Stock-Based Compensation

9 Months Ended

Sep. 30, 2011

Stock-Based Compensation [Abstract]

STOCK-BASED COMPENSATION

11. STOCK-BASED COMPENSATION

As of September 30, 2011, the Company has two active equity incentive plans under which stock awards can be issued as well as an expired plan under which stock options previously granted remain outstanding and exercisable. Under the Michael Baker Corporation Long-Term Incentive Plan approved by the Company’s shareholders in 2010 (the “Long-Term Plan”), the Company is authorized to grant stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units, performance share units and other stock-based awards for an aggregate of 500,000 shares of Common Stock to employees through April 8, 2020. Under the Long-Term Plan, outstanding restricted stock awards vest in equal annual increments over three years. Under the amended 1996 Non-employee Directors’ Stock Incentive Plan (the “Directors’ Plan”), the Company is authorized to grant options and restricted shares for an aggregate of 400,000 shares of Common Stock to non-employee board members through February 18, 2014. The options under the Directors’ Plan become fully vested on the date of grant and become exercisable six months after the date of grant. Under the 1995 Stock Incentive Plan (the “1995 Plan”), the Company was authorized to grant options for an aggregate of 1,500,000 shares of Common Stock to key employees through its expiration on December 14, 2004. Under the 1995 Plan, options were typically granted under agreements to key employees, with one-fourth of the options immediately vested and the remaining three-fourths vested in equal annual increments over three years. Under the 1995 Plan and the Directors’ Plan, the exercise price of each option equals the average market price of the Company’s stock on the date of grant. Under the Long-Term Plan and the Directors’ Plan, the restricted shares awarded are equal to the closing price of the Company’s stock on the date of the grant. Vested options remain exercisable for a period of ten years from the grant date under the plans. From the date a restricted share award is effective, the awardee will be a shareholder and have all the rights of a shareholder, including the right to vote such shares. Restricted shares may not be sold or assigned during the restriction period commencing on the date of the award.

As of both September 30, 2011 and December 31, 2010, the restrictions had not lapsed on 24,000 shares of the Company’s restricted stock awarded under the Directors’ Plan. As of September 30, 2011 and December 31, 2010, the restrictions had not lapsed on 100,407 shares and 70,907 shares, respectively, of the Company’s restricted stock awarded under the Long-Term Plan. As of both September 30, 2011 and December 31, 2010, all outstanding options were fully vested under the Directors’ Plan and the expired 1995 Plan. There were 98,324 and 114,301 exercisable options under the Directors’ Plan and the expired 1995 Plan as of September 30, 2011 and December 31, 2010, respectively. Unearned compensation related to restricted stock awards was approximately $2,833,000 and $2,352,000 as of September 30, 2011 and December 31, 2010, respectively.

The following table summarizes all restricted stock issued for the Directors’ Plan and the Long-Term Plan:

		exercise price			exercise price
	Restricted shares			Weighted average issuance price per share
Balance at December 31, 2010		94,907		$	35.63
Granted		72,866			27.18
Vested		(43,366	)		35.48
Balance at September 30, 2011		124,407		$	30.74

Under the Long-Term Plan, participants may elect to withhold shares to satisfy their tax obligations related to vesting shares. Shares withheld are reflected as treasury share purchases in the accompanying Condensed Consolidated Balance Sheet. For the nine months ended September 30, 2011, the Company purchased 3,648 shares aggregating $86,361 due to these elections.

The following table summarizes all stock options outstanding for the Directors’ Plan and the expired 1995 Plan:

		exercise price			exercise price		exercise price		exercise price
	Shares subject to option			Weighted average exercise price per share		Aggregate intrinsic value		Weighted average contractual remaining life in years
Balance at December 31, 2010		114,301		$	25.67	$	971,014		5.3
Granted		16,000			25.18
Exercised		(4,000	)		10.03
Forfeited		(11,977	)		13.69
Balance at September 30, 2011		114,324		$	27.41	$	155,076		5.9

As of September 30, 2011, no shares of the Company’s Common Stock remained available for future grants under the expired 1995 Plan, while 364,270 shares were available for future grants under the Long-Term Plan and 75,000 shares were available for future grants under the Directors’ Plan.

The following table summarizes information about stock options outstanding under the Directors’ Plan and the expired 1995 Plan as of September 30, 2011:

		exercise price		exercise price		exercise price		exercise price		exercise price
	Options outstanding						Options exercisable
Range of exercise prices	Number of options		Average life (1)		Weighted average exercise price		Number of options		Weighted average exercise price
$8.52 – $8.55		6,000		1.6	$	8.55		6,000	$	8.55
$10.025 – $15.625		20,324		1.1		14.62		20,324		14.62
$20.16 – $26.86		40,000		6.7		23.52		24,000		22.43
$37.225 – $40.455		48,000		7.8		38.40		48,000		38.40
Total		114,324		5.9	$	27.41		98,324	$	27.77

⁽¹⁾  Average life remaining in years.

During the second quarter of 2008, the Company issued 40,000 SARs, which vested at varying intervals over a three-year period, in connection with the Company’s Chief Executive Officer’s employment agreement. The fair value of the SARs was estimated using a Black-Scholes option pricing model. In June 2011, all of these SARs were vested and were redeemed for 3,957 shares of the Company’s common stock made available under the Long-Term Plan.

In April 2010, the Company’s Board of Directors adopted the Michael Baker Corporation Employee Stock Purchase Plan (the “ESPP”). The first day of each quarter is an offering date and the last day of each quarter is a purchase date. The first purchase period began on January 1, 2011. Employees are able to purchase shares of Common Stock under the ESPP at 90% of the fair market value of the Common Stock on the purchase date. The company issued 39,737 shares under the ESPP during the nine months ended September 30, 2011. The maximum number of shares of Common Stock which are available for issuance pursuant to the ESPP is 750,000 shares.

The Company recognized total stock-based compensation expense under the caption “Selling, general and administrative expenses” in the Condensed Consolidated Statement of Income related to its restricted stock, options, ESPP and SARs of $0.4 million for both the three months ended September 30, 2011 and 2010 and $1.9 million and $1.0 million for the nine months ended September 30, 2011 and 2010, respectively.