Share-Based Compensation

12 Months Ended

Dec. 31, 2011

Share-Based Compensation [Abstract]

SHARE-BASED COMPENSATION

NOTE 18 — SHARE-BASED COMPENSATION

The Corporation maintains a share-based compensation plan, under which it periodically grants share-based awards for a fixed number of shares to certain officers of the Corporation. The fair value of share-based awards is recognized as compensation expense over the requisite service or performance period. During the years ended December 31, 2011, 2010 and 2009, share-based compensation expense related to stock options and restricted stock performance units totaled $1.5 million, $1.4 million and $0.5 million, respectively.

During the year ended December 31, 2011, the Corporation granted options to purchase 99,172 shares of common stock and 52,087 restricted stock performance units to certain officers. At December 31, 2011, there were 393,914 shares of common stock available for future grants under share-based compensation plans.

Stock Options

The Corporation issues fixed stock options to certain officers. Stock options are issued at the current market price of the Corporation’s common stock on the date of grant, generally vest ratably over a three-year period and expire ten years from the date of grant.

The following summarizes information about stock options outstanding at December 31, 2011:

	Options Outstanding			Options Exercisable
Range of Exercise Prices Per Share	Number Outstanding	Weighted Average Exercise Price Per Share	Weighted Average Contractual Term (In Years)	Number Exercisable	Weighted Average Exercise Price Per Share	Weighted Average Contractual Term (In Years)
$19.43 – 21.10	169,576	$                20.43	8.48	47,424	$                21.09	7.31
24.07 – 24.86	293,658	24.68	6.22	252,927	24.70	5.91
25.60 – 27.78	35,508	27.45	0.91	35,508	27.45	0.91
32.28	131,000	32.28	3.97	131,000	32.28	3.97
35.67	51,765	35.67	1.95	51,765	35.67	1.95
39.69	133,612	39.69	2.95	133,612	39.69	2.95
$19.43 – 39.69	815,119	$                28.29	5.29	652,236	$                30.05	4.43

The weighted-average remaining contractual terms were 5.3 years for all outstanding stock options and 4.4 years for exercisable stock options at December 31, 2011. The intrinsic value of all outstanding in-the-money stock options and exercisable in-the-money stock options was $0.15 million and $0.01 million, respectively, at December 31, 2011. The aggregate intrinsic values of outstanding and exercisable options at December 31, 2011 were calculated based on the closing market price of the Corporation’s common stock on December 31, 2011 of $21.32 per share less the exercise price. Options with intrinsic values less than zero, or “out-of-the-money” options, were not included in the aggregate intrinsic value reported.

At December 31, 2011, unrecognized compensation cost related to stock options totaled $0.7 million. This cost is expected to be recognized over a remaining weighted average period of 1.9 years.

A summary of activity for the Corporation’s stock options as of and during the three years ended December 31, 2011 is presented below:

	Non-Vested Stock Options Outstanding							Stock Options Outstanding
	Number of Options			Weighted- Average Exercise Price Per Share		Weighted- Average Grant Date Fair Value Per Share		Number of Options			Weighted- Average Exercise Price Per Share
Outstanding at January 1, 2009		178,837		$	24.65	$	6.90		701,546		$	31.15
Activity during 2009:
Granted		70,190			21.10		6.46		70,190			21.10
Exercised		—			—		—		(1,555	)		23.14
Vested		(76,400	)		24.68		6.99		—			—
Forfeited/expired		(3,554	)		24.67		6.85		(49,806	)		33.61
Outstanding at December 31, 2009		169,073			23.17		6.68		720,375			30.02
Activity during 2010:
Issued in OAK acquisition		—			—		—		26,425			26.83
Granted		60,365			24.56		7.65		60,365			24.56
Exercised		—			—		—		(1,736	)		23.63
Vested		(99,540	)		23.84		6.87		—			—
Forfeited/expired		(3,228	)		23.70		7.07		(47,764	)		31.08
Outstanding at December 31, 2010		126,670			23.29		6.99		757,665			29.42
Activity during 2011:
Granted		99,172			19.95		6.12		99,172			19.95
Exercised		—			—		—		—			—
Vested		(62,959	)		23.27		6.76		—			—
Forfeited/expired		—			—		—		(41,718	)		28.96
Outstanding at December 31, 2011		162,883		$	21.27	$	6.55		815,119		$	28.29
Exercisable/vested at December 31, 2011									652,236		$	30.05

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions.

