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Treasury Stock and Share Based Awards | 9 Months Ended
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Sep. 30, 2011
Treasury Stock and Share Based Awards [Abstract] |
Treasury Stock and Share Based Awards | 11. Treasury Stock and Share Based Awards Treasury Stock — Treasury stock represents shares of common stock repurchased or withheld by the Company and not yet retired. The Company has applied the cost method in recording its treasury shares. Below is a summary of the Company’s treasury stock activity for the nine months ended September 30, 2011:
|  | Number of |  |  |  |
|  | Treasury |  |  |  |
|  | Shares |  |  | Cost |
Balance at December 31, 2010 |  |  | 3,359,859 |  |  | $ | 44,725 |
Restricted stock forfeitures (1) |  |  | 853 |  |  |  | — |
Restricted stock withholdings (2) |  |  | 25,200 |  |  |  | 494 |
Restricted stock awards canceled (1) |  |  | 4,613 |  |  |  | — |
Balance at September 30, 2011 |  |  | 3,390,525 |  |  | $ | 45,219 |
(1) |  | The Company repurchased forfeited and canceled restricted shares at a cost of $0.001 per share in accordance with the Amended and Restated 2006 Cinemark Holdings, Inc. Long Term Incentive Plan.
(2) |  | The Company withheld restricted shares as a result of the election by certain employees to satisfy their tax liabilities upon vesting in restricted stock. The Company determined the number of shares to be withheld based upon a market value of $19.60 per share.
Stock Options — A summary of stock option activity and related information for the nine months ended September 30, 2011 is as follows:
|  |  |  |  |  |  |  |  |  | Weighted Average |  |  |  |
|  | Number of |  |  | Weighted Average |  |  | Grant Date Fair |  |  | Aggregate Intrinsic |
|  | Options |  |  | Exercise Price |  |  | Value |  |  | Value |
Outstanding at December 31, 2010 |  |  | 140,356 |  |  | $ | 7.63 |  |  | $ | 3.51 |  |  |  |  |
Exercised |  |  | (58,190 | ) |  | $ | 7.63 |  |  | $ | 3.51 |  |  |  |  |
Outstanding at September 30, 2011 |  |  | 82,166 |  |  | $ | 7.63 |  |  | $ | 3.51 |  |  | $ | 924 |
Options exercisable at September 30, 2011 |  |  | 82,166 |  |  | $ | 7.63 |  |  | $ | 3.51 |  |  | $ | 924 |
The total intrinsic value of options exercised during the nine months ended September 30, 2011 was $699. The Company recognized a tax benefit of approximately $238 during the nine months ended September 30, 2011 related to these option exercises. As of September 30, 2011, there was no remaining unrecognized compensation expense related to outstanding stock options as all outstanding options fully vested on April 2, 2009. Options outstanding at September 30, 2011 have an average remaining contractual life of approximately three years. Restricted Stock - During the nine months ended September 30, 2011, the Company granted 424,436 shares of restricted stock to directors and employees of the Company. The fair values of the restricted stock granted was determined based on the market values of the Company’s common stock on the dates of grant, which ranged from $19.35 to $20.71 per share. The Company assumed forfeiture rates ranging from 0% to 5% for the restricted stock awards. The restricted stock granted to directors vests over one year based on continued service. The restricted stock granted to employees vests over four years based on continued service. The recipients of restricted stock are entitled to receive dividends and to vote their respective shares, however the sale and transfer of the restricted shares is prohibited during the restriction period. Below is a summary of restricted stock activity for the nine months ended September 30, 2011:
|  | Shares of |  |  | Weighted Average |
|  | Restricted |  |  | Grant Date |
|  | Stock |  |  | Fair Value |
Outstanding at December 31, 2010 |  |  | 1,254,691 |  |  | $ | 14.60 |
Granted |  |  | 424,436 |  |  | $ | 19.45 |
Forfeited |  |  | (853 | ) |  | $ | 12.89 |
Vested |  |  | (288,204 | ) |  | $ | 10.84 |
Canceled |  |  | (4,613 | ) |  | $ | 18.35 |
Outstanding at September 30, 2011 |  |  | 1,385,457 |  |  | $ | 16.85 |
Unvested restricted stock at September 30, 2011 |  |  | 1,385,457 |  |  | $ | 16.52 |
