SHARE-BASED COMPENSATION AND SHAREHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2012

Share Based Compensation and Shareholders Equity [Abstract]

SHARE- BASED COMPENSATION AND SHAREHOLDERS' EQUITY

NOTE K – SHARE-BASED COMPENSATION AND SHAREHOLDERS’ EQUITY

We provide share-based compensation under equity incentive plans approved by shareholders, which provide for the granting of stock options, restricted stock and other equity incentives. As of December 31, 2012 there were 3,266,032 shares remaining available for issuance under our equity incentive plan. We issue new shares from our authorized but unissued share pool.

Stock Options

Our equity incentive plan requires that stock options granted have an exercise price at least equal to 100% of market value of the underlying common stock on the grant date. These options expire ten years from the grant date and become exercisable over a three to five-year vesting period.

The following is a summary of activity in stock options outstanding during the year ended December 31, 2012 (shares and intrinsic value in thousands):

	Shares			Weighted average exercise price		Weighted average remaining contractual life (yrs)		Aggregate intrinsic value
Outstanding, beginning of period		1,670		$	2.86
Granted		—			—
Exercised		—			—
Forfeited		(5	)		3.95
Expired		(341	)		5.83
Outstanding, end of period		1,324		$	2.09		6.8	$	269
Exercisable at end of period		782		$	2.47		6.1	$	153

A summary of grant date fair values and intrinsic values follows (in thousands, except per share amounts):

	Year ended December 31,
	2012		2011		2010
Weighted average grant date fair value of options granted	$	N/A	$	1.15	$	0.96
Total intrinsic value of options exercised	$	N/A	$	N/A	$	N/A
Total fair value of options vested	$	312	$	282	$	196

The fair values were estimated using the Black-Scholes options-pricing model with the following weighted average assumptions:

	2011			2010
Expected dividend yield		0.0	%		0.0	%
Expected stock price volatility		62.8	%		63.4	%
Risk-free interest rate		3.0	%		3.3	%
Expected life of option (years)		8.0			8.0

No stock options were granted during the year ended December 31, 2012.

We recognize compensation expense for awards with graded vesting on a straight-line basis over the requisite service period for each separately vesting portion of the award. Compensation cost related to stock options totaled $212,000, $368,000, and $272,000 for the years ended December 31, 2012, 2011 and 2010, respectively. As of December 31, 2012, there was approximately $145,000 of unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted average period of approximately two years.

We may issue restricted stock to employees, directors and others. Non-vested restricted stock is included in our outstanding common shares. Restrictions limit the sale or transfer of the shares until vested. Vesting of restricted stock is time-based over a three to four-year period. A summary of activity in non-vested restricted stock awards for the year ended December 31, 2012 follows (shares in thousands):

Non-vested Restricted Stock	Shares			Weighted average grant date fair value
Non-vested at January 1, 2012		531		$	1.65
Granted		785			1.56
Vested		(190	)		1.74
Forfeited		—			—
Non-vested at December 31, 2012		1,126		$	1.57

Fair value of restricted shares granted to employees and directors is based on the fair value of the underlying common stock at the grant date. Compensation cost related to the restricted shares is based on the grant date fair value of the common stock granted and is recorded over the requisite service period of three to four years. The weighted average per share grant date fair value of restricted shares issued was $1.56, $1.76, and $1.43 in 2012, 2011, and 2010, respectively. Compensation expense related to the restricted stock totaled approximately $714,000, $379,000, and $257,000 in 2012, 2011 and 2010, respectively. As of December 31, 2012, there was approximately $880,000 of unrecognized compensation cost related to the restricted shares, which is expected to be recognized over a weighted average period of approximately two years.

Modified Dutch Auction Tender Offer

On June 12, 2012, we announced a modified “Dutch Auction” tender offer to repurchase up to $10 million of our common stock.  The offer period expired on July 11, 2012. On July 17, 2012 we repurchased 4,761,904 shares of our common stock for a total cost of $10 million, or $2.10 per share, excluding transaction costs.  The purchase price was funded from cash on hand, and the shares repurchased represented approximately 14% of our issued and outstanding common stock at that time.  We did not acquire any stated or unstated rights or privileges in connection with the repurchase of this common stock and, accordingly, the entire purchase price of $10.4 million, including transaction costs, was accounted for as treasury stock.

Employee Stock Purchase Plan

The Theragenics Corporation Employee Stock Purchase Plan (the “ESPP”) allows eligible employees the right to purchase common stock on a quarterly basis at the lower of 85% of the market price at the beginning or end of each quarterly offering period. Compensation cost related to the ESPP totaled approximately $13,000, $12,000 and $4,000 in 2012, 2011 and 2010, respectively.   250,000 shares of Common Stock are authorized under our current ESPP, and 136,309 shares remained available for issuance under the ESPP at December 31, 2012.

Shareholder Rights Plan

We have a Shareholder Rights Plan (the “Rights Plan”), which contains provisions designed to protect our shareholders in the event of an unsolicited takeover attempt. It is not intended to prevent a takeover on terms that are favorable and fair to all shareholders and will not interfere with a merger approved by the Board of Directors. Pursuant to the Rights Plan each share of our Common Stock contains a share purchase right (a “Right”), which expires in February 2017 and does not become exercisable unless a group acquires or announces a tender or exchange offer for 20% or more of our outstanding Common Stock. Upon a triggering event, each Right that is not held by the 20% or more shareholders will entitle its holder to purchase additional shares of Common Stock at a substantial discount to the then current market prices.