Stock-based Compensation

9 Months Ended

Sep. 30, 2011

Stock-Based Compensation [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments

Stock-Based Compensation

The Compensation Committee of the Company’s Board of Directors is responsible for the administration of the Company’s stock incentive plans, which include the balance of shares remaining under the 2007 Long Term Incentive Plan (the "2007 LTIP) and the 2011 Long Term Incentive Plan (the "2011 LTIP") which was approved by the shareholders in May 2011.  The 2011 LTIP provides for a maximum aggregate number of shares to be issued of 3,000,000. In general, both plans provide for grants of restricted stock and stock options to be issued with a per-share price equal to the fair market value of a share of common stock on the date of grant.  Option terms are specified at each grant date, but are generally are 10 years from the date of issuance.  Options generally vest over a three to five year period.  

For the three months ended September 30, 2011 and 2010, compensation expense related to stock based awards outstanding for the periods was $697,000 and $481,000, respectively, and for the nine month period was $1.8 million and $1.9 million in 2011 and 2010, respectively.  

In August 2011, the Company granted options to purchase 948,760 shares of common stock and used the Black Scholes option pricing model to estimate the fair value of stock-based awards. The option awards granted in August 2011 used the following assumptions:

Expected life of options	7.5 years
Expected volatility	68.5	%
Risk-free interest rate	1.47	%
Dividend yield	—	%
Grant date fair value	$4.03

Also in August 2011, the Company granted 400,417 shares of restricted common stock to its named executive officers and directors. The fair value on the date of grant was $6.00 per share. By the terms of the 2011 LTIP, these shares may not be sold, transferred, pledged, hypothecated, margined or otherwise encumbered during the applicable restricted period. The restricted period for the Company's directors is over a six month period, and for the named executive officers is over a five year period, in each case commencing from the date of grant. Compensation expense to be recorded over the restricted period of six months for the director grants is $240,000, and expense over the five year restricted period for the named executive officers is approximately $2.2 million.

In April 2011, the Company granted options to purchase 5,040 shares of common stock and used the Black-Scholes option pricing model to estimate the fair value of stock-based awards.  The option awards granted in April 2011 used the following assumptions:

Expected life of options	5.75 years
Expected volatility	49.6		%
Risk-free interest rate	2.28		%
Dividend yield	—		%
Grant date fair value	$	4.96

The Company applies a 5.5% forfeiture rate to its restricted stock and option grants.

In the nine months ended September 30, 2011, 57,177 unvested options and 12,783 unvested shares were forfeited. In the nine months ended September 30, 2011, 41,026 vested options expired unexercised. At September 30, 2011, the Company's unrecognized compensation expense related to options awards was approximately $5.2 million, to be recognized over approximately 3 years.

During the three and nine months ended September 30, 2011, the Company received proceeds of approximately $3,000 and $185,000 from the exercise of 1,433 and 32,124 options, respectively. During the three and nine months ended September 30, 2010, the Company received proceeds of approximately $1,000 and $528,000 from the exercise of 224 and 55,964 stock options, respectively.