STOCK-BASED COMPENSATION PLANS

12 Months Ended

Dec. 31, 2012

STOCK-BASED COMPENSATION PLANS

STOCK-BASED COMPENSATION PLANS

The 2008 Omnibus Incentive Compensation Plan (the "Omnibus 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 Omnibus 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 Omnibus Plan. The Omnibus Plan originally authorized 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 ten years from the date of grant, with vesting terms ranging from six months to five years from the date of grant. On May 3, 2012, our shareholders approved an amendment to the Omnibus Plan to increase the number of shares of common stock reserved and available for issuance under the 2008 Plan by an additional 1.1 million shares.

At December 31, 2012, there were outstanding stock options held by 1,428 participants for the purchase of 6,932,046 shares of our common stock and there were 1,313,615 shares available for grant under the Omnibus Plan.

A summary of Valassis' stock option activity for the year ended December 31, 2012, is as follows:

	Shares		Weighted Average per Share Exercise Price		Remaining Contractual Life	Aggregate Intrinsic Value
					(in years)	($ in millions)
Outstanding at beginning of year	8,131,242		$	19.45
Granted	802,759		$	24.71
Exercised	(1,100,554	)	$	10.97
Forfeited/Expired	(901,401	)	$	30.86
Outstanding at end of year	6,932,046		$	19.93	5.21	$	51.5
Options exercisable at year end	4,227,684		$	19.65	3.72	$	32.9
Options expected to vest	2,444,513		$	20.41	7.54	$	16.7

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 $15.4 million, $8.7 million and $47.0 million for the years ended December 31, 2012, 2011 and 2010, respectively.

The weighted average fair value per option at date of grant during the years ended December 31, 2012, 2011 and 2010 was $10.16, $11.50 and $11.89, 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,
	2012		2011		2010
Expected option life (years)	4.4		4.4		4.9
Expected annual volatility	61	%	61	%	61	%
Risk-free interest rate	0.8	%	1.2	%	2.6	%
Dividend yield	2.6	%	0.0	%	0.0	%

A summary of restricted stock activity for the year ended December 31, 2012 is as follows:

	Shares		Weighted Average Grant Date Fair Value per Share
Non-vested at beginning of year	550,206		$	27.88
Granted	440,150		$	25.62
Vested	(281,267	)	$	29.16
Forfeited	(5,829	)	$	22.67
Non-vested at end of year	703,260		$	26.00

Total stock-based compensation expense was $13.9 million, $12.9 million and $32.1 million for the years ended December 31, 2012, 2011 and 2010, respectively. As of December 31, 2012, there was a total of $21.0 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.