Stock-Based Compensation Plans

Total stock-based compensation cost recognized in the consolidated statements of operations as a component of selling, general and administrative expenses was $5.8 million, $5.5 million and $4.8 million for the years ended December 31, 2012, 2011 and 2010, respectively. Total unrecognized compensation cost related to non-vested share-based compensation arrangements was $4.6 million at December 31, 2012, which is expected to be recognized over a weighted-average period of 1.7 years.

Employee stock-based compensation expense recognized in 2012 was calculated based on awards ultimately expected to vest and has been reduced for estimated forfeitures. Our forfeiture experience since inception of our plans has been approximately 4% of the total grants. The historical rate of forfeiture is a component of the basis for predicting the future rate of forfeitures, which are also dependent on the remaining service period related to grants and on the limited number of approximately 84 plan participants that have been awarded grants since the inception of our plans. We issue new shares to satisfy stock option exercises.

In 2010, we established the 2010 Long-Term Incentive Plan. All shares available for issuance under our previous plans have been transferred to the 2010 Long-Term Incentive Plan, from which all future awards will be made. The following table summarizes the number of securities to be issued and remaining available for future issuance under all of the plans as of December 31, 2012:



	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column 1)
2004 Long-Term Incentive Plan
-options	17,376	$	34.94	—
2005 Long-Term Incentive Plan
-Restricted stock units	3,053	$	0.01	—
2007 Long-Term Incentive Plan⁽¹⁾	202,480	$	21.40	—
2010 Long-Term Incentive Plan ⁽¹⁾	204,673	$	1.21	370,271

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(1)	Includes non-qualified stock options, restricted stock units and performance shares.

2004 Long-Term Incentive Plan

The 2004 Long-Term Incentive Plan (“2004 LTIP”) provided for issuance of shares of non-qualified stock options and restricted stock units to officers and key employees. For option grants, the exercise price equals the fair value of the Company's common stock on the date of grant. Options vested over a three-year period; one-third of the options cliff-vest on the first anniversary of the vesting commencement date and the remaining options vest in equal monthly installments over the two-year period following the first anniversary of the vesting commencement date. Stock options expire seven years after the date of grant. No further grants will be made under the 2004 LTIP.

2005 Long-Term Incentive Plan

The 2005 Long-Term Incentive Plan (“2005 LTIP”) provided for the granting of restricted stock units to officers and key employees. The majority of restricted stock units issued under the 2005 LTIP generally vest over three years: one-third of the restricted stock units cliff vest on the first anniversary of the vesting commencement date and the remaining restricted stock units vest in equal quarterly installments over the two-year period following the first anniversary of the vesting commencement date. Restricted stock units do not have an expiration date. No further grants will be made under the 2005 LTIP.

2005 Directors' Equity Incentive Plan

The 2005 Directors' Equity Incentive Plan (“2005 Directors' Plan”) consists of 15,000 non-qualified stock options that

have been granted to non-employee Directors of the Company. The terms and vesting requirements of the 2005 Directors' Plan are similar to those of the 2004 LTIP, except options vest quarterly after the first anniversary of the vesting commencement date. No stock options are available for future issuance.

2007 Long-Term Incentive Plan

The 2007 Long-Term Incentive Plan (“2007 LTIP”) provided for the granting of stock options, restricted stock units and performance share awards of our common stock to officers, employees and non-employee directors. The majority of awards issued under the 2007 LTIP generally vest over three years: one-third of the awards cliff vest on the first anniversary of the vesting commencement date and the remaining awards vest in equal quarterly installments over the two-year period following the first anniversary of the vesting commencement date. Stock options expire seven years after the date of grant. Restricted stock units do not have an expiration date. No further grants will be made under the 2007 LTIP.

2010 Long-Term Incentive Plan

The 2010 Long-Term Incentive Plan (“2010 LTIP”) provides for the granting of awards of up to 1,115,952 shares of our common stock to officers, employees and non-employee directors. The 2010 LTIP became effective on April 1, 2010 and awards may be made under the plan through March 31, 2020. The available awards under the 2010 LTIP include: stock options, stock appreciation rights, restricted stock units, other stock-based awards and performance shares. The 2010 LTIP limits awards to 100,000 shares to any one participant in any one year. The majority of awards issued under the 2010 LTIP through December 31, 2012, have been restricted stock units which generally vest over three years: one-third of the restricted stock units cliff vest on the first anniversary of the vesting commencement date and the remaining restricted stock units vest in equal quarterly installments over the two-year period following the first anniversary of the vesting commencement date.

Assumptions Used for Fair Value

Restricted stock units and performance shares are valued at the fair market value of our stock at date of grant. For stock options we use the Black-Scholes option-pricing model to determine the grant date fair value. Option-pricing models require the input of assumptions that are estimated at the date of grant.

There were no stock options granted in 2012 and 2010. The following table presents the assumptions used in the Black-Scholes option-pricing model to value the stock options granted during 2011 and the fair value of restricted stock units and performance shares granted during the periods.



