American Airlines 2007 Annual Report Download - page 73

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70
9. Share Based Compensation (Continued)
Activity during 2007 for deferred awards accounted for as equity awards was:
Weighted
Average
Shares
Remaining
Contractual
Term
Aggregate
Intrinsic Value
Outstanding at January 1 3,476,039
Reclassified from liability awards 681,115
Granted 462,980
Settled (882,128)
Forfeited or Expired (69,209)
Outstanding at December 31
3,668,797
4.3
$ 51,473,223
The weighted-average grant date fair value per share of deferred awards granted during 2007, 2006 and 2005
was $28.54, $25.12 and $39.50, respectively. The total fair value of awards settled during the years ended
December 31, 2007, 2006 and 2005 was $24 million, $4 million and $1 million, respectively. As of December 31,
2007, there was $31 million of total unrecognized compensation cost related to deferred awards that is expected
to be recognized over a weighted average period of 3.4 years.
Other Awards As of December 31, 2007, certain performance share agreements and deferred share award
agreements were accounted for as a liability, or as equity, as appropriate, 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, SFAS 123(R) required awards under
these agreements to be marked to current market value. As of December 31, 2007, the aggregate intrinsic value
of these awards was $21 million and the weighted average remaining contractual term of these awards was 1.9
years. The total fair value of awards settled during the years ended December 31, 2007, 2006 and 2005 was $11
million, $29 million, and $7 million respectively. As of December 31, 2007, there was $7 million of total
unrecognized compensation cost related to other awards that is expected to be recognized over a weighted
average period of 3.5 years.
10. Retirement Benefits
All employees of the Company may participate in pension plans if they meet the plans’ eligibility requirements.
The defined benefit plans provide benefits for participating employees based on years of service and average
compensation for a specified period of time before retirement. The Company uses a December 31 measurement
date for all of its defined benefit plans. American’s pilots also participate in a defined contribution plan for which
Company contributions are determined as a percentage (11 percent) of participant compensation. Certain non-
contract employees (including all new non-contract employees) participate in a defined contribution plan in which
the Company will match the employees’ before-tax contribution on a dollar-for-dollar basis, up to 5.5 percent of
their pensionable pay.
In addition to pension benefits, retiree medical and other postretirement benefits, including certain health care
and life insurance benefits (which provide secondary coverage to Medicare), are provided to retired employees.
The amount of health care benefits is limited to lifetime maximums as outlined in the plan. Substantially all
regular employees of American and employees of certain other subsidiaries may become eligible for these
benefits if they satisfy eligibility requirements during their working lives.
Certain employee groups make contributions toward funding a portion of their retiree health care benefits during
their working lives. The Company funds benefits as incurred and makes contributions to match employee
prefunding.