Stock and Other Incentive Plans

Stock Incentive Plan

The Incentive Plan authorizes the Company to issue 2,390,272 shares of common stock to its employees and directors. The Incentive Plan will continue until terminated by the Company’s Board of Directors. As of December 31, 2012, 2011 and 2010, the Company had issued, net of forfeitures, a total of 1,576,632 shares, 1,182,074 shares and 1,091,007 shares, respectively, under the Incentive Plan for compensation-related awards to employees and directors, with a total of 813,640 authorized shares, 1,208,198 authorized shares and 1,299,265 authorized shares, respectively, remaining which had not been issued. Non-vested shares issued under the Incentive Plan are generally subject to fixed vesting periods varying from three to eight years beginning on the date of issue. If an employee voluntarily terminates employment with the Company or is terminated for cause before the end of the vesting period, the shares are forfeited, at no cost to the Company. Once the shares have been issued, the employee has the right to receive dividends and the right to vote the shares. Compensation expense recognized during the years ended December 31, 2012, 2011 and 2010 from the amortization of the value of non-vested shares issued to employees was $2.5 million, $2.2 million and $1.6 million, respectively.

On July 31, 2012, the Company adopted a new Executive Incentive Program. The Executive Incentive Program was adopted to provide specific award criteria with respect to incentive awards made under the Incentive Plan. No new shares of common stock were authorized in connection with the Executive Incentive Program. Under the terms of the Executive Incentive Program, the Company's named executive officers may earn incentive awards in the form of cash and non-vested stock. Cash incentive awards are based on individual and Company performance. Company performance is measured over a four-quarter period against targeted financial and operational metrics set in advance by the Compensation Committee. Non-vested stock awards are based on the Company's relative total shareholder return performance over one-year and three-year periods, measured against the Company's peer group. The executive officers may also receive non-vested stock awards by electing to take cash incentive awards in the form of non-vested stock. In the fourth quarter of 2012, the Company granted performance-based awards to its five named-executive officers under the Incentive Plan with a grant date fair value totaling $2.7 million, which were granted in the form of non-vested shares totaling approximately 112,000 shares, with a three year vesting period. Six other officers will be eligible to participate under a program similar to the Executive Incentive Program beginning January 1, 2013.

In the fourth quarters of 2012 and 2010, the Company granted performance-based awards under the Long-term Incentive Program adopted under the Incentive Plan (the "LTIP") totaling approximately $3.6 million and $1.4 million, respectively, which were granted in the form of non-vested shares totaling approximately 154,700 shares and 67,800 shares, respectively. The shares have vesting periods ranging from three to eight years with a weighted average vesting period of approximately six years. Beginning in 2012, the Company's executive officers were no longer eligible to participate in the LTIP. No performance-based awards were released under the Incentive Plan during 2011.

The Incentive Plan also authorizes the Company’s Compensation Committee of its Board of Directors to grant restricted stock units or other performance awards to eligible employees. Such awards, if issued, will also be subject to restrictions and other conditions as determined appropriate by the Compensation Committee. Grantees of restricted stock units will not have stockholder voting rights and will not receive dividend payments. The award of performance units does not create any stockholder rights. Upon satisfaction of certain performance targets as determined by the Compensation Committee, payment of the performance units may be made in cash, shares of common stock, or a combination of cash and common stock, at the option of the Compensation Committee. As of December 31, 2012, the Company had not granted any restricted stock units or other performance awards under the Incentive Plan.

Beginning in 2009, the Company also began issuing non-vested shares to its non-employee directors under the Incentive Plan. The directors’ stock issued generally has a three-year vesting period and is subject to forfeiture prior to such date upon termination of the director’s service, at no cost to the Company. During 2012, 2011 and 2010, the Company issued approximately 27,900 shares, 27,400 shares, and 25,400 shares, respectively, to its non-employee directors through the Incentive Plan or the 1995 Directors’ Plan. For 2012, 2011 and 2010, compensation expense resulting from the amortization of non-vested share grants to directors was $0.6 million, $0.5 million, and $0.6 million

A summary of the activity under the Incentive Plan and the previous directors' plan and related information for the three years in the period ended December 31, 2012 follows:



	2012			2011			2010
Stock-based awards, beginning of year	1,430,675			1,379,243			1,224,779
Granted	397,917			106,569			175,412
Vested	(58,531		)	(44,211		)	(20,948		)
Forfeited	—			(10,926		)	—
Stock-based awards, end of year	1,770,061			1,430,675			1,379,243
Weighted-average grant date fair value of:
Stock-based awards, beginning of year	$	24.65		$	24.71		$	25.16
Stock-based awards granted during the year	$	22.35		$	21.64		$	21.19
Stock-based awards vested during the year	$	20.97		$	20.13		$	22.60
Stock-based awards forfeited during the year	$	—		$	21.00		$	—
Stock-based awards, end of year	$	24.23		$	24.65		$	24.71
Grant date fair value of shares granted during the year	$	8,894,424		$	2,305,848		$	3,600,160

The vesting periods for the non-vested shares granted during 2012 ranged from three to eight years with a weighted-average amortization period remaining as of December 31, 2012 of approximately 4.8 years.

