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Employee Benefit Plans | 12 Months Ended
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Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] |
Employee Benefit Plans | Employee Benefit Plans Officer, Management and Director Compensation Programs Our officers participate in an annual non-equity incentive program whereby they are eligible for incentive cash payments based on a percentage of their annual base salary. Each officer has a target annual non-equity incentive payment percentage that ranges from 30% to 130% of base salary depending on the officer’s position. The officer’s actual incentive payment for the year is the product of the target annual incentive payment percentage times a “performance factor,” which can range from zero to 200%. This performance factor depends upon the relationship between how various performance criteria compare with predetermined goals. For an officer who has division responsibilities, goals for certain performance criteria are based partly on the division’s actual performance relative to that division’s established goals and partly on actual total performance. Incentive payments are accrued and expensed in the year earned and are generally paid in the first quarter of the following year. Certain other employees participate in an annual non-equity incentive program whereby a target annual cash incentive payment is established based upon the job responsibilities of their position. Incentive payment eligibility ranges from 10% to 30% of annual base salary. The actual incentive payment is determined by our overall performance and the individual’s performance during each year. These incentive payments are also accrued and expensed in the year earned and are generally paid in the first quarter of the following year. Our officers generally receive annual grants of stock options and restricted stock on or about March 1 of each year. Restricted stock grants are also made annually to directors and certain other employees. Dividends received on restricted stock are non-forfeitable and are paid at the same rate and on the same date as on shares of Common Stock. Dividends paid on subsequently forfeited shares are expensed. Additional total return-based restricted stock may be issued at the end of the three-year periods if actual performance exceeds certain levels of performance. Such additional shares, if any, would be fully vested when issued. No expense is recorded for additional shares of total return-based restricted stock that may be issued at the end of the three-year period since that possibility is already reflected in the grant date fair value. The following table sets forth the number of shares of Common Stock reserved for future issuance:
| December 31,
| 2011 |  | 2010
Outstanding stock options and warrants | 1,224,455 |  |  | 1,495,196 |
Possible future issuance under equity incentive plans | 2,363,695 |  |  | 2,642,620 |
| 3,588,150 |  |  | 4,137,816 |
13. | Employee Benefit Plans - Continued
Of the possible future issuance under equity incentive plans at December 31, 2011, no more than 0.7 million can be in the form of restricted stock. At December 31, 2011, we had 127.4 million remaining shares of Common Stock authorized to be issued under our charter. During the years ended December 31, 2011, 2010 and 2009, we recognized $6.1 million, $6.6 million and $6.6 million, respectively, of share-based compensation expense. Because REITs generally do not pay income taxes, we do not realize tax benefits on share-based payments. At December 31, 2011, there was $5.6 million of total unrecognized share-based compensation costs, which will be recognized over vesting periods that have a weighted average remaining term of 2.1 years. - Stock Options Stock options issued prior to 2005 vest ratably over four years and remain outstanding for 10 years. Stock options issued beginning in 2005 vest ratably over a four-year period and remain outstanding for seven years. The value of all options as of the date of grant is calculated using the Black-Scholes option-pricing model and is amortized over the respective vesting or service period. The fair values of options granted during 2011, 2010 and 2009 were $6.47, $4.96 and $1.82, respectively, per option. The fair values of the options granted were determined at the grant dates using the following assumptions:
| 2011 |  | 2010 |  | 2009
Risk free interest rate (1) | 2.4 | % |  | 2.6 | % |  | 2.3 | %
Common stock dividend yield (2) | 5.0 | % |  | 5.9 | % |  | 9.0 | %
Expected volatility (3) | 32.5 | % |  | 32.2 | % |  | 29.9 | %
Average expected option life (years) (4) | 5.75 |  |  | 5.75 |  |  | 5.75 |
__________
(1) | Represents the interest rate as of the grant date on US treasury bonds having the same life as the estimated life of the option grants.
(2) | The dividend yield is calculated utilizing the dividends paid for the previous one-year period and the per share price of Common Stock on the date of grant.
(3) | Based on the historical volatility of Common Stock over a period relevant to the related stock option grant.
(4) | The average expected option life is based on an analysis of our historical data.
