US Airways 2009 Annual Report Download - page 110

Table of Contents
CSARs activity for the year ending December 31, 2009 is as follows (CSARs in thousands):
Weighted
Average
Weighted Remaining
Average Contractual Term Aggregate
CSARs Exercise Price (years) Intrinsic Value
(In millions)
2008 Equity Incentive Plan
Balance at December 31, 2008 — $ —
Granted 4,645 3.10
Exercised — —
Forfeited (232) 3.10
Expired — —
Balance at December 31, 2009 4,413 $ 3.10 6.27 $ 7.7
Vested or expected to vest at December 31, 2009 4,110 $ 3.10 6.27 $ 7.2
Exercisable at December 31, 2009 3 $ 5.23 5.87 $ —
The fair value of stock options and stock appreciation rights is determined at the grant date using a Black-Scholes option pricing
model, which requires several assumptions. The risk-free interest rate is based on the U.S. Treasury yield curve in effect for the expected
term of the award at the time of grant. The dividend yield is assumed to be zero as the Company does not pay dividends and has no
current plans to do so in the future. The volatility is based on the historical volatility of the Company's common stock over a time period
equal to the expected term of the award. The expected life of the award is based on the historical experience of the Company.
The per share weighted-average grant-date fair value of stock appreciation rights granted and the weighted-average assumptions used
for the years ended December 31, 2009, 2008 and 2007 were as follows:
Year Ended
December 31, December 31, December 31,
2009 2008 2007
Weighted average fair value $ 1.84 $ 3.28 $ 16.57
Risk free interest rate 1.3% 2.5% 4.5%
Expected dividend yield — — —
Expected life 3.0 years 3.0 years 3.0 years
Volatility 92% 62% 52%
As of December 31, 2009, there was $12 million of total unrecognized compensation costs related to stock options and SARs. These
costs are expected to be recognized over a weighted average period of 1.1 years. There were no stock options or SARs exercised during
2009. The total intrinsic value of stock options and SARs exercised during the years ended December 31, 2008 and 2007 was
$0.1 million and $4 million, respectively. Cash received from stock option and SAR exercises during the years ended December 31, 2008
and 2007 was $0.1 million and $2 million, respectively.
As of December 31, 2009, the average fair market value of outstanding CSARs was $3.52 per share and the related liability was
$3 million. These CSARs will continue to be remeasured at fair value at each reporting date until all awards are settled. As of December
31, 2009, the total unrecognized compensation expense for CSARs was $10 million and is expected to be recognized over a weighted
average period of 1.3 years.
Agreements with the Pilot Union — US Airways Group and US Airways have a letter of agreement with the US Airways' pilot union
through April 18, 2008, that provides that US Airways' pilots designated by the union receive stock options to purchase 1.1 million shares
of the Company's common stock. The first tranche of 0.5 million stock options was granted on January 31, 2006 with an exercise price of
$33.65. The second tranche of 0.3 million stock options was granted on January 31, 2007 with an exercise price of $56.90. The third and
final tranche of 0.3 million stock options was granted on January 31, 2008 with an exercise price of $12.50. The stock options granted to
pilots do not reduce the shares available for grant under any equity incentive plan. Any of these pilot stock options that are forfeited or
that expire without being exercised will not become available for grant under any of the Company's plans.
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