	Year Ended December 31,
	2012		2011			2010
Expected life (years)	N/A		5.3			N/A
Risk-free interest rate	N/A		0.48		%	N/A
Volatility	N/A		41		%	N/A
Dividend yield	N/A		2		%	N/A
Weighted-average fair value per share of grants:
Stock options	N/A		$	9.88		N/A
Restricted stock units	$	39.98	$	34.12		$	31.57
Performance shares	$	39.59	$	34.12		$	—

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The expected volatility is based on the historical implied volatility of our stock price. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected term of options granted represents the period of time we estimate that options granted are expected to be outstanding.

The following table summarizes the activity for all stock options, restricted stock units and performance shares under all of the Long-Term Incentive Plans ("LTIPs") for the year ended December 31, 2012:



		December 31, 2011			Activity during 2012												December 31, 2012
		Outstanding			Granted				Exercised				Canceled				Outstanding			Exercisable
Plans	Securities	Number	Price		Number		Price		Number		Price		Number		Price		Number	Price		Number	Price
2004 LTIP	RSUs	188	$	0.01	—		$	—	(188	)	$	0.01	—		$	—	—	$	—	—	$	—
	Options	41,077	35.08		—		—		(23,701	)	35.18		—		—		17,376	34.94		17,376	34.94
2005 LTIP	RSUs	3,053	0.01		—		—		—		—		—		—		3,053	0.01		3,053	0.01
2005 Directors’ Plan	Options	7,500	27.03		—		—		(7,500	)	27.03		—		—		—	—		—	—
2007 LTIP (1)	RSUs	78,509	0.01		—		—		(51,922	)	0.01		(1,667	)	0.01		24,920	0.01		24,920	0.01
	Options	274,034	25.71		—		—		(104,927	)	25.86		—		—		169,107	25.62		169,107	25.62
	Perf. shares	11,271	0.01		—		—		(2,818	)	0.01		—		—		8,453	0.01		8,453	0.01
2010 LTIP (1)	RSUs	137,532	0.01		84,468		0.01		(91,499	)	0.01		(10,375	)	0.01		120,126	0.01		1,733	0.01
	Options	7,500	32.78		—		—		—		—		—		—		7,500	32.78		2,500	32.78
	Perf. shares	28,192	0.01		85,252	⁽²⁾	0.01		(25,967	)	0.01		(10,430	)	0.01		77,047	0.01		1,366	0.01
Total		588,856			169,720				(308,522	)			(22,472	)			427,582			228,508

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Note: Price is weighted-average price per share.


(1)	The 2007 and 2010 LTIPs are for officers, employees and non-employee directors.


(2)	This number consists of 13,375 shares of one-time special incentive awards granted in 2012 and 71,877 performance shares granted during 2012 of which 45,493 performance shares were determined to be earned subsequent to December 31, 2012 based upon achievement of 2012 performance criteria.

The aggregate intrinsic value of stock options exercised in 2012, 2011 and 2010 was $2.2 million, $4.3 million and $4.7 million, respectively. The aggregate intrinsic value of restricted stock units exercised in 2012, 2011 and 2010 was $6.4 million, $5.3 million and $4.2 million, respectively. The aggregate intrinsic value of performance shares exercised in 2012, 2011 and 2010 was $1.1 million, $0.7 million and $1.5 million, respectively.

The following table summarizes stock options, restricted stock units and performance shares that have vested and are expected to vest as of December 31, 2012:



		December 31, 2012
		Outstanding		Weighted-Average Remaining Contractual Term (years)		Aggregate Intrinsic Value⁽¹⁾ (dollars in thousands)
Plans	Securities	Vested	Expected to vest⁽²⁾	Vested	Expected to vest⁽²⁾	Vested		Expected to vest⁽²⁾
2004 LTIP	Options	17,376	—	1.3	—	$	216	$	—
2005 LTIP	RSUs	3,053	—	—	—	145		—
2007 LTIP	RSUs	24,920	—	—	—	1,180		—
	Options	169,107	—	2.5	—	3,675		—
	Perf. shares	8,453	—	—	—	400		—
2010 LTIP	RSUs	1,733	118,393	—	—	82		5,605
	Options	2,500	5,000	5.8	5.8	36		73
	Perf. shares	1,366	49,297	—	—	65		2,334
Total		228,508	172,690			$	5,799	$	8,012

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(1)

Aggregate intrinsic value is calculated based upon the difference between the exercise prices of options or restricted stock units and our closing common stock price on December 31, 2012 of $47.35, multiplied by the number of instruments that are vested or expected to vest. Options and restricted stock units having exercise prices greater than the closing stock price noted above are excluded from this calculation.


(2)	Options, restricted stock units and performance shares that are expected to vest are net of estimated future forfeitures.

The aggregate fair value of options vested in 2012, 2011 and 2010 was $0.1 million, $1.7 million and $5.5 million, respectively. The aggregate fair value of restricted stock units vested in 2012, 2011 and 2010 was $6.4 million, $6.1 million and $4.7 million, respectively. The aggregate fair value of performance shares vested in 2012, 2011 and 2010 was $1.1 million, $0.8 million and $2.0 million, respectively.