Delta Airlines 2010 Annual Report Download - page 93

Table of Contents
Preferred Stock. We may issue preferred stock in one or more series. The Board of Directors is authorized (1) to fix the descriptions, powers (including
voting powers), preferences, rights, qualifications, limitations and restrictions with respect to any series of preferred stock and (2) to specify the number of
shares of any series of preferred stock. As of December 31, 2010, we have not issued any preferred stock.
Treasury Stock. We generally withhold shares of Delta common stock to cover employees' portion of required tax withholdings when employee equity
awards are issued or vest. These shares are valued at cost, which equals the market price of the common stock on the date of issuance or vesting. The
weighted average cost of shares held in treasury was $15.33 and $15.89 as of December 31, 2010 and 2009, respectively.
Equity-Based Compensation
Our broad based equity and cash compensation plan provides for grants of restricted stock, stock options, performance awards, including cash incentive
awards, and other equity-based awards (the "2007 Plan"). 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),
such shares will again be available for issuance under the 2007 Plan. The 2007 Plan authorizes the issuance of up to 157 million shares of common stock. As
of December 31, 2010 there were 35 million shares available for future grants.
We make long term incentive awards annually to eligible management employees under the 2007 Plan. 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. The following table shows non-cash equity compensation expense recognized in salaries and related costs on our Consolidated Statements
of Operations:
Year Ended December 31,
(in millions) 2010 2009 2008
Restricted stock $ 65 $ 77 $ 62
Stock options 18 26 12
Performance shares 6 5 (8)
Total $ 89 $ 108 $ 66
These amounts do not represent cash payments made to employees; rather they represent non-cash compensation expense recognized for financial
reporting purposes. The actual value of these awards to recipients depends on various factors, including (1) the risk the award may be forfeited in the event of
certain terminations of employment, (2) for an award subject to performance conditions, the risk there is no payout because the performance conditions are
not met and (3) the price of Delta common stock when the award vests.
As of December 31, 2010, approximately $65 million of total unrecognized costs related to unvested shares and stock options are expected to be
recognized over the remaining weighted average period of 0.6 years, including approximately $60 million in 2011.
Stock Grants. In connection with the Merger, U.S. based non-pilot, non-management employees received 34 million shares of common stock and pilot
employees received 50 million shares of common stock, which resulted in a $791 million charge in restructuring and merger-related items in 2008.
Additionally, 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 an additional $75 million of restructuring and merger-related items in 2008.
Restricted Stock. Restricted stock is common stock that may not be sold or otherwise transferred for a period of time and is subject to forfeiture in certain
circumstances. Generally, awards vest over several years, subject to the employee's continued employment. The fair value of restricted stock awards is based
on the closing price of the common stock on the grant date. We expect substantially all unvested restricted stock awards at December 31, 2010 to vest.
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