Stock-Based Compensation

The 1995 Executive Incentive Compensation Plan, as amended, authorizes the issuance of up to 8,000,000 shares of the Company's common stock for use in paying incentive compensation awards in the form of stock options or other equity awards such as restricted stock, restricted stock units or stock appreciation rights. The 1995 Non-Employee Directors' Stock Plan authorizes the issuance of up to 600,000 shares of the Company's common stock for equity awards. Both plans have been approved by the Company's stockholders. At December 31, 2012, there were 1,165,744 and 186,190 shares available for granting equity awards under the 1995 Executive Incentive Compensation Plan and the 1995 Non-Employee Directors' Stock Plan, respectively.

Restricted Stock Units

The Board approves the granting of performance-based restricted stock units as the long-term equity component of director, officer and certain key employee compensation. The restricted stock units require no payment from the recipient and compensation cost is measured based on the market price on the grant date and is generally recorded over the vesting period. The vesting period for restricted stock units granted to non-employee directors is one year, and each restricted stock unit is exchanged for a like number of shares of Company stock following the termination of the participant's service as a director. Generally, restricted stock units granted to officers and certain key employees prior to 2012 vest on a pro rata basis over a three-year period, and the specified retirement age is 62. Restricted stock units granted in March and May of 2012 "cliff" vest at the end of three years, and the specified retirement age is 62. Upon vesting, each restricted stock unit is exchanged for a like number of new shares of the Company's stock. Restricted stock units do not have an option for cash payment.

The following table summarizes restricted stock units issued and the compensation expense recorded for 2012, 2011 and 2010:

Stock-Based Compensation Expense



	Restricted Stock Units	Fair Value per Unit	Expense
(Dollars in thousands, except per unit)	Restricted Stock Units	Fair Value per Unit	2012		2011		2010
Directors:
May 1, 2009	16,000	27.28	$	—	$	—	$	145
May 3, 2010	16,000	30.99	—		165		331
May 2, 2011	20,192	34.79	234		468		—
May 2, 2012	27,930	21.58	402		—		—
December 4, 2012	2,688	19.95	—		—		—
Employees:
January 23, 2007	101,700	38.25	—		—		41
January 22, 2008	130,950	45.95	—		68		1,601
January 27, 2009	106,625	25.15	43		614		667
November 19, 2009	15,000	31.90	—		12		298
January 25, 2010	1,000	31.49	1		10		20
September 22, 2010	25,000	23.47	20		373		194
April 26, 2011	3,750	32.10	44		29		—
September 20, 2011	13,500	21.18	151		111		—
January 23, 2012	30,000	17.81	168		—		—
March 16, 2012	44,268	21.39	130		—		—
May 4, 2012	56,233	17.34	213		—		—
September 10, 2012	5,985	19.05	11		—		—
November 16, 2012	5,000	16.45	3		—		—
Total			$	1,420	$	1,850	$	3,297

Restricted stock unit activity for 2012, 2011 and 2010 was as follows:



	Restricted Stock Units		Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2010	229,491		$	34.45
Granted	42,000		26.53
Vested	(124,424	)	35.81
Forfeited	(6,532	)	35.23
Nonvested at December 31, 2010	140,535		30.83
Granted	37,442		29.61
Vested	(113,136	)	33.55
Forfeited	(2,200	)	25.15
Nonvested at December 31, 2011	62,641		25.39
Granted	172,104		19.23
Vested	(67,861	)	24.86
Forfeited	(25,411	)	20.35
Nonvested at December 31, 2012	141,473		$	19.19

At December 31, 2012, the total unrecognized compensation cost related to nonvested restricted stock units was $1.9 million, which will be recognized over a weighted-average period of approximately two years.

Stock Options

From time to time, the Company may grant incentive stock options and nonqualified stock options to officers, certain key employees and non-employee directors under the two plans noted above. The stock options would generally vest three years from the date of grant, which is the date the Board of Directors approved the grants, and expire no later than ten years after the date of grant. The exercise price of the stock would be fair value on the grant date. Upon exercise, a new share of Company stock is issued for each option.

