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STOCK COMPENSATION PLANS | 12 Months Ended
--- | ---
Dec. 31, 2011
STOCK COMPENSATION PLANS |
STOCK COMPENSATION PLANS |
22. STOCK COMPENSATION PLANS The Company issues stock options and restricted stock awards to employees under share-based compensation plans. The adoption of ASC 505 and ASC 718 on January 1, 2006 has resulted in incremental stock-based compensation expense. Since the Company has previously recognized compensation expense on restricted stock awards, the incremental stock-based compensation expense recognized pursuant to ASC 505 and ASC 718 relates only to issued and unvested stock option grants. For the years ended December 31, 2011, 2010, and 2009, incremental stock-based compensation expense reduced income before income taxes by $685 thousand, $937 thousand, and $1.4 million, and reduced net income by $397 thousand, $544 thousand, and $841 thousand, respectively. This additional expense reduced both basic and diluted earnings per share by $0.00, $0.00, and $0.01 for the years ended December 31, 2011, 2010, and 2009, respectively. During the years ended December 31, 2011, 2010 and 2009, total compensation expense related to stock options and restricted stock awards reduced income before taxes by $13.5 million, $8.5 million, and $5.3 million, respectively, and reduced net income by $7.9 million, $4.9 million and $3.1 million, respectively. The Company received $4.2 million and $3.6 million as of December 31, 2011 and 2010, respectively, in cash proceeds from stock option exercises. The net tax benefit recognized in equity for stock compensation plans was $717 thousand for 2011 compared with a net tax expense of $170 thousand for 2010. As of December 31, 2011, there are 4,648,828 shares available to be issued, subject to the Company's current 1998 Stock Incentive Plan, as amended. Stock Options—The Company issues fixed stock options to certain employees, officers, and directors. Stock options are issued at the current market price on the date of grant with a three-year or four-year vesting period and contractual terms of 7 or 10 years. The Company issues new shares upon the exercise of stock options. A summary of activity for the Company's stock options as of and for the year ended December 31, 2011 is presented below:
|  | Shares |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term |  | Aggregate Intrinsic Value (In thousands) |
--- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Outstanding at beginning of year |  |  | 1,438,979 |  | $ | 24.21 |  |  |  |  |  |
Granted |  |  | 8,654 |  |  | 23.11 |  |  |  |  |  |
Exercised |  |  | (330,756 | ) |  | 12.70 |  |  |  |  |  |
Forfeited |  |  | (171,797 | ) |  | 29.92 |  |  |  |  |  |
Outstanding at end of year |  |  | 945,080 |  | $ | 27.19 |  | 2.28 years |  | $ | 782 |
Vested or expected to vest at year-end |  |  | 933,258 |  | $ | 27.30 |  | 2.26 years |  | $ | 739 |
Exercisable at year-end |  |  | 758,166 |  | $ | 29.34 |  | 1.98 years |  | $ | 350 |
A summary of changes in unvested stock options and related information for the year ended December 31, 2011 is presented below:
Unvested Options |  | Shares |  | Weighted Average Grant Date Fair Value (per share) |
--- | --- | --- | --- | --- | ---
Unvested at January 1, 2011 |  |  | 416,851 |  | $ | 5.04 |
Granted |  |  | 8,654 |  |  | 13.21 |
Vested |  |  | (227,813 | ) |  | 5.59 |
Forfeited |  |  | (10,778 | ) |  | 4.56 |
Unvested at December 31, 2011 |  |  | 186,914 |  | $ | 4.77 |
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:
|  | Year Ended December 31, |
--- | --- | --- | ---
|  | 2011 |  | 2010(5) |  | 2009 |
Expected term(1) |  |  | 4 years |  | N/A |  |  | 4 years |
Expected volatility(2) |  |  | 78.1 | % | N/A |  |  | 60.5 | %
Expected dividend yield(3) |  |  | 0.2 | % | N/A |  |  | 0.6 | %
Risk-free interest rate(4) |  |  | 1.6 | % | N/A |  |  | 1.8 | %
(1) The expected term (estimated period of time outstanding) of stock options granted was estimated using the historical exercise behavior of employees. (2) The expected volatility was based on historical volatility for a period equal to the stock option's expected term. (3) The expected dividend yield is based on the Company's prevailing dividend rate at the time of grant. (4) The risk-free rate is based on the U.S. Treasury strips in effect at the time of grant equal to the stock option's expected term. (5) The Company did not issue any stock options during the year ended December 31, 2010. The following table summarizes information about stock options outstanding as of December 31, 2011:
|  | Options Outstanding |  | Options Exercisable |
--- | --- | --- | --- | --- | ---
Range of Exercise Prices |  | Number of Outstanding Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life |  | Number of Exercisable Options |  | Weighted Average Exercise Price |
$0.00 to $4.99 |  |  | 15,530 |  | $ | 4.25 |  | 4.25 years |  |  | — |  | $ | — |
$5.00 to $9.99 |  |  | 7,292 |  |  | 5.43 |  | 4.21 years |  |  | — |  |  | — |
$10.00 to $14.99 |  |  | 32,528 |  |  | 13.62 |  | 1.42 years |  |  | 24,115 |  |  | 13.17 |
$15.00 to $19.99 |  |  | 117,511 |  |  | 17.73 |  | 2.47 years |  |  | 90,117 |  |  | 17.63 |
