Note 4. Equity Incentive Plans

We have two stock-based compensation plans, the LKQ Corporation 1998 Equity Incentive Plan (the "Equity Incentive Plan") and the Stock Option and Compensation Plan for Non-Employee Directors (the "Director Plan"). Under the Equity Incentive Plan, both qualified and nonqualified stock options, stock appreciation rights, restricted stock, performance shares and performance units may be granted. On January 13, 2011, the Compensation Committee amended the Equity Incentive Plan to allow the grant of Restricted Stock Units ("RSUs"). Under the Director Plan, shares of LKQ common stock may be issued to directors in lieu of cash compensation. We expect to issue new shares of common stock to cover future equity grants under these plans. In May 2011, we filed a registration statement on Form S-8 to register an additional 6.4 million shares of LKQ common stock, which may be issued in accordance with the Equity Incentive Plan.

We have granted stock options, restricted stock and RSUs under the Equity Incentive Plan. Stock options expire 10 years from the date they are granted. Most of the options granted under the Equity Incentive Plan vest over a period of five years. Most of the restricted stock and RSU awards granted to date vest over a period of five years, subject to a continued service condition. Until the shares of restricted stock vest, they may not be sold, pledged or otherwise transferred and are subject to forfeiture. Each RSU converts into one share of LKQ common stock on the applicable vesting date.

A summary of transactions in our stock-based compensation plans for the six months ended June 30, 2011 is as follows:


	Shares Available For Grant			Stock Options					Restricted Stock					RSUs
	Shares Available For Grant			Number Outstanding			Weighted Average Exercise Price		Number Outstanding			Weighted Average Grant Date Fair Value		Number Outstanding			Weighted Average Grant Date Fair Value
Balance, January 1, 2011		2,140,090			8,073,965		$	12.27		154,000		$	19.00		—		$	—
Granted		(816,674	)		—			—		—			—		816,674			23.59
Shares issued for director compensation		(9,481	)		—			—		—			—		—			—
Exercised		—			(694,744	)		7.35		—			—		—			—
Restricted stock or RSUs vested		—			—			—		(43,000	)		19.07		—			—
Cancelled		102,409			(93,575	)		16.80		—			—		(8,834	)		23.54
Additional shares registered		6,400,000			—			—		—			—		—			—

Balance, June 30, 2011		7,816,344			7,285,646		$	12.68		111,000		$	18.97		807,840		$	23.59

During the six month period ended June 30, 2011, our Board of Directors granted 816,674 RSUs to employees and directors. The fair value of RSUs is based on the market price of LKQ stock on the date of issuance. When estimating forfeitures, we consider voluntary and involuntary termination behavior as well as analysis of historical forfeitures. For valuing RSUs granted during the six month period ended June 30, 2011, forfeiture rates of 5% and 0% have been used for grants to employees and executive officers, respectively.

The total grant-date fair value of options that vested during the six months ended June 30, 2011 was approximately $4.7 million. There were 694,744 stock options exercised during the six months ended June 30, 2011 with an intrinsic value of $12.2 million. The fair value of restricted shares that vested during the six months ended June 30, 2011 was approximately $1.0 million.

The components of pre-tax stock-based compensation expense are as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Stock options	$	2,057	$	2,288	$	4,147	$	4,514
Restricted stock		228		228		453		453
RSUs		891		—		1,769		—
Stock issued to non-employee directors		84		72		233		145

Total stock-based compensation expense	$	3,260	$	2,588	$	6,602	$	5,112

The following table sets forth the total stock-based compensation expense included in the accompanying Unaudited Consolidated Condensed Statements of Income (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Cost of goods sold	$	79		$	73		$	168		$	143
Facility and warehouse expenses		623			540			1,234			1,067
Selling, general and administrative expenses		2,558			1,975			5,200			3,902

		3,260			2,588			6,602			5,112
Income tax benefit		(1,252	)		(1,017	)		(2,555	)		(2,009	)

Total stock-based compensation expense, net of tax	$	2,008		$	1,571		$	4,047		$	3,103

We have not capitalized any stock-based compensation costs during either of the six month periods ended June 30, 2011 or 2010.

At June 30, 2011, a total of 7,251,079 options with a weighted average exercise price of $12.65 and a weighted average remaining contractual life of 6.0 years were expected to vest. As of June 30, 2011, 111,000 shares of restricted stock with a weighted average remaining contractual life of 2.1 years were expected to vest. As of June 30, 2011, 790,939 RSUs with a weighted average remaining contractual life of 4.5 years were expected to vest. Unrecognized compensation expense related to stock options, restricted stock and RSUs at June 30, 2011 is expected to be recognized as follows (in thousands):


	Stock Options		Restricted Stock		RSUs		Total
Remainder of 2011	$	4,109	$	460	$	1,820	$	6,389
2012		6,930		913		3,785		11,628
2013		4,743		208		3,785		8,736
2014		3,117		139		3,700		6,956
2015		78		—		3,652		3,730
2016		—		—		149		149

Total unrecognized compensation expense	$	18,977	$	1,720	$	16,891	$	37,588

The following table summarizes information about outstanding and exercisable stock options at June 30, 2011:


Range of Exercise Prices	Outstanding						Exercisable
Range of Exercise Prices	Shares		Weighted Average Remaining Contractual Life (Yrs)		Weighted Average Exercise Price		Shares		Weighted Average Remaining Contractual Life (Yrs)		Weighted Average Exercise Price
$0.75 - $5.00		1,600,290		2.6	$	3.75		1,600,290		2.6	$	3.75
$5.01 - $10.00		618,820		4.5		9.31		618,820		4.5		9.31
$10.01 - $15.00		2,254,118		6.8		11.33		1,190,198		6.4		11.04
$15.01 - $20.00		2,786,918		7.7		19.56		996,392		7.1		19.33
$20.01 +		25,500		6.9		21.43		14,900		6.9		21.47

		7,285,646		6.0	$	12.68		4,420,600		4.9	$	10.06

The aggregate intrinsic value (market value of stock less option exercise price) of outstanding, expected to vest and exercisable stock options at June 30, 2011 was $97.7 million, $97.5 million and $70.8 million, respectively. The aggregate intrinsic value represents the total pre-tax intrinsic value, based on the Company's closing stock price of $26.09 on June 30, 2011. This amount changes based upon the fair market value of our common stock.