Share-Based Compensation and Stock Repurchases

9 Months Ended

Sep. 30, 2018

Share-Based Compensation and Stock Repurchases

Share-Based Compensation and Stock Repurchases

Note 3 — Share-Based Compensation and Stock Repurchases

During the nine months ended September 30, 2018, the Company granted 15,165 fully-vested shares of common stock to the Company’s directors at a grant date fair value of $53.40. Additionally, during the nine months ended September 30, 2018, the Company granted 114,856 restricted stock units and 89,982 performance shares to certain employees of the Company and its subsidiaries under the SkyWest, Inc. 2010 Long-Term Incentive Plan.  Both the restricted stock units and performance shares have a three-year vesting period, during which the recipient must remain employed with the Company or one of the Company’s subsidiaries. The number of performance shares awardable from the 2018 grants can range from 0% to 200% of the original amount granted depending on the Company’s performance over the three-year vesting period against the pre-established targets. Upon vesting, each restricted stock unit and performance share will be replaced with one share of common stock. The fair value of the restricted stock units and performance shares on the date of grant was $53.40 per share. During the nine months ended September 30, 2018, the Company did not grant any options to purchase shares of common stock.

The Company accounts for forfeitures of stock options, restricted stock units and performance share grants in 2018 when forfeitures occur.  The estimated fair value of the stock options, restricted stock units and performance shares is amortized over the applicable vesting periods.  During the nine months ended September 30, 2018 and 2017, the Company recorded pre-tax share-based compensation expense of $10.4 million and $8.2 million, respectively.

The Company repurchased 427,869 shares of its common stock for $25.2 million, and paid $13.6 million for the income tax obligation on vested employee equity awards and issued the net, after-tax shares to employees during the nine months ended September 30, 2018. The Company repurchased 281,000 shares of its common stock for $10.0 million and paid $4.3 million for the income tax obligation on vested employee equity awards and issued the net, after-tax shares to employees during the nine months ended September 30, 2017.