Share-Based Compensation

9 Months Ended

Sep. 30, 2011

Share-Based Compensation [Abstract]

Share-Based Compensation

9. Share-Based Compensation

Our non-employee directors and key employees are awarded share-based awards through our Directors Stock Compensation Plan (“DSCP”) and the Performance Incentive Plan (“PIP”), respectively. We record these share-based awards as compensation costs over the respective service period for which services are received in exchange for an award of equity or equity-based compensation. The compensation cost is primarily based on the fair value of the grant on the date it was awarded.

The table below presents the amounts included in net income related to share-based compensation expense for the awards granted under the DSCP and the PIP for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended				Nine Months Ended
For the Periods Ended September 30,	2011		2010		2011		2010
(in thousands)
Directors Stock Compensation Plan	$	111	$	74	$	296	$	209
Performance Incentive Plan		262		213		782		690
Total compensation expense		373		287		1,078		899
Less: tax benefit		150		115		432		361
Share-Based Compensation amounts included in net income	$	223	$	172	$	646	$	538

Directors Stock Compensation Plan

Shares granted under the DSCP are issued in advance of the directors’ service periods and are fully vested as of the date of the grant. We record a prepaid expense of the shares issued and amortize the expense equally over a service period of one year. In May 2011, each of our non-employee directors received an annual retainer of 900 shares of common stock under the DSCP. A summary of stock activity under the DSCP during the nine months ended September 30, 2011 is presented below:

	Number of		Weighted Average
	Shares		Grant Date Fair Value
Outstanding — December 31, 2010		—		—
Granted (1)		11,104	$	41.03
Vested		11,104	$	41.03
Forfeited		—		—
Outstanding — September 30, 2011		—		—

⁽¹⁾ In January 2011, our former Chief Executive Officer John Schimkaitis, retired from the Company and was awarded 304 shares of common stock for the prorated portion of his service period as he began his service as a non-executive board member.

At September 30, 2011, there was $258,000 of unrecognized compensation expense related to the DSCP awards. This expense is expected to be recognized over the remaining directors’ service periods ending as of the 2012 Annual Meeting.

Performance Incentive Plan

The table below presents the summary of the stock activity for the PIP for the nine months ended September 30, 2011:

	Number of		Weighted Average
	Shares		Fair Value
Outstanding — December 31, 2010		101,150	$	28.78
Granted		41,664		40.16
Vested		31,400		27.63
Forfeited		24,000		29.31
Expired		—		—
Outstanding — September 30, 2011		87,414	$	34.47

In January 2011, the Board of Directors granted awards under the PIP for 41,664 shares. The shares granted in January 2011 are multi-year awards, of which 10,500 shares will vest at the end of the two-year service period, or December 31, 2012. The remaining 31,164 shares will vest at the end of the three-year service period, or December 31, 2013. These awards are earned based upon the successful achievement of long-term goals, growth and financial results, which comprised both market-based and performance-based conditions or targets. The fair value of each performance-based condition or target is equal to the market price of our common stock on the date of the grant. For the market-based conditions, we used the Black-Scholes pricing model to estimate the fair value of each market-based award granted.

In conjunction with his retirement, our former Chief Executive Officer forfeited 24,000 shares, which represents the shares awarded under the PIP in January 2009 for the performance period ending December 31, 2011 and in January 2010 for the performance period ending December 31, 2012, that had not vested.

At September 30, 2011, the aggregate intrinsic value of the PIP awards was $1.9 million.