The following table sets forth stock option activity:
| Options Outstanding
| Number of Shares |  | Weighted Average Exercise Price
Balance at December 31, 2008 | 1,489,250 |  |  | $ | 28.74 |
Options granted | 394,044 |  |  | 19.00 |
Options cancelled | (111,590 | ) |  | 27.65 |
Options exercised | (303,931 | ) |  | 24.18 |
Balances at December 31, 2009 | 1,467,773 |  |  | 27.15 |
Options granted | 190,826 |  |  | 29.05 |
Options exercised | (178,403 | ) |  | 22.54 |
Balances at December 31, 2010 (1) (2) | 1,480,196 |  |  | 27.95 |
Options granted | 146,581 |  |  | 33.93 |
Options exercised | (417,322 | ) |  | 26.79 |
Balances at December 31, 2011 | 1,209,455 |  |  | $ | 29.08 |
__________
13. | Employee Benefit Plans - Continued
(1) | The outstanding options at December 31, 2011 had a weighted average remaining life of 3.5 years.
(2) | We have 646,029 options exercisable at December 31, 2011 with weighted average exercise price of $31.01, weighted average remaining life of 2.4 years and intrinsic value of $1.1 million. Of these exercisable options, 252,277 had exercise prices higher than the market price of our Common Stock at December 31, 2011.
Cash received or receivable from options exercised was $11.9 million, $4.4 million and $7.4 million for the years ended December 31, 2011, 2010 and 2009, respectively. The total intrinsic value of options exercised during the years ended December 31, 2011, 2010 and 2009 was $3.0 million, $1.7 million and $2.0 million, respectively. The total intrinsic value of options outstanding at December 31, 2011, 2010 and 2009 was $3.3 million, $7.2 million and $10.3 million, respectively. We generally do not permit the net cash settlement of exercised stock options, but do permit net share settlement so long as the shares received are held for at least one year. We have a policy of issuing new shares to satisfy stock option exercises. - Time-Based Restricted Stock Shares of time-based restricted stock issued to officers and employees generally vest 25% on the first, second, third and fourth anniversary dates, respectively. Shares of time-based restricted stock issued to directors generally vest 25% on January 1 of each successive year after the grant date. The value of grants of time-based restricted stock is based on the market value of Common Stock as of the date of grant and is amortized to expense over the respective vesting or service periods. The following table sets forth time-based restricted stock activity:
| Number of Shares |  | Weighted Average Grant Date Fair Value
Restricted shares outstanding at December 31, 2008 | 329,795 |  |  | $ | 34.21 |
Awarded and issued (1) | 128,384 |  |  | 19.33 |
Vested (2) | (132,779 | ) |  | 33.38 |
Forfeited | (9,326 | ) |  | 31.26 |
Restricted shares outstanding at December 31, 2009 | 316,074 |  |  | 28.60 |
Awarded and issued (1) | 88,930 |  |  | 29.05 |
Vested (2) | (138,745 | ) |  | 31.81 |
Forfeited | (1,933 | ) |  | 25.86 |
Restricted shares outstanding at December 31, 2010 | 264,326 |  |  | 27.08 |
Awarded and issued (1) | 76,966 |  |  | 33.70 |
Vested (2) | (116,631 | ) |  | 30.64 |
Restricted shares outstanding at December 31, 2011 | 224,661 |  |  | $ | 28.02 |
__________
(1) | The fair value at grant date of time-based restricted stock issued during the years ended December 31, 2011, 2010 and 2009 was $2.6 million, $2.6 million and $2.5 million, respectively.
(2) | The vesting date fair value of time-based restricted stock that vested during the years ended December 31, 2011, 2010 and 2009 was $3.9 million, $4.3 million and $2.9 million, respectively.
13. | Employee Benefit Plans - Continued
- Total Return-Based Restricted Stock During 2011, 2010 and 2009, we issued shares of total return-based restricted stock to officers that will vest from zero to 250% based on (1) our absolute total returns for the three-year periods ended December 31, 2012, 2013 and 2014, respectively, relative to defined target returns and (2) whether our total return exceeds the average total returns of a selected group of peer companies. The grant date fair value of such shares of total return-based restricted stock was determined to be $41.02, $29.05 and $15.01, respectively, of the market value of a share of Common Stock as of the grant date and is amortized over the respective three-year period. The fair values of the total return-based restricted stock granted were determined at the grant dates using the following assumptions:
| 2011 |  | 2010 |  | 2009
Risk free interest rate (1) | 1.0 | % |  | 1.3 | % |  | 1.3 | %
Common stock dividend yield (2) | 5.4 | % |  | 5.6 | % |  | 7.6 | %
Expected volatility (3) | 42.8 | % |  | 42.5 | % |  | 37.8 | %
__________
(1) | Represents the interest rate as of the grant date on US treasury bonds having the same life as the estimated life of the total return-based restricted stock grants.
