JetBlue board approves accelerated vesting of unvested stock

Airline Industry Information, Oct 20, 2005

AIRLINE INDUSTRY INFORMATION-(C)1997-2005 M2 COMMUNICATIONS LTD

JetBlue Airways (NasdaqNM:JBLU) has said that its board of directors has approved the acceleration of the vesting of all unvested stock options awarded under the company's stock incentive plan prior to 31 December 2005, excluding those held by section 16(b) officers and members of its board.

The airline said that as a result of this action, options to purchase up to approximately 13m shares of common stock may become exercisable immediately effective 9 December 2005, representing 65% of the company's total current outstanding options. All other terms and conditions applicable to such options, including the exercise prices, remain unchanged. Stock options granted by JetBlue typically vest over five or seven years.

All of the accelerated options are held by FAA-licensed and certain salaried employees. According to the airline, this accelerated vesting enables JetBlue to avoid recognising the stock compensation expense associated with these unvested options in future periods in its income statement after its adoption of FASB Statement No.123(R), Share-Based Payment, in January 2006. Assuming that all holders of ISOs elect to accelerate, this action will result in a non-cash, one-time stock compensation expense that is estimated to be up to USD9m in Q4 2005.

In addition to this, the company's board of directors has declared a three-for-two stock split of the company's common stock. The three-for-two split will be distributed on 23 December 2005 to stockholders of record at the close of business on 12 December 2005. Cash will be paid in lieu of fractional shares. Once the stock split is completed, the number of issued and outstanding shares of the company's common stock will increase by 50%.

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