SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2011

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

NOTE 12: SHARE-BASED COMPENSATION

        Share-based compensation is measured at grant date, based on the fair value of the award, and is recognized on a straight-line basis over the requisite service period. See Note 1 for additional information. The following table presents total share-based compensation expense, which is a non-cash charge, included in the Consolidated Statements of Income:

	Year Ended December 31,
	2011			2010			2009
	(in thousands)
Direct cost of services	$	309		$	222		$	427
General and administrative		7,060			6,505			8,116
Pre-tax share-based compensation expense		7,369			6,727			8,543
Income tax benefit		(3,190	)		(2,112	)		(2,375	)
Total share-based compensation expense, net of tax	$	4,179		$	4,615		$	6,168

        Share-based compensation expense was adjusted for stock options and awards that we estimate will be forfeited prior to vesting. We use historical information to estimate employee termination and the resulting forfeiture rate. As of December 31, 2011, there was $5.1million of total unrecognized compensation cost related to nonvested share-based compensation arrangements, which will be recognized over a weighted-average period of 3.2 years.

        The 2004 Equity Incentive Plan, as amended (the "2004 Plan") limits the combined grant of options to acquire shares of common stock, stock appreciation rights, and nonvested share (commonly referred to as restricted stock) awards stock to 7,500,000 shares. Any grant under the 2004 Plan that expires or terminates unexercised, becomes unexercisable or is forfeited will generally be available for further grants. At December 31, 2011, there were approximately 659,299 shares of common stock available for future equity-related grants under the 2004 Plan.

        As part of certain acquisitions and as an inducement to key employees, stock options are issued outside of the 2004 Plan from time to time. These options are granted at an option exercise price equal to fair market value of the common stock on the date of grant, are non-qualified options, are exercisable for up to 10 years from the date of grant, and generally vest 25% on the second anniversary of the grant date and continue to vest 25% per year on each anniversary of the grant date until fully vested.

        Although various forms of equity instruments may be issued, through December 31, 2011 we have only issued incentive stock options, nonqualified stock options, and nonvested share awards under the 2004 Plan.

Stock Options

        Stock options are awards which allow the employee or director to purchase shares of our common stock at prices equal to the fair value at the date of grant. Stock options are issued with an exercise price equal to the grant date closing market price of our common stock. Stock options become exercisable under various vesting schedules, ranging from immediate vesting to a 7 year vesting period, and expire 10 years from the date of grant.

        The estimated fair value of stock options is determined using the Black-Scholes valuation model. Key inputs and assumptions to estimate the fair value of stock options include the grant price of the award, the expected option term, the volatility of the company's stock, the risk-free interest rate, and the company's dividend yield. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by individuals who receive equity awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the company.

        The fair value of each stock option grant was estimated at the date of grant using a Black-Scholes option pricing model. The following table presents the weighted-average assumptions used and the weighted-average fair value per option granted.

	Year Ended December 31,
	2011			2010			2009
Expected life of stock option (years)		6.6			6.5			6.4
Expected volatility		30	%		37	%		41	%
Risk-free interest rate		2.5	%		2.7	%		3.0	%
Dividend yield		1.08	%		0.63	%		0	%
Weighted average grant-date fair value	$	4.49		$	4.68		$	6.84

        We have estimated the expected term of our stock options based on the historical exercise pattern of groups of employees that have similar historical exercise behavior. The expected volatility is estimated based upon implied volatilities from traded stock options on our stock and on our stock's historical volatility, based on daily stock prices. The expected risk-free interest rate is based on the United States Treasury yield curve in effect at the time of the grant. We calculate the expected dividend yield based on an average of historical stock prices and on our estimate of dividends expected to be paid.

        A summary of option activity during the year ended December 31, 2011 is presented below (shares and aggregate intrinsic value in thousands):

	Shares			Weighted Average Exercise Price		Weighted Average Contractual Term		Aggregate Intrinsic Value
Outstanding, beginning of period		7,121		$	11.92
Granted		558			14.60
Exercised		(519	)		9.59
Forfeited		(180	)		14.58
Expired		(85	)		16.61
Outstanding, end of period		6,895		$	12.19		4.35	$	7,320
Options vested and expected to vest, end of period		6,779		$	12.14		4.28	$	7,318
Options exercisable, end of period		5,836		$	11.72		3.73	$	7,289

        The aggregate intrinsic value was calculated using the difference between the December 31, 2011 market price and the grant price for only those awards that have a grant price that is less than the December 31, 2011 market price.

        The following table summarizes information about stock options outstanding as of December 31, 2011 (in thousands, except contractual life and price data):

	Options Outstanding
							Options Exercisable
			Weighted- Average Remaining Contractual Life (in years)
Range of Exercise Prices	Number Outstanding				Weighted- Average Exercise Price		Number Exercisable		Weighted- Average Exercise Price
$8.13 to $10.39		2,252		3.45	$	9.45		2,252	$	9.45
$10.40 to $12.64		1,796		2.31		11.24		1,687		11.21
$12.65 to $15.15		1,743		6.47		13.95		1,120		13.60
$15.16 to $18.15		1,104		6.17		16.52		777		16.67
		6,895		4.35		12.19		5,836		11.72

Exercises of Stock Options

        The total intrinsic value of stock options exercised during the years ended December 31, 2011, 2010, and 2009 was $2.4 million, $2.2 million, and $2.7 million, respectively. During the years ended December 31, 2011, 2010, and 2009 we received cash for payment of the grant price of exercised stock options of approximately $2.9 million, $1.5 million, and $2.9 million, respectively, and we anticipate we will realize a tax benefit related to these exercised stock options of approximately $1.9 million, $3.8 million, and $2.7 million, respectively. The cash received for payment of the grant price is included as a component of cash flows from financing activities. The tax benefit related to the option exercise price in excess of the option fair value at grant date is separately disclosed as a component of cash flows from financing activities on the consolidated statement of cash flows, and the remainder of the tax benefit is included as a component of cash flows from operating activities.

        We settle stock option exercises and nonvested share awards with newly issued common shares or treasury stock.

Nonvested Share Awards

	Shares			Weighted Average Grant Date Fair Value
Nonvested, beginning of period		200		$	11.67
Granted		430			13.39
Vested		(200	)		11.67
Forfeited/Canceled		—			—
Outstanding, end of period		430		$	13.39

        The fair value of performance-based stock awards is based on the closing market price of our common stock on the date of award.

        Nonvested share awards entitle the holder to shares of common stock as the award vests. During the year ended December 31, 2011, we granted 430,000 nonvested share awards at a weighted-average grant date price of $13.39 per share. These awards vest 12 months after the date of grant upon achievement of a performance condition for the calendar year ending December 31, 2011. As of December 31, 2011, the performance condition had been met.

        In 2010 we granted 430,000 nonvested share awards at a weighted-average grant date price of $11.67 per share; 230,000 of these awards vested six months after the date of grant, and 200,000 of these awards vest 12 months after the date of grant upon achievement of a performance condition for the calendar year ending December 31, 2010. As of December 31, 2010 the performance condition had been met.