SkyWest Airlines 2004 Annual Report Download - page 50

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48
2004 2003 2002
Expected annual dividend rate 0.63% 0.76% 0.31%
Risk-free interest rate 2.75% 2.56% 3.91%
Average expected life (years) 4 4 4
Expected volatility of common stock 0.422 0.603 0.584
Options are exercisable for a period as defined by the Compensation Committee at the date granted; however, no stock option will
be exercisable before six months have elapsed from the date it is granted and no incentive stock option shall be exercisable after
ten years from the date of grant. The following table summarizes the stock option activity for all plans for the years ended
December 31, 2004, 2003 and 2002:
2004 2003 2002
Number of
Options
Weighted
Average
Price
Number of
Options
Weighted
Average
Price
Number of
Options
Weighted
Average
Price
Outstanding at beginning of year 4,690,122 $ 19.27 3,679,925 $ 21.70 3,028,534 $ 18.66
Granted 1,134,812 19.18 1,116,915 10.57 1,073,968 26.24
Exercised (207,755) 12.12 (24,396) 11.97 (389,260) 11.15
Canceled (86,078) 18.31 (82,322) 21.20 (33,317) 22.54
Outstanding at end of year 5,531,101 19.39 4,690,122 19.27 3,679,925 21.70
Weighted average fair value of
options granted during the year 6.66 4.85 12.46
The following table summarizes information about stock options outstanding at December 31, 2004:
Options Outstanding Options Exercisable
Range of
Exercise
Prices
Number
Outstanding
Weighted Average
Remaining
Contractual Life
Weighted Average
Exercise Price
Number
Exercisable
Weighted Average
Exercise Price
$3 to $15 1,695,246 6.7 years $ 11.31 624,000 $ 12.54
$16 to $21 1,830,812 7.7 years 19.54 696,000 20.13
$22 to $26 2,005,043 6.8 years 26.10 989,905 25.95
$3 to $26 5,531,101 7.1 years 19.39 2,309,905 20.57
(6) Retirement Plan and Employee Stock Purchase Plan
Retirement Plan
The Company sponsors the SkyWest Airlines Employee’s Retirement Plan (the “Plan”). Employees who have completed 90 days
of service and are 18 years of age are eligible for participation in the Plan. Employees may elect to make contributions to the Plan.
The Company matches 100% of such contributions up to 2%, 4% or 6% of the individual participant’s compensation, based upon
length of service. Additionally, a discretionary contribution may be made by the Company. The Company’s combined
contributions to the Plan were $9.7 million, $7.8 million and $7.5 million for the years ended December 31, 2004, 2003 and 2002,
respectively.
Employee Stock Purchase Plan
In February 1996, the Company’s Board of Directors approved the SkyWest, Inc. 1995 Employee Stock Purchase Plan (“The
Stock Purchase Plan”). All employees who have completed 90 days of employment are eligible to participate, except employees
who own five percent or more of the Company’s common stock. The Stock Purchase Plan enables employees to purchase shares
of the Company’s common stock at a 15% discount, through payroll deductions. Employees can contribute up to 15% of their
base pay, not to exceed $21,250 each calendar year, for the purchase of shares. Shares are purchased semi-annually at the lower
of the beginning or the end of the period price. Employees can terminate their participation in the Stock Purchase Plan at anytime
upon written notice.