Stock Option Plans

12 Months Ended

Dec. 31, 2012

Stock Option Plans [Abstract]

Stock Option Plans

(11) Stock Option Plans

The Company currently has two stock compensation plans. The 1996 Nonemployee Director Stock Option Plan and the 2000 Incentive Stock Compensation Plan provide for the granting of stock options to officers, employees and non-employee directors at an exercise price equal to the fair market value of the stock at the date of grant. Unrestricted options granted to employees vest over two to four years and are exercisable up to ten years from the grant date. Upon retirement, any unvested options become exercisable immediately. Options granted to directors vest at the grant date and are exercisable up to ten years from the grant date.

The following table is a summary of the stock-based compensation expense recognized for the years ended December 31, 2012, 2011 and 2010:

(Thousands of dollars)	2012			2011			2010
Stock options	$	5,162		$	4,881		$	4,627
Performance shares		288			-			-
Restricted stock awards and units		2,216			429			-
Total stock-based compensation expense		7,666			5,310			4,627
Tax benefit		(2,836	)		(1,964	)		(1,712	)
Total compensation expense, net of tax	$	4,830		$	3,346		$	2,915

Stock Options

The fair value of each option grant during the years ended December 31, 2012, 2011 and 2010 was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	2012			2011			2010
Expected dividend yield		0.64% -1.02	%		0.60% -0.80	%		0.94% - 1.60	%
Expected stock price volatility		45.00% - 56.40	%		48.10% - 57.90	%		51.20% - 57.80	%
Risk free interest rate		0.27% - 0.82	%		0.28% - 2.39	%		0.53% - 2.96	%
Expected life of options	2 - 4 years			3 - 4 years			2 - 6 years
Weighted-average fair value per share at grant date	$	63.84		$	26.29		$	17.05

The expected life of options was determined based on the exercise history of employees and directors since the inception of the plans. The expected volatility is based upon the historical weekly and daily stock price for the prior number of year's equivalent to the expected life of the stock option. The expected dividend yield was based on the dividend yield of the Company's common stock at the date of the grant. The risk free interest rate was based upon the yield of U.S. Treasuries which terms were equivalent to the expected life of the stock option.

A summary of stock option activity under the plans during the year ended December 31, 2012, is presented below:

						Weighted-
				Weighted-		Average		Aggregate
				Average		Remaining		Intrinsic
				Exercise		Contractual		Value
Options	Shares			Price		Term		($000's)
Outstanding at January 1, 2012		1,504,311		$	42.26
Granted		236,800			50.58
Exercised		(71,026	)		27.46
Forfeited or expired		(44,758	)		48.04
Outstanding at December 31, 2012		1,625,327			43.96		7.3		25,474
Exercisable at December 31, 2012		921,461			38.37		6.4		19,430

As of December 31, 2012, there was $4.8 million of total unrecognized compensation expense related to non-vested stock options. That cost is expected to be recognized over a weighted-average period of 1.96 years. The intrinsic value of stock options exercised in 2012, 2011 and 2010 was $3.4 million, $9.2 million and $11.4 million, respectively.

Performance Shares

The Company has granted performance shares to members of senior management, at no cost to the recipient, as a means of rewarding them for the Company's shareholder return performance relative to a specific group of companies over a three-year performance cycle. Compensation expense, which is recorded ratably over the vesting period, is based on the fair value at grant date and the anticipated number of shares of the Company's common stock to be issued, which is determined on a Monte Carlo probability model. Grant recipients do not have any shareholder rights until the granted shares have been issued.

The following table summarizes information about the performance shares that remain outstanding as of December 31, 2012:

										Weighted
	Target Shares							Target Shares		Average
	Outstanding at		Target		Target			Outstanding		Grant Date
Period	Beginning		Shares		Shares			at End		Fair Value
Granted	of Year		Granted		Forfeited			of Year		per Share
2012		-		70,151		(2,996	)		67,155	$	59.55
Total		-		70,151		(2,996	)		67,155

As of December 31, 2012, there was $3.9 million of total unrecognized compensation expense related to unvested PSAs. The cost is expected to be recognized over a weighted average period of 1.5 years.

Restricted Stock Awards and Units

The 2000 Incentive Stock Compensation Plan also provides for other forms of stock-based compensation such as restricted stock awards ("RSA") and restricted stock units ("RSU"). The Company granted 74,705 shares and 57,300 shares of restricted stock to employees and non-employee directors for the years ended December 31, 2012 and 2011, respectively. These awards vest over a three year period and had a fair value of $62.36 and $57.40 on date of issuance for the years ended December 31, 2012 and 2011, respectively.

A summary of the combined changes of RSAs and RSUs for the year ended December 31, 2012, is presented below:

				Weighted-
				Average
	Number of			Grant Date
Awards	Awards			Fair Value
Unvested at January 1, 2012		57,300		$	57.40
Granted		74,705			62.36
Vested		(19,102	)		57.40
Forfeited		(2,996	)		79.64
Unvested at December 31, 2012		109,907		$	60.13

As of December 31, 2012 and 2011, there was $7.7 million and $2.9 million of total unrecognized compensation cost related to unvested RSAs and RSUs. The cost is expected to be recognized over a weighted average period of 2.3 years.