Southwest Airlines 2011 Annual Report Download - page 115

2011, 2010, and 2009, was not material. As of December 31, 2011, there was $21 million of total unrecognized
compensation cost related to share-based compensation arrangements, which is expected to be recognized over a
weighted-average period of 1.2 years.
Restricted stock units and stock grants
Under the Company’s Amended and Restated 2007 Equity Incentive Plan (“2007 Equity Plan”), it granted
restricted stock units (“RSUs”) to Employees and members of its Board of Directors during 2010 and to
Employees during 2011. In addition, during 2011, the Company granted unrestricted stock to members of its
Board of Directors. The fair value of RSUs and unrestricted stock grants is based on the closing price of the
Company’s common stock on the date of grant. Outstanding RSUs vest over three years, subject to the
Employee’s continued employment or the Board member’s continued service. The Company recognizes expense
on a straight-line basis over the vesting period. A remaining balance of up to 12 million shares of the Company’s
common stock may be issued pursuant to grants under the 2007 Equity Plan. Aggregated information regarding
the Company’s RSUs and stock grants is summarized below:
RESTRICTED STOCK UNITS
Units (000)
Wtd. Average
Grant Date
Fair Value
Outstanding December 31, 2009 .......................... — $ —
Granted ......................................... 997 12.28
Vested .......................................... — —
Surrendered ...................................... (7) 12.28
Outstanding December 31, 2010 .......................... 990 12.28
Granted ......................................... 1,007 12.27
Vested .......................................... (327) 12.28
Surrendered ...................................... (30) 12.28
Outstanding December 31, 2011 .......................... 1,640 $12.27
Stock options
The Company has previously awarded stock options under plans covering Employees subject to collective
bargaining agreements (collective bargaining plans) and plans covering other Employees and members of the
Board of Directors (other Employee plans). None of the collective bargaining plans were required to be approved
by Shareholders. Options granted to Employees under collective bargaining plans are non-qualified, granted at or
above the fair value of the Company’s common stock on the date of grant, and generally have terms ranging from
six to twelve years. Neither Executive Officers nor members of the Company’s Board of Directors are eligible to
participate in any of the collective bargaining plans. Options granted to Employees and members of the Board of
Directors through other Employee plans are both qualified as incentive stock options under the Internal Revenue
Code of 1986 and non-qualified stock options, granted at no less than the fair value of the Company’s common
stock on the date of grant, and have ten-year terms. All of the options included in other Employee plans have
been approved by Shareholders, except one plan covering non-management, non-contract Employees, which had
options outstanding to purchase one million shares of the Company’s common stock as of December 31, 2011.
Although the Company does not have a formal policy, upon option exercise, the Company will typically issue
treasury stock, to the extent such shares are available.
Vesting terms for the collective bargaining plans differ based on the grant made, and have ranged in length
from immediate vesting to vesting periods in accordance with the period covered by the respective collective
bargaining agreement. For other Employee plans, options vest and generally become fully exercisable over three,
five, or ten years of continued employment, depending upon the grant type. For grants in any of the Company’s
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