Southwest Airlines 1994 Annual Report Download - page 33

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Notes to Consolidated Financial Statements
Southwest Airlines – 1994 Annual Report Page 33
Available for granting in future periods: Incentive Plan Non-Qualified Plan
1994 3,447,694 279,165
1993 4,137,528 343,083
1992 4,631,196 364,545
Average price of exercised options: Incentive Plan Non-Qualified Plan
1994 $8.23 $7.85
1993 $7.14 $7.37
1992 $6.10 $11.36
*Includes 108,113 pre-split shares and 36,115 post-split shares, of which 5,476 pre-split shares
and 72 post-split shares were issued from treasury.
** Includes 12,740 pre-split shares and 75,700 post-split shares.
The exercise price of outstanding options ranged from $6.02 to $37.44 in 1994, $6.02 to $19.71 in 1993,
and $6.02 to $12.06 in 1992.
In 1991, the Company's stockholders also approved the Employee Stock Purchase Plan that provides for
the sale of common stock to Employees of the Company at a price equal to 90% of the market value at the
end of each purchase period. Common stock purchases are paid for through periodic payroll deductions.
Participants under the plan received 290,054 shares in 1994, 182,459 shares (59,442 pre-split shares and
93,296 post-split shares) in 1993 and 166,436 shares in 1992 at average prices of $24.98, $25.25, and
$12.89, respectively.
At December 31, 1994, 1993, and 1992, 1,489,753, 1,504,752, and 1,512,252 options to purchase the
Company's common stock were also outstanding related to employment contracts with the Company's
president and chief executive officer. Exercise prices range from $1.00 to $11.33 per share. Options for
15,000 shares, 7,500 shares (5,000 pre-split shares, of which 968 shares were issued from treasury), and
22,500 shares were exercised in 1994, 1993, and 1992, respectively.
Effective January 12, 1995, the Company adopted, pursuant to a collective bargaining agreement between
the Company and the Southwest Airlines Pilots' Association (SWAPA), the 1995 SWAPA Non-Qualified
Stock Option Plan (SWAPA Plan). Under the terms of the SWAPA Plan, 18,000,000 common shares
have been reserved for issuance. An initial grant of approximately 14.5 million shares was made on the
effective date at an option price of $20.00 per share. On September 1 of each year of the agreement,
commencing September 1, 1996, additional options will be granted to Pilots that became eligible during
that year at an option price equal to the fair market value of the common stock of the Company on the
date of grant plus 5 percent. Options vest in ten annual increments of 10 percent and must be exercised
prior to January 31, 2007, or within a specified time upon retirement or termination. In the event that
SWAPA exercises its option to make the collective bargaining agreement amendable on or before
September 1, 1999, any unexercised options will be canceled on December 1, 1999.