Accounting for Stock-Based Compensation

3 Months Ended

Mar. 31, 2013

Accounting for Stock-Based Compensation [Abstract]

Accounting for Stock-Based Compensation

Note 6. Accounting for Stock-Based Compensation

The Company recognized stock-based compensation expense of $2.0 million for the three months ended March 31, 2013, and $1.8 million for the three months ended March 31, 2012. Unrecognized compensation expense of $22.8 million as of March 31, 2013, related to unvested stock options, restricted stock, and restricted stock units (“RSUs”), will be recognized over a weighted-average period of approximately three years. During the three months ended March 31, 2013, the Company granted approximately 0.4 million shares in the form of equity compensation, including stock options, and RSUs. As of March 31, 2013, the Company had approximately 0.4 million shares available to grant under its equity compensation plan.

In the first quarter of 2013, in addition to stock options, restricted stock, and RSUs, the Company granted Cash Settled RSUs (“CSRSUs”) for the first time. The CSRSUs vest annually over a four-year vesting term, and are settled only in cash payments. The cash payment is based on the fair value of the Company’s stock price at the vesting date, calculated by multiplying the number of CSRSUs vested, by the Company’s closing stock price on the vesting date. The payment is subject to a maximum payment cap and a minimum payment floor. The Company treats these awards as liability classified awards, and therefore accounts for them at fair value. These awards have no impact to the shares available for grant under the Company’s 2010 Omnibus Incentive Plan, and have no impact to the calculated shares used in earnings per share calculations.

During the three months ended March 31, 2013, the Company awarded 0.2 million CSRSUs to its employees. The weighted-average grant date fair value of CSRSUs was $27.03 per share. Compensation expense related to CSRSUs computed under the fair value method for the three months ended March 31, 2013, was less than $0.1 million, based on the Company’s closing stock price of $27.20 per share as of March 31, 2013. The unrecognized expense related to CSRSUs totaled approximately $4.8 million. These costs are expected to be recognized over a weighted-average period of 3.9 years.

The aggregate intrinsic value of CSRSUs at March 31, 2013 that are expected to vest was approximately $4.8 million.