SWA Poolie Stock Options

[PTinbound]

Someone had asked a question about stock options for new hires.
I sure don't have many answers, but I do have this "Contract Overview" booklet that my OAK buddy sent me. I figure most of the poolies should be dry by May, so here are the numbers:
1/04 = 3344
2/04 = 3271
3/04 = 3198
4/04 = 3125
5/04 = 3052

Of course, you don't get these options and the ability to cash them out all on day one. Even if you did, they'd be worthless because normally the stock price doesn't change that much in one day. I believe there's some complicated formula in which you actually get the options over a long period of time. But what they hey, we are all in this for the long haul anyway, so as far as I'm concerned it doesn't matter that much if we get them right away or in ten years. I'm just thankful for all the great news that's been coming our way!

 

[CoopDog]

Let's be Bullish

OK PT, good numbers for next year, but since we're all hoping and praying for a couple of Fall classes, why don't you post the numbers for October, November, and December.

Just feeling a little Bullish....

Coop

 

[HOUMAN]

oct 3563
nov 3490
dec 3417

Is this right PT ????

 

[Take_off_Thrust]

Just clarifyin' sumpm fellas

If those are 2002 options you guys are speaking about, you don't receive any of them until Sep '04.

Hope you're not too bumbed.

Ther good news is that when you do get them, your strike price on them is $12.83. so you're about $4.00 "in the money" right now.

 

[PTinbound]

HOUMAN, you da man. Of course you are right. Take Off, I was under the impression that for poolies, our strike price will be whatever the stock is on our date of hire. Of course if I'm wrong, I'm sure this will be the first of many things you'll teach me.

 

[Take_off_Thrust]

PT

If your hired after Aug 2002, you get your options on date of hire. The strike price is still $12.83. So, your half right and I'm half wrong. Here it is.....

Pilots hired in or before August 2003 will vest in options starting in September 2004, since these Pilots will have successfully completed probation by that time. Pilots hired after August 2003 will receive an option on their date of hire, and will begin vesting on the first vesting date after successful completion of probation (one year after date of hire). The first month of vesting will include the number of shares as calculated in the above vesting schedule, plus all options eligible to be accumulated during probation. In subsequent months, options will vest according to the above vesting schedule.

Welcome to the world of the "Luv Rockets"

 

[shagadelic]

Take off thrust,

That is correct as far as when and how many they vest, but that contract blurb says nothing of the strike price. According to the interim contract handout, "Option strike price for new hire pilots will be at the fair market value of LUV on the date their options are granted." Unfortunately, I don't believe they don't get the $12.83 if they weren't on property.

As for what how options work, here is a quick example. If I have 8000 options at $12.83, then if the stock price is:

12.83 or less - I have zilch.
13.83 - $8000
14.83 -$16,000
15.83 -$24,000
16.83 -$32,000
17.83 -$40,000

Etc, Etc.

There are better explanations in the archives....

 

[T1bubba]

Stock Options Explained

Chase posted the above explanation a while ago, it pretty much covers everything you might want to know.

The important thing to remember is that those of us hired this year and in the future get two different sets of options with two different strike prices, only one set (ORG) vests immediately.

 

[shagadelic]

T1Bubba,
That's true, but the ORG (option repair grant) was created to address inequities in the first contract that ends in 2004. No one after August 2004 will see an Option from the ORG. And any one hired in 04 will see very few (from 200 to 20 depending on which month they are hired).

 

[ivauir]

Can someone direct me to where the strike price date for a new hire is addressed? I have been looking through the contract and all I can find is the 12.83, but we were told our strike price was determined three months after our hire date.
According to the SWAPA web site's calender all of my options have the 12.83 price. I wish that were true, but I'm trying to find the source document.

Thanks!

 

[shagadelic]

Go to the SWAPA website and click on Contract Menu, then click on interim offer. I believe your strike price will be set Monday, Sept 1st if you were hired within the last year.

 

[Boeing4Me]

ivauir

"Options shall be granted at an exercise price equal to the fair market value of the Common Stock of the Company on the date of the grant of the option"

from Appendix A of side letter 26 of SWA/SWAPA contract.

also, grant date is hire date. vesting date is off probation date.

B4Me

 

[ivauir]

Thanks!!

 

[box]

ivauir,

It depends on when you were hired. If you were hired before 9/02, then the above is true. If you were hired after 9/02, then your strike price is 3 months after your hire date.

This is from the interim offer:

[The options shown above would be granted on date of ratification (DOR) to pilots who are employees at that time.
The option strike price will be the fair market value of LUV on DOR and will expire 8 years after date of grant (i.e., DOR).
Pilots hired after DOR will be granted options three months after the month of hire in the amounts indicated. Option strike price for new hire pilots will be at the fair market value of LUV on the date their options are granted.

Box