Long-Term Incentive Plan

12 Months Ended

Dec. 31, 2012

Long-Term Incentive Plan [Abstract]

Long-Term Incentive Plan

Note 5: Long-Term Incentive Plan

Belo has a long-term incentive plan under which awards may be granted to employees and outside directors in the form of non-qualified stock options, incentive stock options, restricted shares, restricted stock units, performance shares, performance units or stock appreciation rights. In addition, options may be accompanied by stock appreciation rights and limited stock appreciation rights. Rights and limited rights may also be issued without accompanying options. Cash-based bonus awards are also available under the plan. The Company believes that the long-term incentive plan better aligns the interests of its employees with those of its shareholders. Shares of common stock reserved for future grants under the plan were 2,187, 2,975, and 3,996 at December 31, 2012, 2011 and 2010, respectively.

Under the long-term incentive plan, the compensation cost that has been charged against income from continuing operations for the years ended December 31, 2012, 2011 and 2010 was $8,009, $5,579 and $5,842, respectively. The total income tax benefit for continuing operations recognized in the consolidated statements of operations for share-based compensation arrangements was $2,947, $2,067 and $2,153 for the years ended December 31, 2012, 2011 and 2010, respectively.

Options

The non-qualified options granted to employees and outside directors under Belo’s long-term incentive plan become exercisable in cumulative installments over periods of one to three years and expire after 10 years. The fair value of each option award granted is estimated on the date of grant using the Black-Scholes-Merton valuation model that uses the assumptions noted in the following table. Volatility is calculated using an analysis of historical volatility. The Company believes that the historical volatility of the Company’s stock is the best method for estimating future volatility. The expected lives of options are determined based on the Company’s historical share option exercise experience using a rolling ten-year average. The Company believes the historical experience method is the best estimate of future exercise patterns currently available. The risk-free interest rates are determined using the implied yield currently available for zero-coupon U.S. government issues with a remaining term equal to the expected life of the options. The expected dividend yields are based on the approved annual dividend rate in effect and current market price of the underlying common stock at the time of grant. There were no options granted in the year ended December 31, 2012 or 2011.

	2010
Weighted average grant date fair value	$	4.78
Weighted average assumptions used:
Expected volatility		84.1	%
Expected lives		5 yrs
Risk-free interest rates		2.62	%
Expected dividend yields		–

A summary of option activity under the long-term incentive plan for the three years ended December 31, 2012, is included in the following table:

	2012					2011					2010
	Number of Options			Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price
Outstanding at January 1		7,265		$	16.06		9,566		$	15.50		10,639		$	15.69
Granted		–		$	–		–		$	–		609		$	7.09
Exercised		(225	)	$	1.88		(162	)	$	1.85		(56	)	$	1.76
Canceled		(1,506	)	$	17.13		(2,139	)	$	14.66		(1,626	)	$	14.07
Outstanding at December 31		5,534		$	16.34		7,265		$	16.06		9,566		$	15.50
Vested and exercisable at December 31		5,366		$	16.63		6,897		$	16.55		8,756		$	16.58
Weighted average remaining contractual term (in years)		3.0					4.5					3.8

Options granted under the long-term incentive plan are granted where the exercise price equals the closing stock price on the day of grant; therefore the options outstanding have no intrinsic value until exercised. The total intrinsic value of options exercised during the years ended December 31, 2012, 2011 and 2010 is as follows:

2012	$	1,207
2011		782
2010		280

The following table summarizes information (net of estimated forfeitures) related to stock options outstanding at December 31, 2012:

Range of Exercise Prices	Number of Options Outstanding (a)		Weighted Average Remaining Life (years)	Weighted Average Exercise Price		Number of Options Exercisable		Weighted Average Exercise Price
$1–6		430	6.0	$	1.76		430	$	1.76
$7–14		1,324	5.8	$	10.23		1,154	$	10.69
$15–17		789	2.9	$	17.10		789	$	17.10
$18–23		2,977	1.4	$	21.00		2,977	$	21.00
$1–23		5,520	3.0	$	16.36		5,350	$	16.66

(a) Comprised of Series B shares

As of December 31, 2012, there was $87 of total unrecognized compensation cost related to non-vested options which is expected to be recognized over a weighted average period of 0.2 years.

Restricted Stock Units (RSUs)

Under the long-term incentive plan, the Company’s Board of Directors has awarded RSUs. The RSUs have service and/or performance conditions and vest over a period of one to three years. Upon vesting, the RSUs will be redeemed with 60 percent in Belo’s Series A common stock and 40 percent in cash. A liability has been established for the cash portion of the redemption. During the vesting period, holders of service-based RSUs and RSUs with performance conditions where the performance conditions have been met participate in the Company’s dividends, if declared, by receiving payments for dividend equivalents. Such dividend equivalents are recorded as components of the Company’s share-based compensation. The RSUs do not have voting rights.

A summary of RSU activity under the long-term incentive plan for the three years ended December 31, 2012, is summarized in the following table.

	2012					2011					2010
	Number of RSUs			Weighted Average Price		Number of RSUs			Weighted Average Price		Number of RSUs			Weighted Average Price
Outstanding at January 1		1,523		$	6.38		1,433		$	8.23		1,895		$	9.86
Granted		1,140		$	7.17		836		$	7.87		492		$	7.20
Vested		(545	)	$	4.23		(726	)	$	11.74		(891	)	$	10.88
Canceled		(53	)	$	7.33		(20	)	$	6.31		(63	)	$	12.04
Outstanding at December 31		2,065		$	7.36		1,523		$	6.38		1,433		$	8.23
Vested at December 31		–		$	–		–		$	–		–		$	–

The fair value of the RSUs granted is determined using the closing trading price of the Company’s shares on the grant date. The weighted-average grant-date fair value of the RSUs granted during the years ended December 31, 2012, 2011 and 2010, was $7.17, $7.87 and $7.20, respectively. During 2012, 545 of RSUs were converted into shares of stock and $1,188 in share-based liabilities was paid. During 2011, 726 of RSUs were converted into shares of stock and $2,268 in share-based liabilities was paid. During 2010, 891 of RSUs were converted into shares of stock and $2,447 in share-based liabilities was paid. As of December 31, 2012, there was $5,978 of total unrecognized compensation cost related to non-vested RSUs. The compensation cost is expected to be recognized over a weighted-average period of 1.2 years.