SkyWest Airlines 2010 Annual Report Download - page 98

SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2010
(8) Investment in Other Companies
In September 2008, the Company entered into an agreement to acquire a 20 percent interest in
Trip. During the year ended December 31, 2010, the Company invested an additional $10 million in
Trip. As of December 31, 2010, the Company’s investment balance in Trip was $35.0 million, which
represented a 20 percent ownership interest in Trip and was recorded as an ‘‘Other asset’’ on the
Company’s consolidated balance sheet. The Company accounts for its interest in Trip using the equity
method of accounting. The Company records its equity in Trip’s earnings on a one-quarter lag. The
Company’s portion of Trip’s income for the year ended December 31, 2010 was $0.6 million.
On September 29, 2010, the Company invested $7 million for a 30 percent ownership interest in
Mekong Aviation Joint Stock Company, an airline operating in Vietnam (‘‘Air Mekong’’). The
Company’s investment in Air Mekong is recorded as an ‘‘Other asset’’ on the Company’s consolidated
balance sheet. The Company anticipates accounting for the investment using the equity method of
accounting and intends to reflect its equity interest in Air Mekong’s earnings on a one-quarter lag.
(9) Capital Transactions
Preferred Stock
The Company is authorized to issue 5,000,000 shares of preferred stock in one or more series
without shareholder approval. No shares of preferred stock are presently outstanding. The Company’s
Board of Directors is authorized, without any further action by the shareholders of the Company, to
(i) divide the preferred stock into series; (ii) designate each such series; (iii) fix and determine dividend
rights; (iv) determine the price, terms and conditions on which shares of preferred stock may be
redeemed; (v) determine the amount payable to holders of preferred stock in the event of voluntary or
involuntary liquidation; (vi) determine any sinking fund provisions; and (vii) establish any conversion
privileges.
Stock Compensation
On May 4, 2010, the Company’s shareholders approved the adoption of the SkyWest Inc. 2010
Long-Term Incentive Plan, which provides for the issuance of up to 5,150,000 shares of common stock
to the Company’s directors, employees, consultants and advisors (the ‘‘2010 Incentive Plan’’). The 2010
Incentive Plan provides for awards in the form of options to acquire shares of common stock, stock
appreciation rights, restricted stock grants and performance awards. The 2010 Incentive Plan is
administered by the Compensation Committee of the Company’s Board of Directors (the
‘‘Compensation Committee’’) who is authorized to designate option grants as either incentive or
non-statutory. Incentive stock options are granted at not less than 100% of the market value of the
underlying common stock on the date of grant. Non-statutory stock options are granted at a price as
determined by the Compensation Committee.
In prior years, the Company adopted three stock option plans: the Executive Stock Incentive Plan
(the ‘‘Executive Plan’’), the 2001 Allshare Stock Option Plan (the ‘‘Allshare Plan’’) and SkyWest Inc.
Long-Term Incentive Plan (the ‘‘2006 Incentive Plan’’). However, as of December 31, 2010, options to
purchase 4,266,521 shares of the Company’s common stock remained outstanding under the Executive
Plan, the Allshare Plan and the 2006 Incentive Plan. There are no additional shares of common stock
available for issuance under these plans.
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