(2) | The dividend yield is calculated utilizing the dividends paid for the previous one-year period and the per share price of Common Stock on the date of grant.
(3) | Based on the historical volatility of Common Stock over a period relevant to the related total return-based restricted stock grant.
The following table sets forth total return-based and other types of performance-based restricted stock activity:
| Number of Shares |  | Weighted Average Grant Date Fair Value
Restricted shares outstanding at December 31, 2008 | 151,342 |  |  | $ | 33.39 |
Awarded and issued (1) | 127,594 |  |  | 15.01 |
Vested (2) | (68,929 | ) |  | 32.66 |
Forfeited | (7,232 | ) |  | 34.14 |
Restricted shares outstanding at December 31, 2009 | 202,775 |  |  | 22.05 |
Awarded and issued (1) | 77,624 |  |  | 29.05 |
Vested (2) | (47,257 | ) |  | 38.50 |
Forfeited | (1,307 | ) |  | 22.99 |
Restricted shares outstanding at December 31, 2010 | 231,835 |  |  | 21.03 |
Awarded and issued (1) | 57,386 |  |  | 41.02 |
Vested (2) | (66,417 | ) |  | 13.79 |
Forfeited/cancelled | (99,975 | ) |  | 13.79 |
Restricted shares outstanding at December 31, 2011 | 122,829 |  |  | $ | 34.86 |
__________
(1) | The fair value at grant date of total return-based restricted stock issued during the years ended December 31, 2011, 2010 and 2009 was $2.4 million, $2.3 million and $1.9 million, respectively. There were no performance-based restricted stock issued subsequent to 2008.
(2) | The vesting date fair value of total return-based and other types performance-based restricted stock that vested during the years ended December 31, 2011, 2010 and 2009 was $2.0 million, $1.6 million and $2.6 million, respectively.
13. | Employee Benefit Plans - Continued
Retirement Plan We have adopted a retirement plan applicable to all employees, including officers, who, at the time of retirement, have at least 30 years of continuous qualified service or are at least 55 years old and have at least 10 years of continuous qualified service. Subject to advance retirement notice and execution of a non-compete agreement with us, eligible retirees are entitled to receive a pro rata amount of the annual incentive payment earned during the year of retirement. Stock options and restricted stock granted by us to such eligible retiree during his or her employment would be non-forfeitable and vest according to the terms of their original grants. For employees who meet the age and service eligibility requirements, 100% of their annual grants are deemed fully vested at the grant date. Deferred Compensation We have a non-qualified deferred compensation plan pursuant to which each officer and director could elect to defer a portion of their base salary and/or annual non-equity incentive payment (or director fees) which are invested in unrelated mutual funds. These investments are recorded at fair value which aggregated $3.1 million and $3.5 million at December 31, 2011 and 2010, respectively, and are included in prepaid expenses and other assets, with an offsetting deferred compensation liability recorded in accounts payable, accrued expenses and other liabilities. Such deferred compensation is expensed in the period earned by the officers and directors. Deferred amounts ultimately payable to the officers and directors are based on the value of the related mutual fund investments. Accordingly, changes in the value of the marketable mutual fund investments are recorded in interest and other income and the corresponding offsetting changes in the deferred compensation liability are recorded in general and administration expense. As a result, there is no effect on our net income subsequent to the time the compensation is deferred and fully funded. Prior to 2006, as part of the non-qualified deferred compensation plan, officers and directors could elect to defer cash compensation for investment in units of phantom stock. At the end of each calendar quarter, any person who deferred compensation into phantom stock was credited with units of phantom stock at a 15% discount. Dividends on the phantom units were assumed to be issued in additional units of phantom stock at a 15% discount. By the terms of the plan, the cash value of all phantom stock outstanding under the plan was reinvested in unrelated mutual funds as of December 31, 2011. The following table sets forth our deferred compensation liability:
| Years Ended December 31,
| 2011 |  | 2010 |  | 2009
Beginning deferred compensation liability | $ | 4,091 |  |  | $ | 6,898 |  |  | $ | 6,522 |
Contributions to deferred compensation plans | 545 |  |  | 229 |  |  | — |
Mark-to-market adjustment to deferred compensation (general and administrative expense) | (119 | ) |  | 246 |  |  | 1,497 |
Distributions from deferred compensation plans | (1,368 | ) |  | (3,282 | ) |  | (1,121 | )
Total deferred compensation liability | $ | 3,149 |  |  | $ | 4,091 |  |  | $ | 6,898 |
401(k) Savings Plan We have a 401(k) savings plan covering substantially all employees who meet certain age and employment criteria. We contribute amounts for each participant at a rate of 75% of the employee’s contribution (up to 6% of each employee’s bi-weekly salary and cash incentives subject to statutory limits). During the years ended December 31, 2011, 2010 and 2009, we contributed $1.1 million, $1.0 million and $1.0 million, respectively, to the 401(k) savings plan. The assets of this qualified plan are not included in our Consolidated Financial Statements since the assets are not owned by us. Administrative expenses of the plan are paid by us.
