Share-Based Compensation and Stock Repurchases

9 Months Ended

Sep. 30, 2017

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, 2017, the Company granted 22,617 fully-vested shares of common stock to the Company’s directors at a grant date fair value of $35.81. Additionally, during the nine months ended September 30, 2017, the Company granted 160,137 restricted stock units and 119,315 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.  In addition to the three-year vesting period, certain performance metrics of the Company must be met before the recipient will receive any shares of stock attributable to the restricted stock units and performance shares. 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 $35.81 per share. During the nine months ended September 30, 2017, the Company did not grant any options to purchase shares of common stock.

With the adoption of ASU No. 2016‑09, the Company accounts for forfeitures of restricted stock units and performance share grants in 2017 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 three months ended September 30, 2017 and 2016, the Company recorded pre-tax share-based compensation expense of $2.4 million and $1.9 million, respectively. During the nine months ended September 30, 2017 and 2016, the Company recorded pre-tax share-based compensation expense of $8.2 million and $5.8 million, respectively.

The Company repurchased 281,000 shares of its common stock for $10.0 million during the nine months ended September 30, 2017. Additionally, during the nine months ended September 30, 2017, the Company paid $4.3 million for a net settlement of the income tax obligation on employee equity awards. The Company did not repurchase any shares of its common stock during the nine months ended September 30, 2016.