$20.00 to $24.99 |  |  | 364,982 |  |  | 21.14 |  | 3.21 years |  |  | 236,697 |  |  | 21.09 |
$25.00 to $29.99 |  |  | — |  |  | — |  | — |  |  | — |  |  | — |
$30.00 to $34.99 |  |  | 18,320 |  |  | 33.82 |  | 0.57 years |  |  | 18,320 |  |  | 33.82 |
$35.00 to $39.99 |  |  | 382,168 |  |  | 37.83 |  | 1.38 years |  |  | 382,168 |  |  | 37.83 |
$40.00 to $44.99 |  |  | 6,749 |  |  | 40.36 |  | 1.66 years |  |  | 6,749 |  |  | 40.36 |
$0.00 to $44.99 |  |  | 945,080 |  | $ | 27.19 |  | 2.28 years |  |  | 758,166 |  | $ | 29.34 |
During the years ended December 31, 2011, 2010 and 2009, information related to stock options are presented as follows:
|  | Year Ended December 31, |
--- | --- | --- | ---
|  | 2011 |  | 2010 |  | 2009 |
Weighted average grant date fair value of stock options granted during the year(1) |  | $ | 13.21 |  | $ | — |  | $ | 3.00 |
Total intrinsic value of options exercised (in thousands) |  | $ | 2,650 |  | $ | 1,772 |  | $ | 53 |
Total fair value of options vested (in thousands) |  | $ | 1,274 |  | $ | 2,137 |  | $ | 1,638 |
(1) The Company did not issue any stock options during the year ended December 31, 2010. As of December 31, 2011, total unrecognized compensation cost related to stock options amounted to $185 thousand. This cost is expected to be recognized over a weighted average period of 2.8 years. Restricted Stock—In addition to stock options, the Company also grants restricted stock awards to directors, officers and employees. The restricted stock awards fully vest after one to five years of continued employment from the date of grant; some of the awards are also subject to achievement of certain established financial goals. The Company becomes entitled to an income tax deduction in an amount equal to the taxable income reported by the holders of the restricted stock when the restrictions are released and the shares are issued. Restricted stock awards are forfeited if officers and employees terminate employment prior to the lapsing of restrictions or if established financial goals are not achieved. The Company records forfeitures of issued restricted stock as treasury share repurchases. A summary of the activity for the Company's time-based and performance-based restricted stock awards as of December 31, 2011, including changes during the year then ended, is presented below:
|  | 2011 |
--- | --- | --- | ---
|  | Restricted Stock |
|  | Time-Based |  | Performance-Based |
|  | Shares |  | Weighted Average Price |  | Shares |  | Weighted Average Price |
Outstanding at beginning of year |  |  | 1,789,498 |  | $ | 17.09 |  |  | — |  | $ | — |
Granted |  |  | 502,781 |  |  | 19.17 |  |  | 513,022 |  |  | 22.25 |
Vested |  |  | (242,025 | ) |  | 23.82 |  |  | — |  |  | — |
Forfeited |  |  | (240,193 | ) |  | 17.05 |  |  | (32,287 | ) |  | 23.11 |
Outstanding at end of year |  |  | 1,810,061 |  | $ | 16.77 |  |  | 480,735 |  | $ | 22.19 |
During 2011 there were no restricted stock granted to outside directors. Restricted stock awards are valued at the closing price of the Company's stock on the date of award. The weighted average fair values of time-based restricted stock awards granted during the years ended December 31, 2011, 2010, and 2009 were $19.17, $17.11, and $7.41, respectively. The weighted average fair value of performance-based restricted stock awards granted during the year ended December 31, 2011, was $22.25. There were no performance-based restricted stock awarded during the years ended December 31, 2010 and 2009. The total fair value of time-based restricted stock awards vested during 2011, 2010 and 2009 was $4.9 million, $4.3 million and $1.0 million, respectively. There were no performance-based restricted stock awards vested during the year ended December 31, 2011, 2010 and 2009. As of December 31, 2011, total unrecognized compensation cost related to time-based and performance-based restricted stock awards amounted to $16.5 million and $7.4 million, respectively. This cost is expected to be recognized over a weighted average period of 2.13 years and 1.88 years, respectively. Stock Purchase Plan—The Company adopted the 1998 Employee Stock Purchase Plan (the "Purchase Plan") providing eligible employees of the Company and its subsidiaries participation in the ownership of the Company through the right to purchase shares of its common stock at a discount. The Purchase Plan allows employees to purchase shares at 90% of the per share market price at the date of exercise, with an annual common stock value purchase limitation of $25,000. As of December 31, 2011, the Purchase Plan qualifies as a non-compensatory plan under Section 423 of the Internal Revenue Code and, accordingly, no compensation expense is recognized under the Purchase Plan. The Purchase Plan covers a total of 2,000,000 shares of the Company's common stock. During 2011 and 2010, 64,032 shares totaling $1.0 million and 56,448 shares totaling $849 thousand, respectively, were sold to employees under the Purchase Plan.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 93-6 -Paragraph 53 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 64, 65, A240 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 + Details
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