Annual report pursuant to Section 13 and 15(d)

Stock Based Compensation

v2.4.0.6
Stock Based Compensation
 12 Months Ended
Dec. 31, 2011
Stock Based Compensation [Abstract]  
Stock Based Compensation
4. STOCK BASED COMPENSATION

 

Stock options are granted under the Company's long-term incentive plan and have an exercise price that may not be less than the fair market value of the underlying shares on the date of grant. In general, stock options granted will become exercisable over a period determined by the Compensation Committee which in the past has been a five year life, with the options vesting over a three year period. A portion of the stock options granted in March 2011 and 2010 were vested immediately with the others vesting over a three year period. In addition, stock options will become exercisable upon a change in control, unless provided otherwise by the Compensation Committee. At December 31, 2011, there were 1,382,846 shares subject to options authorized but not granted.

For the years ended December 31, 2011, 2010 and 2009, the Company recognized non-cash compensation expense of $2.2 million, $1.8 million and $1.8 million, respectively. These amounts were recorded as general and administrative expense. Because the Company does not pay significant United States taxes, no amounts were recorded for tax benefits.

A summary of the stock option activity for the year ended December 31, 2011 is provided below:

                                 
     Number of
Shares
Underlying
Options
(in thousands)		     Weighted
Average
Exercise
Price Per
Share		      Weighted
Average
Remaining
Contractual
Term		      Aggregate
Intrinsic
Value
(in millions)		  

Outstanding at beginning of period

      4,266      $ 5.40         2.64            

Granted

      1,169      $ 6.97         4.17            

Exercised

      (302 )    $ 4.12         0.84            

Forfeited

      (1,328 )    $ 7.95         —              
    

 

 

    

 

 

     

 

 

           

Outstanding at end of period

      3,805      $ 5.10         2.94       $ 6.08   
    

 

 

    

 

 

     

 

 

     

 

 

  

Vested—end of period

      2,775      $ 4.75         2.60       $ 5.25   
    

 

 

    

 

 

     

 

 

     

 

 

  

Vested and expected to vest—end of period

      3,786      $ 5.10         2.94       $ 6.06   
    

 

 

    

 

 

     

 

 

     

 

 

  

The intrinsic value of a stock option is the amount by which the current market value of the underlying stock exceeds the exercise price of the option.

As of December 31, 2011, unrecognized compensation costs totaled $0.9 million. The expense is expected to be recognized over a weighted average period of 1.1 years.

 

A summary of the values of options granted and exercised for each of the years ending December 31, 2011, 2010 and 2009 is provided below:

                         
     2011      2010      2009  

Options granted—(thousands)

      1,169         1,565         —     

Weighted average grant date fair value—($/share)

    $ 2.09       $ 1.61         —     

Weighted average exercise price—($/share)

    $ 4.12       $ 4.28         —     

Options exercised (thousands)

      302         1,014         693   

Total intrinsic value of options exercised—($thousands)

    $ 859       $ 2,413       $ 642   

The Company received cash proceeds of $1.9 million, $0.5 million and $1.8 million from options exercised in 2011, 2010 and 2009, respectively.

During the year ended December 31, 2010, 672,300 options were exercised on a cashless basis, resulting in 120,695 shares being issued to employees and 551,605 shares being added to treasury stock.

The valuation of the options granted is based upon a Black Scholes model. The table below summarizes the assumptions used to value the options issued in 2011 and 2010. There were no options issued in 2009.

                                         

Year

    Options Issued
(in thousands)		      Weighted
Avg. Volatility		     Expected
Term		      Risk Free
Interest Rate		     Expected
Dividend Yield		  

2011

      1,169         47 %      2.5 years         0.8 %      0 % 

2010

      1,565         58 %      2.5 years         2.6 %      0 % 

The Company has no set policy for sourcing shares for options grants. Historically the shares issued under options grants have been new shares.