(16) STOCK INCENTIVE AND STOCK OPTION PLANS

Key employees and directors of the Company and its subsidiaries have been granted stock options under the Company's 1994, 1995 and 1998 stock incentive plans (the “Plans”). The 1994 and 1995 stock incentive plans were amended in 1998 to allow a limited number of restricted stock awards and, in 2011, the name of the 1994 stock incentive plan was changed to the Long-Term Equity Incentive Plan. All options granted pursuant to these plans have an exercise price equal to the market value on the date of the grant and are exercisable over periods of one to ten years. Upon the exercise of stock options, new shares are issued by the Company.

In 1998, the Company adopted a stock plan through which a minimum of 50% of the compensation payable to each director is paid in the form of the Company's common stock. This plan is registered under the Company's dividend reinvestment plan and the shares are purchased through the Company's dividend reinvestment plan which purchases shares in the open market.

FASB ASC 718 requires that compensation expense be measured using estimates of fair value of all stock-based awards. Compensation expense arising from stock options that has been charged against income for the Plans was $2.1 million, $2.1 million and $1.7 million for 2011, 2010 and 2009, respectively. As of December 31, 2011, there was $1.7 million of total unrecognized compensation cost related to nonvested stock options. That cost is expected to be recognized over a three-year period.

In December 2010, the Company granted stock options to purchase 408,363 shares of the Company's common stock to its employees under the 1994 stock incentive plan. These stock options have a contractual life of seven years and vest over a one, two or three-year service period. No stock options were granted during 2011. The following tables present the stock option activity under the Plans as of December 31, 2011 and 2010 and changes during the years then ended:

	2011
	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (In thousands)
Options
Outstanding at January 1, 2011		2,946,307		$	21.41
Exercised		(2,225	)		9.40
Cancelled or forfeited		(76,659	)		22.86
Expired		(153,400	)		15.39
Outstanding at December 31, 2011		2,714,023		$	21.72		3.6	$	2

Exercisable at December 31, 2011		2,330,234		$	22.63		3.3	$	2

	2010
	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (In thousands)
Options
Outstanding at January 1, 2010		2,701,693		$	22.33
Granted		408,363			13.25
Exercised		(22,336	)		15.01
Cancelled or forfeited		(46,213	)		23.28
Expired		(95,200	)		13.21
Outstanding at December 31, 2010		2,946,307		$	21.41		4.4	$	1,219

Exercisable at December 31, 2010		2,151,996		$	22.68		3.7	$	116

The following table presents the status of the Company's nonvested options as of December 31, 2011 and changes during the year then ended:

				Weighted-		Weighted-
				Average		Average
				Exercise		Grant Date
	Shares			Price		Fair Value
Nonvested Options
Outstanding at January 1, 2011		794,311		$	17.96	$	5.25
Vested		(388,383	)		19.46		5.55
Forfeited or cancelled		(22,139	)		22.31		6.42
Outstanding at December 31, 2011		383,789		$	16.20	$	4.87

The Company uses historical data to estimate stock option exercise and employee departure behavior used in the Black-Scholes-Merton option valuation model; groups of participants (executive, non-executives and directors) are considered separately for valuation purposes. The expected term of stock options granted is derived from analysis of all historical data on stock option activity and represents the period of time that stock options granted are expected to be outstanding; the range given below results from certain groups of participants exhibiting different post-vesting behaviors. The risk-free rate for periods within the contractual term of the stock option is based on the U. S. Treasury yield curve in effect at the time of grant. The expected volatility is estimated based on the Company's historical experience. The following table provides the range of assumptions used for stock options granted during the years ended December 31, 2010 and 2009:

	2010			2009

Expected volatility		45.2	%		43.6	%
Weighted-average volatility		45.2	%		43.6	%
Expected dividends		3.75	%		3.75	%
Expected term (in years)		4.8 - 6.0			5.1 - 5.7
Risk-free rate		1.64	%		2.33	%

The weighted-average grant-date fair value of stock options granted during the years 2010 and 2009 was $4.00 and $6.70, respectively. The intrinsic value of stock options exercised during the years ended December 31, 2010 and 2009 was approximately $143,000 and $1.6 million, respectively.

The following table summarizes information about stock options outstanding at December 31, 2011:

		Options Outstanding						Options exercisable
Range of		Number		Weighted-Avg		Weighted-Avg		Number		Weighted-Avg
Exercise Prices		Outstanding		Remaining Life (years)		Exercise Price		Exercisable		Exercise Price

$	9.97 to $13.25		409,356		5.9	$	13.23		149,258	$	13.21
$	17.10 to $20.23		150,688		1.3		19.59		150,688		19.59
$	21.41 to $23.51		1,313,363		3.4		22.89		1,189,672		22.94
$	24.03 to $25.31		840,616		3.1		24.39		840,616		24.40
$	9.97 to $25.31		2,714,023		3.6	$	21.72		2,330,234	$	22.63

The 1994 stock incentive plan allows for the issuance of performance shares. Performance shares entitle the recipient to receive shares of the Company's common stock upon the achievement of performance goals that are specified in the award over a specified performance period. The recipient of performance shares is not treated as a shareholder of the Company and is not entitled to vote or receive dividends until the performance conditions stated in the award are satisfied and the shares of stock are actually issued to the recipient. In January 2008, the Company granted 85,395 performance shares to employees for the two-year performance period from January 1, 2008 through December 31, 2009. In January 2009, the Company granted 101,225 performance shares to employees for the two-year performance period from January 1, 2009 through December 31, 2010. In January 2010, the Company granted 125,395 performance shares to employees for the two-year performance period from January 1, 2010 through December 31, 2011. In March 2011, the Company granted 125,410 performance shares to employees for the two-year performance period from January 1, 2011 through December 31, 2012. All of these performance shares vest over a three-year period and are valued at the fair value of the Company's stock at the grant date based upon the estimated number of shares expected to vest. No expense was recorded in 2008 and 2009 for the 2008 grant, as the Company failed to meet the performance threshold for the 2008-2009 performance period. Compensation expense of approximately $461,000 was recognized in 2009 related to the 2009 grant of performance shares. This amount was reversed in 2010 and no additional expense was recorded in 2010, as the Company failed to meet the performance threshold for the 2009-2010 performance period. No expense was recorded in 2010 or 2011 related to the 2010 grant, as the Company failed to meet the performance threshold for the 2010-2011 performance period. Compensation expense of approximately $147,000 was recognized in 2011 related to the 2011 grant of performance shares.

In May 2009, the Company awarded 5,000 restricted stock units covering 5,000 shares of Company common stock to its directors with the shares of stock covered by this award issued to the directors in May 2010. In

May 2010, the Company awarded 5,000 restricted stock units covering 5,000 shares of Company common stock to its directors and the shares of stock covered by this award were issued to the directors in May 2011. No restricted stock units were awarded during 2011. Compensation expense of approximately $37,000, $112,000 and $117,000 was recognized in 2011, 2010 and 2009, respectively, related to the restricted stock units issued to the Company's directors.