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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2011
Stock-Based Compensation  
Stock-Based Compensation

14. Stock-Based Compensation

        The Company maintains two award plans under which stock-based compensation has been granted, the 2006 Stock Option Plan (the "2006 Plan") and the 2007 Long-Term Incentive Plan (Amended and Restated as of May 5, 2011) (the "LTIP"). Upon the adoption of the LTIP, awards were no longer granted under the 2006 Plan. The LTIP was approved by our shareholders and provides for grants of (a) incentive stock options qualified as such under U.S. federal income tax laws, (b) stock options that do not qualify as incentive stock options, (c) stock appreciation rights, (d) restricted stock awards, (e) performance awards, (f) phantom stock, (g) stock bonuses, (h) dividend equivalents, or (i) any combination of such awards. The LTIP permits the granting of up to 3,000,000 shares to directors, officers and other employees of the Company. Grants of awards to employees are approved by the Compensation Committee of the Board of Directors and grants to independent members of the Board of Directors are approved by the Board of Directors. All awards are made with an exercise price or base price, as the case may be, that is not less than the full fair market value per share. No stock option or stock appreciation right may be exercised more than 10 years from the date of grant.

        Shares issued as a result of stock option exercises or stock grants may be made available from authorized unissued shares of Common Stock or treasury stock. The Company believes that it currently has adequate authorized unissued shares and treasury stock to meet any requirements to issue shares during 2012. The Company has been given authorization from the Board of Directors to use its discretion to repurchase shares from time-to-time based upon the volume of stock options that have been exercised. To date, the Company has not made any such repurchases.

Stock Options

        The Company uses the Black-Scholes-Merton option-pricing model to estimate the fair value of each stock option grant as of the date of grant. The resulting compensation cost for fixed awards with graded vesting schedules is amortized on a straight-line basis over the vesting period for the entire award. The expected term of awards granted under the LTIP is determined using the simplified method as outlined in the applicable ASC 718 and SAB No. 110 guidance. The expected volatility is determined based on the average of comparable public companies', deemed competitors of the Company, historical stock prices over the most recent period commensurate with the expected term of the award. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term commensurate with the expected term of the award. The expected dividend yield is based on our intent to not issue cash dividends in the foreseeable future.

        The following summarizes the assumptions used in determining the fair value of stock options granted for fixed awards with graded vesting schedules during the years ended December 31, 2011 and 2010. These options vest ratably over a three-year period. No options were granted during the year ended December 31, 2009.

 
   2011   2010

Risk-free interest rate

   2.41%   2.95%

Expected dividend yield

   0.0%   0.0%

Weighted average expected volatility

   49%   50%

Expected term

   6.0 years   6.0 years

Weighted average grant-date fair value

   $11.88   $8.72

        A summary of the activity relating to the options outstanding under the Company's plans for the years ended December 31, 2011, 2010 and 2009 is presented below.

 
   Options   Weighted-
Average
Exercise
Price 		  Weighted-
Average
Remaining
Contractual
Term 		  Aggregate
Intrinsic
Value
(in thousands) 		 

Outstanding at January 1, 2009

     1,913,442   $ 6.30            

Granted

     —   $ 0.00            

Exercised

     (94,610 ) $ 3.71            

Forfeited

     (1,500 ) $ 13.00            
                       

Outstanding at December 31, 2009

     1,817,332   $ 6.43   6.9 years   $ 21,118  
                       

Granted

     106,912   $ 17.18            

Exercised

     (145,715 ) $ 4.60            

Forfeited

     (12,276 ) $ 13.57            
                       

Outstanding at December 31, 2010

     1,766,253   $ 7.18   6.1 years   $ 24,398  
                       

Granted

     90,080   $ 24.18            

Exercised

     (332,099 ) $ 4.12            

Forfeited

     (8,850 ) $ 14.89            

Expired

     (500 ) $ 13.00            
                       

Outstanding at December 31, 2011

     1,514,884   $ 8.82   5.5 years   $ 16,083  
                       

Exercisable at December 31, 2011

     1,355,743   $ 7.39   5.1 years   $ 15,932  
                       

        The following table summarizes information with respect to stock options outstanding under the Company's plans at December 31, 2011.