13. | Employee Benefit Plans - Continued
Employee Stock Purchase Plan We have an Employee Stock Purchase Plan pursuant to which employees generally may contribute up to 25% of their base and annual non-equity incentive compensation for the purchase of Common Stock. At the end of each three-month offering period, the contributions in each participant's account balance, which includes accrued dividends, is applied to acquire shares of Common Stock at a cost that was calculated during 2011 at 85% of the average closing price on the New York Stock Exchange on the five days preceding the last day of the quarter and during 2010 and 2009 at 85% of the lower of the average closing price on the New York Stock Exchange on the five consecutive days preceding the first day of the quarter or the five days preceding the last day of the quarter. In the years ended December 31, 2011, 2010 and 2009, the Company issued 30,826, 27,378 and 37,287 shares, respectively, of Common Stock under the Employee Stock Purchase Plan. The discount on newly issued shares is expensed by us as additional compensation and aggregated $0.2 million, $0.1 million and $0.3 million in the years ended December 31, 2011, 2010 and 2009, respectively.
Highwoods Realty Limited Partnership [Member] |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] |
Employee Benefit Plans | Employee Benefit Plans Officer, Management and Director Compensation Programs The officers of the Company, which is the sole general partner of the Operating Partnership, participate in an annual non-equity incentive program whereby they are eligible for incentive cash payments based on a percentage of their annual base salary. Each officer has a target annual non-equity incentive payment percentage that ranges from 30% to 130% of base salary depending on the officer’s position. The officer’s actual incentive payment for the year is the product of the target annual incentive payment percentage times a “performance factor,” which can range from zero to 200%. This performance factor depends upon the relationship between how various performance criteria compare with predetermined goals. For an officer who has division responsibilities, goals for certain performance criteria are based partly on the division’s actual performance relative to that division’s established goals and partly on actual total performance. Incentive payments are accrued and expensed in the year earned and are generally paid in the first quarter of the following year. Certain other employees participate in an annual non-equity incentive program whereby a target annual cash incentive payment is established based upon the job responsibilities of their position. Incentive payment eligibility ranges from 10% to 30% of annual base salary. The actual incentive payment is determined by our overall performance and the individual’s performance during each year. These incentive payments are also accrued and expensed in the year earned and are generally paid in the first quarter of the following year. The Company's officers generally receive annual grants of stock options and restricted stock on or about March 1 of each year. Restricted stock grants are also made annually to directors and certain other employees. Dividends received on restricted stock are non-forfeitable and are paid at the same rate and on the same date as on shares of Common Stock. Dividends paid on subsequently forfeited shares are expensed. Additional total return-based restricted stock may be issued at the end of the three-year periods if actual performance exceeds certain levels of performance. Such additional shares, if any, would be fully vested when issued. No expense is recorded for additional shares of total return-based restricted stock that may be issued at the end of the three-year period since that possibility is already reflected in the grant date fair value. The following table sets forth the number of shares of Common Stock reserved for future issuance:
| December 31,
| 2011 |  | 2010
Outstanding stock options and warrants | 1,224,455 |  |  | 1,495,196 |
Possible future issuance under equity incentive plans | 2,363,695 |  |  | 2,642,620 |
