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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2011
Stock-Based Compensation [Abstract]  
STOCK-BASED COMPENSATION

NOTE 10 — STOCK-BASED COMPENSATION

The Company’s stock compensation plans, approved by the Company’s shareholders and administered by the Compensation and Benefits Committee of the Board of Directors of the Company, provide for the grant of incentive and non-incentive stock options, restricted stock, and other stock-based awards or units to key employees and directors. The plans, as amended, authorize the grant of up to 7.8 million shares or units through April 2020. These share or unit amounts exclude amounts that were issued under predecessor plans.

Stock options vest equally over the three years from the date of the grant. The cost of stock options, based on the fair market value of the shares on the date of grant, is charged to expense over the respective vesting periods. Stock options normally become exercisable at a rate of one-third annually and in full on the third anniversary date. All options and rights must be exercised within ten years from date of grant. At the Company’s discretion, vested stock option holders are permitted to elect an alternative settlement method in lieu of purchasing common stock at the option price. The alternative settlement method permits the employee to receive, without payment to the Company, cash, shares of common stock, or a combination thereof equal to the excess of market value of common stock over the option purchase price. The Company intends to settle all such options in common stock.

The weighted average fair value of options granted during 2011, 2010, and 2009 was $3.12, $3.27 and $2.00, respectively. The fair value of each option grant was estimated using the Black-Scholes option pricing model with the following assumptions:

 

                         
    2011     2010     2009  

Dividend yield

     0.6 %      2.9 %      3.7 % 

Expected volatility

     52 %      48 %      40 % 

Risk free interest rate

     2.2 %      2.0 %      2.2 % 

Weighted average expected option life in years

     5.9       5.9       6.5  

The expected life of options represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting schedules and the Company’s historical exercise patterns. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant for periods corresponding with the expected life of the options. Expected volatility is based on historical volatility of the Company’s common stock. Dividend yields are based on historical dividend payments.

Stock option activity for the three years ended December 31, 2011 was as follows:

 

                                                 
    Option Shares     Weighted Average Exercise Price  
    2011     2010     2009         2011             2010             2009      
    (In millions)  

Outstanding at beginning of year

     1.9       2.1       2.3     $ 12.61     $ 13.60     $ 16.20  

Granted

     0.7       0.4       0.5       6.50       8.93       6.74  

Cancelled or expired

     (0.6 )      (0.6 )      (0.7 )      14.02       13.47       17.00  

Exercised

     -         -         -         6.68       6.68       -      
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Outstanding at end of year

     2.0       1.9       2.1     $ 10.16     $ 12.61     $ 13.60  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Exercisable at end of year

     1.0       1.2       1.3     $ 13.12     $ 14.84     $ 16.35  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

The following table summarizes information concerning stock options outstanding as of December 31, 2011 under all plans:

 

                                         
    Options Outstanding           Options Exercisable  

Range of Exercise Prices

   Shares     Weighted
Average
Remaining Life		     Weighted
Average
Exercise
Price		     Shares     Weighted
Average
Exercise
Price		  
    (in millions)     (in years)           (in millions)        

$  0.00 — $5.00

     -         9.7     $ 4.47       -       $ -    

    5.01 — 10.00

     1.0       8.8       6.51       0.2       6.58  

  10.01 — 15.00

     0.5       6.7       10.78       0.4       11.01  

  15.01 — 20.00

     0.5       3.3       16.86       0.4       16.86  

  20.01 — 25.00

     -         0.2       23.00       -         23.00  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
      2.0       6.9     $ 10.16       1.0     $ 13.12  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

The exercise price of stock options outstanding and exercisable at December 31, 2011 exceeded the market value and therefore, the aggregate intrinsic value was near zero. The closing price on December 31, 2011 was $4.15.

Restricted stock awards are granted to employees at no cost. Through 2004, these awards primarily vested at the rate of 25% annually commencing one year from the date of award, provided the recipient was still employed by the Company on the vesting date. Beginning in 2005, awards primarily cliff vest at the third anniversary from the date of award, provided the recipient is still employed by the Company on the vesting date. The cost of restricted stock awards, based on the fair market value at the date of grant, is being charged to expense over the respective vesting periods. The following table summarizes restricted stock grants for the twelve month period ended December 31, 2011:

(shares in millions)

 

                 
     Number of
Restricted  Shares		     Weighted Average
Price  per Share		  

Outstanding and non-vested at December 31, 2010

     0.6     $ 8.78  

Granted

     -         6.09  

Vested

     (0.1 )      10.56  

Cancelled

     (0.1 )      8.72  
   

 

 

    

 

 

  

Outstanding and non-vested at December 31, 2011

     0.4     $ 7.99  
   

 

 

    

 

 

  

The total compensation expense related to all share-based compensation plans was $2.0 million, $2.3 million, and $3.1 million for the years ended December 31, 2011, 2010, and 2009, respectively. Also, as of December 31, 2011, there were $2.3 million and $1.6 million of total unrecognized compensation cost related to stock options and stock awards, respectively, that is expected to be recognized over the weighted-average period of approximately 2.2 and 1.4 years, respectively.

Beginning in 2008, the Company established a long term incentive plan for executive officers under which awards thereunder are classified as equity in accordance with ASC Topic 718, Compensation — Stock Compensation. Performance shares units shall become vested if (1) the Company achieves certain specified stock performance targets compared to a defined group of peer companies and (2) the employee remains continuously employed by the Company three calendar years from date of the grant. Compensation expense for the stock performance portion of the plan is based on the fair value of the plan that is determined on the day the units are awarded. The fair value is calculated using a Monte Carlo simulation model. The total compensation expense for these awards is being amortized over a three-year service period. Compensation expense relating to these awards included in the consolidated statement of operations was $0.2 million, ($0.1) million, and $0.4 million, for 2011, 2010, and 2009, respectively. As of December 31, 2011, the unrecognized compensation cost relating to these plans was $0.2 million, which will be amortized over the remaining requisite service period.

 

The performance shares units granted in 2011 were extended to certain other non-executive officers. The 2011 performance shares units shall become vested if (1) the Company achieves certain earnings per share (EPS) on December 31, 2011 and (2) the employee remains continuously employed by the Company three calendar years from date of the grant. No compensation expense was recorded relating to this award as the Company did not meet the EPS target.