SkyWest Airlines 2006 Annual Report Download - page 74

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68
TheStock Purchase Planisa compensatory plan under SFAS 123(R) because the shares are
purchased semi-annuallyat a 15% discount based on the lower of the beginning or the end of the period
price.During the year ended December 31, 2006, the Company recorded compensation expense of $1.8
million related to StockPurchase Plan. The fair value of theshares purchasedunder the StockPurchase
Plan wasdetermined using theBlack-Scholes option pricing model with the following assumptions: a risk
free rate of 4.8%, a volatility factor of 29.4%, a weighted average life of four months and an expected
annualdividend rate of 0.7%.
During the year ended December 31, 2005, the Company discovered that it had issued329,606 more
shares of common stock than originally authorized to certain of its employees participatingin its Employee
Stock PurchasePlan. Of the shares sold in excess of the EmployeeStock Purchase Plan’s authorized limit,
154,126 shares were sold on January 4, 2005 at a price of $14.35 per share and 175,480 shares were sold on
July 5, 2005 at aprice of $15.45per share. Because the shares that exceedtheoriginal authorized shares
were not deemed to be qualified under theStock Purchase Plan,the intrinsicvalueoftheseshareson the
purchase date wasrecordedas compensation expense.
(8) Related-Party Transactions
TheCompany’s President, Chairman of the Boardand Chief Executive Officer, serveson the Board
of Directors of Zion’s Bancorporation (“Zion’s”). The Company maintains a line of credit (see Note 2)
and certain bank accounts with Zion’s.Zion’s is an equity participant in leveragedleases on two CRJ200
and four Brasilia turboprop aircraft operated by theCompany. Zion’s also serves as the Company’s
transfer agent. The Company’s cash balance in the accounts held at Zion’s as of December 31, 2006 and
2005 was $10,974,000, and $30,693,000, respectively.
One of theCompany’s former directors is a shareholder in Soltis InvestmentAdvisors, Inc. (“Soltis”).
Priorto June 2006, Soltis provided cash management advisory services for aportion of the Company’s cash
programs, to the SkyWest Plan and the Company’s deferred executive compensation plan. Soltis received
no amount in 2006 and $263,000 in 2005 for fees from Fidelity relating to the Company’s cash programs.
Soltis received approximately$156,000 in 2006 and $144,850 in 2005 for fees for advisory servicestothe
SkyWest Plan and the Company’s executive deferredcompensation plan. With respectto the Company’s
executive deferred compensation plan, Soltis provided consulting servicesin conjunction with the Newport
Group. Soltis received $20,000 during 2006 and 2005from the Newport Group.