STOCK COMPENSATION

The Company’s stock incentive plans provide for the making of awards to employees based upon time-based criteria or through the achievement of performance-related objectives. The Company has issued three types of stock grant awards under these plans: restricted stock with time-based vesting, performance share grants that only vest upon the achievement of specified performance conditions, such as corporate cash flow goals, and performance share grants that include threshold, target, and maximum achievement levels based on the achievement of specific performance milestones. The payouts at each performance goal are as follows:



Performance Share Grants with Performance Conditions (in shares)
Below threshold performance		—
Threshold performance		93,550
Target performance		558,582
Maximum performance		821,814

The following is a summary of the Company’s stock grant activity assuming target achievement for outstanding performance grants for the following periods:



	March 31 2013		December 31 2012
Stock Grants Outstanding Beginning of the Year	688,041		744,508
New Stock Grants/Estimated additional shares maximum performance	56,087		113,643
Vested Grants	(62,997	)	(170,110	)
Expired/Forfeited Grants	(70,145	)	—
Stock Grants Outstanding March 31, 2013	610,986		688,041

The unamortized cost associated with nonvested stock grants and the weighted-average period over which it is expected to be recognized as of March 31, 2013 was $6,013,000 and 38 months, respectively. The fair value of restricted stock with time-based vesting features is based upon the Company’s share price on the date of grant and is expensed over the service period. Fair value of performance grants that cliff vest based on the achievement of performance conditions is based on the share price of the Company’s stock on the day of grant once the Company determines that it is probable that the award will vest. This fair value is expensed over the service period applicable to these grants. For performance grants that contain a range of shares from zero to maximum we determine, based on historic and projected results, the probability of (1) achieving the performance objective, and (2) the level of achievement. Based on this information, we determine the fair value of the award and measure the expense over the service period related to these grants. Because the ultimate vesting of all performance grants is tied to the achievement of a performance condition, we estimate whether the performance condition will be met and over what period of time. Ultimately, we adjust compensation cost according to the actual outcome of the performance condition. Under the Non-Employee Director Stock Incentive Plan, or NDSI Plan, each non-employee director receives his or her annual compensation in stock.

The following table summarizes stock compensation costs for the Company's 1998 Stock Incentive Plan, or Employee 1998 Plan, and the NDSI Plan for the following periods:



(in shares)	Three Months Ended		Three Months Ended
Employee 1998 Plan:	March 31, 2013		March 31, 2012
Expensed	$	437,000	$	971,000
Capitalized	131,000		196,000
	568,000		1,167,000
NDSI Plan	192,000		81,000
	$	760,000	$	1,248,000

During the first quarter of 2013 an executive officer of the Company resigned, which led to the Company reversing $485,000 of previously recognized stock compensation expense as the shares were forfeited upon leaving the Company.