Share Based Compensation

9 Months Ended

Sep. 30, 2011

Share Based Compensation [Abstract]

Share Based Compensation

2.   Share Based Compensation

Share-based compensation expense for the three and nine months ended September 30, 2011 was $1.2 million and $3.1 million, respectively, which was related to restricted stock units only as the Company did not have any share-based compensation expense for stock options. This compared to $1.0 million and $3.0 million for the three and nine months ended September 30, 2010, respectively.

Share-based compensation expense is based on the value of the portion of share-based payment awards that is ultimately expected to vest. Forfeitures are estimated at the time of grant in order to estimate the amount of share-based awards that will ultimately vest. The forfeiture rate is based on historical rates. Share-based compensation expense recognized in the Company's Consolidated Statements of Income for the three and nine month periods ended September 30, 2011 includes (i) compensation expense for share-based payment awards granted prior to, but not yet vested as of January 1, 2006, based on the estimated grant-date fair value and (ii) compensation expense for the share-based payment awards granted subsequent to December 31, 2005, based on the estimated grant-date fair value. Since share-based compensation expense recognized in the Consolidated Statements of Income for the three and nine month periods ended September 30, 2011 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.

The Company maintains the 1994 Stock Incentive Plan and 2003 Stock Incentive Plan.

The Company was authorized to grant options for up to 2,362,500 shares under its 1994 Stock Incentive Plan. The Company has granted options for 2,691,225 shares and has had cancellations of 397,811 shares through September 30, 2011. There are no remaining stock options available to grant under this plan. The options granted under this plan generally became exercisable over a five-year period for incentive stock options and six months for nonqualified stock options and have a maximum term of ten years.

The 2003 Stock Incentive Plan was amended in 2005 to allow the issuance of Restricted Stock Units (the “Units”) to eligible employees and non-employee directors. The Units are payable in shares of the Company's common stock upon vesting. For directors, the Units typically vest annually over three years following the date of their issuance. For officers and employees, Units typically vest annually over five years following the date of their issuance.

The Company may grant options and Units for up to 1,875,000 shares under the 2003 Stock Incentive Plan. The Company has granted options for 475,125 shares and Units for 869,865 shares under this plan through September 30, 2011. There have been cancellations of 118,809 shares associated with this plan through September 30, 2011. The options under this plan have a life of ten years.

During the three and nine months ended September 30, 2011 and 2010, the Company issued Units to certain directors, officers and employees with weighted average grant date fair values and Units issued as indicated in the table below. The Company records compensation expense for the amount of the grant date fair value on a straight line basis over the vesting period.

Share-based compensation expense reduced the Company's results of operations as follows (dollars in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Share-based compensation expense recognized:
General and administrative, options	$	-		$	-		$	-		$	41
General and administrative, restricted stock units		1,120			1,019			3,150			2,960
Related deferred income tax benefit		(446	)		(406	)		(1,255	)		(1,196	)
Decrease in net income	$	674		$	613		$	1,895		$	1,805
Decrease in basic earnings per share	$	0.03		$	0.02		$	0.08		$	0.07
Decrease in diluted earnings per share	$	0.03		$	0.02		$	0.08		$	0.07

The amounts above include the impact of recognizing compensation expense related to non-qualified stock options.

As of September 30, 2011, all stock options were vested, consequently there was no unrecognized compensation cost related to them. The aggregate intrinsic value of stock options exercised was $4.3 million and $200,000 for the nine months ended September 30, 2011 and 2010, respectively.

As of September 30, 2011, there was approximately $9.8 million of total unrecognized compensation cost related to non-vested Units granted under the 2003 Stock Incentive Plan. That cost is expected to be recognized over a weighted average period of 3.0 years.

The following is a summary of stock option activity:

	Nine Months Ended September 30, 2011
	Number of Options			Weighted Average Exercise Price
Outstanding, December 31, 2010		428,000		$	12.28
Options exercised		(160,100	)	$	6.45
Outstanding, September 30, 2011		267,900		$	15.76
Exercisable, September 30, 2011		267,900		$	15.76

The following is a summary of Unit activity:

	Nine Months Ended September 30, 2011
	Number of Units			Weighted Average Grant Date Fair Value
Non-vested Units at December 31, 2010		399,684		$	28.40
Granted		109,834		$	42.12
Forfeited		(7,234	)	$	28.74
Vested		(131,757	)	$	31.50
Non-vested Units at September 30, 2011		370,527		$	31.36

The following table summarizes information regarding options outstanding and options exercisable at September 30, 2011:

		Outstanding and Exercisable
Range of Grant Prices		Number of Options		Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Aggregate Intrinsic Value (000s)
	$2.98 - $4.58		57,600		0.96	$	3.44	$	1,351
	$16.90 - $18.80		118,700		2.09	$	17.05	$	1,168
	$21.50 - $22.67		91,600		2.90	$	21.85	$	462
			267,900		2.12	$	15.76	$	2,981

The following table summarizes information regarding Units outstanding at September 30, 2011:

		Outstanding
Range of Grant Prices		Number of Units		Average Remaining Contractual Life (Years)		Weighted Average Grant Date Fair Value
$	16.53 - $31.69		203,307		2.31	$	21.46
$	35.67 - $39.43		56,800		2.71	$	37.43
$	40.73 - $45.70		100,600		3.48	$	44.79
$	52.47 - $62.07		4,600		0.43	$	55.90
$	66.35 - $81.18		5,220		0.73	$	70.42
			370,527		2.65	$	31.36