Southwest Airlines 1999 Annual Report Download - page 41

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annual increments of 14.3 percent, respectively. Options under all grants must be
exercised prior to January 31, 2007, or within a specified time upon retirement or
termination.
Under the 1996 Incentive Stock Option Plan, the Company may grant options to key
Employees for up to 20.3 million shares of common stock. Under the 1996 Non-Qualified
Stock Option Plan, the Company may grant options to key Employees and non-employee
directors for up to 1.9 million shares of common stock. All options granted under these
plans have ten-year terms and vest and become fully exercisable at the end of three, five,
or ten years of continued employment, depending upon the grant type.
Under the 1998 Southwest Airlines Employee Association Non-Qualified Stock
Option Plan (SAEA Plan), the Company may grant options to Dispatchers for up to 1.6
million shares of common stock. An initial grant of 1.1 million shares was made on
September 10, 1998, at an option price of $13.08 per share, which exceeded the market
price of the Company’s stock on that date. Options granted under the initial grant vest in
annual increments of varying percentages, depending on seniority level, through 2006. On
December 1 of each year of the agreement beginning in 1998 and through December 1,
2008, additional options will be granted to Dispatchers who become eligible during that
year. No options were granted on December 1, 1998 or 1999. Options under all grants
must be exercised prior to June 30, 2012, or within a specified time upon retirement or
termination.
Under the 1999 Southwest Airlines Professional Instructors’ Association Non-
Qualified Stock Option Plan (SWAPIA Plan), the Company may grant options to
Professional Instructors for up to 525,000 shares of common stock. An initial grant of
approximately 229,500 shares was made on May 20, 1999, at an option price of $22.60
per share, which exceeded the market price of the Company’s stock on that date. Options
granted under the initial grant vest in ten annual increments of ten percent. On January 1 of
each year of the agreement beginning in 2001, additional options will be granted to
Professional Instructors who become eligible during that year. Options under all grants
must be exercised prior to June 30, 2012, or within a specified time upon retirement or
termination.
Under all fixed option plans, except the SWAPA, SAEA, and SWAPIA Plans, the
exercise price of each option equals the market price of the Company’s stock on the date
of grant. Under the SWAPA, SAEA, and SWAPIA Plans, for additional options granted