Stock-Based Compensation

9 Months Ended

Sep. 30, 2012

Stock-Based Compensation

4. Stock-Based Compensation

Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense ratably over the requisite service period, which is generally the vesting period, net of estimated forfeitures.

The Company awards non-vested stock to employees, directors and executive officers in the form of Restricted Stock Awards (“RSAs”) and Restricted Stock Units (“RSUs”), market-based RSAs and RSUs, stock options and performance-based RSAs and RSUs. The Compensation Committee of the Company’s Board of Directors approves stock-based compensation awards for all employees and executive officers of the Company. The Corporate Governance and Nominating Committee of the Company’s Board of Directors approves stock-based compensation awards for all non-employee directors of the Company. The Company uses the fair-market value of the Company’s common stock on the date the award is approved to measure fair value for service-based awards, a Monte Carlo simulation model to determine both the fair value and requisite service period of market-based awards and the Black-Scholes option-pricing model to determine the fair value of stock option awards. The Company presents as a financing activity in the consolidated statement of cash flows the benefits of tax deductions in excess of the tax-effected compensation of the related stock-based awards for the options exercised and RSAs and RSUs vested. In accordance with Accounting Standards Codification (“ASC”) 718, Compensation-Stock Compensation, the Company’s forfeiture rate as of September 30, 2012 includes the impact of the cost reduction initiatives the Company announced on November 8, 2012 (see Note 17, Subsequent Events).

The Company recognized pre-tax compensation expense recorded in salaries and related in the consolidated statements of operations and comprehensive income (loss) related to stock-based compensation as follows (the following table excludes stock-based compensation attributable to the business held for sale) :

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Non-vested stock, included in salaries and related	$	5,711	$	8,693	$	21,223	$	33,462
Stock options, included in salaries and related		—		95		51		343
Total	$	5,711	$	8,788	$	21,274	$	33,805

During the nine months ended September 30, 2012 and 2011, the Company capitalized $1,202 and $1,704, respectively, of stock-based compensation associated with internally developed software for internal use and enhancements to our website.

During the first nine months of 2012, the Company granted an aggregate of 3,146,515 RSAs and 1,222,026 RSUs to approximately 242 employees, executive officers and directors of the Company. The RSAs and RSUs vest in various increments on the anniversaries of the individual grant dates, through September 18, 2016, subject to the recipient’s continued employment or service through each applicable vesting date. The fair-market value of RSAs and RSUs vested during the nine months ended September 30, 2012 is $23,373.

The Company’s non-vested stock activity for the nine months ended September 30, 2012 is as follows:

(thousands of shares)	Shares			Weighted Average Fair Value at Grant Date
Non-vested at January 1, 2012		7,432		$	13.85
Granted		4,369			6.89
Forfeited		(692	)		13.65
Vested		(3,000	)		14.00
Non-vested at September 30, 2012		8,109		$	10.06

As of September 30, 2012, the unrecognized compensation expense related to non-vested stock was $63,653, which is being amortized over the requisite service period on a straight-line basis. The remaining weighted average term over which the unamortized compensation expense will be recognized is 1.6 years.

The Company’s stock option activity for the nine months ended September 30, 2012 is as follows:

(thousands of shares)	Shares			Weighted Average Exercise Price		Weighted Average Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at January 1, 2012		1,560		$	24.10
Granted		—			—
Forfeited		(522	)		14.63
Exercised		(3	)		9.11
Outstanding at September 30, 2012		1,035		$	29.01		2.22	$	—
Options exercisable at September 30, 2012		1,035		$	29.01		2.22	$	—

Aggregate intrinsic value is calculated as the difference between the closing market price of the Company’s common stock as of September 30, 2012 and the exercise price of the underlying options. During the nine months ended September 30, 2012 and 2011, the aggregate intrinsic value of options exercised was $0 and $4, respectively. As of March 31, 2012, all stock options granted have been fully expensed.