Equity-Based Compensation

9 Months Ended

Sep. 30, 2012

Equity-Based Compensation [Abstract]

Equity-Based Compensation

9. Equity-Based Compensation

ICG issues the following types of equity-based compensation to its employees and non-employee directors: (1) stock appreciation rights (SARs), (2) stock options, (3) restricted stock and (4) deferred stock units (DSUs). The following table summarizes the equity-based compensation recognized in the respective periods; that equity-based compensation is primarily included in the line item “Selling, general and administrative” on ICG’s Consolidated Statements of Operations (in thousands, except weighted average years):

	Three Months Ended September 30,				Nine Months Ended September 30,				Unrecognized Equity-Based Compensation as of September 30,		Weighted Average Years Remaining of Equity-Based Compensation as of September 30,
	2012		2011		2012		2011		2012		2012
SARs	$	661	$	611	$	1,887	$	1,645	$	4,610		2.4
Restricted Stock		737		85		2,134		162		8,886		3.2
DSUs		87		175		332		528		144		0.4
Equity-Based Compensation		1,485		871		4,353		2,335		13,640
Equity-Based Compensation for Consolidated Core Companies		689		54		1,402		370		4,914		3.3
Equity-Based Compensation	$	2,174	$	925	$	5,755	$	2,705	$	18,554

SARs

Each SAR represents the right of the holder to receive, upon exercise of that SAR, shares of ICG Common Stock equal to the amount by which the fair market value of a share of that Common Stock on the date of exercise of the SAR exceeds the base price of the SAR. The base price is determined by the NASDAQ closing price of ICG’s Common Stock on the date of grant (or the closing price on the next trading day if there are no trades in ICG’s stock on the date of grant). The fair value of each SAR is estimated on the grant date using the Black-Scholes option-pricing model. SARs generally vest over four years, with 25% vesting on the first anniversary of the grant date, and the remaining 75% vesting equally each month over the subsequent 36 months. Activity with respect to SARs during the three and nine months ended September 30, 2012 and 2011 was as follows:

	Three Months Ended September 30,
	2012						2011
	Number of SARs		Weighted Average Base Price		Weighted Average Fair Value		Number of SARs		Weighted Average Base Price		Weighted Average Fair Value
Granted		500	$	9.84	$	5.23		—		—		—
Exercised (1)		16,000	$	8.41	$	4.96		—		—		—
Cancelled		607	$	6.70	$	3.93		—		—		—
	Nine Months Ended September 30,
	2012						2011
	Number of SARs		Weighted Average Base Price		Weighted Average Fair Value		Number of SARs		Weighted Average Base Price		Weighted Average Fair Value
Granted		260,125	$	9.23	$	4.89		275,625	$	12.15	$	6.58
Exercised (1)		16,000	$	8.41	$	4.96		98,057	$	10.35	$	5.86
Forfeited		1,598	$	10.54	$	5.83		—		—		—
Cancelled		607	$	6.70	$	3.93		—		—		—

⁽¹⁾  The exercise of those SARs resulted in the issuance of 1,516 shares of ICG’s Common Stock during the three and nine months ended September 30, 2012 and 19,998 shares of ICG’s Common Stock during the nine months ended September 30, 2011.

There were 4,389,311 and 4,147,391 SARs outstanding at September 30, 2012 and December 31, 2011, respectively. The aggregate intrinsic values of the SARs outstanding at September 30, 2012 and December 31, 2011 were $11.1 million and $2.1 million, respectively.

Stock Options

The fair value of each stock option is estimated on the grant date using the Black-Scholes option-pricing model. Stock options generally vest ratably over four years: 25% vests on the first anniversary of the grant date, and the remaining 75% vests equally each month over the subsequent 36 months. Activity with respect to stock options during the three and nine months ended September 30, 2012 and 2011 was as follows (in number of stock options):

	Three Months Ended September 30,
	2012						2011
	Number of Options		Weighted Average Base Price		Weighted Average Fair Value		Number of Options		Weighted Average Base Price		Weighted Average Fair Value
Exercised		26,342	$	7.08	$	5.07		15,300	$	8.39	$	6.44
Cancelled		229	$	8.41	$	4.96		39,619	$	28.00	$	23.39
	Nine Months Ended September 30,
	2012						2011
	Number of Options		Weighted Average Base Price		Weighted Average Fair Value		Number of Options		Weighted Average Base Price		Weighted Average Fair Value
Exercised		56,842	$	7.71	$	5.73		18,725	$	8.06	$	6.22
Cancelled		8,229	$	10.62	$	8.16		108,736	$	32.02	$	27.97
Forfeited		21	$	8.41	$	4.96		—		—		—

There were 118,116 and 183,208 stock options outstanding as of September 30, 2012 and December 31, 2011, respectively; the aggregate intrinsic values of the stock options outstanding at September 30, 2012 and December 31, 2011 were $0.6 million and $0.3 million, respectively.

SARs and Stock Options Fair Value Assumptions

ICG estimates the grant date fair value of SARs and stock options using the Black-Scholes option-pricing model, which requires the input of highly subjective assumptions. Those assumptions include estimating the expected life of the award and estimating volatility of ICG’s stock price over the expected term. Expected volatility approximates the historical volatility of ICG’s Common Stock over the period commensurate with the expected term of the award. The expected term calculation is based on an average of the award vesting term and the life of the award. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for an instrument with a maturity that is commensurate with the expected term of the award. Changes in these assumptions, the estimated forfeitures and/or the requisite service period can materially affect the amount of equity-based compensation recognized in ICG’s Consolidated Statements of Operations.