During 2012, 2011 and 2010, the Company withheld 3,359 shares, 4,576 shares and 520 shares, respectively, of common stock from its officers to pay estimated withholding taxes related to non-vested stock that vested. Also, during 2010, 6,586 non-vested shares vested upon the retirement of a member of the board of directors.

401(k) Plan

The Company maintains a 401(k) plan that allows eligible employees to defer salary, subject to certain limitations imposed by the Code. The Company provides a matching contribution of up to 3% of each eligible employee’s salary, subject to certain limitations. The Company’s matching contributions were approximately $0.4 million during 2012 and 2011 and were approximately $0.3 million during 2010.

Dividend Reinvestment Plan

The Company is authorized to issue 1,000,000 shares of common stock to stockholders under the Dividend Reinvestment Plan. As of December 31, 2012, the Company had issued 503,043 shares under the plan of which 16,732 shares were issued in 2012, 18,791 shares were issued in 2011 and 19,267 shares were issued in 2010.

Employee Stock Purchase Plan

In January 2000, the Company adopted the Employee Stock Purchase Plan, pursuant to which the Company is authorized to issue shares of common stock. As of December 31, 2012, 2011 and 2010, the Company had a total of 169,099 shares, 232,218 shares and 278,798 shares authorized under the Employee Stock Purchase Plan, respectively, which had not been issued or optioned. Under the Employee Stock Purchase Plan, each eligible employee in January of each year is able to purchase up to $25,000 of common stock at the lesser of 85% of the market price on the date of grant or 85% of the market price on the date of exercise of such option. The number of shares subject to each year’s option becomes fixed on the date of grant. Options granted under the Employee Stock Purchase Plan expire if not exercised 27 months after each such option’s date of grant. Cash received from employees upon exercising options under the Employee Stock Purchase Plan was approximately $1.0 million for the year ended December 31, 2012, and $0.2 million for each of the two years ending December 31, 2011 and 2010.

A summary of the Employee Stock Purchase Plan activity and related information for the three years in the period ended December 31, 2012 is as follows:



	2012			2011			2010
Outstanding, beginning of year	425,196			392,517			335,608
Granted	327,936			261,960			256,080
Exercised	(59,163		)	(13,901		)	(9,131		)
Forfeited	(78,202		)	(49,173		)	(53,504		)
Expired	(182,315		)	(166,207		)	(136,536		)
Outstanding and exercisable, end of year	433,452			425,196			392,517
Weighted-average exercise price of:
Options outstanding, beginning of year	$	15.80		$	17.99		$	18.24
Options granted during the year	$	15.80		$	17.99		$	18.24
Options exercised during the year	$	16.18		$	16.31		$	18.19
Options forfeited during the year	$	16.74		$	17.12		$	18.69
Options expired during the year	$	18.24		$	19.34		$	19.80
Options outstanding, end of year	$	16.78		$	15.80		$	17.99
Weighted-average fair value of options granted during the year (calculated as of the grant date)	$	4.13		$	7.61		$	8.07
Intrinsic value of options exercised during the year	$	439,645		$	38,784		$	29,037
Intrinsic value of options outstanding and exercisable (calculated as of December 31)	$	3,132,506		$	1,186,297		$	1,248,204
Exercise prices of options outstanding (calculated as of December 31)	$	16.78		$	15.80		$	17.99
Weighted-average contractual life of outstanding options (calculated as of December 31, in years)	0.8			0.8			0.8

The fair values for these options were estimated at the date of grant using a Black-Scholes options pricing model with the weighted-average assumptions for the options granted during the period noted in the following table. The risk-free interest rate was based on the U.S. Treasury constant maturity-nominal two-year rate whose maturity is nearest to the date of the expiration of the latest option outstanding and exercisable; the expected dividend yield was based on the expected dividends of the current year as a percentage of the average stock price of the prior year; the expected life of each option was estimated using the historical exercise behavior of employees; expected volatility was based on historical volatility of the Company’s stock; and expected forfeitures were based on historical forfeiture rates within the look-back period.



	2012		2011		2010
Risk-free interest rates	0.25	%	0.61	%	1.14	%
Expected dividend yields	6.17	%	5.35	%	5.68	%
Expected life (in years)	1.46		1.48		1.50
Expected volatility	30.3	%	64.8	%	69.5	%
Expected forfeiture rates	70	%	91	%	91	%