6. Stock-Based Compensation Plans

The Texas Industries, Inc. 2004 Omnibus Equity Compensation Plan (the “2004 Plan”) provides that, in addition to other types of awards, non-qualified and incentive stock options to purchase Common Stock may be granted to employees and non-employee directors at market prices at date of grant. In addition, non-qualified and incentive stock options remain outstanding under our 1993 Stock Option Plan.

Options become exercisable in installments beginning one year after the date of grant and expire ten years after the date of grant. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model. Options with graded vesting are valued as single awards and the compensation cost recognized using a straight-line attribution method over the shorter of the vesting period or required service period adjusted for estimated forfeitures. The following table sets forth the information about the weighted-average grant date fair value of options granted during the three years ended May 31, 2012 and the weighted-average assumptions used for such grants.


	2012			2011			2010
Weighted average grant date fair value	$	13.80		$	18.52		$	16.83
Weighted average assumptions used:
Expected volatility		.450			.462			.469
Expected option term in years		6.7			6.7			6.5
Risk-free interest rate		1.31	%		2.68	%		3.20	%
Expected dividend yield		.02	%		.74	%		.83	%

Expected volatility is based on an analysis of historical volatility of our common stock. Expected option term is the period of time that options granted are expected to be outstanding and is derived by analyzing the historical option exercise experience of our optionees. Risk-free interest rate is determined using the implied yield currently available for zero coupon U.S. treasury issues with a remaining term equal to the expected term of the option. Expected dividend yield is based on the approved annual dividend rate in effect and the market price of our common stock at the time of grant.

A summary of option transactions for the three years ended May 31, 2012, follows:


	Shares Under Option			Weighted-Average Option Price
Outstanding at May 31, 2009		1,594,757		$	38.03
Granted		320,450			36.15
Exercised		(122,884	)		25.50
Canceled		(27,807	)		39.20

Outstanding at May 31, 2010		1,764,516			38.54
Granted		358,450			40.22
Exercised		(103,280	)		22.51
Canceled		(47,245	)		43.13

Outstanding at May 31, 2011		1,972,441			39.58
Granted		389,850			29.75
Exercised		(105,269	)		21.44
Canceled		(111,452	)		42.31

Outstanding at May 31, 2012		2,145,570		$	38.54

Options exercisable at May 31 were 1,160,420 shares for 2012, 1,040,521 shares for 2011 and 905,066 shares for 2010 at a weighted-average option price of $42.59, $41.34 and $39.09 respectively. The following table summarizes information about stock options outstanding as of May 31, 2012.


	Range of Exercise Prices
	$16.04—$29.38		$33.57—$48.60		$50.63—$70.18
Options outstanding
Shares outstanding		818,763		800,257		526,550
Weighted-average remaining life in years		6.72		6.67		4.06
Weighted-average exercise price	$	25.32	$	39.68	$	57.37
Options exercisable
Shares exercisable		323,633		346,447		490,340
Weighted-average remaining life in years		3.71		5.12		3.99
Weighted-average exercise price	$	21.09	$	41.06	$	57.86

Outstanding options expire on various dates to January 11, 2022. Shares reserved for future awards under the 2004 Plan totaled 335,199 at May 31, 2012.

As of May 31, 2012, the aggregate intrinsic value (the difference in the closing market price of our common stock of $32.00 and the exercise price to be paid by the optionee) of stock options outstanding was $5.5 million. The aggregate intrinsic value of exercisable stock options at that date was $3.5 million. The total intrinsic value for options exercised (the difference in the market price of our common stock on the exercise date and the price paid by the optionee to exercise the option) was $1.0 million in 2012, $1.7 million in 2011 and $1.5 million in 2010.

We have provided additional stock-based compensation to employees and directors under stock appreciation rights contracts, deferred compensation agreements, restricted stock payments and a former stock awards program which was settled during 2012. At May 31, 2012, outstanding stock appreciation rights totaled 133,315 shares, deferred compensation agreements to be settled in cash totaled 101,790 shares, deferred compensation agreements to be settled in common stock totaled 2,995 shares and unvested restricted stock payments totaled 18,334 shares. Other credits included $4.1 million at May 31, 2012 and $6.8 million at May 31, 2011 representing accrued compensation which is expected to be settled in cash. Common stock reserved for the settlement of stock-based compensation totaled 2.5 million shares at May 31, 2012 and 2.6 million shares at May 31, 2011.

Total stock-based compensation included in selling, general and administrative expense was $2.4 million in 2012, $5.6 million in 2011 and $5.1 million in 2010. The impact of changes in our company’s stock price on stock-based awards accounted for as liabilities reduced stock-based compensation $2.6 million in 2012 and increased stock-based compensation $0.8 million in 2011 and $0.5 million in 2010.

The total tax expense or benefit recognized in our statements of operations for stock-based compensation was a benefit of less than $0.1 million in 2012, $1.1 million in 2011 and $1.0 million in 2010. No cash tax benefit was realized for stock-based compensation in 2012 and 2011. The total cash tax benefit realized for stock-based compensation was $0.7 million in 2010.

As of May 31, 2012, the total unrecognized stock-based compensation expense was $11.9 million. We currently expect to recognize approximately $4.2 million of this expense in 2013, $3.4 million in 2014, $2.3 million in 2015, $1.5 million in 2016 and $0.5 million in 2017.