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STOCK OPTION PLANS
 12 Months Ended
Dec. 31, 2011
STOCK OPTION PLANS [Abstract]  
STOCK OPTION PLANS
STOCK OPTION PLANS

The Company accounts for stock options using ASC 718 Compensation – Stock Compensation.  The Company recorded stock-based compensation of $2.4 million in 2011 and $0.2 million in 2010.  No stock-based compensation expense was recorded during 2009.  The Company granted 492,500 stock options in 2011 and 494,938 stock options in 2010.  Options to the Board of Directors vest immediately and options to employees vest over three years. All options expire 10 years from the grant date.  The Company granted no stock options during 2009.  All stock options granted before 2010 were fully vested before January 1, 2009.

Non-Employee Director Stock Option Plan
The Company adopted the 1994 Non-Employee Director Stock Option Plan (the Director Plan) to provide for grants of stock options as a means of attracting and retaining qualified independent directors for the Company.  There will be no additional issuance of stock options under this plan as it has expired.  Options previously granted are fully vested and expire 10 years from the grant date of the option.

2005 Equity Incentive Plan
The Company adopted the 2005 Equity Incentive Plan to provide stock options as a means of attracting and retaining qualified independent directors and employees for the Company.  A total of 2.3 million shares are available for future issuance under the equity incentive plan.  The exercise price of stock options may not be less than the fair market value of the common stock on the date of the grant.  The vesting and term of each option is set by the Board of Directors.  The Company granted 492,500 stock options under this plan in 2011 and 494,938 stock options under this plan in 2010.  In 2009, no stock options were granted under this equity incentive plan.
 
The following is a summary of activity in the stock option plans for 2011:
 
Shares Subject
to Option
 
Weighted- Average
Exercise Price
 
Weighted- Average Remaining Contractual Life (in Years)
 
Aggregate Intrinsic Value (in thousands)
Outstanding, December 31, 2010
829,224

 
$
13.75

 
 
 
 
Granted
492,500

 
22.10

 
 
 
 
Exercised
(69,375
)
 
7.56

 
 
 
 
Forfeited/Expired
(18,298
)
 
15.75

 
 
 
 
Outstanding, December 31, 2011
1,234,051

 
17.40

 
8.11
 
$
3,842

Exercisable, December 31, 2011
495,805

 
14.53

 
6.00
 
$
2,782


 
The total intrinsic value of options exercised in 2011 was $1.3 million.  Cash received from the exercise of stock options was $0.5 million for 2011.  Tax benefit realized for the tax deductions from stock options exercised was $0.7 million for 2011.  The weighted-average per share estimated grant date fair value of options issued in 2011 was $13.30.  Pre-tax unrecognized compensation expense for stock options was $8.1 million at December 31, 2011, and will be recognized as expense over a weighted-average period of 2.6 years.
 
The total intrinsic value of options exercised in 2010 was $0.4 million.  Cash received from the exercise of stock options was $0.3 million for 2010.  The weighted-average per share estimated grant date fair value of options issued in 2010 was $8.65. There was no tax benefit realized for the tax deductions from stock options exercised for 2010.
 
The total intrinsic value of options exercised in 2009 was $0.2 million.  Cash received from the exercise of stock options was $1.1 million for 2009.  There was no tax benefit realized for the tax deductions from stock options exercised for 2009.
 
The Company currently uses treasury shares to satisfy any stock option exercises.  At December 31, 2011, the Company had 0 thousand1.9 million shares of treasury stock.

Valuation Assumptions
The Company uses the Black-Scholes option pricing model to determine the fair value of its stock options.  The determination of the fair value of stock option awards on the date of grant using option pricing models is affected by the Company’s stock price, as well as assumptions regarding a number of complex and subjective variables.  These variables include the Company’s expected stock price volatility over the expected term of the awards, actual and projected stock option exercise behaviors, risk-free interest rates and expected dividends.  The expected term of options represents the period of time over which options are expected to be outstanding and is estimated based on historical experience.  Expected volatility is based on the historical volatility of the Company’s common stock calculated over the expected term of the option.  The risk-free interest rate is based on U.S. Treasury yields in effect at the date of grant.

Weighted average assumptions used for stock options issued in 2011 and 2010 (no options were issued in 2009):
 
2011
 
2010
Expected life (in years)
6.0

 
6.1

Expected volatility
65.8
%
 
55.5
%
Expected dividends
0.1
%
 
—

Risk-free interest rate
1.21
%
 
1.82
%