Southwest Airlines 2010 Annual Report Download - page 102
Download and view the complete annual report
Please find page 102 of the 2010 Southwest Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
1 -
2
-
3
-
4
-
5
-
6
-
7
-
8
-
9
-
10
-
11
-
12
-
13
-
14
-
15
-
16
-
17
-
18
-
19
-
20
-
21
-
22
-
23
-
24
-
25
-
26
-
27
-
28
-
29
-
30
-
31
-
32
-
33
-
34
-
35
-
36
-
37
-
38
-
39
-
40
-
41
-
42
-
43
-
44
-
45
-
46
-
47
-
48
-
49
-
50
-
51
-
52
-
53
-
54
-
55
-
56
-
57
-
58
-
59
-
60
-
61
-
62
-
63
-
64
-
65
-
66
-
67
-
68
-
69
-
70
-
71
-
72
-
73
-
74
-
75
-
76
-
77
-
78
-
79
-
80
-
81
-
82
-
83
-
84
-
85
-
86
-
87
-
88
-
89
-
90
-
91
-
92 -
93 -
94 -
95 -
96 -
97 -
98 -
99 -
100 -
101 -
102 -
103 -
104 -
105 -
106 -
107 -
108 -
109 -
110 -
111 -
112 -
113
-
114
-
115
-
116
-
117
-
118
-
119
-
120
 |
 |
Employee Stock Purchase Plan
Under the amended 1991 Employee Stock Purchase Plan (ESPP), which has been approved by shareholders,
the Company is authorized to issue up to a remaining balance of 7 million shares of Common Stock to
Employees of the Company. These shares may be issued at a price equal to 90 percent of the market value at the
end of each monthly purchase period. Common Stock purchases are paid for through periodic payroll deductions.
For the years ended December 31, 2010, 2009, and 2008, participants under the plan purchased 1.3 million
shares, 2.2 million shares, and 1.3 million shares at average prices of $11.25, $6.78, and $11.29, respectively.
The weighted-average fair value of each purchase right under the ESPP granted for the years ended
December 31, 2010, 2009, and 2008, which is equal to the ten percent discount from the market value of the
Common Stock at the end of each monthly purchase period, was $1.23, $0.75, and $1.25, respectively.
Taxes
A portion of the Company’s granted options qualify as incentive stock options (ISO) for income tax
purposes. As such, a tax benefit is not recorded at the time the compensation cost related to the options is
recorded for book purposes due to the fact that an ISO does not ordinarily result in a tax benefit unless there is a
disqualifying disposition. Grants of non-qualified stock options result in the creation of a deferred tax asset,
which is a temporary difference, until the time that the option is exercised. Due to the treatment of incentive
stock options for tax purposes, the Company’s effective tax rate from year to year is subject to variability.
16. Employee Retirement Plans
Defined contribution plans
The Company has defined contribution plans covering substantially all its Employees. The Southwest
Airlines Co. Profit Sharing Plan (Profit Sharing Plan) is a defined contribution plan to which the Company
contributes 15 percent of its eligible pre-tax profits, as defined, on an annual basis. No Employee contributions to
the Profit Sharing Plan are allowed.
The Company also sponsors Employee savings plans under section 401(k) of the Internal Revenue Code,
which include Company matching contributions. The 401(k) plans cover substantially all Employees.
Contributions under all defined contribution plans are primarily based on Employee compensation and
performance of the Company.
Company contributions to all defined contribution plans expensed in 2010, 2009, and 2008, reflected as a
component of Salaries, wages, and benefits, were $350 million, $203 million, and $243 million, respectively.
Postretirement benefit plans
The Company provides postretirement benefits to qualified retirees in the form of medical and dental
coverage. Employees must meet minimum levels of service and age requirements as set forth by the Company, or
as specified in collective bargaining agreements with specific workgroups. Employees meeting these
requirements, as defined, may use accrued unused sick time to pay for medical and dental premiums from the age
of retirement until age 65.
96