Stock-based compensation

6 Months Ended

Jun. 30, 2012

Share-based Compensation [Abstract]

Stock-based compensation

Stock-based compensation

The Company recognizes compensation expense for all share-based payments granted based on the grant-date fair value estimated in accordance with the provisions of the Financial Accounting Standards Board Accounting Standards Codification topic (“ASC”) 718-10. Compensation expense is recognized on a straight-line basis over the options’ or other awards’ estimated lives for fixed awards with ratable vesting provisions.

Under the Company’s 2007 Incentive Plan (“2007 Plan”), the Company's principal stock compensation plan prior to May 9, 2012, the Company reserved up to a maximum of 3,200 shares of common stock for issuance upon the grant or exercise of stock options, restricted stock, restricted stock units (“RSUs”) and other types of awards, to directors and key employees through 2017. Option awards are granted with an exercise price equal to the market price of the Company’s common stock on the date of the grant and generally vest between three and five years with a 10-year contractual term. Restricted stock and RSUs are granted with a price equal to the market price of the Company’s common stock on the date of the grant and generally vest between three and five years. On May 9, 2012, the Company's stockholders approved the 2012 Long-Term Incentive Plan (“2012 Plan”), which allows the Company to reserve up to a maximum of 3,200 shares of common stock for issuance upon the grant or exercise of awards under the 2012 Plan. No additional awards may be granted under the 2007 Plan after May 9, 2012. As of June 30, 2012, there have been no awards granted under the 2012 Plan.

Under the 2007 Plan, the Company granted 83 and 76 options to employees at a weighted-average grant-date fair value of $28.71 and $25.39 per share for the six months endedJune 30, 2012 and July 2, 2011, respectively. There were no options granted during the three months endedJune 30, 2012 and July 2, 2011. The Company recognized stock-based compensation costs related to stock options of $518 ($328 net of taxes) and $450 ($285 net of taxes) for the three months endedJune 30, 2012 and July 2, 2011, respectively, and $1,132 ($717 net of taxes) and $1,009 ($639 net of taxes) for the six months endedJune 30, 2012 and July 2, 2011, respectively, which has been allocated to selling, general and administrative expenses. Pre-tax unrecognized compensation expense for stock options granted to employees and outside directors, net of estimated forfeitures, was $3,140 as of June 30, 2012, and will be recognized as expense over a weighted-average period of approximately 1.9 years.

The fair value of the option award is estimated on the date of grant using the Black-Scholes-Merton valuation model. Expected volatility is based on the historical volatility of the Company’s common stock. The Company uses historical data to estimate option exercise and forfeiture rates within the valuation model.

Under the 2007 Plan, the Company granted 261 and 196 RSUs at a weighted-average grant-date fair value of $65.98 and $57.34 per unit for the six months endedJune 30, 2012 and July 2, 2011, respectively. There were no RSUs granted during the three months endedJune 30, 2012 and July 2, 2011. The Company recognized stock-based compensation costs related to the issuance of RSUs of $2,311 ($1,464 net of taxes) and $1,708 ($1,082 net of taxes) for the three months endedJune 30, 2012 and July 2, 2011, respectively, and $7,248 ($4,592 net of taxes) and $4,979 ($3,154 net of taxes) for the six months endedJune 30, 2012 and July 2, 2011, respectively, which has been allocated to selling, general and administrative expenses. Pre-tax unrecognized compensation expense for unvested RSUs granted to employees, net of estimated forfeitures, was $20,072 as of June 30, 2012, and will be recognized as expense over a weighted-average period of approximately 3.4 years.

The Company did not grant any restricted stock awards for the six months endedJune 30, 2012 and July 2, 2011. Compensation expense for restricted stock awards for the three months ended and six months endedJune 30, 2012 and July 2, 2011, respectively, was not significant.