Note 12 — Stock-Based Compensation

Incentive Plans

The Company has outstanding stock options and restricted stock granted under the 2007 Stock Option and Incentive Plan (“2007 Plan”) and its 2012 Omnibus Incentive Plan (the “2012 Plan”). The 2007 Plan was terminated in 2012. Thus, there are no longer available shares for future grants under the 2007 Plan. Under the 2012 Plan, the aggregate number of shares of the Company’s common stock reserved and available for issuance is 5,000,000. With respect to the 2012 Plan at June 30, 2013, no incentive stock options had been granted, 588,240 shares of restricted stock were outstanding, and 4,411,760 shares were available for future grant.

Stock Options

Outstanding stock options granted under the 2007 Plan vest over periods ranging from immediately vested to five years and are exercisable over the contractual term of ten years.

A summary of the activity in the Company’s 2007 Plan for the three and six months ended June 30, 2013 and 2012 is as follows (option amounts not in thousands):


						Weighted
				Weighted		Average
				Average		Remaining	Aggregate
	Number of			Exercise		Contractual	Intrinsic
	Options			Price		Term	Value

Outstanding at January 1, 2013		280,000		$	2.91	4.9 years	$	5,007

Outstanding at March 31, 2013		280,000			2.91	4.7 years	$	6,816

Outstanding at June 30, 2013		280,000			2.91	4.4 years	$	7,788

Exercisable at June 30, 2013		270,000		$	2.78	4.3 years	$	7,543


Outstanding at January 1, 2012		620,000		$	2.97	5.7 years	$	3,122
Exercised		(217,003	)		3.33

Outstanding at March 31, 2012		402,997			2.78	5.5 years	$	3,997

Outstanding at June 30, 2012		402,997			2.78	5.3 years	$	5,971

Exercisable at June 30, 2012		382,997		$	2.60	5.1 years	$	5,745

The following table summarizes information about options exercised for the three and six months ended June 30, 2013 and 2012 (option amounts not in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Options exercised		—		—		—		217,003
Total intrinsic value of exercised options		—		—		—	$	1,470
Fair value of vested stock options	$	17	$	22	$	17	$	22
Tax benefits realized		—		—		—	$	437

During the six months ended June 30, 2012, a total of 217,003 options were exercised and net settled by surrender of 71,409 shares. The Company recognized compensation expense of approximately $5 and $6, respectively, for the three months ended June 30, 2013 and 2012 and $9 and $59, respectively, for the six months ended June 30, 2013 and 2012. At June 30, 2013, there was approximately $15 of unrecognized compensation expense related to nonvested stock options granted under the plan. The Company expects to recognize the remaining compensation expense over a weighted-average period of 10 months. Deferred tax benefits related to stock options for the three and six months ended June 30, 2013 and 2012 were immaterial.

Restricted Stock Awards

From time to time, the Company has granted and may grant restricted stock awards to certain executive officers, other employees and nonemployee directors in connection with their service to the Company. The terms of the Company’s outstanding restricted stock grants include both service and market-based conditions. The fair value of the awards with market-based conditions is determined using a Monte Carlo simulation method which calculates many potential outcomes for an award and then establishes fair value based on the most likely outcome. The determination of fair value with respect to the awards with only service-based conditions is based on the value of the Company’s common stock on the grant date.

Information with respect to the activity of unvested restricted stock awards during the three and six months ended June 30, 2013 and 2012 is as follows (share amounts not in thousands):


	Number of			Weighted
	Restricted			Average
	Stock			Grant Date
	Awards			Fair Value

Nonvested at January 1, 2013		246,320		$	14.54
Forfeited		(920	)

Nonvested at March 31, 2013		245,400		$	14.51
Granted		544,000		$	26.58
Vested		(29,000	)
Forfeited		(28,160	)

Nonvested at June 30, 2013		732,240		$	23.53


Nonvested at January 1, 2012		—			—

Nonvested at March 31, 2012		—			—
Granted		200,000		$	12.91

Nonvested at June 30, 2012		200,000		$	12.91

The Company recognized compensation expense of $1,080 and $153, respectively, for the three months ended June 30, 2013 and 2012 and $1,465 and $153, respectively, for the six months ended June 30, 2013 and 2012. At June 30, 2013, there was approximately $15,364 of total unrecognized compensation expense related to nonvested restricted stock arrangements granted under the Company’s 2007 Plan and 2012 Plan. The Company expects to recognize the remaining compensation expense over a weighted-average period of 30 months. The following table summarizes information about deferred tax benefits recognized related to restricted stock awards and the fair value of vested restricted stock for the three and six months ended June 30, 2013 and 2012:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Deferred tax benefits recognized	$	417	$	59	$	565	$	59
Fair value of vested restricted stock	$	379	$	—	$	379	$	—

For the three and six months ended June 30, 2013, the Company realized tax benefits of approximately $61 and $83, respectively, related to cash dividends paid on restricted stock. The following presents assumptions used in a Monte Carlo simulation model to determine the fair value of the awards with market-based conditions:


	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2013	2012	2013	2012
Expected dividends per share	$0.90	$0.80	$0.90	$0.80
Expected volatility	41.5 – 51.6%	36.7 – 50.0%	41.5 – 51.6%	36.7 – 50.0%
Risk-free interest rate	0.0 – 2.0%	0.1 – 1.2%	0.0 – 2.0%	0.1 – 1.2%
Estimated cost of capital	9.3%	11.9 – 12.1%	9.3%	11.9 – 12.1%
Expected life (in years)	6.00	6.00	6.00	6.00