SkyWest Airlines 2012 Annual Report Download - page 100

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SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2012
(9) Capital Transactions (Continued)
Incentive Plan. The following table shows the assumptions used and weighted average fair value for
grants in the years ended December 31, 2012, 2011 and 2010.
2012 2011 2010
Expected annual dividend rate .................. 1.23% 1.04% 1.10%
Risk-free interest rate ........................ 0.81% 2.08% 1.88%
Average expected life (years) ................... 5.6 5.8 4.6
Expected volatility of common stock ............. 0.409 0.404 0.402
Forfeiture rate ............................. 0.0% 0.0% 0.0%
Weighted average fair value of option grants ....... $ 4.43 $ 5.74 $ 4.78
The Company recorded share-based compensation expense only for those options that are
expected to vest. The estimated fair value of the stock options is amortized over the vesting period of
the respective stock option grants.
During the year ended December 31, 2012, the Company granted 290,265 shares of restricted stock
to the Company’s employees under the 2010 Incentive Plan. The restricted stock has a three-year
vesting period, during which the recipient must remain employed with the Company or its subsidiaries.
The weighted average fair value of the restricted stock on the date of grants made during the year
ended December 31, 2012 was $13.06 per share. Additionally, the Company granted 27,874 fully-vested
shares of common stock to the Company’s directors with a weighted average grant-date fair value of
$13.06. The following table summarizes the restricted stock activity as of December 31, 2012, 2011 and
2010:
Weighted-Average
Number of Grant-Date
Shares Fair Value
Non-vested shares outstanding at December 31, 2009 . . . 686,586 $23.13
Granted .................................... 248,384 14.49
Vested ..................................... (256,285) 25.51
Cancelled ................................... (19,422) 21.68
Non-vested shares outstanding at December 31, 2010 . . . 659,263 18.97
Granted .................................... 249,502 15.51
Vested ..................................... (238,848) 25.80
Cancelled ................................... (58,315) 15.71
Non-vested shares outstanding at December 31, 2011 . . . 611,602 15.08
Granted .................................... 318,139 13.04
Vested ..................................... (212,841) 14.95
Cancelled ................................... (18,015) 14.20
Non-vested shares outstanding at December 31, 2012 . . . 698,885 14.21
During the year ended December 31, 2012, 2011 and 2010, the Company recorded equity-based
compensation expense of $4.7 million, $5.4 million and $6.4 million, respectively.
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