STOCKHOLDERS' EQUITY AND STOCK INCENTIVE PLANS

Share Repurchase Program

We have in the past, and may in the future, acquire our debt or equity securities, through open market purchases, privately negotiated transactions, tender offers, exchange offers, redemptions or otherwise, upon such terms and at such prices as we may determine from time to time. In July 2008, our Board of Directors authorized an amendment to our existing share repurchase program to increase the amount of common stock available to be repurchased to $100 million. We are not obligated to purchase any shares under our stock repurchase program.

Subject to applicable corporate securities laws, repurchases under our stock repurchase program may be made at such times and in such amounts as we deem appropriate. Purchases under our stock repurchase program can be discontinued at any time that we feel additional purchases are not warranted. We intend to fund the repurchases under the stock repurchase program with existing cash resources and availability under our Credit Facility.

We are subject to certain limitations regarding the repurchase of common stock, such as restricted payment limitations related to our outstanding notes and our Credit Facility.

During the years ended December 31, 2012, 2011 and 2010, we did not repurchase any shares of our common stock. We are currently authorized to repurchase up to an additional $92.1 million in shares of our common stock under the share repurchase program.

Dividends

Dividends are declared at the discretion of our Board of Directors. We are subject to certain limitations regarding payment of dividends, such as restricted payment limitations related to our outstanding notes and our Credit Facility. No dividends were declared during the years ended December 31, 2012, 2011 or 2010.

Stock Option Incentive Plan

On May 17, 2012, at our Annual Meeting of Stockholders, the Company's stockholders approved the amendment and restatement of the Company's 2002 Stock Incentive Plan (the "2002 Plan") as the 2012 Stock Incentive Plan (the "2012 Plan") in order to (a) provide for a term ending ten years from the date of stockholder approval at the Annual Meeting, (b) increase the maximum number of shares of the Company's common stock authorized for issuance over the term of the 2012 Plan by 4 million shares from 17 million to 21 million shares, (c) permit the future grant of certain equity-based awards, including awards designed to constitute performance-based compensation under Section 162(m) of the Internal Revenue Code, and (d) make certain other changes. Under our 2012 Stock Incentive Plan, approximately 2.2 million shares remain available for grant at December 31, 2012. The number of authorized but unissued shares of common stock under this plan as of December 31, 2012 was approximately 17.8 million shares.

Options granted under the plan generally become exercisable ratably over a three-year period from the date of grant. Options that have been granted under the plan had an exercise price equal to the market price of our common stock on the date of grant and will expire no later than ten years after the date of grant.

Summarized stock option plan activity for the years ended December 31, 2012, 2011 and 2010 is as follows.



	Options		Weighted Average Option Price		Weighted Average Remaining Term	Aggregate Intrinsic Value
					(In years)	(In thousands)
Outstanding at January 1, 2010	9,569,657		$	27.68
Granted	1,190,867		8.34
Canceled	(126,496	)	24.64
Exercised	(114,525	)	6.31
Outstanding at December 31, 2010	10,519,503		25.76
Granted	541,340		6.74
Canceled	(316,743	)	29.91
Exercised	(72,757	)	5.46
Outstanding at December 31, 2011	10,671,343		24.81
Granted	537,840		5.22
Canceled	(366,344	)	21.4
Exercised	(16,835	)	6.95
Outstanding at December 31, 2012	10,826,004		$	23.98	5.0	$	810

Exercisable at December 31, 2011	8,911,028		$	28.20	4.9	$	1,011

Exercisable at December 31, 2012	9,545,547		$	26.31	4.5	$	47

Share-based compensation costs related to stock option awards are calculated based on the fair value of each option grant on the date of the grant using the Black-Scholes option pricing model.

The following table summarizes the information about stock options outstanding and exercisable at December 31, 2012.



