5. Stock-Based Compensation

In October 1999, the Company adopted a long-term equity incentive plan, which provides for grants of stock options, stock appreciation rights, restricted stock and performance awards to directors, officers and employees of PCA, as well as others who engage in services for PCA. The Company has not granted any option awards since 2007. Restricted stock awards granted to officers and employees generally vest at the end of a four-year period, and restricted stock awards granted to directors vest immediately. The plan, which will terminate on October 19, 2014, provides for the issuance of up to 8,550,000 shares of common stock over the life of the plan. As of September 30, 2011, options and restricted stock of 7,660,885 shares have been granted, net of forfeitures. Forfeitures are added back to the pool of shares of common stock available to be granted at a future date.

Compensation expense for both stock options, which were fully vested at June 30, 2010, and restricted stock recognized in the condensed consolidated statements of income for the three- and nine-month periods ended September 30, 2011 and 2010 was as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
(In thousands)
Stock options	$	—		$	—		$	—		$	221
Restricted stock		2,487			1,615			7,191			5,182

Impact on income before income taxes		2,487			1,615			7,191			5,403
Income tax benefit		(968	)		(630	)		(2,798	)		(2,105	)

Impact on net income	$	1,519		$	985		$	4,393		$	3,298

The Company uses the Black-Scholes-Merton option-pricing model to estimate the fair value of each option grant as of the date of grant. Expected volatilities are based on historical volatility of the Company's common stock. The expected life of the option is estimated using historical data pertaining to option exercises and employee terminations. Separate groups of employees that have similar historical exercise behavior are considered separately for estimating the expected life. The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant. The fair value of restricted stock is determined based on the closing price of the Company's common stock on the grant date.

A summary of the Company's stock option activity and related information follows:


	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
								(In thousands)
Outstanding at December 31, 2010		1,568,384		$	21.38
Exercised		(336,285	)		20.35

Outstanding and exercisable at September 30, 2011		1,232,099		$	21.64		1.8	$	2,604

The total intrinsic value of options exercised during the three months ended September 30, 2011 and 2010 was $0.1 million and $0.3 million, respectively, and during the nine months ended September 30, 2011 and 2010 was $2.7 million and $1.5 million, respectively. As of September 30, 2011, there is no unrecognized compensation cost related to stock option awards granted under the Company's equity incentive plan as all outstanding awards have vested.

A summary of the Company's restricted stock activity follows:


	2011						2010
	Shares			Fair Market Value at Date of Grant			Shares			Fair Market Value at Date of Grant
(Dollars in thousands)
Restricted stock at January 1		1,478,000		$	30,600			1,235,505		$	24,718
Granted		575,694			16,005			573,440			12,693
Vested		(219,469	)		(5,608	)		(318,350	)		(6,563	)
Cancellations		(4,340	)		(96	)		(12,595	)		(248	)

Restricted stock at September 30		1,829,885		$	40,901			1,478,000		$	30,600

The Company generally recognizes compensation expense associated with restricted stock awards ratably over their vesting periods. As PCA's Board of Directors has the ability to accelerate vesting of restricted stock upon an employee's retirement, the Company accelerates the recognition of compensation expense for certain employees approaching normal retirement age. As of September 30, 2011, there was $24.1 million of total unrecognized compensation costs related to the above restricted stock awards. The Company expects to recognize the cost of these stock awards over a weighted-average period of 2.8 years.