JetBlue Airlines 2007 Annual Report Download - page 70

that all options granted now vest in equal installments over a period of three or five years, or upon
the occurrence of a change in control. All options issued under the 2002 Plan expire ten 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 under
the 2002 Plan 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 12.2 million shares. The 2002 Plan will
terminate no later than December 31, 2011.
The following is a summary of stock option activity for the years ended December 31:
2007 2006 2005
Shares
Weighted
Average
Exercise
Price Shares
Weighted
Average
Exercise
Price Shares
Weighted
Average
Exercise
Price
Outstanding at beginning of
year ..................... 31,089,745 $12.13 31,086,422 $11.52 26,966,499 $10.54
Granted .................... 2,926,250 10.94 4,360,949 11.43 6,600,006 13.53
Exercised ................... (1,823,903) 4.25 (3,011,260) 3.75 (1,779,598) 3.16
Forfeited ................... (737,127) 11.87 (344,398) 12.11 (593,758) 14.59
Expired .................... (1,723,033) 15.73 (1,001,968) 15.20 (106,727) 11.20
Outstanding at end of year ..... 29,731,932 12.30 31,089,745 12.13 31,086,422 11.52
Vested at end of year ......... 22,537,850 12.19 24,881,786 11.86 28,411,718(1) 11.13
Available for future grants (2) . . 12,589,744 6,022,883 2,132,587
(1) Includes 19.9 million shares associated with our December 2005 stock option acceleration
discussed in Note 1.
(2) On January 1, 2008, the number of shares reserved for issuance was increased by 7,263,737 shares.
The following is a summary of outstanding stock options at December 31, 2007:
Options Outstanding Options Vested
Range of
exercise prices Shares
Weighted
Average
Remaining
Contractual
Life (years)
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
(millions) Shares
Weighted
Average
Remaining
Contractual
Life (years)
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
(millions)
$0.33 to $4.00..... 4,354,965 3.2 $ 1.74 $18 4,354,965 3.2 $ 1.74 $18
$7.79 to $29.71.... 25,376,967 6.7 14.11 — 18,182,885 6.2 14.69 $—
29,731,932 6.2 12.30 $18 22,537,850 5.6 12.19 $18
The total intrinsic value, determined as of the date of exercise, of options exercised during the
twelve months ended December 31, 2007, 2006 and 2005 was $15 million, $25 million and $19 million,
respectively. We received $8 million, $11 million and $6 million in cash from option exercises for the
twelve months ended December 31, 2007, 2006 and 2005, respectively.
During 2007, we also began issuing restricted stock units under the 2002 Plan. These awards will
vest in annual installments over three years. During the year ended December 31, 2007, we granted
71,418 restricted stock units at a weighted average grant date fair value of $10.42, none of which are
vested and all of which remain outstanding at December 31, 2007.
SFAS 123(R) requires that deferred taxes be recognized on temporary differences that arise with
respect to stock-based compensation attributable to nonqualified stock options and awards. However,
no tax benefit is recognized for stock-based compensation attributable to incentive stock options (ISO)
or CSPP shares until there is a disqualifying disposition, if any, for income tax purposes. A portion of
our stock-based compensation is attributable to ISO and CSPP shares therefore, our effective tax rate
is subject to fluctuation.
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