Share-Based Compensation

3 Months Ended

Mar. 31, 2013

Share-Based Compensation

11. Share-Based Compensation

Our non-employee directors and key employees are awarded share-based awards through our Directors Stock Compensation Plan (“DSCP”) and our 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 based primarily on the fair value of each award on the date it was granted.

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 months ended March 31, 2013 and 2012:

For the Three Months Ended March 31,	2013		2012
(in thousands)
Directors Stock Compensation Plan	$	111	$	111
Performance Incentive Plan		270		234
Total compensation expense		381		345
Less: tax benefit		153		138
Share-Based Compensation amounts included in net income	$	228	$	207

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 equal to the fair value of the shares issued and amortize the expense equally over a service period of one year. At March 31, 2013, there was $37,000 of unrecognized compensation expense related to the DSCP awards. This expense is expected to be recognized over the directors’ remaining service period ending April 30, 2013.

Performance Incentive Plan

The table below presents the summary of the stock activity for the PIP for the three months ended March 31, 2013:

	Number of Shares		Weighted Average Fair Value
Outstanding—December 31, 2012		84,645	$	37.86
Granted		23,491	$	44.97
Vested		24,332	$	33.26
Expired		3,043	$	39.12
Outstanding—March 31, 2013		80,761	$	42.14

In January 2013, the Board of Directors granted awards under the PIP for 23,491 shares. The shares granted in January 2013 are multi-year awards that will vest at the end of the three-year service period, or December 31, 2015. These awards are earned based upon the successful achievement of long-term goals, growth and financial results, which are comprised of 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 each award is granted. For the market-based conditions, we used the Black-Scholes pricing model to estimate the fair value of each market-based award granted.

At March 31, 2013, the aggregate intrinsic value of the PIP awards was $4.0 million.