| 3,588,150 |  |  | 4,137,816 |
Of the possible future issuance under equity incentive plans at December 31, 2011, no more than 0.7 million can be in the form of restricted stock. At December 31, 2011, the Company had 127.4 million remaining shares of Common Stock authorized to be issued under our charter. During the years ended December 31, 2011, 2010 and 2009, we recognized $6.1 million, $6.6 million and $6.6 million, respectively, of share-based compensation expense. Because REITs generally do not pay income taxes, we do not realize tax benefits on share-based payments. At December 31, 2011, there was $5.6 million of total unrecognized share-based compensation costs, which will be recognized over vesting periods that have a weighted average remaining term of 2.1 years. - Stock Options Stock options issued prior to 2005 vest ratably over four years and remain outstanding for 10 years. Stock options issued beginning in 2005 vest ratably over a four-year period and remain outstanding for seven years. The value of all options as of the date of grant is calculated using the Black-Scholes option-pricing model and is amortized over the respective vesting or service period. The fair values of options granted during 2011, 2010 and 2009 were $6.47, $4.96 and $1.82, respectively, per option. The fair values of the options granted were determined at the grant dates using the following assumptions:
13. | Employee Benefit Plans - Continued
| 2011 |  | 2010 |  | 2009
Risk free interest rate (1) | 2.4 | % |  | 2.6 | % |  | 2.3 | %
Common stock dividend yield (2) | 5.0 | % |  | 5.9 | % |  | 9.0 | %
Expected volatility (3) | 32.5 | % |  | 32.2 | % |  | 29.9 | %
Average expected option life (years) (4) | 5.75 |  |  | 5.75 |  |  | 5.75 |
__________
(1) | Represents the interest rate as of the grant date on US treasury bonds having the same life as the estimated life of the option grants.
(2) | The dividend yield is calculated utilizing the dividends paid for the previous one-year period and the per share price of Common Stock on the date of grant.
(3) | Based on the historical volatility of Common Stock over a period relevant to the related stock option grant.
(4) | The average expected option life is based on an analysis of the Company's historical data.
The following table sets forth stock option activity:
| Options Outstanding
| Number of Shares |  | Weighted Average Exercise Price
Balance at December 31, 2008 | 1,489,250 |  |  | $ | 28.74 |
Options granted | 394,044 |  |  | 19.00 |
Options cancelled | (111,590 | ) |  | 27.65 |
Options exercised | (303,931 | ) |  | 24.18 |
Balances at December 31, 2009 | 1,467,773 |  |  | 27.15 |
Options granted | 190,826 |  |  | 29.05 |
Options exercised | (178,403 | ) |  | 22.54 |
Balances at December 31, 2010 (1) (2) | 1,480,196 |  |  | 27.95 |
Options granted | 146,581 |  |  | 33.93 |
Options exercised | (417,322 | ) |  | 26.79 |
Balances at December 31, 2011 | 1,209,455 |  |  | $ | 29.08 |
__________
(1) | The outstanding options at December 31, 2011 had a weighted average remaining life of 3.5 years.
(2) | The Company has 646,029 options exercisable at December 31, 2011 with weighted average exercise price of $31.01, weighted average remaining life of 2.4 years and intrinsic value of $1.1 million. Of these exercisable options, 252,277 had exercise prices higher than the market price of our Common Stock at December 31, 2011.
Cash received or receivable from options exercised was $11.9 million, $4.4 million and $7.4 million for the years ended December 31, 2011, 2010 and 2009, respectively. The total intrinsic value of options exercised during the years ended December 31, 2011, 2010 and 2009 was $3.0 million, $1.7 million and $2.0 million, respectively. The total intrinsic value of options outstanding at December 31, 2011, 2010 and 2009 was $3.3 million, $7.2 million and $10.3 million, respectively. The Company generally does not permit the net cash settlement of exercised stock options, but does permit net share settlement so long as the shares received are held for at least one year. The Company has a policy of issuing new shares to satisfy stock option exercises.