	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted-Average Remaining Contractual Life (Years)	Weighted-Average Exercise Price		Number Exercisable	Weighted-Average Exercise Price
$5.22-$5.22	537,840	9.8	$	5.22	—	$	—
6.60-6.60	1,162,552	5.8	6.60		1,162,552	6.60
6.70-6.70	537,840	8.9	6.70		179,284	6.70
7.55-7.55	1,327,655	6.8	7.55		1,327,655	7.55
8.34-8.34	1,160,533	7.8	8.34		776,472	8.34
11.28-33.31	470,928	0.9	16.35		470,928	16.35
36.76-36.76	1,436,827	1.9	36.76		1,436,827	36.76
38.11-38.11	491,000	4.9	38.11		491,000	38.11
39.00-39.00	1,336,500	3.8	39.00		1,336,500	39.00
39.78-52.35	2,364,329	3.7	39.95		2,364,329	39.95
5.22-52.35	10,826,004	5.0	$	23.98	9,545,547	$	26.31

The total intrinsic value of in-the-money options exercised during the years ended December 31, 2012, 2011 and 2010 was $19 thousand, $0.3 million and $0.7 million, respectively. The total fair value of options vested during the years ended December 31, 2012, 2011 and 2010 was approximately $4.8 million, $5.1 million and $9.7 million, respectively. As of December 31, 2012, there was approximately $3.8 million of total unrecognized share-based compensation costs related to unvested stock options, which is expected to be recognized over approximately 1.4 years, the weighted-average remaining requisite service period.

Restricted Stock Units

Our 2012 Plan amended and restated the 2002 Plan, which provided for the grant of Restricted Stock Units (“RSUs”). A RSU is an award which may be earned in whole, or in part, upon the passage of time, and which may be settled for cash, shares, other securities or a combination thereof. The RSUs do not contain voting rights and are not entitled to dividends. The RSUs are subject to the terms and conditions contained in the applicable award agreement and our 2002 Stock Incentive Plan.

We annually award RSUs to certain members of our Board of Directors. Each RSU is fully vested upon grant and is to be paid in shares of common stock upon cessation of service to the Company. We also grant RSUs to members of management of the Company, which represents a contingent right to receive one share of our common stock upon vesting.

During the years ended December 31, 2012, 2011 and 2010, certain of our executive management employees were granted RSUs, totaling approximately 751,000 units, 695,000 units, and 429,000 units, respectively. Each of these RSUs represent a contingent right to receive one share of Boyd Gaming Corporation common stock upon vesting. These RSUs were issued for past service; therefore, they are fully vested on the date of issuance and expensed on the date of issuance.

Summarized RSU activity for the years ended December 31, 2012, 2011 and 2010 is as follows.



	Restricted Stock Units		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2010	970,108
Granted	485,067		$8.36
Canceled	(19,080	)
Awarded	—
Outstanding at December 31, 2010	1,436,095
Granted	765,516		$6.96
Canceled	(41,340	)
Awarded	(310,881	)
Outstanding at December 31, 2011	1,849,390
Granted	860,376		$5.51
Canceled	(9,781	)
Awarded	(328,838	)
Outstanding at December 31, 2012	2,371,147

Vested at December 31, 2011	573,798

Vested at December 31, 2012	955,693

As of December 31, 2012, there was approximately $7.8 million of total unrecognized share-based compensation costs related to unvested RSUs, which is expected to be recognized over approximately 2.0 years.

Performance Stock Units

Our 2012 Plan amended and restated the 2002 Plan, which provided for the grant of Performance Stock Units (“PSUs”). A PSU is an award which may be earned in whole, or in part, upon the passage of time, and the attainment of performance criteria, and which may be settled for cash, shares, other securities or a combination thereof. The PSUs do not contain voting rights and are not entitled to dividends. The PSUs are subject to the terms and conditions contained in the applicable award agreement and our 2012 Plan.

