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Share Capital
 12 Months Ended
Dec. 31, 2012
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]  
Share Capital

12. Share Capital

The authorized share capital of the Company is as follows:

(a) Authorized Share Capital

Class A Shares

An unlimited number, subordinate voting shares, carrying one vote each, entitled to dividends equal to or greater than Class B shares, convertible at the option of the holder into one Class B share for each Class A share after the occurrence of certain events related to an offer to purchase all Class B shares.

Class B Shares

An unlimited number, carrying 20 votes each, convertible at any time at the option of the holder into one Class A share for each Class B share.

Preferred A Shares

An unlimited number, non-voting, issuable in series.

(b) Employee Stock Incentive Plan

On May 26, 2005, the Company’s shareholders approved the Company’s 2005 Stock Incentive Plan (the “2005 Incentive Plan”). The 2005 Incentive Plan authorizes the issuance of awards to employees, officers, directors and consultants of the Company with respect to 2,000,000 shares of MDC Partners’ Class A Subordinate Voting Shares or any other security in to which such shares shall be exchanged. On June 1, 2007 and on June 2, 2009, the Company’s shareholders approved a total additional authorized Class A Shares of 2,500,000 to be added to the 2005 Incentive Plan for a total of 4,500,000 authorized Class A Shares. On May 30, 2008, the Company’s shareholders approved the 2008 Key Partner Incentive Plan, which provides for the issuance of 600,000 Class A Shares. On June 1, 2011, the Company’s shareholders approved the 2011 Stock Incentive Plan, which provides for the issuance of up to 2,000,000 Class A Shares. As of December 31, 2012, the Company has granted 200,000 Director options (of which 100,000 were forfeited), which option grants were for a ten-year term and vests over five (5) years from the grant date under the 2005 Incentive Plan.

The following table summarizes information about time based and financial performance-based restricted stock and restricted stock unit awards granted under the 2005 Incentive Plan, 2008 Key Partner Incentive Plan and 2011 Stock Incentive Plan:

 

Performance Based AwardsTime Based Awards
SharesWeighted Average Grant Date Fair ValueSharesWeighted Average Grant Date Fair Value
Balance at December 31, 2009557,958$8.17924,160$7.33
Granted753,2098.83258,22310.28
Vested(804,300)8.37(562,971)8.60
Forfeited(4,944)8.88(3,345)8.13
Balance at December 31, 2010501,923$8.83616,067$7.40
Granted1,097,75418.39297,52016.93
Vested(217,697)12.74(287,234)5.17
Forfeited(1,423)14.59(41,454)8.79
Balance at December 31, 20111,380,557$15.81584,899$12.86
Granted753,89613.05250,23711.67
Vested(1,747,987)14.44(263,458)12.25
Forfeited(29,946)15.66(14,720)14.82
Balance at December 31, 2012356,520$16.09556,958$12.72

 The total fair value of restricted stock and restricted stock unit awards, which vested during the year ended December 31, 2012, 2011 and 2010 was $22,557, $8,269 and $14,976, respectively. In connection with the vesting of these awards, the Company included in the taxable loss the amounts of $5,242, $7,280 and $3,431 in 2012, 2011 and 2010, respectively. At December 31, 2012, the weighted average remaining contractual life for performance based awards is 1.8 years and for time based awards is 1.5 years. At December 31, 2012, the fair value of all restricted stock and restricted stock unit awards is $10,322. The term of these awards is three years with vesting up to three years. At December 31, 2012, the unrecognized compensation expense for these awards was $6,186 and will be recognized through 2015. At December 31, 2012, there are 2,067,303 awards available to grant.

The Company’s Board of Directors adopted the 2005 Incentive Plan as a replacement for MDC Partners’ Amended and Restated Stock Option Incentive Plan (the “Prior 2003 Plan”). Following approval of the 2005 Incentive Plan, the Company ceased making awards under the Prior 2003 Plan.

Prior to adoption of the 2005 Incentive Plan, the Company’s Prior 2003 Plan provided for grants of up to 1,890,786 options to employees, officers, directors and consultants of the Company. All the options granted were for a term of five years from the date of the grant and vest 20% on the date of grant and a further 20% on each anniversary date. In addition, the Company granted 534,960 options, on the privatization of Maxxcom, with a term of no more than 10 years from initial date of grant by Maxxcom and vest 20% in each of the first two years with the balance vesting on the third anniversary of the initial grant.