The following assumptions were used to determine the fair value of SARs granted to employees and a non-management director by ICG during the three and nine months ended September 30, 2012 and 2011:

	Three and Nine Months  Ended September 30,
	2012			2011
Expected volatility		56	%	56%
Average expected life of SAR (in years)		6.25		5.25-6.25
Risk-free interest rate		0.92	%	1.62-1.97%
Dividend yield		0	%	0%

Restricted Stock

ICG periodically issues shares of restricted stock to its employees and non-management directors. In October 2011, ICG issued 1,100,000 shares of restricted stock to its chief executive officer and its president. ICG has also issued shares of restricted stock to executives of one of its consolidated subsidiaries. Those awards are subject to a variety of vesting arrangements. As of September 30, 2012, outstanding shares of restricted stock vested as follows: (1) 87,498 shares of restricted stock vest 25% each year over a four-year period, (2) 69,875 shares of restricted stock vest 12.5% on the nine-month anniversary of the grant date, and the remaining 87.5% every six months subsequent to the first vesting date, (3) 320,834 shares of restricted stock vest in equal installments each November and May through November 9, 2015, (4) 366,666 shares of restricted stock vest based on certain performance goals related to ICG’s results, (5) 366,666 shares of restricted stock vest based on stipulated market thresholds related to ICG’s Common Stock price through December 31, 2015, (6) 18,750 shares of restricted stock vest 100% on the one-year anniversary date of the grant, and (7) 43,383 shares of restricted stock relate to awards issued to executives of one of its consolidated subsidiaries and vest upon the achievement of certain performance conditions or the seven-year anniversary of the grant. Share activity with respect to restricted stock awards for the three and nine months ended September 30, 2012 and 2011 are as follows (in thousands, except share data):

	Three Months Ended September 30,								Nine Months Ended September 30,
	2012				2011				2012				2011
	Number of Shares		Grant Date Fair Value		Number of Shares		Grant Date Fair Value		Number of Shares		Grant Date Fair Value		Number of Shares		Grant Date Fair Value
Granted		—	$	—		—	$	—		116,973	$	1,065		81,910	$	267
Vested		—	$	—		—	$	—		68,711	$	653		6,250	$	87
Forfeited		—	$	—		—	$	—		375	$	—		—	$	—

There were 1,273,672 and 1,225,785 shares of restricted stock issued and unvested at September 30, 2012 and December 31, 2011, respectively.

The issuance of shares of ICG restricted stock to executives of one of ICG’s consolidated subsidiaries during the nine months ended September 30, 2012 and 2011 is included with the issuances of shares of restricted stock to employees in the line item “Issuance of restricted stock to employees, net of forfeitures” in ICG’s Consolidated Statements of Changes in Equity and the vesting amortization associated with those awards of $0.3 million and less than $0.1 million for the nine months ended September 30, 2012 and 2011, respectively, is included in the line item “Equity-based compensation expense related to restricted stock” in ICG’s Consolidated Statements of Changes in Equity. The expense associated with those awards of $0.3 million and less than $0.1 million for the nine months ended September 30, 2012 and 2011, respectively, is included in line item “Equity-Based Compensation for Consolidated Core Companies” in the summary table above.

Deferred Stock Units (DSUs)

ICG periodically issues DSUs to its non-management directors. Each DSU represents a share of Common Stock into which that DSU will be converted upon the termination of the recipient’s service at ICG. Those DSUs general vest on the one-year anniversary of the grant date. Share activity with respect to those DSUs for the three and nine months ended September 30, 2012 and 2011 are as follows (in thousands, except share data):

	Nine Months Ended September 30,
	2012				2011
	Number of DSUs		Grant Date Fair Value		Number of DSUs		Grant Date Fair Value
Granted		41,250	$	347		60,000	$	799
Vested		52,500	$	699		39,000	$	245

There were 41,250 DSUs and 52,500 DSUs issued and unvested at September 30, 2012 and December 31, 2011, respectively.

ICG issues quarterly compensation payments to each non-management director for his service on the Board of Directors and its committees, as applicable, under the Director Plan. Each director has the right to elect to receive those payments in whole or in part in the form of DSUs in lieu of cash. Each participating director receives DSUs representing shares of ICG’s Common Stock with a fair market value equal to the relevant cash fees (with such fair market value determined by reference to the closing Common Stock price reported by NASDAQ on the date these cash fees otherwise would have been paid). Those DSUs vest immediately. The expense for those DSUs is recorded when the fees to which the DSUs relate are earned.

During the three and nine months ended September 30, 2012, ICG issued 9,473 and 24,724 DSUs, respectively, to ICG’s non-management directors. During the three and nine months ended September 30, 2011, ICG issued 2,759 and 8,493 DSUs, respectively, to ICG’s non-management directors. The expense of $0.1 million and $0.3 million for the three- and nine month-periods ended September 30, 2012, respectively, and less than $0.1 million and $0.1 million for the three- and nine-month periods ended September 30, 2011, respectively, associated with the quarterly grants for service is included in the line item “Selling, general and administrative” in ICG’s Consolidated Statements of Operations (but is not reflected in the summarized Equity-Based Compensation table above).

Consolidated Core Companies

All of ICG’s consolidated core companies issue equity-based compensation awards to their employees. Those awards are most often in the form of stock options that vest over four years. The fair value of the stock option awards are estimated on the grant date using the Black-Scholes option pricing model. The majority of the stock options vest 25% on the first anniversary of the grant date, and the remaining 75% vest equally each month over the subsequent 36 months. The remaining awards generally vest ratably over four years, with 25% vesting on each anniversary date over that term.