(15) Stock Incentive Plans

Under the 2005 Re-designated, Amended and Restated Stock Incentive Plan for Officers and Employees of Astoria Financial Corporation, as amended, or the 2005 Employee Stock Plan, 6,850,000 shares were reserved for option, restricted stock and/or stock appreciation right grants, of which 2,139,895 shares remain available for issuance of future grants at December 31, 2012. Employee grants generally occur annually, upon approval by our board of directors, on the third business day after we issue a press release announcing annual financial results for the prior year. However, an annual grant did not occur in 2012. Discretionary grants may be made to eligible employees from time to time upon approval by our board of directors.

During 2012, 155,000 shares of restricted stock were granted to select officers, of which 153,000 remain outstanding and 4,000 shares vest one-half per year in December 2013 and December 2014, 6,000 shares vest one-third per year beginning February 2013, 27,400 shares vest in July 2013, 6,000 shares vest one-third per year beginning December 2013, 41,100 shares vest in July 2014 and 68,500 shares vest in July 2015. During 2011, 663,530 shares of restricted stock were granted to select officers, of which 343,958 remain outstanding and 260,958 vest one-third per year in December 2013, 2014 and 2015, 5,000 shares vest in March 2013, 13,000 shares vest in December 2013 and 65,000 shares were granted under a performance-based award which, if the performance conditions are met, will vest on June 30, 2016. During 2010, 778,740 shares of restricted stock were granted to select officers, of which 212,800 remain outstanding and vest one-half per year in December 2013 and 2014. During 2009, 1,126,280 shares of restricted stock were granted to select officers, of which 150,194 remain outstanding and vest in December 2013. During 2008, 311,500 shares of restricted stock were granted to select officers, of which 251,600 remain outstanding and vest in January 2013. Options outstanding at December 31, 2012 which were granted under plans other than the 2005 Employee Stock Plan have a maximum term of ten years. In the event the grantee terminates his/her employment due to death or disability, or in the event we experience a change in control, as defined and specified in the 2005 Employee Stock Plan, all options and restricted stock granted pursuant to such plan immediately vests, except for the performance-based restricted stock award granted in 2011 which, in the event of death or disability prior to vesting, will remain outstanding subject to satisfaction of the performance and vesting conditions, unless otherwise settled. Options granted under all plans were granted in tandem with limited stock appreciation rights exercisable only in the event we experience a change in control, as defined by the plans.

Under the Astoria Financial Corporation 2007 Non-Employee Directors Stock Plan, as amended, or the 2007 Director Stock Plan, 240,080 shares of common stock were reserved for restricted stock grants, of which 2,000 shares of restricted stock were granted in 2012 and 132,501 shares remain available at December 31, 2012 for issuance of future grants. Annual awards and discretionary grants, as such terms are defined in the plan, are authorized under the 2007 Director Stock Plan. Annual awards to non-employee directors occur on the third business day after we issue a press release announcing annual financial results for the prior year. However, the directors waived their right to such awards which were scheduled for grant on or about January 30, 2012. Discretionary grants may be made to eligible directors from time to time as consideration for services rendered or promised to be rendered. Such grants are made on such terms and conditions as determined by a committee of independent directors.

Under the 2007 Director Stock Plan, restricted stock granted vests approximately three years after the grant date, although awards immediately vest upon death, disability, mandatory retirement, involuntary termination or a change in control, as such terms are defined in the plan. Shares awarded will be forfeited in the event a recipient ceases to be a director prior to the vest date for any reason other than death, disability, mandatory retirement, involuntary termination or a change in control, as defined in the plan. Under prior plans involving option grants to non-employee directors, all options granted have a maximum term of ten years and were exercisable immediately on their grant date. Options granted under all plans were granted in tandem with limited stock appreciation rights exercisable only in the event we experience a change in control, as defined by the plans.

Restricted stock activity in our stock incentive plans for the year ended December 31, 2012 is summarized as follows:

	Number of Shares		Weighted Average Grant Date Fair Value
Nonvested at beginning of year	1,936,225		$ 16.53
Granted	157,000		9.82
Vested	(671,171	)	(18.74)
Forfeited	(275,397	)	(14.23)
Nonvested at end of year	1,146,657		14.87

The aggregate fair value on the vest date of restricted stock awards which vested during the year ended December 31, 2012 totaled $6.2 million.

Option activity in our stock incentive plans for the year ended December 31, 2012 is summarized as follows:

	Number of Options		Weighted Average Exercise Price
Outstanding at beginning of year	5,837,653		$ 24.41
Expired	(2,990,803	)	(23.18)
Outstanding and exercisable at end of year	2,846,850		25.70

At December 31, 2012, options outstanding and exercisable had no intrinsic value and a weighted average remaining contractual term of approximately 1.1 years.

No options were exercised during the years ended December 31, 2012 and 2011. The aggregate intrinsic value of options exercised during the year ended December 31, 2010 totaled $39,000. Shares issued upon the exercise of stock options are issued from treasury stock. We have an adequate number of treasury shares available for future stock option exercises.

Stock-based compensation expense recognized for restricted stock totaled $3.3 million, net of taxes of $1.8 million, for the year ended December 31, 2012, $5.9 million, net of taxes of $3.2 million, for the year ended December 31, 2011 and $5.2 million, net of taxes of $2.8 million, for the year ended December 31, 2010. At December 31, 2012, pre-tax compensation cost related to all nonvested awards of restricted stock not yet recognized totaled $10.2 million and will be recognized over a weighted average period of approximately 2.4 years, which includes $860,000 of pre-tax compensation cost related to 65,000 shares granted in 2011 under a performance-based award for which compensation cost will begin to be recognized when the achievement of the performance conditions becomes probable.

As a result of the resignation and retirement of several executive officers during the 2012 first quarter, the level of forfeitures in 2012 significantly exceeded our original estimate of restricted stock forfeitures based on our prior experience. As a result, we reversed stock-based compensation expense during 2012 totaling $569,000, net of taxes of $310,000, representing stock-based compensation expense previously recognized on unvested shares of restricted stock which will not vest as a result of forfeitures.