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Share-Based Compensation
 9 Months Ended
Sep. 30, 2012
Share-Based Compensation

Note 8 – Share-Based Compensation

Stock Options

During the nine months ended September 30, 2012, 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 Exercise
Price		      Number of Shares     Weighted
Average
Remaining
Contractual Life
(In Years)		      Aggregate
Intrinsic Value		  

Outstanding, January 1, 2012

    $ 10.97         2,912,000        

Granted

      17.50         601,000        

Cancelled

      14.33         (73,000 )      

Exercised

      9.40         (443,000 )      
  

 

 

     

 

 

       

Outstanding, September 30, 2012

    $ 12.43         2,997,000        6.15       $ 31,265,000   
  

 

 

     

 

 

    

 

 

     

 

 

  

Options exercisable as of September 30, 2012

         1,359,000        3.95       $ 18,961,000   
     

 

 

    

 

 

     

 

 

  

 

The weighted average fair value per share of options granted during the 2012 and 2011 nine month periods ended September 30 was $4.74 and $3.26, respectively. The following table summarizes information about stock options outstanding at September 30, 2012.

 

     Options Outstanding             Options
Exercisable		  

Exercise Price Range

    Number
Outstanding		      Average
Remaining
Contractual Life		      Weighted
Average Exercise
Price Per Share		      Number
Exercisable		      Weighted
Average Exercise
Price		  

$  2.41  -   3.68

      399,000         0.85       $ 3.24         399,000       $ 3.24   

    6.07

      267,000         2.24         6.07         267,000         6.07   

  10.39

      410,000         6.27         10.39         196,000         10.39   

  13.93  - 14.31

      869,000         6.49         14.16         420,000         14.09   

$16.11  - 17.50

      1,052,000         8.83         16.89         77,000         16.11   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     2,997,000         6.15       $ 12.43         1,359,000       $ 8.90   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Other information pertaining to option activity during the nine month periods ended September 30, 2012 and 2011 was as follows:

 

     September 30, 2012      September 30, 2011  

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

    $ 2,438,000       $ 1,477,000   

Total fair value of stock options vested:

    $ 1,870,000       $ 1,015,000   

Total intrinsic value of stock options exercised:

    $ 5,026,000       $ 4,736,000   

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

    $ 1,423,000       $ 1,402,000   

Total unrecognized compensation expense related to non-vested options:

    $ 4,473,000       $ 4,015,000   

Under our Stock Option Plans at September 30, 2012, in addition to the 2,997,000 shares issuable pursuant to outstanding option grants, an additional 3,338,000 shares of our Common Stock are available for future grants. Such 3,338,000 shares consist of 1,338,000 shares from our Stock Option Plans that were rolled into our recently approved 2012 Equity Incentive Plan (the “2012 Plan”) plus an additional 2,000,000 shares that are contained in the 2012 Plan. Options outstanding and exercisable were granted at stock option 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 2012, options vested and became exercisable either on the date of grant or commencing nine months after the option grant date. The options granted in 2008 through 2012 become vested and exercisable ratably over a five year period on each anniversary date of the option grant.

At September 30, 2012, the total unrecognized compensation expense related to non-vested options, as reported above, was expected to be recognized through the fourth quarter of 2016 for the options granted in 2012 and the fourth quarter of 2015 for the options granted in 2011. The fair value of options granted in 2012 and 2011 was estimated on the date of grant using the Black-Scholes valuation model with the following weighted average assumptions:

 

     September 30, 2012     September 30, 2011  

Risk-free interest rate

      1.3 %      2.6 % 

Expected volatility

      39.2 %      27.4 % 

Weighted average expected life in years

      6.8        7.4   

Dividend yield

      3.6 %      3.7 % 

 

Employee Stock Purchase Plan

Total pre-tax share-based compensation expense charged against income for the nine month periods ended September 30, 2012 and 2011 for options granted under our Employee Stock Purchase Plan (“ESPP”) was $276,000 and $228,000, respectively. It is estimated, at this time, that the expense attributable to such share-based payments in the fourth quarter of 2012 will approximate the amount recorded in the 2012 first, second and third quarters. 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, 2012 measurement date.

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

 

     September 30, 2012     September 30, 2011  

Risk-free interest rate

      0.19 %      0.04 % 

Expected volatility

      36.5 %      25.0 % 

Weighted average expected life in years

      1.0        1.0   

Dividend yield

      3.6 %      3.7 % 

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.