Information related to share option transactions grant under all plans over the past three years is summarized as follows:

 

Options OutstandingOptions Exercisable
Number OutstandingWeighted Average Price per ShareNumber OutstandingWeighted Average Price per ShareNon Vested Options
Balance at December 31, 2009239,992$9.55194,992$9.6445,000
Vested——(20,000)
Granted———
Exercised(6,495)9.19—
Expired and cancelled(17,297)17.08—
Balance at December 31, 2010216,200$9.41191,200$9.4125,000
Vested——(20,000)
Granted———
Exercised(113,085)8.94—
Expired and cancelled(15,034)12.57—
Balance at December 31, 201188,081$9.1283,081$9.145,000
Vested——(5,000)
Granted———
Exercised(3,153)8.69—
Expired and cancelled(9,928)7.79—
Balance at December 31, 201275,000$9.5375,000$9.53—

 At December 31, 2012, the intrinsic value of vested options and the intrinsic value of all options was $133. For options exercised during 2012, 2011 and 2010, the Company received cash proceeds of $27, $1,011 and $60, respectively. The Company did not receive any windfall tax benefits. The intrinsic value of options exercised during 2012, 2011 and 2010 was $5, $900 and $20, respectively. At December 31, 2012, the weighted average remaining contractual life of all outstanding options was 3.8 years and for all vested options was 3.8 years. At December 31, 2012, the unrecognized compensation expense of all options was nil.

Share options outstanding as of December 31, 2012 are summarized as follows:

 

Options OutstandingOptions Exercisable
Range of Exercise PricesOutstanding NumberWeighted Average Contractual LifeWeighted Average Price per ShareExercisable NumberWeighted Average Price per ShareWeighted Average Contractual Life
$8.75 – $8.9575,0003.75$9.5375,000$9.533.75

(c) Stock Appreciation Rights

During 2003, the Compensation Committee of the Board of Directors approved a stock appreciation rights (“SAR’s”) compensation program for senior officers and directors of the Company. SARS’s granted prior to 2006 have a term of four years, for SAR’s granted in 2006 and after they have a term of up to 10 years and all awards vest one-third on each anniversary date.

SAR’s granted and outstanding are as follows:

 

SAR’s OutstandingSAR’s Exercisable
Weighted Average Number OutstandingWeighted Average Price per ShareNumber OutstandingPrice per ShareNon Vested SAR’s
Balance at December 31, 20093,518,769$3.8030,000$8.183,488,769
Vested——(1,747,034)
Granted———
Exercised(187,666)$4.19(187,666)
Expired and cancelled——
Balance at December 31, 20103,331,103$3.781,777,034$3.771,554,069
Vested——(290,089)
Granted——
Exercised(172,974)4.23(172,974)
Expired and cancelled———
Balance at December 31, 20113,158,129$3.752,067,123$3.751,091,006
Vested——(1,047,026)
Granted———
Exercised(69,365)4.41(43,980)
Expired and cancelled———
Balance at December 31, 20123,088,764$3.743,088,764$3.74—

 At December 31, 2012, the aggregate amount of shares to be issued on vested SAR’s was 2,067,303 shares with an intrinsic value of $23,361 and for all outstanding SAR’s, the aggregate amount of shares to be issued was 2,067,303 with an intrinsic value of $23,361. During 2012, 2011 and 2010, the aggregate value of SAR’s exercised was $301, $2,289 and $1,147, respectively. The Company received tax deductions of $296, $387 and $180 in 2012, 2011 and 2010, respectively. At December 31, 2012, the weighted average remaining contractual life of all outstanding SAR’s was 1.2 years and for all vested SAR’s was 1.2 years. At December 31, 2012, the unrecognized compensation expense of all SAR’s was nil.

 

SAR’s OutstandingSAR’s Exercisable
Range of Exercise PricesOutstanding NumberWeighted Average Contractual LifeWeighted Average Price per ShareExercisable NumberWeighted Average Price per ShareWeighted Average Contractual Life
$3.72 – $8.943,078,7641.17$3.723,078,764$3.721.17
$8.75 – $8.9510,0003.33$8.9510,000$8.953.33

 (d) Equity Value Appreciation Awards

In January 2011, the Company awarded 1,413,000 extraordinary Equity Value Appreciation Awards (“EVARs”) to its employees. These EVARs may result in the issuance of up to 1,413,000 restricted stock units and restricted stock shares (“RSUs”), but only upon the achievement of extraordinary stock performance targets. If issued the RSUs underlying the EVAR grant will vest on December 31, 2013.

The Company measured the fair value of EVARs using a lattice based model (Monte Carlo) on the grant date.

Information related to EVAR transactions over the past three years is summarized as follows:

 

EVARs OutstandingEVARs Exercisable
Number OutstandingWeighted Average Issuance Price per ShareNumber OutstandingWeighted Average Issuance Price per ShareNon Vested EVARs
Balance at December 31, 2010—$——$——
Vested———
Granted1,413,00023.00——1,413,000
Expired and cancelled(45,000)23.00——(45,000)
Balance at December 31, 20111,368,000$23.00—$—1,368,000
Vested———
Granted———
Expired and cancelled(90,000)23.00——(90,000)
Balance at December 31, 20121,278,000$23.00—$—1,278,000

 The grant date fair value of these EVARs was $13,240. At December 31, 2012, the weighted average remaining contractual life for these awards is one year. At December 31, 2012, the unrecognized compensation expense of these awards is $4,106 and will be recognized through 2013.

The Company has reserved a total of 1,516,832 Class A shares in order to meet its obligations under various conversion rights, warrants and employee share related plans. At December 31, 2012 there were 1,777,547 shares available for future option and similar grants.