Stock-Based Compensation

3 Months Ended

Mar. 31, 2013

Stock-Based Compensation

Note 7 — Stock-Based Compensation

Under the 2012 Long-Term Incentive Plan (2012 Plan), as discussed in the 2012 Annual Report on Form 10-K, the Company has the ability to grant stock options, stock appreciation rights (SARs), restricted stock, stock units, other stock-based awards and cash incentive awards. Awards under the 2012 Plan will have a maximum term of ten years from the date of grant. The compensation committee may provide that the vesting or payment of any award will be subject to the attainment of specified performance measures in addition to the satisfaction of any continued service requirements and the compensation committee will determine whether such measures have been achieved. The per share exercise price of stock options and SARs granted under the 2012 Plan generally may not be less than the fair market value of a share of our common stock on the date of the grant.

Employee Stock Purchase Plan

The Company’s 2012 Employee Stock Purchase Plan (ESPP), as discussed in the 2012 Annual Report on Form 10-K, allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15 percent of their eligible compensation, subject to plan limitations. The ESPP provides for six-month offering periods ending May 15 and November 15, respectively. At the end of each offering period, employees are able to purchase shares at 85 percent of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last trading day of the offering period.

Stock-Based Compensation Expense

Stock-based compensation expense was $0.9 million for each of the three months ended March 31, 2013 and 2012, respectively.

Stock Options

A summary of stock option activity for the three months ended March 31, 2013 is as follows:

				Weighted-
				Average
	Stock Options			Exercise Price
Options outstanding at December 31, 2012		1,691,357		$	11.11
Granted		125,325			47.08
Exercised		(351,216	)		4.60
Cancelled		(250	)		30.58
Options outstanding at March 31, 2013		1,465,216		$	15.74
Exercisable at March 31, 2013		491,674		$	7.07

The outstanding options generally have a term of ten years. For employees, options granted become exercisable ratably over the vesting period, which is generally a five-year period beginning on the first anniversary of the grant date, subject to the employee’s continuing service to the Company. For directors, options generally become exercisable in full on the first anniversary of the grant date.

The weighted-average grant date fair value of options that were granted for the three months ended March 31, 2013 was $24.74.

The following table provides the assumptions used in the Black-Scholes pricing model valuation of options:

	Three months ended March 31,
	2013			2012
Risk-free interest rate		1.27	%		1.16	%
Expected life (years)		6.50			6.25
Expected volatility		53.54	%		53.00	%
Expected dividend yield		0	%		0	%

As of March 31, 2013, there was $7.7 million of total unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average period of 2.9 years.

Employee Stock Purchase Plan

The following table presents the assumptions used to estimate the fair value of the ESPP during the three months ended March 31, 2013 and 2012, respectively:

	Three months ended March 31,
	2013			2012
Risk-free interest rate		0.13	%		0.16	%
Expected life (months)		6.0			8.5
Expected volatility		53.14	%		53.00	%
Expected dividend yield		0	%		0	%