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Share-Based Compensation
 6 Months Ended
Jun. 30, 2012
Share-Based Compensation [Abstract]  
Share-Based Compensation
(6)
Share-Based Compensation.  A&B employees have historically participated in equity plans of Alexander & Baldwin Holdings, Inc. The following disclosures represent A&B's portion of the plans maintained by Holdings, in which A&B's employees participated prior to the Separation.

Effective as of the completion of the Separation, all A&B employees that held Holdings restricted stock units ("RSUs") on June 29, 2012 (the "Distribution Date") received replacement A&B RSUs with terms and conditions substantially identical to the terms and conditions formerly applicable to the Holdings RSUs replaced. Additionally, effective as of the completion of the Separation, A&B employees that held Holdings stock options on the Distribution Date received replacement A&B stock options with terms and conditions substantially identical to the terms and conditions formerly applicable to the Holdings stock options. The number of shares and exercise price of each replacement award were adjusted in order to preserve the aggregate intrinsic value of the awards held by such employee, as follows:
 
·  
The number of A&B replacement stock options was computed by multiplying the number of Holdings stock options held by the employee on the Distribution Date by the ratio of the sum of the A&B when-issued and Holdings when-issued closing stock prices to the A&B when-issued closing stock price on the Distribution Date.

·  
The exercise prices of replacement A&B stock options were adjusted by multiplying the exercise prices of Holdings stock options by the ratio of the A&B when-issued closing stock price to the sum of the A&B when-issued and Holdings when-issued closing stock prices on the Distribution Date.

·  
The number of A&B replacement RSUs was computed by multiplying the number of Holdings RSUs held by the employee on the Distribution Date by the ratio of the sum of the A&B when-issued and Holdings when-issued closing stock prices to the A&B when-issued closing stock price on the Distribution Date.

The replacement of awards described above constitutes a "modification" under Financial Accounting Standards Board Accounting Standards Codification Topic ASC 718, Compensation-Stock Compensation. Accordingly, the Company measured the excess of the fair value of the replacement awards over the fair value of the replaced awards and recorded incremental share-based compensation expense of $0.8 million in the second quarter of 2012. The remaining $1.2 million of incremental share-based compensation expense will be amortized over a weighted average vesting period of approximately one year.

The replacement awards were made under the Company's new 2012 Incentive Compensation Plan ("2012 Plan"), which became effective as of the Separation, and allows for the granting of stock options, restricted stock units, and common stock. Under the 2012 Plan, 4.3 million shares of common stock were initially reserved for issuance, and as of June 30, 2012, 1,573,088 million shares of the Company's common stock remained available for future issuance. The shares of common stock authorized to be issued under the 2012 Plan may be drawn from the shares of the Company's authorized but unissued common stock or from shares of its common stock that the Company acquires, including shares purchased on the open market or private transactions.

As of June 30, 2012, following the Distribution Date, the number of converted non-qualified stock options outstanding was approximately 2,410,000. These options had a weighted average exercise price of $20.01 and a weighted average remaining contractual life of 5.6 years. As of June 30, 2012, the number of unvested restricted stock units outstanding was approximately 317,000, with a weighted average grant-date fair value of $20.11 and a remaining weighted average vesting period of 1.3 years. Approximately 269,000 restricted stock units are time-based awards that vest ratably over three years. The remaining 48,000 restricted stock units represent performance-based awards that vest after three years, provided certain performance targets related to the first year of the vesting period are achieved.

 


A summary of compensation cost related to share-based payments is as follows (in millions):

Quarter Ended
Six Months Ended
June 30,
June 30,
2012
2011
2012
2011
Share-based expense (net of estimated forfeitures):
Stock options
$
1.1
$
0.3
$
1.4
$
0.6
Restricted stock units
1.0
0.8
2.0
1.8
Total share-based expense
2.1
1.1
3.4
2.4
Total recognized tax benefit
(0.7
)
(0.2
)
(1.1
)
(0.6
)
Share-based expense (net of tax)
$
1.4
$
0.9
$
2.3
$
1.8