Stock Compensation Plans

3 Months Ended

Mar. 31, 2013

Stock Compensation Plans [Abstract]

Stock Compensation Plans

16. Stock Compensation 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 2000 Incentive Stock Compensation Plan also provides for other forms of stock-based compensation such as restricted stock.  

The following table is a summary of the stock-based compensation expense recognized by type of grant for the three months ended March 31, 2013 and 2012 (in thousands of dollars):

	Three Months Ended
	March 31,
	2013			2012
Stock options	$	1,212		$	1,331
Performance shares		490			-
Restricted stock awards and units		871			288
Total stock-based compensation expense		2,573			1,619
Tax benefit		(952	)		(599	)
Stock-based compensation expense, net of tax	$	1,621		$	1,020

Stock Options

The fair value of each option grant during the first three months of 2013 was estimated on the date of grant using the Black-Scholes option-pricing model, based on the following assumptions. There were no option grants during the first three months of 2012.  

	2013
Expected dividend yield		1.02	%
Expected stock price volatility		46.4% - 53.0	%
Risk free interest rate		0.27% - 0.60	%
Expected life options	2 - 4 years
Weighted-average fair value per option at grant date	$	18.24

The expected life of options was determined based on the exercise history of employees and directors since the inception of the plans. The expected stock price volatility is based upon the historical weekly and daily stock price for the prior number of years 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, the terms of which were equivalent to the expected life of the stock option.

A summary of stock option activity under the plans during the three months ended March 31, 2013, is presented below:

Options	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value ($000's)
Outstanding at January 1, 2013		1,625,327		$	43.96
Granted		10,500			62.26
Exercised		(30,182	)		36.63
Forfeited or expired		(15,791	)		57.64
Outstanding at March 31, 2013		1,589,854		$	44.08	$	7.1	$	36,657
Exercisable at March 31, 2013		954,735		$	38.54		6.2	$	27,340

As of March 31, 2013, there was $4.6 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 1.83 years. The intrinsic value of stock options exercised in the first three months of 2013 was $0.9 million.

Performance Shares

The Company has granted performance share awards ("PSAs") 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 March 31, 2013:

									Weighted
			Target Shares		Target Shares				Average
	Target Shares		Granted		Granted		Target Shares		Grant Date
Period	Outstanding at		During		During		Outstanding		Fair Value
Granted	December 31, 2012		Current Year		Current Year		at March 31, 2013		per Share
2012		67,155		-		-		67,155	$	58.66
Total		67,155		-		-		67,155

As of March 31, 2013, there was $2.9 million of total unrecognized compensation expense related to unvested PSAs.  The cost is expected to be recognized over a weighted average period of 1.28 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").  These awards vest over a three year period.

A summary of the combined changes of RSAs and RSUs for the three months ended March 31, 2013, is presented below:

			Weighted-
			Average
	Number of		Grant Date
Awards	Awards		Fair Value
Unvested at January 1, 2013		109,907	$	60.13
Granted		-		-
Vested		-		-
Forfeited		-		-
Unvested at March 31, 2013		109,907	$	60.13

As of March 31, 2013 there was $4.3 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 1.67 years.