During the year ended December 31, 2012, certain executive management employees were granted PSUs, totaling approximately 423,955 units. Each of these PSUs represent a contingent right to receive a share of Boyd Gaming Corporation common stock; however, the actual denomination of units awarded is dependent upon the occurrence of: (i) a requisite service period; and (ii) an evaluation of specific performance conditions. The performance conditions are based on Company metrics for net revenue growth, EBITDA growth and customer service scores, all of which shall be determined on a comprehensive annual three year growth rate. Based upon actual and combined achievement, the number of units awarded could range from zero, if no conditions are met, a 50% payout if only threshold performance is achieved, a payout of 100% for target performance, or a payout of up to 200% of the original award for achievement of maximum performance. Each condition weighs equally and separately in determining the payout, and based upon management's estimates at the service inception date, the Company is expected to meet the target for each performance condition. Therefore, the related compensation costs of these PSUs assumes all units granted will be awarded.

These PSUs will vest three years from the service inception date, during which time achievement of the related performance conditions will be evaluated, and the number of shares expected to be awarded, and resulting compensation expense, will be adjusted accordingly.

Summarized PSU activity for the years ended December 31, 2012, 2011 and 2010 is as follows.



	Performance Stock Units		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2010	—
Granted	406,602		$6.70
Canceled	—
Awarded	—
Outstanding at December 31, 2011	406,602
Granted	423,955		$5.24
Canceled	(1,427	)
Awarded	—
Outstanding at December 31, 2012	829,130

Vested at December 31, 2011	—

Vested at December 31, 2012	—

As of December 31, 2012, there was approximately $6.8 million of total unrecognized share-based compensation costs related to unvested PSUs, which is expected to be recognized over approximately 2.5 years.

Career Shares

Our Career Shares Program is a stock incentive award program for certain executive officers to provide for additional capital accumulation opportunities for retirement. The program incentivizes and rewards executives for their period of service. Our Career Shares Program was adopted in December 2006, and modified in October 2010, as part of the overall update of our compensation programs. The Career Shares Program rewards eligible executives with annual grants of Boyd Gaming Corporation stock units, to be paid out at retirement. The payout at retirement is dependent upon the executive's age at such retirement and the number of years of service with the Company. Executives must be at least 55 years old and have at least 10 years of service to receive any payout at retirement. Career Shares do not contain voting rights and are not entitled to dividends. Career Shares are subject to the terms and conditions contained in the applicable award agreement and our 2002 Stock Incentive Plan. The Career Share awards are tranched by specific term, in the following periods: 10 years, 15 years and 20 years of service. These grants vest over the remaining period of service required to fulfill the requisite years in each of these tranches, and compensation expense is recorded in accordance with the specific vesting provisions.

Summarized Career Shares activity for the years ended December 31, 2012, 2011 and 2010 is as follows.



	Career Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2010	304,441
Granted	146,622		$8.60
Canceled	(18,201	)
Awarded	—
Outstanding at December 31, 2010	432,862
Granted	113,495		$10.81
Canceled	(6,668	)
Awarded	—
Outstanding at December 31, 2011	539,689
Granted	163,137		$7.69
Canceled	—
Awarded	—
Outstanding at December 31, 2012	702,826

Vested at December 31, 2011	314,888

Vested at December 31, 2012	441,736

Share-Based Compensation

We account for share-based awards exchanged for employee services in accordance with the authoritative accounting guidance for share-based payments. Under the guidance, share-based compensation expense is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense, net of estimated forfeitures, over the employee's requisite service period.

The following table summarizes our share-based compensation costs by award type.



	Year Ended December 31,
	2012		2011		2010
	(In thousands)
Stock Options	$	4,634	$	4,850	$	9,104
Restricted Stock Units	5,816		3,062		1,759
Performance Stock Units	729		76		—
Career Shares	1,068		2,008		461
Total shared-based compensation costs	$	12,247	$	9,996	$	11,324

The following table provides classification detail of the total costs related to our share-based employee compensation plans reported in our condensed consolidated statements of operations.



	Year Ended December 31,
	2012		2011		2010
	(In thousands)
Gaming	$	233	$	192	$	318
Food and beverage	44		37		61
Room	21		17		29
Selling, general and administrative	1,183		977		1,619
Corporate expense	10,766		8,773		9,297
Total shared-based compensation expense	$	12,247	$	9,996	$	11,324