American Airlines 2006 Annual Report Download - page 77

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73
9. Share Based Compensation (Continued)
Deferred Awards
The distribution of deferred share awards granted under the LTIP Plans is based solely on a requisite service
period (generally 36 months). Career equity awards granted to certain employees of the Company vest upon the
retirement of those individuals. The fair value of each deferred award is based on AMR’s stock price on the
measurement date.
Activity during 2006 for deferred awards accounted for as equity awards was:
Weighted
Average
Shares
Remaining
Contractual
Term
Aggregate
Intrinsic Value
Outstanding at January 1 2,324,561
Reclassified from liability awards 1,262,382
Granted 92,600
Settled (132,922)
Forfeited or Expired (70,582)
Outstanding at December 31
3,476,039
5.4
$ 105,080,658
The weighted-average grant date fair value per share of deferred awards granted during 2006, 2005 and 2004
was $24.93, $13.67 and $25.07, respectively. The total fair value of awards settled during the years ended
December 31, 2006, 2005 and 2004 was $4 million, $1 million and $3 million, respectively. As of December 31,
2006, there was $27 million of total unrecognized compensation cost related to deferred awards that is expected
to be recognized over a weighted average period of 5.1 years.
Other Awards
As of December 31, 2006, certain performance share agreements and deferred share award agreements were
accounted for as a liability in the consolidated balance sheet as the plans only permit settlement in cash or the
awards required that the employee meet certain performance conditions which were not subject to market
measurement. As a result, FAS 123(R) required awards under these agreements to be marked to current market
value. As of December 31, 2006, the aggregate intrinsic value of these awards was $183 million and the
weighted average remaining contractual term of these awards was 1.3 years. The total fair value of awards
settled during the years ended December 31, 2006, 2005 and 2004 was $29 million, $7 million and $9 million,
respectively. As of December 31, 2006, there was $76 million of total unrecognized compensation cost related to
other awards that is expected to be recognized over a weighted average period of 1.2 years.
On January 16, 2007, the AMR Board of Directors approved the amendment and restatement of two of these
plans as described above to permit settlement in a combination of cash and/or stock, and as a result awards
under these plans will be accounted for as equity awards in accordance with SFAS 123(R).