 
   Options Outstanding   Options Exercisable  
Exercise Price Ranges
  Number Of
Options 		  Weighted-
Average
Exercise
Price 		  Weighted-
Average
Remaining
Contractual
Term 		  Number Of
Options 		  Weighted-
Average
Exercise
Price 		 

$3.65 - $9.00

     833,119   $ 3.69   4.5 years     831,244   $ 3.68  

$9.01 - $18.00

     592,525   $ 13.72   6.4 years     524,499   $ 13.27  

$18.01 - $24.18

     89,240   $ 24.18   9.2 years     —     n/a  
                           

 

     1,514,884   $ 8.82   5.5 years     1,355,743   $ 7.39  
                           

Restricted Stock

        For the twelve months ended December 31, 2011, the Company granted restricted stock awards covering 47,918 shares of common stock to various employees, including the Company's named executive officers, and 17,367 shares of common stock to eligible members of the Board of Directors. The restricted stock awards granted to employees vest as follows: 41,230 shares vest ratably, on an annual basis, over a five-year period beginning on March 24, 2012, and 6,688 shares cliff vest on May 12, 2016. The restricted stock awards granted to the eligible members of the Board of Directors vest ratably, on an annual basis, over a three-year period. During the restriction period, the restricted stockholders are entitled to the same rights as a common stockholder with respect to the shares, including the right to vote and receive dividends. These restricted stock awards are also subject to certain claw-back provisions, as defined in the grant agreements. The grant date fair value of the restricted stock was as follows: $24.18 for 58,597 shares and $24.67 for 6,688 shares, which was equal to the closing market price of the Company's common stock on the date of grant.

        Following is a summary of restricted stock activity for the two-year period ending December 31, 2011:

 
   Number of
Shares 		  Weighted-Average
Grant Date Fair
Value 		 

Outstanding at January 1, 2010

     —        

Granted

     54,502   $ 17.15  

Cancelled

     (557 ) $ 17.18  
             

Outstanding at December 31, 2010

     53,945   $ 17.15  
             

Granted

     65,285   $ 24.23  

Vested

     (11,128 ) $ 17.13  

Cancelled

     (1,264 ) $ 17.74  
             

Outstanding at December 31, 2011

     106,838   $ 21.47  
             

Performance Awards

        For the twelve months ended December 31, 2011, the Company granted performance stock awards covering 34,179 shares of common stock, at target level, to certain key management personnel, including the Company's named executive officers. The grant date fair value of the performance stock awards was $24.18, which was equal to the closing market price of the Company's common stock on the date of grant. The performance stock awards will cliff vest on December 31, 2013, subject to the achievement of certain specified levels of the Company's average return-on-equity ("ROE") over the performance period. If the Company achieves an ROE that is equal to or greater than the threshold ROE, as defined in the grant agreements, the payment of the performance stock awards will vary depending upon the actual ROE that the Company achieves over the performance period, with the potential payout ranging from a minimum of 50% to a maximum of 200% of the target award. However, if the Company were to achieve an ROE that is less than the threshold ROE, there would not be any payout under these awards and the awards would be forfeited. Additionally, these performance stock awards are subject to certain claw-back provisions, as defined in the grant agreements.

        Following is a summary of performance stock award activity for the two-year period ending December 31, 2011:

 
   Number of
Shares 		  Weighted-Average
Grant Date Fair
Value 		 

Outstanding at January 1, 2010

     —        

Granted

     40,741   $ 17.18  

Cancelled

     (485 ) $ 17.18  
             

Outstanding at December 31, 2010

     40,256   $ 17.18  
             

Granted

     34,179   $ 24.18  
             

Outstanding at December 31, 2011

     74,435   $ 20.39  
             

Stock-based Compensation Expense

        The Company recognized stock-based compensation expense of approximately $2.1 million, $1.6 million and $0.9 million for the years ended December 31, 2011, 2010 and 2009, respectively, in selling, general and administrative expenses.

        Cash received from option exercises for the years ended December 31, 2011, 2010 and 2009 was $1.4 million, $0.7 million and $0.4 million, respectively. The excess tax benefit realized from option exercises during 2011, 2010 and 2009 was $1.3 million, $0.2 million and $0.2 million, respectively.

        The total intrinsic value of stock options exercised during 2011, 2010 and 2009 was $6.6 million, $1.9 million and $1.6 million, respectively. The total fair value of stock options vested during the years ended December 31, 2011, 2010 and 2009 was $1.2 million, $0.9 million and $0.9 million, respectively.

        As of December 31, 2011, there was approximately $3.6 million of total unrecognized stock-based compensation expense related to awards granted under the LTIP, net of estimated forfeitures. This included $1.0 million of unrecognized compensation cost related to non-vested stock options to be recognized over a remaining weighted average vesting period of approximately 1.9 years, $1.8 million of unrecognized compensation cost related to non-vested restricted stock expected to be recognized over a remaining weighted average vesting period of approximately 3.6 years and $0.8 million of unrecognized compensation cost related to non-vested performance awards, expected to be recognized over a remaining weighted average vesting period of approximately 1.8 years.