Stock option activity for 2012, 2011 and 2010 was as follows:



	Shares Under Option		Weighted Average Exercise Price		Aggregate Intrinsic Value (in millions)(a)
Outstanding, January 1, 2010	389,970		$	15.66	$	6.7
Exercised	(115,493	)	13.77		—
Expired	(805	)	16.33		—
Outstanding, December 31, 2010	273,672		16.46		3.3
Granted	617,500		31.75		—
Exercised	(199,032	)	15.95		—
Forfeited/Expired	(30,300	)	30.92		—
Outstanding, December 31, 2011	661,840		30.22		0.2
Exercised	(38,900	)	18.23		—
Forfeited/Expired	(294,940	)	31.29		—
Outstanding, December 31, 2012	328,000		$	30.67	$	0.2


(a)	Intrinsic value is defined as the difference between the current market value and the exercise price, for those options where the market price exceeds the exercise price.

In January 2011, 617,500 stock options were granted. The Company used a binomial lattice model to estimate the fair value of $10.90 for this stock-based award. The fair value was estimated with the following assumptions: Dividend yield—2.5%; Volatility—40.6%; Risk-free interest rate—0.6%; and Expected life—seven years. These assumptions are based on multiple factors, including the historical volatility of the Company's stock price. The options vest three years from the grant date and expire seven years after the grant date. No compensation expense was recognized in 2012 for stock options due to forfeitures. Compensation expense recognized in 2011 for stock options totaled $2.0 million. No compensation expense was recognized in 2010.

At December 31, 2012, the total unrecognized compensation cost related to nonvested stock options was $1.1 million, which is expected to be recognized over a period of approximately one year.

Net cash proceeds from the exercise of stock options totaled $0.7 million, $2.4 million and $1.0 million in 2012, 2011 and 2010, respectively.

The total intrinsic value of options exercised during 2012, 2011 and 2010 was $0.1 million, $2.2 million and $1.7 million, respectively.

The following table summarizes information concerning outstanding and exercisable options at December 31, 2012:



	Options Outstanding					Options Exercisable
Range of Exercisable Prices	Vested	Unvested	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life in Years	Number Exercisable	Weighted Average Exercise Price Per Share
$16.96 - $16.96	24,000	—	$	16.96	0.33	24,000	$	16.96
$31.75 - $31.75	—	304,000	31.75		5.07	—	—
	24,000	304,000	$	30.67	4.72	24,000	$	16.96

At December 31, 2012, outstanding options, substantially all of which are expected to vest, have a weighted-average remaining contractual life of 4.72 years and an aggregate intrinsic value of $0.2 million. Vested and currently exercisable options have a weighted-average remaining contractual life of 0.33 years and an aggregate intrinsic value of $0.2 million.

Weighted-average grant-date fair value of unvested options during the year ended December 31, 2012 was as follows:



	Shares Under Option		Weighted Average Grant-Date Fair Value
Outstanding, January 1, 2012	589,000		$	10.90
Forfeited	(285,000	)	10.90
Outstanding, December 31, 2012	304,000		$	10.90

Stock Appreciation Rights

During 2012, the Company issued Stock Appreciation Rights ("SARs") covering 318,452 shares in March, 345,502 shares in May and 43,058 shares in September under the 1995 Executive Incentive Compensation Plan to officers and key executive employees.

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



	March 2012 Grant			May 2012 Grant			September 2012 Grant
Risk-free interest rate	1.56		%	1.18		%	1.00		%
Dividend yield	3.50		%	4.20		%	3.80		%
Expected life (years)	6.5			6.5			6.5
Volatility	43.9		%	44.0		%	44.3		%
SAR grant price	$	23.73		$	19.65		$	21.37
Fair value of SAR award	$	6.10		$	4.77		$	6.20

A summary of activity relating to SARs for the year ended December 31, 2012 was as follows:



	SARs
	Number of Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value (in millions)		Weighted Average Remaining Contractual Term (Years)
Outstanding, January 1, 2012	—		$	—	$	—
Granted	707,012		21.23
Forfeited/expired	(181,725	)	21.23
Outstanding, December 31, 2012	525,287		$	21.23	$	1.2	9.3

No SARs are vested or exercisable at December 31, 2012.

Unrecognized compensation expense related to SARs not yet exercisable was $2.3 million at December 31, 2012. This cost is expected to be recognized over a weighted average period of approximately 4.3 years.

Other Stock Grants

During 2012, the Company issued 43,873 shares to its then Interim Chief Executive Officer as part of his compensation agreement. In addition, 4,000 shares were issued to other employees under incentive award programs. All shares vested immediately and were not subject to any holding period restrictions. Fair value of the grants were based on the market price of Company stock at the grant date. Expense recognized in 2012 for these grants total $1.0 million.

There was no change, a $1.1 million increase and a $0.1 million decrease of excess tax benefits principally from restricted stock units recognized in 2012, 2011 and 2010, respectively.