12. Share-Based Compensation

As of December 31, 2012, we had share-based compensation, which includes both stock options and restricted stock awarded to employees and directors that were either performance-related or granted upon initial employment as part of their compensation package.

Incentive Plans

We provide performance-based long-term bonus plans for the benefit of all employees - the Crimson Cash Incentive Bonus Plan (“CIBP”) and the Crimson Long-Term Incentive Plan (“LTIP”), respectively. Both plans and specific targeted performance measures under those plans are approved by the Compensation Committee. Upon achieving the performance levels established each year, bonus awards are calculated as a percentage of base salary for the plan year. The plan awards for each year are disbursed in the first quarter of the following year. Employees must be employed by us at the time that final plan awards are dispersed to be eligible.

The CIBP awards are paid out in cash (“Cash Awards”). The performance targets are evaluated on a quarterly basis and used to estimate the approximate expense earned to date for each year. Approximately $1.2 million, $2.8 million and $2.9 million were recognized as compensation expense related to the Cash Awards for the twelve months ended December 31, 2012, 2011 and 2010, respectively and were paid in March 2013, 2012 and 2011, respectively.

The LTIP bonus awards can be paid in either restricted Common Stock or stock options (“Stock Awards”). The Stock Awards vest 25% per year, over the first through fourth anniversaries from the date of grant, at which time 100% of all Stock Awards will be vested. The number of shares of restricted Common Stock and the number of shares underlying the stock options granted as Stock Awards are determined based upon the fair market value of the Common Stock on the date of the grant. The fair value of the stock options to be awarded as part of this plan is determined through use of the Black-Scholes valuation model. The Stock Awards granted pursuant to this plan are granted under the existing amended and restated 2005 Stock Incentive Plan.

Due to the decline in our stock price, the Board of Directors suspended the LTIP in 2009. The LTIP has not yet been reinstated. However at the Board of Directors’ discretion, bonus awards may be made in the form of restricted stock or stock options.

Stock Options

We maintain a 2005 Stock Incentive Plan (“2005 Plan”) and authorized the issuance of up to approximately 5.8 million shares of Common Stock pursuant to awards under the plan. In 2007, we also issued 250,000 shares of restricted Common Stock to our executive officers outside of these plans. Approximately 1.7 million (0.5 million vested) stock options and 1.8 million unvested restricted shares were outstanding at December 31, 2012. Option awards outstanding have exercise prices ranging from $2.13 to $5.00 per share. In 2012 and 2011, respectively, 393,127 and 354,051 shares of restricted Common Stock vested, of which 53,826 and 46,215 shares were withheld by us to satisfy the employees’ tax liability resulting from the vesting of these shares, as provided for in the restricted stock agreement, with the remaining shares being released to the employees and associated directors. At December 31, 2012, we had approximately 1.1 million shares of Common Stock available for future grant under the 2005 Plan.

For stock options, we recorded $0.5 million, $0.6 million and $0.3 million in expense (included on the Consolidated Statements of Operations in general and administrative expense) for the years ended December 31, 2012, 2011 and 2010, respectively, and an estimated $0.8 million will be expensed over the remaining vesting period.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. Assumptions used in the valuation are disclosed in the following table. Expected volatilities are based on historical volatility of our stock with a look back period based on the expected term. The expected dividend yield is zero as we have never declared dividends on our Common Stock. The expected term of options granted represents the period of time that the options are expected to be outstanding. The risk-free rate is based on U.S. Treasury bills with a duration equal or close to the expected term of the options at the time of grant. The forfeiture rates are based on historical forfeitures.

	2012			2011			2010
Weighted average fair value of awards	$	2.16		$	2.07		$	2.19
Pre-vest forfeiture rate	7.36		%	6.92		%	5.01		%
Average grant price	$	3.23		$	3.35		$	3.19
Expected volatility	74.68		%	74.47		%	75.38		%
Risk-free rate	1.13		%	1.65		%	2.55		%
Expected dividend yields	None			None			None
Expected term (in years)	6.40			6.34			6.36

The following table summarizes stock option activity for the three years ended December 31, 2012:

	Number of Shares Underlying Options		Weighted Average Exercise Price	Intrinsic Value
Outstanding at December 31, 2010	1,741,543		8.84	$	700,174
Granted	1,453,240		4.79	—
Exercised	(25,036	)	2.42	$	17,251
Cancelled/forfeited	(1,454,389	)	10.20	$	42,039
Outstanding at December 31, 2011	1,715,358		4.35	$	114,189
Granted	34,500		3.23	—
Exercised	(15,463	)	2.43	$	30,745
Cancelled/forfeited	(58,976	)	3.89	$	65,302
Outstanding at December 31, 2012	1,675,419		4.36	$	69,712
Exercisable at December 31, 2012	522,870		4.01	$	48,425

Restricted Stock Awards

For restricted stock awards, we recorded $2.0 million, $1.4 million and $1.5 million in expense (included on the Consolidated Statements of Operations in general and administrative expense) for the years ended December 31, 2012, 2011 and 2010, respectively and an estimated $3.6 million will be expensed over the remaining vesting period.

In 2012, we issued 959,000 shares of unvested Common Stock, pursuant to restricted stock awards under the 2005 Stock Plan to employees, of which 33,500 were subsequently forfeited. The restricted stock will vest over a four year period. We also issued 54,879 shares of Common Stock pursuant to restricted stock awards to three members of our board of directors as compensation pursuant to the Director Compensation Plan. The fair value of the unvested Common Stock was calculated as approximately $3.3 million on the grant date and will be amortized over the vesting period.

In 2011, we issued 446,725 shares of unvested Common Stock, pursuant to restricted stock awards under the 2005 Stock Plan, of which 43,020 were subsequently forfeited. The restricted stock will vest over a four year period. We also issued 39,267 shares of Common Stock pursuant to restricted stock awards to three members of our board of directors as compensation pursuant to the Director Compensation Plan. The fair value of the unvested Common Stock was calculated as approximately $1.8 million on the grant date and will be amortized over the vesting period.

In 2010, we issued 402,859 shares of unvested Common Stock, pursuant to restricted stock awards under the 2005 Stock Plan, of which 22,000 were subsequently forfeited. The restricted stock will vest over a four year period. We also issued 31,646 shares of Common Stock pursuant to restricted stock awards to two members of our board of directors as compensation pursuant to the Director Compensation Plan. The fair value of the unvested Common Stock was calculated as approximately $1.2 million on the grant date and will be amortized over the vesting period.

Restricted stock activity for the three years ended December 31, 2012 is summarized below:

			Weighted-Average
			Grant Date
	Shares		Fair Value
Non-vested as of December 31, 2010	1,268,037		$	3.28
Granted	485,992		3.78
Vested	(354,051	)	3.48
Cancelled/forfeited	(192,665	)	3.70
Non-vested as of December 31, 2011	1,207,313		3.36
Granted	1,013,879		3.26
Vested	(393,127	)	3.23
Cancelled/forfeited	(43,601	)	3.23
Non-vested as of December 31, 2012	1,784,464		$	3.33

Certain of these restricted stock awards were issued separately from the 2005 Plan.

Subsequent Event

During the first quarter 2013, we issued restricted stock awards for 632,000 shares of Common Stock to employees. As a result, we have 515,380 shares available to be awarded pursuant to the 2005 Plan.