	2011			2010			2009
Expected dividend yield		3.50	%		3.50	%		3.50	%
Risk-free interest rate		2.76	%		3.37	%		2.58	%
Expected stock price volatility		42.0	%		41.1	%		42.0	%
Expected life of options — in years		6.10			6.33			6.33
Weighted average per share fair value	$	6.12		$	7.65		$	6.46

The Corporation estimates potential forfeitures of stock option grants and adjusts compensation expense accordingly. The estimate of forfeitures is adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures are recognized in the period of change and also impact the amount of share-based compensation expense to be recognized in future periods.

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant and the expected life of the options granted. Expected stock volatility was based on historical volatility of the Corporation’s common stock over a seven-year period. The expected life of options represents the period of time that options granted are expected to be outstanding and is based primarily upon historical experience, considering both option exercise behavior and employee terminations.

Because of the unpredictability of the assumptions required, the Black-Scholes (or any other valuation) model is incapable of accurately predicting the Corporation’s common stock price or of placing an accurate present value on options to purchase its stock. In addition, the Black-Scholes model was designed to approximate value for types of options that are very different from those issued by the Corporation. In spite of any theoretical value that may be placed on a stock option grant, no value is possible under options issued by the Corporation without an increase in the market price per share of the Corporation’s common stock over the market price per share of the Corporation’s common stock at the date of grant.

In conjunction with the acquisition of OAK, each unexercised vested stock option of OAK outstanding at the acquisition date was converted into a vested option to purchase 1.306 shares of the Corporation’s common stock. The exercise price per share of the Corporation’s common stock for each of these options was equal to the exercise price per share of the OAK unexercised stock option divided by 1.306. Accordingly, the Corporation issued 26,425 stock options at a weighted average exercise price of $26.83 per share. The duration and other terms and conditions of these options are the same as the unexercised OAK stock options.

Restricted Stock Performance Units

In addition to stock options, the Corporation also grants restricted stock performance units to certain officers. The restricted stock performance units vest based on the Corporation achieving certain performance target levels. Generally, the restricted stock performance units are eligible to vest from 0.5x to 1.5x the number of units originally granted depending on which, if any, of the performance target levels are met. However, if the minimum performance target level is not achieved, no shares will become vested or be issued for that respective year’s restricted stock performance units. Upon achievement of the performance target level and satisfaction of a service condition, if applicable, the restricted stock performance units are converted into shares of the Corporation’s common stock on a one-to-one basis. Compensation expense related to restricted stock performance units is recognized over the expected requisite performance period, or requisite service period for awards with multiple performance and service conditions.

A summary of the activity for restricted stock performance units as of and during the three years ended December 31, 2011 is presented below:

	Number of Units			Weighted Average Grant Date Fair Value Per Unit
Outstanding at January 1, 2009		30,701		$	21.21
Activity during 2009:
Granted		41,248			18.04
Forfeited/expired		(373	)		21.21
Outstanding at December 31, 2009		71,576			19.38
Activity during 2010:
Granted		40,629			22.62
Cancelled (2009 grant)		(41,248	)		18.04
Modified (2009 grant)		41,248			23.25
Forfeited/expired		(31,353	)		21.26
Outstanding at December 31, 2010		80,852			22.94
Activity during 2011:
Granted		52,087			17.87
Converted into shares of common stock		(2,427	)		23.70
Forfeited/expired		—			—
Outstanding at December 31, 2011		130,512		$	20.90

At December 31, 2011, unrecognized compensation cost related to restricted stock performance unit awards totaled $0.8 million. This cost is recognized based on the expected achievement of the targeted performance levels for the restricted stock performance units over approximately two years.