Southwest Airlines 2012 Annual Report Download - page 120

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The Black-Scholes option valuation model was developed for use in estimating the fair value of short-term
traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models
require the input of subjective assumptions including expected stock price volatility. The Company estimates
expected stock price volatility via observations of both historical volatility trends as well as implied future
volatility observations as determined by independent third parties. No stock options were issued by the Company
during 2011 and the number of options issued in 2012 was immaterial.
Aggregated information regarding Company issued stock options is summarized below:
COLLECTIVE BARGAINING PLANS
Options
(000)
Wtd.
average
exercise
price
Wtd.
average
remaining
contractual
term
Aggregate
intrinsic
value
(millions)
Outstanding December 31, 2009 .......................... 52,438 $ 13.75
Granted ............................................ 14 11.98
Exercised .......................................... (2,676) 12.68
Surrendered ........................................ (18,381) 12.88
Outstanding December 31, 2010 .......................... 31,395 $ 14.34
Granted ............................................ — —
Exercised .......................................... (38) 10.65
Surrendered ........................................ (837) 14.87
Outstanding December 31, 2011 .......................... 30,520 $ 14.33
Granted ............................................ 6 9.00
Exercised .......................................... (370) 8.69
Surrendered ........................................ (24,781) 14.65
Outstanding December 31, 2012 .......................... 5,375 $ 13.25 1.5 $ —
Vested or expected to vest at December 31, 2012 ............. 5,375 $ 13.25 1.5 $ —
Exercisable at December 31, 2012 ........................ 5,375 $ 13.25 1.5 $ —
OTHER EMPLOYEE PLANS
Options
(000)
Wtd.
average
exercise
price
Wtd.
average
remaining
contractual
term
Aggregate
intrinsic
value
(millions)
Outstanding December 31, 2009 .......................... 25,744 $ 15.17
Granted ............................................ 10 12.04
Exercised .......................................... (673) 9.55
Surrendered ........................................ (5,494) 15.72
Outstanding December 31, 2010 .......................... 19,587 $ 15.22
Granted ............................................ — —
Exercised .......................................... (143) 6.97
Surrendered ........................................ (2,640) 18.18
Outstanding December 31, 2011 .......................... 16,804 $ 14.82
Granted ............................................ — —
Exercised .......................................... (203) 6.75
Surrendered ........................................ (3,066) 16.48
Outstanding December 31, 2012 .......................... 13,535 $ 14.57 2.7 $ 4
Vested or expected to vest at December 31, 2012 ............. 13,466 $ 14.56 2.7 $ 4
Exercisable at December 31, 2012 ........................ 12,605 $ 14.47 2.7 $ 4
112