JetBlue Airlines 2003 Annual Report Download - page 66

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JETBLUE AIRWAYS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2003
Note 7—Stock-Based Compensation (Continued)
average fair values of stock-based compensation used to compute the proforma information for CSPP
purchase rights included in Note 1:
Year of Purchase
Right
2003 2002
Risk-free interest rate ....................................... 1.3% 2.7%
Average expected life (years) .................................. 1.25 1.25
Expected volatility of common stock ............................. 41.5% 41.3%
Weighted average fair value of purchase rights ..................... $ 11.44 $ 5.44
Stock Incentive Plan: The 2002 Stock Incentive Plan, or the 2002 Plan, provides for incentive and
non-qualified stock options to be granted to certain employees and members of the Board of Directors.
The 2002 Plan became effective following our initial public offering and provided that all outstanding
options under the 1999 Stock Option/Stock Issuance Plan, or the 1999 Plan, be transferred to the 2002
Plan. No further option grants will be made under the 1999 Plan. The transferred options will continue
to be governed by their existing terms. Stock options under the 2002 Plan become exercisable when
vested, which occurs in annual installments of three to seven years or upon the occurrence of a change
in control, and expire 10 years from the date of grant. Our policy is to grant options with the exercise
price equal to the market price of the underlying common stock on the date of grant. The number of
shares reserved for issuance will automatically increase each January by an amount equal to 4% of the
total number of shares of our common stock outstanding on the last trading day in December of the
prior calendar year. In no event will any such annual increase exceed 8.1 million shares.
The following is a summary of stock option activity for the years ended December 31:
2003 2002 2001
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
Outstanding at beginning of year ....... 13,439,631 $ 7.87 8,544,780 $ 1.33 5,255,505 $ 0.67
Granted ......................... 4,054,875 27.71 6,488,785 15.16 3,584,250 2.29
Exercised ........................ (1,096,199) 3.78 (1,217,437) 0.87 (52,200) 0.49
Forfeited ........................ (245,295) 11.65 (376,497) 7.49 (242,775) 1.45
Outstanding at end of year ........... 16,153,012 13.08 13,439,631 7.87 8,544,780 1.33
Vested at end of year ............... 2,971,637 3.90 2,632,770 1.05 1,871,201 0.57
Reserved for issuance ............... 18,436,107(1) 14,610,603 11,542,428
Available for future grants ............ 57,209 41,285 2,778,573
(1) On January 1, 2004, the number of shares reserved for issuance was increased by 4,082,764 shares.
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