STOCK-BASED COMPENSATION PLANS

12 Months Ended

Dec. 31, 2011

STOCK-BASED COMPENSATION PLANS

10. STOCK-BASED COMPENSATION PLANS

The 2008 Omnibus Incentive Compensation Plan authorizes 7.3 million shares to be issued by way of stock options, stock appreciation rights, restricted stock, restricted stock units or other equity-based awards. Stock options must be awarded at exercise prices at least equal to the fair market value of the shares on the date of grant and expire not later than 10 years from the date of grant, with vesting terms ranging from six months to five years from the date of grant. The 2008 Omnibus Incentive Compensation Plan was approved by our shareholders on April 24, 2008 as a successor to the:

• 2002 Long-Term Incentive Plan, as amended;

• Broad-based Incentive Plan, as amended;

• 2005 Executive Restricted Stock Plan; and

• 2005 Employee and Director Restricted Stock Award Plan.

Although awards remain outstanding under these predecessor plans, no additional awards may be granted under these plans commencing with the approval of the 2008 Omnibus Incentive Compensation Plan. In addition, substantially all shares available under the ADVO, Inc. 2006 Incentive Compensation Plan, which we assumed as part of the March 2007 acquisition, were transferred to the 2008 Omnibus Incentive Compensation Plan.

At December 31, 2011, there were outstanding stock options held by 1,568 participants for the purchase of 8,131,242 shares of our common stock and there were 1,084,260 shares available for grant under the 2008 Omnibus Incentive Compensation Plan.

A summary of Valassis’ stock option activity for the year ended December 31, 2011, is as follows:

	Shares			Weighted Average per Share Exercise Price		Remaining Contractual Life (in years)		Aggregate Intrinsic Value ($ in millions)
Outstanding at beginning of year		9,157,633		$	19.96
Granted		539,322		$	23.52
Exercised		(542,047	)	$	12.47
Forfeited/Expired		(1,023,666	)	$	29.93
Outstanding at end of year		8,131,242		$	19.45		5.23	$	33.8
Options exercisable at year end		5,134,247		$	20.70		3.83	$	17.3
Options expected to vest		2,748,974		$	17.42		7.63	$	15.0

The intrinsic value of options exercised (the amount by which the market price of the Company’s stock on the date of exercise exceeded the exercise price) was $8.7 million, $47.0 million and $9.4 million for the years ended December 31, 2011, 2010 and 2009, respectively.

The weighted average fair value per option at date of grant during the years ended December 31, 2011, 2010 and 2009 was $11.50, $11.89 and $0.86, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for options granted:

	Year Ended December 31,
	2011			2010			2009
Expected option life		4.4 years			4.9 years			5.8 years
Expected annual voltility		61	%		61	%		59	%
Risk-free interest rate		1.2	%		2.6	%		1.8	%
Dividend yield		0	%		0	%		0	%

A summary of restricted stock activity for the year ended December 31, 2011 is as follows:

	Shares			Weighted Average Grant  Date Fair Value
Non-vested at beginning of year		333,222		$	27.98
Granted		313,140		$	24.66
Vested		(95,806	)	$	17.66
Forfeited		(350	)	$	29.36
Non-vested at end of year		550,206		$	27.88

Total stock-based compensation expense was $12.9 million, $32.1 million and $7.1 million for the years ended December 31, 2011, 2010 and 2009, respectively. The increase in stock-based compensation expense for the year ended December 31, 2010 resulted from the following:

• The appreciation of our stock price, which triggered the accelerated vesting of certain executives’ stock options, resulting in the immediate recognition of the related remaining unrecognized stock-based compensation expense;

• Our modification of outstanding stock option and restricted stock awards to employees and directors to provide for the continued vesting and exercisability in accordance with the terms as originally granted of any outstanding stock options or restricted stock awards held by a grantee, if the grantee has satisfied specified service and age requirements at the time the grantee’s employment or directorship with the Company terminates. As a result of this modification, we recognized previously unrecognized compensation expense that we would have been required to be expensed in future periods related to grantees that had met or will meet the specified service and age requirements prior to the original vesting date. The fair value of outstanding awards did not change based on the modified terms; and

• In 2009 and 2010, annual stock awards were granted to executives on January 1^st. However, the 2011 stock awards were granted as of the close of the trading day on December 14, 2010, the date of approval of the awards by the Compensation/Stock Option Committee of our Board of Directors.

As of December 31, 2011, there was a total of $18.0 million of unrecognized stock-based compensation expense related to unvested stock options and restricted stock awards, which is expected to be recognized over a weighted average period of approximately two years.