Stock-Based Compensation

6 Months Ended

Jun. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-Based Compensation

Under the Company's 1993 Stock Incentive Plan (“1993 Plan”), the Company granted options to purchase shares of the Company's common stock at the fair market value on the date of grant. The options vested over periods up to three years and have a term of 10 years from date of grant. As of December 31, 2003, there were no options available for future grants under the 1993 Plan. The 1993 Plan expired at the end of 2003 and was replaced by the Company's 2004 Stock Incentive Plan. Under this Plan, 12.5 million shares are authorized for grant, of which approximately 1.5 million shares are available for future issuance.

Stock options A summary of the Company’s stock option activity for the six months ended June 30, 2013 is as follows:

	Shares under option (thousands)		Weighted average exercise price		Weighted average remaining contractual life (in years)	Aggregate intrinsic value (in millions)
Outstanding and exercisable at December 31, 2012	1,436		$	30.65	3.4	$	58.8
Exercised	(81	)	$	28.43
Outstanding and exercisable at March 31, 2013	1,355		$	30.78	3.2	$	63.1
Exercised	(201	)	$	27.56
Outstanding and exercisable at June 30, 2013	1,154		$	31.34	3.1	$	63.2

Restricted stock At its November 2007 meeting, the Company's Compensation Committee decided that restricted common stock awards and stock units ("restricted stock") would be awarded in place of stock options for long-term incentive award grants to employees. Restricted stock granted to employees vests 50% after two years and the remainder after three years from the date of grant. Restricted stock granted to non-employee directors generally vests on the anniversary date of the grant.

The value of restricted stock is determined by the market value of the Company’s common stock at the date of grant. In 2013, restricted stock in the amount of 373,197 and 14,140 shares was granted to employees and non-employee directors, respectively, under the 2004 Stock Incentive Plan. The value of the awards is recorded as unearned compensation within capital in excess of par value in equity and is amortized as compensation expense over the restriction periods.

The Company recorded restricted stock compensation expense of $4.8 million and $15.9 million for the three and six months ended June 30, 2013, respectively, and $5.2 million and $9.9 million for the three and six months ended June 30, 2012, respectively.

During the fourth quarter of 2012, the Company waived the forfeiture provision associated with future restricted stock grants made to certain retiring Named Executive Officers. The expense of $15.9 million for the six months ended June 30, 2013 includes $5.5 million of expense related to the grant of restricted stock awards to these Named Executive Officers.

A summary of the Company’s restricted stock activity for the six months ended June 30, 2013 is as follows:

	Shares subject to restriction (thousands)		Weighted average price
Outstanding at December 31, 2012	1,032		$	58.77
Granted	372		$	75.41
Vested	(331	)	$	47.69
Forfeited	(19	)	$	68.14
Outstanding at March 31, 2013	1,054		$	67.71
Granted	15		$	75.32
Vested	(65	)	$	72.93
Forfeited	(12	)	$	75.68
Outstanding at June 30, 2013	992		$	67.37