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Stock-Based Incentive Plans
 3 Months Ended
Mar. 31, 2013
Stock-Based Incentive Plans  
Stock-Based Incentive Plans

8.                                      Stock-Based Incentive Plans

 

The Company currently has one stock-based incentive plan, which incorporates and supersedes its two previous plans (see Note 1 “Basis of Presentation — Accounting for Stock-Based Compensation”). Participants are granted stock-based awards only if the applicable Company-wide or profit-center operating goals, or both, established by the Compensation and Leadership Development Committee of the Board of Directors at the beginning of the year, are met. Certain participants may have additional goals based on strategic initiatives of the Company.

 

The fair value of each restricted stock unit award is estimated on the date of the award based on the closing market price of the underlying stock on the day preceding the date of the award. On February 6, 2013, 359,371 restricted stock units were awarded, including 9,975 awarded to the Company’s independent directors, at an estimated value of $31.96 per share, based on the closing price on February 5, 2013. The restrictions on these awards generally lapse one quarter on the date of the award and one quarter on each of the first, second and third anniversaries of the date of the award.

 

The following table summarizes the Company’s unvested restricted stock unit activity for the three months ended March 31, 2013:

 

 

 

 

 

 

 

Aggregate

 

 

 

 

 

Weighted-

 

Intrinsic

 

 

 

Shares

 

Average

 

Value *

 

Unvested Restricted Stock Units (RSUs)

 

(in thousands)

 

Price

 

(in thousands)

 

 

 

 

 

 

 

 

 

Outstanding at January 1, 2013

 

264

 

$

33.23

 

 

 

Awarded

 

359

 

 

 

 

 

Vested

 

(169

)

 

 

 

 

Forfeited

 

(1

)

 

 

 

 

Outstanding at March 31, 2013

 

453

 

$

32.45

 

$

13,878

 

Outstanding and expected to vest at March 31, 2013

 

442

 

$

32.45

 

$

14,333

 

 

 

*  The intrinsic value is calculated using the closing price per share of $30.61 as reported by the New York Stock Exchange on March 29, 2013.

 

Based on the market value on the award date, the total intrinsic value of vested restricted stock units during the three-month periods ended March 31, 2013 and 2012, was $5.5 million and $3.1 million, respectively.

 

The fair value of each stock option award was estimated on the date of grant using the Black-Scholes option pricing model. Expected volatility was based on historical volatilities of the Company’s common stock measured monthly over a term that is equivalent to the expected life of the award. The expected term of each award was estimated based on the Company’s prior exercise experience and future expectations of the exercise and termination behavior of the grantees. The risk-free rate was based on the yield of United States Treasury zero-coupon bonds with maturities comparable to the expected life in effect at the time of grant. The dividend yield was based on the expected dividend yield on the grant date.

 

No stock options were granted in 2012 or the first quarter of 2013. The following table summarizes the Company’s stock option activity for the three months ended March 31, 2013:

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

Weighted-

 

Average

 

Aggregate

 

 

 

 

 

Average

 

Remaining

 

Intrinsic

 

 

 

Shares

 

Exercise

 

Contractual

 

Value *

 

Non-Qualified Stock Options

 

(in thousands)

 

Price

 

Life (in years)

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

Outstanding at January 1, 2013

 

1,907

 

$

31.58

 

 

 

 

 

Exercised

 

(18

)

27.34

 

 

 

 

 

Forfeited

 

(372

)

40.67

 

 

 

 

 

Outstanding at March 31, 2013

 

1,517

 

$

29.39

 

 

 

$

2,177

 

Outstanding and expected to vest at March 31, 2013

 

1,491

 

$

29.39

 

4.4

 

$

2,149

 

Exercisable at March 31, 2013

 

832

 

$

29.32

 

4.1

 

$

1,404

 

 

 

*  The intrinsic value represents the amount, if any, by which the fair market value of the underlying common stock exceeds the exercise price of the stock option, using the closing price per share of $30.61 as reported by the New York Stock Exchange on March 29, 2013.

 

The total intrinsic value of stock options exercised during the three month periods ended March 31, 2013 and 2012, was $0.1 million and $0.7 million, respectively.

 

A summary of the status of unvested stock options as of March 31, 2013, and changes during the three months ended March 31, 2013, are presented below:

 

 

 

 

 

Weighted-

 

 

 

 

 

Average

 

 

 

Shares

 

Grant-Date

 

Unvested Stock Options

 

(in thousands)

 

Fair Value

 

 

 

 

 

 

 

Unvested at January 1, 2013

 

826

 

$

10.25

 

Vested

 

(140

)

10.18

 

Forfeited

 

(1

)

10.33

 

Unvested at March 31, 2013

 

685

 

$

10.26

 

 

As of March 31, 2013, $15.0 million of total unrecognized compensation cost was related to unvested stock-based compensation arrangements under the 2011 Incentive Plan. The portions of this cost related to stock options, and restricted stock units awarded through January 2013, are expected to be recognized over a weighted-average period of 2.2 years.