The Company recorded compensation expense of $4,832 and $3,507 related to restricted stock awards during the nine months ended September 30, 2011 and 2010, respectively. As of September 30, 2011, the remaining unrecognized compensation expense related to restricted stock awards was $15,447 and the weighted average period over which this remaining compensation expense will be recognized is approximately three years. Upon vesting, the Company receives an income tax deduction. The total fair value of shares that vested during the nine months ended September 30, 2011 was $5,658. The Company recognized a tax benefit of approximately $2,188 during the nine months ended September 30, 2011 related to these vested shares. Restricted Stock Units — During the nine months ended September 30, 2011, the Company granted restricted stock units representing 153,727 hypothetical shares of common stock to employees of the Company. The restricted stock units vest based on a combination of financial performance factors and continued service. The financial performance factors are based on an implied equity value concept that determines an internal rate of return (“IRR”) during the three fiscal year period ending December 31, 2013 based on a formula utilizing a multiple of Adjusted EBITDA subject to certain specified adjustments (as defined in the restricted stock unit award agreement). The financial performance factors for the restricted stock units have a threshold, target and maximum level of payment opportunity. If the IRR for the three year period is at least 8.5%, which is the threshold, one-third of the restricted stock units vest. If the IRR for the three year period is at least 10.5%, which is the target, two-thirds of the restricted stock units vest. If the IRR for the three year period is at least 12.5%, which is the maximum, 100% of the restricted stock units vest. Grantees are eligible to receive a ratable portion of the common stock issuable if the IRR is within the targets previously noted. All payouts of restricted stock units that vest will be subject to an additional service requirement and will be paid in the form of common stock if the participant continues to provide services through March 31, 2015, which is the fourth anniversary of the grant date. Restricted stock unit award participants are eligible to receive dividend equivalent payments if and at the time the restricted stock unit awards vest. Below is a table summarizing the potential number of shares that could vest under restricted stock unit awards granted during the nine months ended September 30, 2011 at each of the three target levels of financial performance (excluding forfeiture assumptions):
|  | Number of |  |  |  |
|  | Shares |  |  | Value at |
|  | Vesting |  |  | Grant |
at IRR of at least 8.5% |  |  | 51,239 |  |  | $ | 991 |
at IRR of at least 10.5% |  |  | 102,488 |  |  | $ | 1,983 |
at IRR of at least 12.5% |  |  | 153,727 |  |  | $ | 2,975 |
Due to the fact that the IRR for the three year performance period could not be determined at the time of grant, the Company estimated that the most likely outcome is the achievement of the mid-point IRR level. The fair value of the restricted stock unit awards was determined based on the market value of the Company’s common stock on the date of grant, which was $19.35 per share. The Company assumed a forfeiture rate of 5% for the restricted stock unit awards. If during the service period, additional information becomes available to lead the Company to believe a different IRR level will be achieved for the three year performance period, the Company will reassess the number of units that will vest for the grant and adjust its compensation expense accordingly on a prospective basis over the remaining service period. No restricted stock unit awards have vested. There were no forfeitures of restricted stock unit awards during the nine months ended September 30, 2011. The Company recorded compensation expense of $2,300 and $1,672 related to restricted stock unit awards during the nine months ended September 30, 2011 and 2010, respectively. As of September 30, 2011, the remaining unrecognized compensation expense related to the outstanding restricted stock unit awards was $6,014. The weighted average period over which this remaining compensation expense will be recognized is approximately two years. As of September 30, 2011, the Company had restricted stock units outstanding that represented a total of 1,037,770 hypothetical shares of common stock, net of actual cumulative forfeitures of 19,918 units, assuming the maximum IRR of at least 12.5% is achieved for all of the grants.

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