Stock-Based Compensation

3 Months Ended

Mar. 31, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Stock-Based Compensation

Note 10 – Stock-Based Compensation

United has an equity compensation plan that allows for grants of incentive stock options, nonqualified stock options, restricted stock and restricted stock unit awards (also referred to as “nonvested stock” awards), stock awards, performance share awards or stock appreciation rights.  Options granted under the plan can have an exercise price no less than the fair market value of the underlying stock at the date of grant.  The general terms of the plan include a vesting period (usually four years) with an exercisable period not to exceed ten years.  Certain option and restricted stock and restricted stock unit awards provide for accelerated vesting if there is a change in control (as defined in the plan).  As of March 31, 2013, 1,194,000 additional awards could be granted under the plan. Through March 31, 2013, incentive stock options, nonqualified stock options, restricted stock and restricted stock unit awards, base salary stock grants and performance share awards have been granted under the plan.

The following table shows stock option activity for the first three months of 2013.

						Weighted-
						Average		Aggregate
				Weighted-		Remaining		Intrinisic
				Average Exercise		Contractual		Value
Options	Shares			Price		Term (Years)		($000)
Outstanding at December 31, 2012		482,528		$	97.73
Forfeited		(859	)		30.11
Expired		(5,358	)		98.55
Outstanding at March 31, 2013		476,311			97.85		3.1	$	1
Exercisable at March 31, 2013		456,514			101.07		2.9		—

The fair value of each option is estimated on the date of grant using the Black-Scholes model.  No stock options were granted during the three month period ended March 31, 2013.  Recent decreases in United’s stock price have rendered most of its outstanding options severely out of the money and potentially worthless to the grantee.  Therefore, historical exercise patterns do not provide a reasonable basis for determining the expected life of new option grants.  United therefore uses the formula provided by the SEC in Staff Accounting Bulletin No. 107 to determine the expected life of options.  No options were granted during the three months ended March 31, 2013 and 2012.

Compensation expense relating to stock options of $64,000 and $180,000 was included in earnings for the three months ended March 31, 2013 and 2012, respectively.  The amount of compensation expense for both periods was determined based on the fair value of the options at the time of grant, multiplied by the number of options granted that are expected to vest, which was then amortized over the vesting period.  The forfeiture rate for options is estimated to be approximately 3% per year.  No options were exercised during the first three months of 2013 or 2012.

The table below presents the activity in restricted stock and restricted stock unit awards for the first three months of 2013.

				Weighted-
				Average Grant-
Restricted Stock	Shares			Date Fair Value
Outstanding at December 31, 2012		485,584		$	10.72
Granted		21,517			10.26
Excercised		(4,301	)		14.03
Cancelled		(5,000	)		10.25
Outstanding at March 31, 2013		497,800			10.68
Vested at March 31, 2013		43,100			21.98

Compensation expense for restricted stock and restricted stock units is based on the fair value of restricted stock and restricted stock unit awards at the time of grant, which is equal to the value of United’s common stock on the date of grant.  The value of restricted stock and restricted stock unit grants that are expected to vest is amortized into expense over the vesting period.  For the three months ended March 31, 2013 and 2012, compensation expense of $445,000 and $405,000, respectively, was recognized related to restricted stock and restricted stock unit awards.  In addition, for the three months ended March 31, 2013, $17,000 was recognized in other operating expense for restricted stock units granted to members of United’s board of directors.  The total intrinsic value of restricted stock and restricted stock units was $5.65 million at March 31, 2013.

As of March 31, 2013, there was $2.85 million of unrecognized compensation cost related to non-vested stock options and restricted stock and restricted stock unit awards granted under the plan.  That cost is expected to be recognized over a weighted-average period of 1.76 years.  The aggregate grant date fair value of options and restricted stock and restricted stock unit awards that vested during the three months ended March 31, 2013, was $461,000.