Share-Based Compensation

9 Months Ended

Sep. 30, 2011

Share-Based Compensation [Abstract]

SHARE-BASED COMPENSATION

H – SHARE-BASED COMPENSATION

          The Company accounts for share-based payment accruals under authoritative guidance on stock compensation, as set forth in Topic 718 of the Codification. The guidance requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values.

          On May 8, 2006, the Company’s stockholders approved its 2006 Long-Term Incentive Plan (the “Plan”). The Company reserved a maximum of 2,400,000 shares of its common stock for issuances under the Plan. The Plan includes a provision that, at the request of a grantee, the Company may repurchase shares to satisfy the grantee’s federal and state income tax withholding requirements. All repurchased shares will be held by the Company as treasury stock. On May 8, 2008, the Plan was amended to increase the maximum authorized number of shares to be issued under the Plan from 2,400,000 to 6,000,000. On May 3, 2010, the Plan was amended to increase the maximum authorized number of shares to be issued under the Plan from 6,000,000 to 7,400,000. As of September 30, 2011, 1,216,801 shares of common stock remained reserved for issuance under the Plan.

          As of September 30, 2011, the Company had $3.8 million of unrecognized compensation related to common stock awards granted under the Plan. That cost is expected to be recognized over a weighted-average period of two years. The related compensation recognized during the three and nine months ended September 30, 2011 was $0.9 million and $2.5 million, respectively, and during the three and nine months ended September 30, 2010 was $0.8 million and $2.3 million, respectively. During the three and nine months ended September 30, 2011, $0.7 million and $2.1 million, respectively, of recognized compensation was recorded as compensation expense and $0.2 million and $0.4 million, respectively, was recorded as capitalized internal costs. During the three and nine months ended September 30, 2010, all recognized compensation was recorded to compensation expense.

          In May 2011, the Company granted 1,530,500 stock appreciation rights (“SARs”) under the Plan at an exercise price of $1.73 per share, which was the weighted average closing price of the Company’s common stock on the date of grant. Compensation expense related to the SARs is based on fair value re-measured at each reporting period and recognized over the vesting period (generally four years). As of September 30, 2011, the fair value calculation resulted in $0.1 million expense recognized during the three and nine months ended September 30, 2011. The SARs expire ten years from date of grant and upon exercise. The Company will settle the SARs in cash, net of the applicable taxes.

          The Company uses the Black-Scholes option pricing model to compute the fair value of the SARs. The following assumptions were used in calculating fair value:

• The risk-free interest rate is based on the zero coupon United States Treasury yield for the expected life of the grant.

• The dividend yield on the Company’s common stock is assumed to be zero since the Company does not pay dividends and has no current plans to do so in the future.

• The volatility of the Company’s common stock is based on volatility of the market price of the Company’s common stock over a period of time equal to the expected term and ending on the grant date.