13. | Employee Benefit Plans - Continued
- Time-Based Restricted Stock Shares of time-based restricted stock issued to officers and employees generally vest 25% on the first, second, third and fourth anniversary dates, respectively. Shares of time-based restricted stock issued to directors generally vest 25% on January 1 of each successive year after the grant date. The value of grants of time-based restricted stock is based on the market value of Common Stock as of the date of grant and is amortized to expense over the respective vesting or service periods. The following table sets forth time-based restricted stock activity:
| Number of Shares |  | Weighted Average Grant Date Fair Value
Restricted shares outstanding at December 31, 2008 | 329,795 |  |  | $ | 34.21 |
Awarded and issued (1) | 128,384 |  |  | 19.33 |
Vested (2) | (132,779 | ) |  | 33.38 |
Forfeited | (9,326 | ) |  | 31.26 |
Restricted shares outstanding at December 31, 2009 | 316,074 |  |  | 28.60 |
Awarded and issued (1) | 88,930 |  |  | 29.05 |
Vested (2) | (138,745 | ) |  | 31.81 |
Forfeited | (1,933 | ) |  | 25.86 |
Restricted shares outstanding at December 31, 2010 | 264,326 |  |  | 27.08 |
Awarded and issued (1) | 76,966 |  |  | 33.70 |
Vested (2) | (116,631 | ) |  | 30.64 |
Restricted shares outstanding at December 31, 2011 | 224,661 |  |  | $ | 28.02 |
__________
(1) | The fair value at grant date of time-based restricted stock issued during the years ended December 31, 2011, 2010 and 2009 was $2.6 million, $2.6 million and $2.5 million, respectively.
(2) | The vesting date fair value of time-based restricted stock that vested during the years ended December 31, 2011, 2010 and 2009 was $3.9 million, $4.3 million and $2.9 million, respectively.
- Total Return-Based Restricted Stock During 2011, 2010 and 2009, we issued shares of total return-based restricted stock to officers that will vest from zero to 250% based on (1) our absolute total returns for the three-year periods ended December 31, 2012, 2013 and 2014, respectively, relative to defined target returns and (2) whether the Company's total return exceeds the average total returns of a selected group of peer companies. The grant date fair value of such shares of total return-based restricted stock was determined to be $41.02, $29.05 and $15.01, respectively, of the market value of a share of Common Stock as of the grant date and is amortized over the respective three-year period. The fair values of the total return-based restricted stock granted were determined at the grant dates using the following assumptions:
13. | Employee Benefit Plans - Continued
| 2011 |  | 2010 |  | 2009
Risk free interest rate (1) | 1.0 | % |  | 1.3 | % |  | 1.3 | %
Common stock dividend yield (2) | 5.4 | % |  | 5.6 | % |  | 7.6 | %
Expected volatility (3) | 42.8 | % |  | 42.5 | % |  | 37.8 | %
__________
(1) | Represents the interest rate as of the grant date on US treasury bonds having the same life as the estimated life of the total return-based restricted stock grants.
(2) | The dividend yield is calculated utilizing the dividends paid for the previous one-year period and the per share price of Common Stock on the date of grant.
(3) | Based on the historical volatility of Common Stock over a period relevant to the related total return-based restricted stock grant.
The following table sets forth total return-based and other types of performance-based restricted stock activity:
| Number of Shares |  | Weighted Average Grant Date Fair Value
Restricted shares outstanding at December 31, 2008 | 151,342 |  |  | $ | 33.39 |
Awarded and issued (1) | 127,594 |  |  | 15.01 |
Vested (2) | (68,929 | ) |  | 32.66 |
Forfeited | (7,232 | ) |  | 34.14 |
Restricted shares outstanding at December 31, 2009 | 202,775 |  |  | 22.05 |
Awarded and issued (1) | 77,624 |  |  | 29.05 |
Vested (2) | (47,257 | ) |  | 38.50 |
Forfeited | (1,307 | ) |  | 22.99 |
Restricted shares outstanding at December 31, 2010 | 231,835 |  |  | 21.03 |
Awarded and issued (1) | 57,386 |  |  | 41.02 |
Vested (2) | (66,417 | ) |  | 13.79 |
Forfeited/cancelled | (99,975 | ) |  | 13.79 |
Restricted shares outstanding at December 31, 2011 | 122,829 |  |  | $ | 34.86 |
__________
(1) | The fair value at grant date of total return-based restricted stock issued during the years ended December 31, 2011, 2010 and 2009 was $2.4 million, $2.3 million and $1.9 million, respectively. There were no performance-based restricted stock issued subsequent to 2008.
(2) | The vesting date fair value of total return-based and other types of performance-based restricted stock that vested during the years ended December 31, 2011, 2010 and 2009 was $2.0 million, $1.6 million and $2.6 million, respectively.
