Share-Based Compensation

6 Months Ended

Jun. 30, 2012

Share-Based Compensation

Share-Based Compensation

Note C — Share-Based Compensation

The fair value of stock options granted by the Company has been estimated as of the grant date using the Black-Scholes option pricing model. During the six months ended June 30, 2012, the Company granted options to purchase 200,115 shares of common stock under the SkyWest, Inc. 2010 Long-Term Incentive Plan (the “2010 Incentive Plan”).  The following table shows the assumptions used and weighted average fair value for stock option grants during the six months ended June 30, 2012.

Expected annual dividend rate	1.23		%
Risk-free interest rate	0.81		%
Average expected life (years)	5.6
Expected volatility of common stock	.409
Forfeiture rate	0.0		%
Weighted average fair value of option grants	$	4.43

During the six months ended June 30, 2012, the Company granted 290,265 restricted stock units to the Company’s employees under the 2010 Incentive Plan.  The restricted stock units have a three-year vesting period, during which the recipient must remain employed with the Company or one of the Company’s subsidiaries.  Upon vesting, a restricted stock unit will be replaced with a common share of stock. Additionally, during the six months ended June 30, 2012, the Company granted 27,874 fully-vested shares of common stock to the Company’s directors.  The weighted average fair value of the shares of restricted stock on the date of grant was $13.06 per share.

The Company records share-based compensation expense only for those options and restricted stock units that are expected to vest.  The estimated fair value of the stock options and restricted stock units is amortized over the applicable vesting periods.  During the three months ended June 30, 2012 and 2011, the Company recorded pre-tax share-based compensation expense of $1.1 million and $1.2 million, respectively. During the six months ended June 30, 2012 and 2011, the Company recorded pre-tax share-based compensation expense of $2.4 million and $3.0 million, respectively.