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11. SHARE-BASED COMPENSATION
On May 17, 2011, our shareholders approved the Georgia Gulf Corporation 2011 Equity and Performance Incentive Plan (the "2011 Plan"). Under the 2011 Plan, we are authorized to grant various stock compensation awards for up to 1,800,000 shares of our common stock to officers, employees and non-employee directors, among others. We have entered into various types of share-based payment arrangements with participants, including restricted stock unit awards and stock option grants. We issue previously unissued shares upon the exercise of stock options and the vesting of restricted stock units. As of September 30, 2011, there were 1,685,044 shares available for future grant to participants under our 2011 Plan. In connection with our adoption, and shareholder approval of, the 2011 Plan, we agreed to not grant additional stock-based compensation awards under our other equity compensation plans.
Total after-tax share-based compensation cost by type of program was as follows:
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|
|
|
|
|
|
|
|
Nine months
ended
September 30, |
|
|
(In thousands) |
|
2011 |
|
2010 |
|
|
Restricted stock units expense |
|
$ |
5,295 |
|
$ |
1,959 |
|
|
Stock options expense |
|
|
191 |
|
|
477 |
|
| |
|
|
|
|
|
|
Before-tax share-based compensation expense |
|
|
5,486 |
|
|
2,436 |
|
|
Income tax benefit |
|
|
(1,683 |
) |
|
(965 |
) |
| |
|
|
|
|
|
|
After-tax share-based compensation expense |
|
$ |
3,803 |
|
$ |
1,471 |
|
| |
|
|
|
|
|
The amount of share-based compensation cost capitalized in periods represented was not material.
As of September 30, 2011 and 2010, we had approximately $6.2 million and $5.8 million of total unrecognized compensation cost related to nonvested share-based compensation, which we will record in our statements of income over a weighted average recognition period of approximately two years. The total fair value of shares vested during the nine months ended September 30, 2011 and 2010 was $5.2 million and $7.0 million, respectively.
Stock Options. During the nine months ended September 30, 2011 and 2010, we did not grant any options to purchase shares. Stock option exercise prices are equal to the closing price of our common stock on the date of grant. Outstanding stock options vest over a three-year period from the date of grant and expire no more than ten years after the date of grant.
A summary of stock option activity under all plans for the nine months ended September 30, 2011 is as follows:
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|
Nine Months Ended September 30, 2011 |
|
|
|
Shares |
|
Weighted
Average
Remaining
Contractual
Terms (Years) |
|
Weighted
Average
Exercise
Price |
|
Aggregate
Intrinsic Value |
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Outstanding on January 1, 2011 |
|
|
155,693 |
|
|
|
$ |
340.48 |
|
|
|
|
|
Exercised |
|
|
(1,840 |
) |
|
|
|
21.25 |
|
|
|
|
|
Expired |
|
|
(6,980 |
) |
|
|
|
422.50 |
|
|
|
|
|
Forfeited |
|
|
(14,029 |
) |
|
|
|
743.80 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding on September 30, 2011 |
|
|
132,844 |
|
5.9 years |
|
$ |
298.00 |
|
$ |
7 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable as of September 30, 2011 |
|
|
114,748 |
|
5.6 years |
|
$ |
341.42 |
|
$ |
5 |
|
|
Vested or expected to vest as of September 30, 2011 |
|
|
132,741 |
|
5.9 years |
|
$ |
298.21 |
|
$ |
7 |
|
Stock-based Compensation Related to Stock Options. The fair value of stock options granted has been estimated as of the date of grant using the Black-Scholes option-pricing model. The use of a valuation model requires us to make certain assumptions with respect to selected model inputs. We use the historical volatility for our stock, as we believe that historical volatility is more representative than implied volatility. The expected life of the awards is based on historical and other economic data trended into the future. The risk-free interest rate assumption is based on observed interest rates appropriate for the terms of our awards. The dividend yield assumption is based on our history and expectation of dividend payouts. The use of a different model or different assumptions may result in a materially different valuation.
Restricted Stock Units. In May 2011, we granted performance restricted stock units ("PRSUs"), which are a form of restricted stock unit in which the number of shares ultimately earned depends on our stock price performance measured against specified performance targets. Following each vesting period, the number of PRSUs subject to award is determined by multiplying the target award by a percentage ranging from 0% to 150%. The percentage is based on predetermined performance metrics related to our stock price for the respective period. The PRSUs are included with all restricted stock units in all calculations.
During the nine months ended September 30, 2011 and 2010, we granted 290,003 and 154,048 restricted stock units, respectively. The restricted stock units are expensed over the requisite service period for each award which generally equals the stated vesting period. The weighted average grant date fair value per share of restricted stock units granted during the nine months ended September 30, 2011 and 2010 was $27.55 and $16.37, respectively, which is based on the stock price as of the date of grant or, in the case of the PRSUs, the fair value was estimated using a Monte Carlo simulation model. A summary of restricted stock units (including PRSUs) and related changes therein during the nine months ended September 30, 2011 is as follows:
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|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2011 |
|
|
|
Shares |
|
Weighted
Average
Remaining
Contractual
Terms (Years) |
|
Weighted
Average
Grant Date
Fair Value |
|
Aggregate
Intrinsic Value |
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Outstanding on January 1, 2011 |
|
|
909,358 |
|
|
|
$ |
10.75 |
|
|
|
|
| |
Granted |
|
|
290,003 |
|
|
|
|
27.55 |
|
|
|
|
| |
Vested |
|
|
(399,212 |
) |
|
|
|
10.57 |
|
|
|
|
| |
Forfeited |
|
|
(7,334 |
) |
|
|
|
8.75 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding on September 30, 2011 |
|
|
792,815 |
|
2.5 Years |
|
$ |
17.00 |
|
$ |
10,965 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Vested or expected to vest as of September 30, 2011 |
|
|
693,465 |
|
2.5 Years |
|
$ |
15.54 |
|
$ |
9,591 |
|
|