SkyWest Airlines 2008 Annual Report Download - page 84

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SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2008
(8) Retirement Plan and Employee Stock Purchase Plan (Continued)
Employee Stock Purchase Plan
In February 1996, the Company’s Board of Directors approved the SkyWest, Inc. 1995 Employee
Stock Purchase Plan (the ‘‘Stock Purchase Plan’’). All employees who have completed 90 days of
employment are eligible to participate, except employees who own five percent or more of the
Company’s common stock. The Stock Purchase Plan enables employees to purchase shares of the
Company’s common stock at a 15% discount, through payroll deductions. Employees can contribute up
to 15% of their base pay, not to exceed $21,250 each calendar year, for the purchase of shares. Shares
are purchased semi-annually at a 15% discount based on the lower of the beginning or the end of the
period price. Employees can terminate their participation in the Stock Purchase Plan at anytime upon
written notice.
The following table summarizes purchases made under the Employee Stock Purchase Plan:
Year Ended December 31,
2008 2007 2006
Number of share purchased .................... 807,797 454,162 161,369
Average price of shares purchased ............... $ 13.90 $ 20.65 $ 21.08
The Stock Purchase Plan is a compensatory plan under SFAS No. 123(R) because the shares are
purchased semi-annually at a 15% discount based on the lower of the beginning or the end of the
period price. During the years ended December 31, 2008, 2007 and 2006, the Company recorded
compensation expense of $3.0 million, $2.8 million and $1.8 million related to Stock Purchase Plan,
respectively. The fair value of the shares purchased under the Stock Purchase Plan was determined
using the Black-Scholes option pricing model with the following assumptions:
2008 2007
Expected annual dividend rate ............................. 0.80% 0.47%
Risk-free interest rate ................................... 2.51% 5.07%
Average expected life (months) ............................ 6 6
Expected volatility of common stock ......................... 0.264 0.272
(9) Stock Repurchase
The Company’s Board of Directors authorized the repurchase of up to 15,000,000 shares of the
Company’s common stock in the public market. During the years ended December 31, 2008 and 2007,
the Company repurchased 5.4 and 5 million shares of common stock for approximately $102.6 million
and $126.0 million at a weighted average price per share of $19.16 and $25.20, respectively.
(10) Related-Party Transactions
The Company’s President, Chairman of the Board and Chief Executive Officer, serves on the
Board of Directors of Zions Bancorporation (‘‘Zions’’). The Company maintains a line of credit (see
Note 2) and certain bank accounts with Zions. Zions is an equity participant in leveraged leases on
three CRJ200, two CRJ700 and six Brasilia turboprop aircraft operated by the Company. Zions also
80