Alaska Airlines and Horizon Air 2007 Annual Report Download - page 190

adoption of SFAS 123R, the expected term was
based on an average historical term of all
options and there was no estimate of forfeiture
rate as forfeitures were accounted for when they
occurred.
The Company recorded stock-based
compensation expense related to stock options
of $3.9 million ($2.6 million, net of tax) and
$3.4 million ($2.5 million, net of tax) in 2007
and 2006, respectively. The total intrinsic value
of options exercised during 2007 was $1.5
million. Cash received from option exercises
during 2007 totaled $3.2 million. A total of
312,156 options vested during 2007 with an
aggregate fair value of $3.9 million. As of
December 31, 2007, $7.4 million of
compensation cost associated with unvested
stock option awards attributable to future service
had not yet been recognized. This amount will be
recognized as expense over a weighted-average
period of 2.6 years.
The following table summarizes stock options
outstanding and exercisable at December 31,
2007 with their weighted-average exercise prices
and remaining contractual lives:
Range of
Exercise prices
Remaining
Life
(years) Shares
Price
Per Share
Outstanding:
$10to$20 ......... 4.8 192,255 $18.68
$21to$28 ......... 5.0 589,308 26.21
$29to$34 ......... 4.3 850,483 31.64
$35to$45 ......... 5.3 695,615 39.78
$46to$58 ......... 0.3 160,200 47.79
Options outstanding . . . 4.5 2,487,861 $32.67
Range of
Exercise prices Shares
Price
Per Share
Exercisable:
$10to$20 .................. 192,255 $18.68
$21to$28 .................. 489,927 26.17
$29to$34 .................. 699,476 31.42
$35to$45 .................. 372,628 39.38
$46to$58 .................. 160,200 47.79
Options exercisable ............ 1,914,486 $31.72
Restricted Stock Awards
The Company grants restricted stock units
(RSUs) under the 2004 Long-term Incentive
Equity Plan. As of December 31, 2007, 534,201
total RSUs have been granted under this plan.
The RSUs are non-voting and are not eligible for
dividends. The fair value of the RSU awards is
based on the closing price of the Company’s
common stock on the date of grant.
Compensation cost for RSUs is recognized over
three years from the date of grant as the awards
“cliff vest” after three years. The Company
recorded stock-based compensation expense
related to RSUs of $5.3 million ($3.3 million
after tax) and $3.8 million ($2.4 million after tax)
in 2007 and 2006, respectively. These amounts
are included in wages and benefits in the
consolidated statements of operations.
The following table summarizes information
about outstanding RSUs:
Number
of Units
Weighted-
Average
Grant Date
Fair Value
Non-vested at December 31,
2006 ................... 449,250 $32.89
Granted ................... 69,726 40.42
Vested ................... (118,410) 28.41
Forfeited .................. (7,840) 33.04
Non-vested at December 31,
2007 ................... 392,726 $35.57
As of December 31, 2007, $5.9 million of
compensation cost associated with unvested
restricted stock awards attributable to future
service had not yet been recognized. This
amount will be recognized as expense over a
weighted-average period of 1.6 years.
Performance Stock Awards
During the first quarter of 2007, the Company
awarded Performance Share Unit awards (PSUs)
to certain executives. PSUs are similar to RSUs,
but vesting is based on a performance condition
tied to the Company achieving a specified pretax
margin over a three-year period. The PSU plan
allows a portion of the PSUs to vest even if the
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