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Compensation Plans
 12 Months Ended
Dec. 31, 2012
Compensation Plans [Abstract]  
Compensation Plans

 

  13. Compensation Plans

 

On December 18, 2000, the Company adopted, and in May 2001 the shareholders approved, the 2001 Stock Option Plan for Non-Employee Directors (the "2001 Plan") under which non-employee directors were granted options to purchase shares of the Company's authorized but unissued stock. The Company reserved 200,000 shares for issuance under the 2001 Plan. In April 2007, all reserved shares for which a stock option had not been granted under the 2001 Plan were deregistered. No further stock options or stock will be granted under the 2001 Plan.

 

In April 2007, the Company adopted and the shareholders approved the 2007 Stock Incentive Plan (the "2007 SIP") under which employees, independent contractors, and non-employee directors may be granted stock options, restricted stock, deferred stock awards, restricted stock units ("RSU's"), and stock appreciation rights, any of which may or may not require the achievement of performance objectives. Vesting requirements are determined by the Compensation Committee of the Board of Directors. The Company reserved 2,550,000 shares for issuance under the 2007 SIP. At December 31, 2012, an aggregate of 830,000 shares remain available for grant under the Plan.

 

Compensation expense related to stock options is recognized based on the grant-date fair value of the awards estimated using the Black-Scholes option pricing model. Compensation expense related to deferred stock, restricted stock, and restricted stock units is recognized based on the grant-date fair value of the Company's common stock. The total stock-based compensation cost included in the Statements of Income was $4.7 million, $3.0 million, and $2.6 million in 2012, 2011, and 2010, respectively.

 

Stock Options

 

For purposes of determining the fair value of stock option awards granted, the Company used the Black-Scholes option pricing model and the assumptions set forth in the table below.

 

    2012     2010  
Dividend yield     2.9 %     0.0 %
Expected volatility     44.2 %     40.0 %
Risk free rate of return     4.0 %     4.0 %
Expected lives     2.9 years       6.7 years  

 

The estimated fair value of options granted is subject to the assumptions made and if the assumptions changed, the estimated fair value amounts could be significantly different.

 

The following table summarizes the stock option activity of the Plans:

 

    Shares     Weighted
Average
Exercise Price		     Weighted
Average
Grant Date
Fair Value		     Weighted
Average
Remaining
Contractual
Life (Years)		  
Outstanding at December 31, 2009     1,498,150     $ 9.00     $ 4.13       7.1  
Granted     40,000       9.70       4.80       9.0  
Exercised     (366,000 )     8.11       3.15       4.5  
Canceled     -       -       -       -  
Outstanding at December 31, 2010     1,172,150       9.30       4.46       6.7  
Granted     -       -       -       -  
Exercised     (843,450 )     9.58       4.48       5.0  
Canceled     -       -       -       -  
Outstanding at December 31, 2011     328,700       8.58       4.42       6.2  
Granted     9,830       8.59       32.57       5.6  
Exercised     (217,820 )     7.92       4.40       4.8  
Canceled     (250 )     8.69       4.57       6.3  
Outstanding at December 31, 2012     120,460       8.58       6.76       5.7  
Exercisable Options Outstanding at December 31, 2012     52,583       8.65       6.97       5.4  
Non-Vested Options Outstanding at December 31, 2012     67,877     $ 9.22     $ 6.81       5.6  

 

At December 31, 2012, the aggregate intrinsic value of all options, including exercisable options, was $4.4 million.

 

At December 31, 2012, there was $0.2 million of unrecognized compensation cost related to stock options that is expected to be recognized over a weighted-average period of 1.2 years.

 

Deferred Stock

 

Deferred stock awards vest based on the passage of time or the Company's attainment of performance objectives. Upon vesting, these awards convert one-for-one to common stock.

 

In 2012, 4,542 deferred stock awards were issued to non-employee directors that will vest in April 2013 and 6,102 deferred stock awards were issued to non-employee directors that will vest in April 2015.

 

In 2011, 9,487 deferred stock awards were issued to non-employee directors that vested in April 2012 and 12,744 deferred stock awards were issued to non-employee directors that will vest in April 2014.

 

In 2010, 12,902 deferred stock awards were issued to non-employee directors that vested in April 2011 and 17,331 deferred stock awards were issued to non-employee directors that will vest in April 2013.

 

Compensation expense related to these awards is amortized ratably over the vesting period. Compensation expense related to these awards was $0.5 million, $0.5 million and $0.3 million in 2012, 2011, and 2010, respectively.

 

Restricted Stock Units

 

Beginning in the second quarter of 2009, the Company began granting restricted stock units in lieu of incentive stock options to senior employees. These RSU's have a vesting "double trigger." The vesting of these RSU's is dependent on the achievement of corporate objectives established by the Compensation Committee of the Board of Directors and the passage of time.

 

During 2012, 139,000 restricted stock units were issued. Compensation costs related to these restricted stock units was $6.2 million, of which $1.2 million was recognized in 2012. The remaining costs will be recognized ratably over the remaining period required before the units to vest, which ranges from two to four years.

 

During 2011, 524,000 restricted stock units were issued. Compensation costs related to these restricted stock units was $10.7 million, of which $2.5 million and $1.8 million was recognized in 2012 and 2011, respectively. The remaining costs will be recognized ratably over the remaining period required before the units to vest, which ranges from one to three years.

 

During 2010, 76,000 restricted stock units were issued. Compensation costs related to these restricted stock units was $1.1 million, all of which was recognized in 2010 because the performance objectives were attained and the awards became fully vested.