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82 WestJet 2010 Annual Report
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
For the years ended December 31, 2010 and 2009
(Stated in thousands of Canadian dollars,
except share and per share amounts)
10. Share capital (continued)
(h) 2007 restricted share units
The Corporation has a cash-settled RSU plan, whereby RSUs may be issued to executive offi cers of the Corporation. Each RSU entitles a participant
to receive cash equal to the market value of the equivalent number of shares of the Corporation. Compensation expense is accrued over the
vesting period of the RSU. Fluctuations in the market value are recognized in the period in which the fl uctuations occur. For the year ended
December 31, 2010, $296 (2009 – $181) of expense was included in marketing, general and administration expense. For the year ended
December 31, 2010, the Corporation granted 21,282 (2009 – nil) RSUs and settled 82,964 (2009 − 6,376) RSUs for total cash payment of $1,060
(2009 − $78). As at December 31, 2010, nil (2009 – 61,682) RSUs were outstanding.
(i) Deferred share units
The Corporation has a cash-settled deferred share unit (DSU) plan as an alternative form of compensation for independent members of the
Corporation’s Board of Directors. Each DSU entitles a participant to receive cash equal to the market value of the equivalent number of shares
of the Corporation. The number of DSUs granted is determined based on the closing price of the Corporation’s common shares on the trading
day immediately prior to the date of grant. Total compensation expense is recognized at the time of grant. Fluctuations in the market value are
recognized in the period in which the fl uctuations occur. For the year ended December 31, 2010, 20,565 (2009 – 24,324) DSUs were granted,
with $344 (2009 – $288) of expense included in marketing, general and administration expense. During the year ended December 31, 2010, the
Corporation settled nil (2009 – 1,392) DSUs for a total cash payment of $nil (2009 – $16). As at December 31, 2010, 60,988 (2009 – 40,423) DSUs
are vested and outstanding. DSUs are redeemable upon the Director’s retirement from the Board.
(j) Employee share purchase plan
The Corporation has an employee share purchase plan (ESPP), whereby the Corporation matches every dollar contributed by each employee.
Under the terms of the ESPP, employees may contribute up to a maximum of 20% of their gross pay and acquire voting shares of the Corporation
at the current fair market value of such shares. Shares acquired for the ESPP are restricted for one year. Employees may offer to sell shares,
which have not been held for at least one year to the Corporation, four times per year. The purchase price of the voting shares shall be equal
to 50% of the weighted average trading price of the Corporation’s voting shares for the fi ve trading days immediately preceding the employee’s
notice to the Corporation.
The Corporation has the option to acquire voting shares on behalf of employees through open market purchases or to issue new shares from
treasury at the current market price, which is determined based on the volume weighted average trading price of the Corporation’s voting shares
for the fi ve trading days preceding the issuance.
For the year ended December 31, 2010, all shares were acquired through open market purchases. For the year ended December 31, 2009, the
Corporation elected to issue a portion of the shares from treasury. During 2009, a total of 977,459 shares were issued at a total market value of
$11,071 for which no cash was exchanged. The remaining shares for 2009 were acquired through the open market.
The Corporation’s share of the contributions in 2010 amounted to $52,643 (2009 – $47,030) and is recorded as compensation expense within the
related business unit.
11. Related-party transactions
The Corporation has debt fi nancing and investments in short-term deposits with a fi nancial institution that is related through two common directors,
one of whom is also the president of the fi nancial institution. As at December 31, 2010, total long-term debt includes an amount of $5,575
(2009 – $6,392) due to the fi nancial institution. See note 7, Long-term debt, for further disclosure. Included in cash and cash equivalents, as
at December 31, 2010, are short-term investments of $164,710 (2009 – $143,332) owing from the fi nancial institution. In 2008, the Corporation
signed a three-year revolving operating line of credit agreement with a banking syndicate, of which one of the members is the related-party
fi nancial institution. See note 12, Commitments and contingencies, for further information. These transactions occurred in the normal course of
operations on terms consistent with those offered to arm’s-length parties and are measured at the exchange amount.