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Stock-Based Compensation Plans
 12 Months Ended
Dec. 31, 2011
Stock-Based Compensation Plans [Abstract]  
Stock-Based Compensation Plans
(9) Stock-Based Compensation Plans

The Company has grants outstanding under three equity compensation plans, with two available for future grants of equity compensation awards to employees, consultants and directors. All of the equity plans were approved by shareholders. The 2007 Long-Term Incentive Compensation Plan (the 2007 Plan) and the 2007 Directors’ Incentive Plan (the Directors’ Plan) superseded the 1999 Stock Option Plan. The 2007 Plan and the Directors’ Plan provide for the issuance of stock options, stock appreciation rights and restricted stock. Vesting is determined on a grant-by-grant basis in accordance with the terms of the plans and the related grant agreements. The Company has reserved 2.4 million shares of common stock for issuance under the 2007 Plan and 250,000 shares for issuance under the Directors’ Plan.

The exercise price of stock options is generally 100% of the fair market value of the underlying common stock on the grant date. The exercise price of incentive stock options granted to a shareholder who owns more than 10% of the total combined voting power of all classes of stock must be at least 110% of the fair market value of the underlying common stock on the grant date. The maximum contractual term of stock options is ten years from the date of grant, except for incentive stock options granted to 10% shareholders, which are five years.

 

During 2011, the Company began issuing shares of restricted stock with no exercise price to employees and directors. Restricted stock issued to employees generally cliff-vests on the fourth anniversary of the date of grant. Restricted stock issued to directors vests on the one-year anniversary of the date of grant.

Stock compensation expense is presented as a component of general and administrative expense in the accompanying consolidated statements of income. At December 31, 2011, there was approximately $1.1 million of unrecognized compensation cost related to share-based payments, which is expected to be recognized over a weighted-average period of 2.6 years. This amount relates primarily to unrecognized compensation cost for employees.

Stock Options

Stock option activity for the year ended December 31, 2011 was as follows:

 

      September 30,       September 30,       September 30,       September 30,  
     Number of
shares		     Weighted-
average
exercise
price per
share		     Weighted-
average
remaining
contractual
term (years)		     Aggregate
intrinsic
value		  

Outstanding, December 31, 2010

     1,905,470     $ 6.45                  
         

Options granted

     —         —                    

Options exercised

     (503,411 )      2.19                  

Options forfeited/expired

     (125,901 )      10.24                  
   

 

 

                          
         

Outstanding, December 31, 2011

     1,276,158       7.75       2.9     $ 700,294  
   

 

 

                          
         

Exercisable at December 31, 2011

     1,161,809     $ 7.34       2.8     $ 699,899  

Information related to the stock option plans during 2011, 2010 and 2009 was as follows:

 

      September 30,       September 30,       September 30,  
    2011     2010     2009  

Intrinsic value of options exercised

   $ 1,742,103     $ 5,519,588     $ 86,155,328  

Weighted-average fair value of equity granted

   $ 2.06     $ 4.13     $ 6.42  

The fair value of employee options granted during 2010 and 2009 was estimated using the Black-Scholes option-pricing model and the following assumptions:

 

    September 30,   September 30,
    2010   2009

Dividend yield

   —   —

Expected term (years)

   2.5 – 6.0   3.7 – 6.2

Expected volatility

   49% – 53%   50% – 52%

Risk-free interest rate

   0.8% – 2.8%   1.4% – 2.7%

 

The fair value of nonemployee options granted during 2010 and 2009 were estimated using the Black-Scholes option-pricing model and the following assumptions:

 

    September 30,   September 30,
    2010   2009

Dividend yield

   —   —

Expected term (years)

   5   2.3 – 10.0

Expected volatility

   52% – 53%   51% – 67%

Risk-free interest rate

   2.2% – 2.4%   1.1% –2.7%

The Company determined the expected life of employee share options based on the simplified method allowed by SEC Staff Accounting Bulletin (SAB) No. 107, as amended by SAB No. 110. Under this approach, the expected term is presumed to be the average between the weighted-average vesting period and the contractual term. The expected term for options granted to nonemployees is generally the contractual term of the option. The expected volatility over the term of the respective option was based on the volatility of similar publicly-traded entities. In evaluating similarity, the Company considered factors such as industry, stage of life cycle, size, and financial leverage. The risk-free interest rate is based on the U.S. Treasury Note, Stripped Principal, on the date of grant with a term substantially equal to the corresponding option’s expected term. The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future.

In the first quarter of 2009, options to purchase 773,556 shares of common stock were exercised with a weighted-average exercise price of $0.11 per share. A portion of the options were exercised using a net-share settlement feature that provided for the option holder to use 204,245 shares acquired upon exercise to settle the minimum statutory tax withholding requirements of approximately $2.7 million. During the third quarter of 2009, options to purchase 4,605,962 shares of common stock were exercised with a weighted-average exercise price of $0.55 per share. A portion of the options was exercised using a net-share settlement feature that provided for the option holder to use 1,445,074 shares acquired upon exercise to settle the minimum statutory tax withholding requirements of approximately $24.6 million. The payment of the exercise price for these options of approximately $2.6 million was settled by cash and the tendering of 140,788 shares of common stock by the optionees. In connection with these exercises, the Company agreed to repurchase up to $1.9 million in common stock during the first quarter of 2010 to provide for the settlement of the remaining tax liabilities associated with the exercise. The repurchase of these shares was completed in 2010.

Restricted Stock Awards

As previously noted, the Company began issuing restricted stock to employees and directors in 2011 under the provisions of the 2007 Plan and the Directors’ Plan. Restricted stock activity during 2011 was as follows:

 

      September 30,       September 30,  
     Number
of shares		     Weighted-
average
grant-date
fair value		  
     

Nonvested, December 31, 2010

     —       $ —    
     

Shares granted

     149,320       5.40  

Shares vested

     (1,000 )      5.28  

Shares forfeited

     (12,150 )      5.28  
   

 

 

          
     

Nonvested, December 31, 2011

     136,170       5.41  
   

 

 

          

The fair value of restricted stock granted during 2011 was based on the closing market price of the Company’s common stock on the date of grant.