Delta Airlines 2009 Annual Report Download - page 109

Table of Contents
Equity-Based Compensation
Successor
Upon emergence from Chapter 11, we adopted with Bankruptcy Court approval the 2007 Plan, a broad based equity and cash compensation plan. The 2007
Plan provides for grants of restricted stock, stock options, stock appreciation rights, restricted stock units, performance awards, including cash incentive
awards, and other stock based awards. Shares of common stock issued under the 2007 Plan may be made available from authorized but unissued common
stock or common stock we acquire. If any shares of our common stock are covered by an award that is cancelled, forfeited or otherwise terminates without
delivery of shares (including shares surrendered or withheld for payment of the exercise price of an award or taxes related to an award), then such shares will
again be available for issuance under the 2007 Plan.
In connection with the Merger, we amended the 2007 Plan with stockholder approval to increase the number of shares of Delta common stock issuable
under the plan from 30 million to 157 million. The purpose of this amendment was to permit Delta to grant equity to substantially all employees of the
combined company in connection with the Merger. There were 35 million shares available for future grants under the 2007 Plan as of December 31, 2009.
Non-cash compensation expense for equity awards is recognized over the employee's requisite service period (generally, the vesting period of the award).
We use straight-line recognition for awards with installment vesting. During the years ended December 31, 2009 and 2008, we recognized expense associated
with restricted stock, stock option, and performance share grants of $108 million and $66 million in salaries and related costs, respectively. The closing of the
Merger constituted a change in control under the 2007 Plan, which caused the vesting of substantially all previously unvested equity awards and resulted in
the recording of an additional $75 million in 2008 in expense to restructuring and merger-related items. These expenses do not represent cash payments
actually made to employees; rather it represents non-cash compensation expense recognition. The actual value of these awards to the recipients depends on the
price of Delta common stock when the awards vest.
As of December 31, 2009, approximately $109 million of total unrecognized costs related to unvested shares and options are expected to be recognized
over the remaining weighted-average period of 0.9 years. Approximately $69 million is expected to be recognized in 2010.
Stock Grants. In connection with the Merger, we granted equity to substantially all employees of Delta and Northwest. U.S. based non-pilot, non-
management employees received 34 million shares of common stock. Pilot employees received 50 million shares of common stock. The fair value of these
grants was based on the closing price of the common stock on the date of grant and resulted in a $791 million charge in restructuring and merger-related
items. In 2007, upon emergence from Chapter 11, we issued 14 million shares of common stock to non-contract, non-management employees. Employees
may hold or sell these shares without restriction.
Merger Awards. In connection with the Merger, we made grants of restricted stock and stock options to approximately 700 management level employees
under the 2007 Plan. As discussed below, these grants vest over three years, subject to the employee's continued employment.
Restricted Stock. Restricted stock is common stock that may not be sold or otherwise transferred for a period of time and that is subject to forfeiture in
certain circumstances. The fair value of the restricted stock awards is based on the closing price of the common stock on the date of grant. In connection with
the Merger, we granted 17 million shares of restricted stock, which, subject to the employee's continued employment, vest over three years in four
installments (20% on May 1, 2009, 20% on November 1, 2009, 20% on May 1, 2010, and 40% on November 1, 2011). Upon emergence from Chapter 11, we
granted eight million shares of restricted stock to eligible employees. Substantially all of these awards, to the extent not previously vested, vested upon the
closing of the Merger. We expect substantially all unvested restricted stock awards at December 31, 2009 to vest during the vesting period.
The following table summarizes restricted stock activity for the year ended December 31, 2009:
Weighted
Average
Shares Grant Date
(000) Fair Value
Unvested at January 1, 2009 17,650 $ 8.11
Granted 3,695 6.71
Vested (8,363) 8.09
Forfeited (459) 7.62
Unvested at December 31, 2009 12,523 $ 7.73
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