Southwest Airlines 1998 Annual Report Download - page 54

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54
SOUTHWEST AIRLINES CO. ¤ SIX STORIES OF FREEDOM
granted under these plans have ten-year terms and vest and become fully exercisable
at the end of three, five, or ten years of continued employment, depending upon the
grant type.
Under the 1998 Southwest Airlines Employee Association Non-Qualified Stock Option
Plan (SAEA Plan), the Company may grant options to Dispatchers for up to 1,050,000
shares of common stock. An initial grant of 738,000 shares was made on September
10, 1998, at an option price of $19.62 per share, which exceeded the market price of
the Company’s stock on that date. Options granted under the initial grant vest in annual
increments of varying percentages, depending on seniority level, through 2006. On
December 1 of each year of the agreement beginning in 1998 and through December
1, 2008, additional options will be granted to Dispatchers that become eligible during
that year. No options were granted on December 1, 1998. Options under all grants
must be exercised prior to June 30, 2012, or within a specified time upon retirement or
termination.
Under all fixed option plans, except the SWAPA and SAEA Plans, the exercise price
of each option equals the market price of the Company’s stock on the date of grant.
Under the SWAPA and SAEA Plans, for additional options granted each September 1
and December 1, respectively, the exercise price will be equal to 105 percent of the fair
value of such stock on the date of the grant.
Information regarding the Company’s six fixed stock option plans, as adjusted for
stock splits, is summarized below: