STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2011

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

NOTE 6—STOCK-BASED COMPENSATION

On November 6, 2009, the Company’s Board of Directors approved the Company’s 2009 Equity Incentive Plan (the “2009 Plan”) which became effective on the same day. A total of 4,750,000 shares of common stock, subject to increase on an annual basis, are reserved for issuance under the 2009 Plan. The 2009 Plan is administered by the Board of Directors or any committee designated by the Board of Directors, which has the authority to designate participants and determine the number and type of awards to be granted, the time at which awards are exercisable, the method of payment and any other terms or conditions of the awards. The 2009 Plan provides for the grant of stock options, including incentive stock options and nonqualified stock options, collectively, “options,” stock appreciation rights, shares of restricted stock, or “restricted stock,” rights to dividend equivalents and other stock-based awards, collectively, the “awards.” The Board of Directors or the committee will, with regard to each award, determine the terms and conditions of the award, including the number of shares subject to the award, the vesting terms of the award, and the purchase price for the award. Awards may be made in assumption of or in substitution for outstanding awards previously granted by the Company or its affiliates, or a company acquired by the Company or with which it combines. Options outstanding generally vest monthly over a four-year period and expire ten years from the date of grant.

During the first six months of 2011, the Company issued 50,000 options to purchase shares of the Company’s common stock at an exercise price of $19.71 to various employees under the 2009 Plan. The following is a summary of the characteristics of these options:

Shares	Service Condition
50,000	Vests ratably in 16 equal quarterly installments as of the last day of each calendar quarter beginning March 31, 2011.

The fair value of the stock options issued were determined using the Black-Scholes option pricing model. The Company’s assumptions about stock-price volatility have been based exclusively on the implied volatilities of other publicly traded options to buy stock with contractual terms closest to the expected life of options granted to the Company’s employees. The expected term represents the estimated time until employee exercise is estimated to occur taking into account vesting schedules and using the Hull-White model. The risk-free interest rate for periods within the contractual life of the award is based on the U.S. Treasury 10 year zero-coupon strip yield in effect at the time of grant. The expected dividend yield was based on the assumption that no dividends are expected to be distributed in the near future.

The following table presents the assumptions used to estimate the fair values of the stock options granted during the periods presented below:

	Six Months Ended June 30, 2011
Risk-free interest rate	2.00		%
Expected volatility	59.0		%
Expected life (in years)	4.96
Dividend yield	—
Weighted-average estimated fair value of options granted during the period	$	10.13

There were no options granted during the three months ended June 30, 2011 or the six months ended June 30, 2010.

The following table summarizes the options activity under the Company’s 2009 Plan for the six months ended June 30, 2011:

	Options Outstanding
	Number of Shares		Weighted - Average Exercise Price		Weighted - Average Remaining Contractual Term(in years)	Weighted -Average Grant-Date Fair Value		Aggregate Intrinsic Value(1)
Balance at December 31, 2010	3,319,355		$	11.59		$	5.02	$	11,053
Options granted	50,000		$	19.71		$	10.13
Exercised	(59,606	)	$	10.00
Canceled/forfeited	(9,628	)	$	10.96
Balance at June 30, 2011	3,300,121		$	11.74	8.41	$	6.12	$	10,494
Vested and exercisable as of June 30, 2011	2,442,728		$	11.07	8.37	$	5.28	$	9,405
Vested and exercisable as of June 30, 2011 and expected to vest thereafter	3,168,116		$	11.74	8.41	$	6.12	$	10,075

(1)The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $14.92 of the Company’s common stock on June 30, 2011.

During the first six months of 2011, the total intrinsic value of options exercised (i.e., the difference between the market price on the date of exercise and the price paid by the employee to exercise the options) was $527. There were no option exercises during the first six months of 2010.

As of June 30, 2011, there was $5,019 of unrecognized compensation cost related to outstanding employee and director stock option awards. This amount is expected to be recognized over a weighted-average remaining vesting period of approximately two years. To the extent the actual forfeiture rate is different from what the Company has anticipated, stock-based compensation related to these awards will be different from its expectations.

The following table summarizes the restricted shares activity of the Company for the six months ended June 30, 2011:

	Unvested Restricted Shares
	Number of Shares		Weighted- Average Grant- Date Fair Value
Unvested at December 31, 2010	727,725		$	10.32
Granted	—
Vested	(145,928	)	10.00
Canceled	(1,693	)	10.00
Unvested at June 30, 2011	580,104		$	10.39
Expected to vest after June 30, 2011	562,701		$	10.39

As of June 30, 2011, there was $3,285 of unrecognized compensation cost related to employee and director unvested restricted shares. This amount is expected to be recognized over a weighted-average remaining vesting period of approximately two years. To the extent the actual forfeiture rate is different from what the Company has anticipated, stock-based compensation related to these awards will be different from its expectations.

Stock-based compensation expense was included in the following condensed consolidated statement of comprehensive income categories:

	Three Months EndedJune 30,				Six Months EndedJune 30,
	2011		2010		2011		2010
Selling, general and administrative expense	$	1,270	$	1,383	$	2,541	$	5,174
Total option exercise recognized tax benefit	$	23	$	—	$	185	$	—