Westjet 2002 Annual Report Download - page 48

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Years ended December 31, 2002 and 2001
(Tabular Amounts are Stated in Thousands of Dollars, Except Per Share Data)
6. Share capital (continued):
(e) Employee Share Purchase Plan:
Under the terms of the Employee Share Purchase Plan, employees may contribute up to a maximum
of 20% of their gross pay and acquire common shares of the Corporation at the current fair market
value of such shares. The Corporation matches the employee contributions and shares may be
withdrawn from the Plan after being held in trust for one year. Employees may offer to sell common
shares, which have not been held for at least one year, on January 1 and July 1 of each year, to the
Corporation for 50% of the then current market price. The Corporation’s share of the contributions is
recorded as compensation expense and amounted to $10,178,000 (2001 - $6,081,000).
(f) Pro forma disclosure:
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option
pricing model with the following weighted average assumptions used for grants in 2002: zero dividend
yield; expected volatility of 38%; risk-free rate of 4.5%; and expected life of four years. The weighted
average fair value of stock options granted during the year was $8.06 per option.
Had the Corporation accounted for employee stock options issued using the fair value based method,
the Corporation’s pro forma net earnings and EPS would be as follows:
As reported 2002 Pro forma 2002
Net earnings $ 51,780 $ 48,963
Earnings per share:
Basic $ 0.70 $ 0.66
Diluted 0.69 0.65
These pro forma earnings reflect compensation cost amortized over the options’ vesting period, which
varies from two to three years.
Figures in Review
Notes to Consolidated Financial Statements
Danielle Hurst, CSA, Victoria
with Sequoia.