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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2012
Stock-Based Compensation [Abstract]  
STOCK-BASED COMPENSATION
8. STOCK-BASED COMPENSATION

On April 29, 2009, our shareholders approved the P. H. Glatfelter Amended and Restated Long Term Incentive Plan (the “LTIP”) authorizing, among other things, the issuance of up to 5,500,000 shares of Glatfelter common stock to eligible participants. The LTIP provides for the issuance of restricted stock units, restricted stock awards, non-qualified stock options, performance shares, incentive stock options and performance units. As of December 31, 2012, there were 1,708,079 shares of common stock available for future issuance under the LTIP.

Since the approval of the LTIP, we have issued to eligible participants restricted stock units, performance share awards and stock only stock appreciation rights (“SOSARs”).

Restricted Stock Units (“RSUs”) and Performance Share Awards (“PSAs”)    Awards of RSUs and PSAs are made under our LTIP. The vesting of RSUs is based solely on the passage of time, generally on a graded scale over a three, four, and five-year period. PSAs were first issued in March 2011 to members of senior management and cliff vest December 31, 2013, assuming the achievement of predetermined, three-year cumulative performance targets. The performance measures include a minimum, target and maximum performance level providing the grantees an opportunity to receive more or less shares than targeted depending on actual financial performance. For both RSUs and PSAs, the grant date fair value of the awards, which is equal to the closing price per common share on the date of the award, is used to determine the amount of expense to be recognized over the applicable service period. Settlement of RSUs and PSAs will be made in shares of our common stock.

 

The following table summarizes RSU and PSA activity during the past three years:

 

                         

Units

     2012       2011       2010  

Balance January 1,

     788,088       579,801       564,037  

Granted

     209,021       251,031       203,889  

Forfeited

     (52,800 )      (28,254 )      (37,368 ) 

Shares delivered

     (96,630 )      (14,490 )      (150,757 ) 

Balance December 31,

     847,679       788,088       579,801  

 

                         
    Dollars in thousands                     

Compensation expense

   $ 2,576     $ 2,069     $ 1,708  

 

The amount granted in 2012 and 2011 includes 161,083 and 98,187 PSAs, respectively, exclusive of reinvested dividends. The weighted average grant fair value per unit for awards in 2012, 2011 and 2010 was $15.49, $12.47, and $13.24, respectively. As of December 31, 2012, unrecognized compensation expense for outstanding RSUs and PSAs totaled $4.0 million. The weighted average remaining period over which the expense will be recognized is 2.2 years.

 

Stock Only Stock Appreciation Rights    The following table sets forth information related to outstanding SOSARS:

 

                                                 
    2012     2011     2010  

SOSARS

     Shares      
 		 Wtd Avg
Exercise Price		   
  		     Shares      
 		 Wtd Avg
Exercise Price		   
  		     Shares      
 		 Wtd Avg
Exercise Price		   
  

Outstanding at January 1,

     2,298,288     $ 12.35       2,061,877     $ 12.28       1,762,020     $ 11.84  

Granted

     364,114       15.58       345,290       12.56       470,520       13.77  

Exercised

     (500,074 )      12.06       –       –       –       –  

Canceled / forfeited

     (40,874 )      14.31       (108,879 )      11.82       (170,663 )      11.81  

Outstanding at December 31,

     2,121,454       12.93       2,298,288       12.35       2,061,877       12.28  

Exercisable at December 31,

     1,469,537       12.30       1,554,852       12.45       1,135,281       12.78  

Vested and expected to vest

     2,055,599               2,076,341               2,059,524          
             

SOSAR Grants

                                                

Weighted average grant date fair value per share

   $ 4.94             $ 4.09             $ 4.65          

Aggregate grant date fair value (in thousands)

   $ 1,797             $ 1,412             $ 2,179          

Black-Scholes assumptions

                                                

Dividend yield

     2.31 %              2.87 %              2.61 %         

Risk free rate of return

     1.02 %              2.55 %              2.48 %         

Volatility

     41.48 %              41.91 %              42.34 %         

Expected life

     6 yrs               6 yrs               6 yrs          

Compensation expense (in thousands)

   $ 1,448             $ 1,564             $ 2,254          

 

Under terms of the SOSAR, the recipients received the right to receive a payment in the form of shares of common stock equal to the difference, if any, in the fair market value of one share of common stock at the time of exercising the SOSAR and the exercise price. The SOSARs vest ratably over a three year period. As of December 31, 2012, the intrinsic value of SOSARs vested and expected to vest totaled $9.4 million. The remaining weighted average contractual life of outstanding SOSARs was 6.7 years as of December 31, 2012.

Our LTIP also permits the issuance of nonqualified stock options; however, we have not issued any options since 2004. As of December 31, 2012, 22,500 stock options were outstanding with a weighted average exercise price of $11.29 per share. All options expire on the earlier of termination or, in some instances, a defined period subsequent to termination of employment, or ten years from the date of grant. The exercise price represents the quoted market price of Glatfelter common stock on the date of grant, or the average quoted market prices of Glatfelter common stock on the first day before and after the date of grant for which quoted market price information was available if such information was not available on the date of grant. As of December 31, 2012, the intrinsic value of outstanding stock options totaled $0.1 million.