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Share-Based Compensation
9 Months Ended
Sep. 30, 2011
Share-Based Compensation 
Share-Based Compensation

 

Note 9 – Share-Based Compensation

Stock Options

During the nine month period ended September 30, 2011, the stock option activity under our 2002 Stock Option Plan, 1995 Incentive and Non-Qualified Stock Option Plan for key employees, and 1996 Non-Employee Director's Stock Option Plan (collectively the "Stock Option Plans"), was as follows:

 

     Weighted
Average
Price		      Number of
Shares		     Weighted
Average
Remaining
Contractual
Life (In Years)		      Aggregate
Intrinsic Value		  

Outstanding, January 1, 2011

    $ 9.13         3,002,000        

Granted

      16.11         510,000        

Cancelled

      9.13         (71,000 )      

Exercised

      4.70         (469,000 )      
  

 

 

     

 

 

       

Outstanding, September 30, 2011

    $ 10.97         2,972,000        6.25       $ 15,370,000   
  

 

 

     

 

 

    

 

 

     

 

 

  

Options exercisable as of September 30, 2011

         1,418,000        4.18       $ 12,062,000   
     

 

 

    

 

 

     

 

 

  

The weighted average fair value of options granted during the 2011 and 2010 nine month periods ended September 30 was $3.26 and $3.98, respectively. The following table summarizes information about stock options outstanding at September 30, 2011.

 

                                 Options  
     Options Outstanding             Exercisable  

Exercise Price Range

    Number
Outstanding		      Average
Remaining
Contractual Life		      Weighted
Average
Exercise price		      Number
Exercisable		      Weighted
Average
Exercise Price		  

$1.83 - 2.50

      199,000         1.12       $ 2.43         199,000       $ 2.43   

3.68- 3.68

      358,000         2.24         3.69         358,000         3.69   

6.07- 6.07

      300,000         3.24         6.07         300,000         6.07   

10.39- 10.39

      516,000         7.27         10.39         185,000         10.39   

$13.93 - 16.11

      1,599,000         8.02         14.77         376,000         14.05   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     2,972,000         6.25       $ 10.97         1,418,000       $ 7.63   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

Other information pertaining to option activity during the nine month periods ended September 30, 2011 and 2010 was as follows:

 

     September 30,
2011		      September 30,
2010		  

Weighted average grant-date fair value of stock options granted:

    $ 1,477,000       $ 2,176,000   

Total fair value of stock options vested:

    $ 1,015,000       $ 681,000   

Total intrinsic value of stock options exercised:

    $ 4,736,000       $ 3,738,000   

Total pre-tax share-based compensation expense charged against income:

    $ 1,402,000       $ 740,000   

Total unrecognized compensation expense related to non-vested options:

    $ 4,015,000       $ 3,631,000   

Under our Stock Option Plans at September 30, 2011, in addition to the 2,972,000 shares issuable pursuant to outstanding options, an additional 5,882,000 shares of our Common Stock are available for future grants. Options outstanding and exercisable were granted at exercise prices which were not less than the fair market value of our Common Stock on the date the options were granted and no option has a term in excess of ten years. Additionally, with the exception of the options granted in years 2008 through 2011, options became vested and exercisable either on the date of grant or commencing six months after the option grant date. The options granted in 2008 through 2011 become vested and exercisable ratably over a five year period commencing one year after the grant date, on each anniversary date of the option grant.

At September 30, 2011, the total unrecognized compensation expense related to non-vested options, as reported above, was expected to be recognized through the fourth quarter of 2015 for the options granted in 2011 and the fourth quarter of 2014 for the options granted in 2010. The fair value of options granted in 2011 and 2010 was estimated on the date of grant using the Black-Scholes valuation model with the following weighted average assumptions:

 

     2011     2010  

Risk-free interest rate

      2.6 %      2.5 % 

Expected volatility

      27.4 %      42.1 % 

Weighted average expected life in years

      7.4        4.5   

Dividend yield

      3.7 %      3.5 % 

Employee Stock Purchase Plan

Total pre-tax share-based compensation expense charged against income for the three and nine month periods ended September 30, 2011 and 2010 for options granted under our Employee Stock Purchase Plan ("ESPP") was as follows:

 

     Three Months Ended
September 30,		  
     2011      2010  

ESPP compensation expense

    $ 69,000       $ 63,000   

 

     Nine Months Ended
September  30,		  
     2011      2010  

ESPP compensation expense

    $ 228,000       $ 207,000   

It is estimated, at this time, that the expense attributable to such share-based payments in each of the subsequent quarters of 2011 will approximate the amount recorded in the preceding 2011 quarter. However, such future expense related to our ESPP will be impacted by, and be dependent on the change in our stock price over the remaining period up to the December 31, 2011 measurement date.

 

Such expense was estimated on the date of grant using the Black-Scholes valuation model with the following weighted average assumptions:

 

     Three and Nine Months Ended
September 30,		  
     2011     2010  

Risk-free interest rate

      0.04 %      0.20 % 

Expected volatility

      25.0 %      34.0 % 

Weighted average expected life in years

      1.0        1.0   

Dividend yield

      3.7 %      3.5 % 

We may issue new common stock or re-issue common stock from treasury to satisfy our obligations under any of our share-based compensation plans.