Stock-Based Compensation

3 Months Ended

Mar. 31, 2013

Share-based Compensation [Abstract]

Stock-Based Compensation

Stock-Based Compensation

Stock Option Activity

A summary of the Company’s stock option activity for the three months ended March 31, 2013 is as follows (share numbers and aggregate intrinsic values in thousands):

	Number of Options Outstanding		Weighted Average Exercise Price		Weighted Average Contractual Term (Years)	Aggregate Intrinsic Value
Balances, December 31, 2012	2,034		$	17.09
Granted	2		32.99
Exercised	(947	)	13.08
Forfeited, cancelled or expired	(22	)	27.65
Balances, March 31, 2013	1,067		$	20.46	5.8	$	25,898
Options vested and expected to vest at March 31, 2013	1,037		$	20.15	5.7	$	25,488
Options vested at March 31, 2013	773		$	17.00	4.8	$	21,268

During the three months ended March 31, 2013, the Company granted options to purchase an aggregate of 2,000 shares of common stock with an estimated weighted-average grant-date fair value of $12.55 per share. The total intrinsic value of options exercised during the three months ended March 31, 2013, was $27,628,000.  Net cash proceeds from the exercise of stock options were $12,390,000 for the three months ended March 31, 2013.

Valuation of Stock Options

The Company estimated the fair value of each option award on the date of grant using the Black-Scholes option-pricing model and the assumptions noted in the following table.  In the three months ended March 31, 2013 and 2012, the Company calculated volatility using an average of its historical and implied volatilities. The expected term of options gave consideration to historical exercises, post-vesting cancellations and the options’ contractual term. The risk-free rate for the expected term of the option is based on the U.S. Treasury Constant Maturity at the time of grant. The assumptions used to value options granted during the three months ended March 31, 2013 and 2012 were as follows:

	Three Months Ended
	March 31,
	2013		2012
Dividend yield	—		—
Annual risk free rate of return	0.8	%	0.9	%
Expected volatility	47.0	%	58.7	%
Expected term (years)	4.2		4.3

Employee stock-based compensation expense recognized in the three months ended March 31, 2013 and 2012, was calculated based on awards ultimately expected to vest and has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Restricted Stock Units

The Company grants restricted stock units (“RSUs”) to its employees under the provisions of the 2006 Equity Incentive Plan and Inducement awards to certain new employees upon hire in accordance with NASDAQ Listing Rule 5635(c)(4). The cost of RSUs is determined using the fair value of the Company’s common stock on the date of grant. RSUs typically vest and are settled annually, based on a three or four year total vesting term.  Compensation cost is amortized on a straight-line basis over the requisite service period.

Restricted Stock Unit Activity

A summary of the Company’s RSU activity for the three months ended March 31, 2013, is as follows (share numbers in thousands):

	Number of Units Outstanding		Weighted Average Grant Date Fair Value
Awarded and unvested, December 31, 2012	3,252		$	31.10
Granted	1,268		41.33
Vested	(664	)	28.66
Forfeited	(58	)	34.69
Awarded and unvested, March 31, 2013	3,798		$	34.89
Restricted stock units expected to vest, March 31, 2013	3,250

Included in the RSU grants for the three months ended March 31, 2013, are 355,000 RSUs that have both performance and service vesting criteria ("PBRSU").  The performance criteria are tied to the Company’s 2013 financial performance and which have three year service criteria.  Compensation cost associated with these PBRSUs is recognized on an accelerated attribution model and ultimately based on whether or not satisfaction of the performance criteria is probable. If in the future, situations indicate that the performance criteria are not probable, then no further compensation cost will be recorded and any previous costs will be reversed.

At March 31, 2013, the Company had $104,009,000 of total unrecognized compensation expense, net of estimated forfeitures, related to stock options and RSUs that will be recognized over a weighted-average period of approximately three years.