Stock-Based Compensation

3 Months Ended

Mar. 31, 2012

Share-based Compensation [Abstract]

Stock-Based Compensation

Note 11 – Stock-Based Compensation

Stock compensation expense totaled $2 million and $4 million for the first quarters of 2012 and 2011, respectively. Stock compensation expense relates primarily to the company’s performance-based long-term incentive program ("LTIP") and time-vested restricted stock unit ("RSU") awards, some of which contain a performance component. LTIP awards cover three-year performance cycles and are measured partly on performance criteria (cumulative earnings per share and/or cumulative free cash flow generation) and partly on market criteria (total shareholder return relative to a peer group of companies).

Changes in capital surplus are primarily a result of stock compensation:

	Quarter ended March 31,
(In thousands)	2012			2011
Stock-based compensation expense	$	2,654		$	3,352
Shares withheld for taxes	(128		)	(8		)
Capital surplus increase	$	2,526		$	3,344

Fair value of LTIP awards, which are measured on performance criteria, and RSU awards containing performance criteria are based on the company's expectations of performance achievement and the closing stock price on the measurement date, a Level 3 fair value measurement. Fair value of LTIP awards based on market criteria are measured using a Monte-Carlo simulation using publicly available data, a Level 2 fair value measurement. See Note 7 for further discussion of fair value measurements.