Restricted Stock Awards and Restricted Stock Units (Nonvested Shares)

12 Months Ended

Dec. 31, 2011

Restricted Stock Awards And Restricted Stock Units Nonvested Shares [Text Block]

(15) Restricted Stock Awards and Restricted Stock Units (Nonvested Shares)

          The 2011 Incentive Stock Plan and, prior to that, the 2001 Incentive Stock Plan provide for the issuance of restricted stock awards and restricted stock units (collectively, nonvested shares) to employees, officers and directors. These awards are issued by the Company effective as of the grant date, in the case of restricted stock awards, or upon the vesting date, in the case of a restricted stock unit. The recipient pays no cash to receive the shares, other than the $0.01 par value in some cases. These awards have vesting periods of three to five years when based solely on service. Certain awards have performance goals which, if met, result in accelerated vesting that could be shorter than three years. If the performance goals are not met, the awards continue to vest over time. All nonvested shares are valued at fair value. The market price of the Company’s stock at grant date is factored by an expected vesting period forfeiture rate based on stratified historical data related to the assumed vesting period. This amount is then amortized over the vesting period on a straight-line basis for those awards that vest based solely on service. For awards subject to performance-based accelerated vesting, the Company monitors progress against performance goals and accelerates the compensation expense as appropriate.

          Under the 2011 Outside Director Compensation Plan, each non-employee director receives an annual grant of restricted stock units (Annual Restricted Stock Grant) settled in shares of common stock on the first trading day after June 30 of each calendar year with a value of $75,000. The Annual Restricted Stock Grant vests in three equal tranches on each of the first three anniversaries of the date of grant, provided that the recipient director remains on the Board. In addition, upon the election of a new non-employee director to the Board, such newly elected director receives a Welcome Grant of restricted stock units settled in shares of common stock with a value of $100,000. The Welcome Grant vests in three equal tranches on each of the first three anniversaries of the date of grant, provided that the recipient director remains on the Board. Furthermore, for a non-employee Chairperson of the Board, the value of restricted stock units covered by the Annual Restricted Stock Grant and the Welcome Grant shall be twice the amounts mentioned above. For a non-employee Vice-Chairperson of the Board, the value of options covered by the Annual Restricted Stock Grant and the Welcome Grant shall be one and a half times the amounts mentioned above. Restricted stock units granted in accordance with the 2011 Outside Director Compensation Plan will be made under the 2011 Incentive Stock Plan.

          Prior to April 1, 2011, under the 2007 Outside Director Compensation Plan, each non-employee director received an annual grant of restricted stock (Annual Restricted Stock Grant) settled in shares of common stock on the first trading day after June 30 of each calendar year with a value of $75,000. The Annual Restricted Stock Grant vested in three equal tranches on each of the first three anniversaries of the date of grant, provided that the recipient director remained on the Board. In addition, upon the election of a new non-employee director, such newly elected director received a Welcome Grant of restricted stock with a value of $75,000. The Welcome Grant vested in three equal tranches on each of the first three anniversaries of the date of grant, provided that the recipient director remained on the Board. Furthermore, for a non-employee Chairperson of the Board, the value of restricted stock covered by the Annual Restricted Stock Grant and Welcome Grant were twice the amounts mentioned above. Restricted stock units granted in accordance with the 2007 Outside Director Compensation Plan were made under the 2001 Incentive Stock Plan.

          A summary of nonvested shares as of December 31, 2011 and changes during the year ended December 31, 2011 is provided below (shares in thousands):

	Number of Nonvested Shares			Weighted Average Grant Date Fair Value Per Share
Nonvested at January 1, 2011		753		$	10.41
Granted		393		$	9.43
Vested		(342	)	$	10.44
Forfeited		(130	)	$	10.02
Nonvested at December 31, 2011		674		$	10.14

          Of the total number of nonvested shares granted during the year, 203,000 are performance-based and had a grant date fair value of $10.53 per share. The total grant-date fair value of nonvested shares that vested during the year ended December 31, 2011 was $3.6 million.

          As of December 31, 2011, there was $4.6 million of total unrecognized compensation cost related to nonvested shares that the Company expects to be recognized over a weighted average period of 24 months, reflective of the blend of service and performance elements. The weighted average vesting period could be affected if the remaining performance goals become probable of being achieved and the related vesting period is shortened as a result.

          In the years ended December 31, 2011, 2010 and 2009, the Company recorded stock-based compensation expense of $2.4 million, $4.6 million, and $4.5 million related to nonvested share awards, which is included in the Company’s net income for each respective period. Of the 2010 expense, $1.2 million related to vesting of performance-based awards. The board of directors of the Company elected to accelerate the vesting of certain nonvested share awards granted under the Company’s 2001 Incentive Stock Plan as of the consummation of the sale of the specialty pharmaceutical business in January 2010. This acceleration resulted in an estimated $0.8 million additional expense in the first quarter of 2010 and $0.5 million in 2009. The charges primarily represented an acceleration of expense recognition pursuant to the original award and, to a lesser extent, an adjustment, in certain cases, to recognize the modification of the award in contemplation of the sale. The Company’s policy is to use newly issued shares to satisfy nonvested share awards. There has been no tax benefit realized to date related to tax deductions for nonvested shares.

          The breakdown of stock-based compensation expense by major line caption in the statements of operations is shown below (in thousands):

	Year Ended December 31,
	2011		2010		2009
Research and development	$	1,281	$	1,643	$	1,223
General and administrative		1,082		2,963		3,268
	$	2,363	$	4,606	$	4,491