Share-based compensation plans

12 Months Ended

Dec. 31, 2011

Share-based compensation plans [Abstract]

Share-based compensation plans

18. Share-based compensation plans

We have certain share-based compensation plans. Under the fair value method, compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period which generally corresponds to the vesting period. The fair value of awards classified as liabilities is remeasured at each reporting period until the award is settled. Awards under our plans generally vest over periods ranging from one to five years.

We have a stock incentive plan that was adopted in May 2011. When the 2011 plan was adopted, no further awards could be made under our previous 2002 plan. All share based compensation granted in 2011 was granted under the 2002 plan prior to the adoption of the 2011 plan. The purpose of the 2011 plan is to motivate and incent performance by and to retain the services of, key employees and non-employee directors through receipt of equity-based and other incentive awards under the plan. The maximum number of shares of stock that can be awarded under the 2011 plan is 7.0 million. Awards issued under the plan that are subsequently forfeited will not count against the limit on the maximum number of shares that may be issued under the plan. In addition, shares used for income tax withholding or used for payment of the exercise price of an option will not be counted against such limit. The plan provides for the award of stock options, stock appreciation rights, restricted stock and restricted stock units, as well as cash incentive awards. No awards may be granted after May 5, 2021 under the 2011 plan. The exercise price of options is the closing price of the common stock on the New York Stock Exchange on the date of grant. The vesting provisions of options, restricted stock and restricted stock units are determined at the time of grant. Shares issued under the 2011 plan are treasury shares if available, otherwise they will be newly issued shares. Treasury shares will continue to be issued for nonvested unit awards under the 2002 plan.

The compensation cost that has been charged against income for the share-based plans was $12.1 million, $13.7 million and $15.2 million for the years ended December 31, 2011, 2010 and 2009, respectively. The related income tax benefit, before valuation allowance, recognized for the share-based compensation plans was $4.2 million, $1.5 million and $5.3 million for the years ended December 31, 2011, 2010 and 2009, respectively.

A summary of option activity in the stock incentive plans during 2011 is as follows:

	Weighted
	Average		Shares
	Exercise		Subject
	Price		to Option
Outstanding, December 31, 2010	$	60.08		1,749,700
Granted		-		-
Exercised		-		-
Forfeited or expired		58.28		(329,200	)
Outstanding, December 31, 2011	$	60.50		1,420,500

There were no options granted or exercised in 2011, 2010 or 2009.

The following is a summary of stock options outstanding, all of which are exercisable, at December 31, 2011:

	Options Outstanding and Exercisable
					Weighted
Exercise			Remaining		Average
Price			Average		Exercise
Range	Shares		Life (years)		Price
$43.70 - 43.70		349,500		1.1	$	43.70
$63.80 - 68.20		1,071,000		1.1	$	65.98
Total		1,420,500		1.1	$	60.50

The aggregate intrinsic value of options outstanding and options exercisable at December 31, 2011 was zero. The aggregate intrinsic value represents the total pre-tax intrinsic value based on our closing stock price of $3.73 as of December 31, 2011 which would have been received by the option holders had all option holders exercised their options on that date. Because our closing stock price at December 31, 2011 was below all exercise prices, none of the outstanding options had any intrinsic value.

A summary of restricted stock or restricted stock unit activity during 2011 is as follows:

	Weighted Average Grant Date Fair Market Value		Shares
Restricted stock outstanding at December 31, 2010	$	14.69		3,457,266
Granted		8.94		1,368,295
Vested		8.32		(1,698,956	)
Forfeited		60.01		(180,843	)
Restricted stock outstanding at December 31, 2011	$	12.88		2,945,762

At December 31, 2011, the 2.9 million shares of restricted stock outstanding consisted of 2.3 million shares that are subject to performance conditions (“performance shares”) and 0.6 million shares that are subject only to service conditions (“time vested shares”). The weighted-average grant date fair value of restricted stock granted during 2010 and 2009 was $6.82 and $3.11, respectively. The fair value of restricted stock granted is the closing price of the common stock on the New York Stock Exchange on the date of grant. The total fair value of restricted stock vested during 2011, 2010 and 2009 was $14.9 million, $8.5 million and $1.3 million, respectively.

As of December 31, 2011, there was $22.6 million of total unrecognized compensation cost related to nonvested share-based compensation agreements granted under the 2002 Plan. Of this total, $21.6 million of unrecognized compensation costs relate to performance shares and $1.0 million relates to time vested shares. The unrecognized costs associated with the performance shares may or may not be recognized in future periods, depending upon whether or not the performance conditions are met. The cost associated with the time vested shares is expected to be recognized over a weighted-average period of 0.2 years.

During 2011, we also granted 449,350 shares that will be settled as cash payments over the vesting period under the 2002 stock incentive plan. The grant date fair value of these restricted share units was $8.94 in 2011. During 2011, 5,400 shares of this grant were forfeited. As of December 31, 2011, there was $1.0 million of total unrecognized compensation cost related to nonvested shares under this grant. The unrecognized compensation cost associated with this grant is expected to be recognized over a period of 2.1 years.

At December 31, 2011, 7.0 million shares were available for future grant under the 2011 stock incentive plan.