
Total Shares Non-Qualified Reserved
Authorized for Stock Options for Future
Plan Issuance Granted Grant
Broad-based employee stock option plans (1) 49,400,000 49,400,000 —
Delta 2000 Performance Compensation Plan (2) 16,000,000 4,948,073 12,218,267
Non-Employee Directors' Stock Option Plan (3) 250,000 119,245 132,755
Non-Employee Directors' Stock Plan (4) 500,000 — 441,869
(1)
In 1996, shareowners approved broad-based pilot and non-pilot stock option plans. Under these two plans, we granted eligible employees non-qualified
stock options to purchase a total of 49.4 million shares of common stock in three approximately equal installments on October 30, 1996, 1997 and
1998.
(2)
On October 25, 2000, shareowners approved this plan, which authorizes the grant of stock options and a limited number of other stock awards. The plan
amends and restates a prior plan which was also approved by shareowners. No awards have been, or will be, granted under the prior plan on or after
October 25, 2000. At December 31, 2003, there were 3.6 million shares of common stock reserved for awards (primarily non-qualified stock options)
that were outstanding under the prior plan. The current plan provides that shares reserved for awards under the plans that are forfeited, settled in cash
rather than stock or withheld, plus shares tendered to us in connection with such awards, may be added back to the shares available for future grants. At
December 31, 2003, 14.4 million shares had been added back pursuant to that provision, including 11.0 million shares canceled under the stock option
exchange program discussed below.
(3)
On October 22, 1998, the Board of Directors approved this plan under which each non-employee director may receive an annual grant of non-qualified
stock options. This plan provides that shares reserved for awards that are forfeited may be added back to the shares available for future grants.
(4)
In 1995, shareowners approved this plan, which provides that a portion of each non-employee director's compensation for serving as a director will be
paid in shares of common stock. It also permits non-employee directors to elect to receive all or a portion of their cash compensation for service as a
director in shares of common stock at current market prices.
On May 28, 2003, we commenced, with shareowner approval, a stock option exchange program (Exchange Program) for eligible employees in our broad-
based stock option plans and the Delta 2000 Performance Compensation Plan. Approximately 45,000 eligible employees were offered the opportunity to
exchange their outstanding stock options with an exercise price of $25 per share or more for a designated fewer number of replacement options with an
exercise price equal to the fair market value of the common stock on the grant date of the replacement options. In accordance with the terms of the Exchange
Program, we canceled approximately 32 million outstanding stock options on June 25, 2003 and issued, in exchange for the canceled options, approximately
12 million replacement options on December 26, 2003. The exercise price of the replacement options is $11.60, the closing price of our common stock on the
grant date. Members of our Board of Directors, including our Chief Executive Officer, were not eligible to participate in the Exchange Program.
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