Note 8 Stock-based Compensation

Under the Company's 2009 Omnibus Equity Compensation Plan (the "2009 Plan"), as approved by the Company's shareholders to replace the 2004 Equity Compensation Plan (the "2004 Plan"), stock options, stock units, stock awards, stock appreciation rights, dividend equivalents, and other stock-based awards may be granted to employees, non-employee directors, and consultants and advisors. The 2009 Plan authorizes 5,000,000 shares for issuance under the plan. A maximum of 50% of the shares available for issuance under the 2009 Plan may be issued as restricted stock and the maximum number of shares that may be subject to grants under the Plan to any one individual in any one year is 200,000. Awards under the 2009 Plan are made by a committee of the Board of Directors. At June 30, 2012, 3,870,434 shares underlying stock-based compensation awards were still available for grants under the 2009 Plan. No further grants may be made under the 2004 Plan.

In the first quarter of 2012, the Company recognized a tax benefit of $588 associated with stock-based compensation that vested or was exercised during the fiscal year ended December 31, 2011, which, as a result of the Company's 2011 Federal cumulative net operating loss, was not recognized in 2011, because the deduction did not reduce income taxes payable. The recognition in the first quarter of 2012 of the tax benefit resulted in a reduction to income taxes payable and an increase in stockholders' equity.

Performance Share Units – A performance share unit ("PSU") represents the right to receive a share of the Company's common stock if specified performance goals are met over the three year performance period specified in the grant, subject to certain exceptions through the respective vesting period, which range from two to three years. Each grantee is granted a target award of PSUs, and may earn between 0% and 200% of the target amount depending on the Company's performance against the performance goals. The following table provides compensation costs for stock-based compensation related to performance share units:


		Six Months Ended				Three Months Ended
		June 30,				June 30,
		2012		2011		2012		2011
Stock-based compensation for performance share units
within operations and maintenance expenses	$	1,058	$	361	$	610	$	260

The following table summarizes nonvested PSU transactions for the six months ended June 30, 2012:


	Number			Weighted
	of			Average
	Share Units			Fair Value

Nonvested share units at beginning of period	137,584		$	24.38
Granted	127,950			23.89
Performance criteria adjustment	46,181			23.67
Forfeited	(4,796	)		23.88
Vested	-			-
Share unit awards issued	-			-
Nonvested share units at end of period	306,919		$	23.67

The fair value of PSUs was estimated at the grant date based on the probability of satisfying the performance conditions associated with the PSUs using the Monte Carlo valuation method. The per unit weighted-average fair value at the date of grant for PSUs granted during the six months ended June 30, 2012 and 2011 was $23.89 and $24.38, respectively. The fair value of each PSU grant is amortized monthly into compensation expense on a straight-line basis over their respective vesting periods, which range from 24 to 36 months. The accrual of compensation costs is based on our estimate of the final expected value of the award, and is adjusted as required. The Company assumes that forfeitures will be minimal, and recognizes forfeitures as they occur, which results in a reduction in compensation expense. The recording of compensation expense for PSUs has no impact on net cash flows.

Restricted Stock Units – A restricted stock unit ("RSU") represents the right to receive a share of the Company's common stock. RSUs are eligible to be earned at the end of a specified restricted period, generally three years, beginning on the date of grant. The Company assumes that forfeitures will be minimal, and recognizes forfeitures as they occur, which results in a reduction in compensation expense. The following table provides compensation costs for stock-based compensation related to restricted stock units:


		Six Months Ended				Three Months Ended
		June 30,				June 30,
		2012		2011		2012		2011
Stock-based compensation for restricted stock units
within operations and maintenance expenses	$	301	$	141	$	172	$	102

The following table summarizes nonvested RSU transactions for the six months ended June 30, 2012:


	Number			Weighted
	of			Average
	Stock Units			Fair Value

Nonvested stock units at beginning of period	44,342		$	22.21
Granted	37,850			22.49
Vested	(11,000	)		22.21
Forfeited	(325	)		22.21
Nonvested stock units at end of period	70,867		$	22.36

The per unit weighted-average fair value at the date of grant for RSUs granted during the six months ended June 30, 2012 and 2011 was $22.49 and $22.21, respectively

Stock Options – The fair value of stock options is estimated at the grant date using the Black-Scholes option-pricing model. The following table provides compensation costs for stock-based compensation related to stock options granted in prior periods:


		Six Months Ended				Three Months Ended
		June 30,				June 30,
		2012		2011		2012		2011
Stock-based compensation for stock options
within operations and maintenance expenses	$	371	$	769	$	124	$	329
Income tax benefit		295		420		162		46

There were no stock options granted during the six months ended June 30, 2012 or 2011.

The following table summarizes stock option transactions for the six months ended June 30, 2012:


				Weighted	Weighted
				Average	Average		Aggregate
				Exercise	Remaining		Intrinsic
	Shares			Price	Life (years)		Value
Options:
Outstanding at beginning of period	3,376,960		$	20.03
Granted	-			-
Forfeited	(7,486	)		17.69
Expired	(26,976	)		23.56
Exercised	(473,351	)		16.63
Outstanding at end of period	2,869,147		$	20.56	4.6	$	14,579,511

Exercisable at end of period	2,724,869		$	20.74	4.5	$	13,451,257

Restricted Stock –During the six and three months ended June 30, 2012 and 2011, the Company recorded stock-based compensation related to restricted stock awards as a component of operations and maintenance expense as follows:


		Six Months Ended				Three Months Ended
		June 30,				June 30,
		2012		2011		2012		2011
Stock-based compensation for restricted stock
within operations and maintenance expenses	$	1,136	$	1,100	$	741	$	711

The following table summarizes nonvested restricted stock transactions for the six months ended June 30, 2012:


	Number			Weighted
	of			Average
	Shares			Fair Value

Nonvested shares at beginning of period	207,989		$	18.66
Granted	17,600			23.09
Vested	(96,070	)		18.76
Forfeited	(1,607	)		17.23
Nonvested share units at end of period	127,912		$	19.22