Retirement Plan The Company has adopted a retirement plan applicable to all employees, including officers, who, at the time of retirement, have at least 30 years of continuous qualified service or are at least 55 years old and have at least 10 years of continuous qualified service. Subject to advance retirement notice and execution of a non-compete agreement with us, eligible retirees are entitled to receive a pro rata amount of the annual incentive payment earned during the year of retirement. Stock options and restricted stock granted by the Company to such eligible retiree during his or her employment would be non-forfeitable and vest according to the terms of their original grants. For employees who meet the age and service eligibility requirements, 100% of their annual grants are deemed fully vested at the grant date.
13. | Employee Benefit Plans - Continued
Deferred Compensation The Company has a non-qualified deferred compensation plan pursuant to which each officer and director could elect to defer a portion of their base salary and/or annual non-equity incentive payment (or director fees) which are invested in unrelated mutual funds. These investments are recorded at fair value which aggregated $3.1 million and $3.5 million at December 31, 2011 and 2010, respectively, and are included in prepaid expenses and other assets, with an offsetting deferred compensation liability recorded in accounts payable, accrued expenses and other liabilities. Such deferred compensation is expensed in the period earned by the officers and directors. Deferred amounts ultimately payable to the officers and directors are based on the value of the related mutual fund investments. Accordingly, changes in the value of the marketable mutual fund investments are recorded in interest and other income and the corresponding offsetting changes in the deferred compensation liability are recorded in general and administration expense. As a result, there is no effect on our net income subsequent to the time the compensation is deferred and fully funded. Prior to 2006, as part of the non-qualified deferred compensation plan, officers and directors could elect to defer cash compensation for investment in units of phantom stock. At the end of each calendar quarter, any person who deferred compensation into phantom stock was credited with units of phantom stock at a 15% discount. Dividends on the phantom units were assumed to be issued in additional units of phantom stock at a 15% discount. By the terms of the plan, the cash value of all phantom stock outstanding under the plan was reinvested in unrelated mutual funds as of December 31, 2011. The following table sets forth the Company's deferred compensation liability:
| Years Ended December 31,
| 2011 |  | 2010 |  | 2009
Beginning deferred compensation liability | $ | 4,091 |  |  | $ | 6,898 |  |  | $ | 6,522 |
Contributions to deferred compensation plans | 545 |  |  | 229 |  |  | — |
Mark-to-market adjustment to deferred compensation (general and administrative expense) | (119 | ) |  | 246 |  |  | 1,497 |
Distributions from deferred compensation plans | (1,368 | ) |  | (3,282 | ) |  | (1,121 | )
Total deferred compensation liability | $ | 3,149 |  |  | $ | 4,091 |  |  | $ | 6,898 |
401(k) Savings Plan We have a 401(k) savings plan covering substantially all employees who meet certain age and employment criteria. We contribute amounts for each participant at a rate of 75% of the employee’s contribution (up to 6% of each employee’s bi-weekly salary and cash incentives subject to statutory limits). During the years ended December 31, 2011, 2010 and 2009, we contributed $1.1 million, $1.0 million and $1.0 million, respectively, to the 401(k) savings plan. The assets of this qualified plan are not included in our Consolidated Financial Statements since the assets are not owned by us. Administrative expenses of the plan are paid by us. Employee Stock Purchase Plan The Company has an Employee Stock Purchase Plan pursuant to which employees generally may contribute up to 25% of their base and annual non-equity incentive compensation for the purchase of Common Stock. At the end of each three-month offering period, the contributions in each participant's account balance, which includes accrued dividends, is applied to acquire shares of Common Stock at a cost that was calculated during 2011 at 85% of the average closing price on the New York Stock Exchange on the five days preceding the last day of the quarter and during 2010 and 2009 at 85% of the lower of the average closing price on the New York Stock Exchange on the five consecutive days preceding the first day of the quarter or the five days preceding the last day of the quarter. In the years ended December 31, 2011, 2010 and 2009, the Company issued 30,826, 27,378 and 37,287 shares, respectively, of Common Stock under the Employee Stock Purchase Plan. The discount on newly issued shares is expensed by us as additional compensation and aggregated $0.2 million, $0.1 million and $0.3 million in the years ended December 31, 2011, 2010 and 2009, respectively.

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