Share Based Compensation

12 Months Ended

Dec. 31, 2012

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

SHARE BASED COMPENSATION

6. SHARE BASED COMPENSATION:

The Company sponsors a share based compensation plan: the 2005 Stock Incentive Plan (the “2005 Plan”). The plan is administered by the Compensation Committee of the Board of Directors (the “Committee”). The share based compensation plan is an important component of the total compensation package offered to the Company's key service providers, and reflects the importance that the Company places on motivating and rewarding superior results.

The 2005 Plan was adopted by the Company's Board of Directors on January 1, 2005 and approved by the Company's shareholders on April 29, 2005. The purpose of the 2005 Plan is to foster and promote the long-term financial success of the Company and to increase shareholder value by attracting, motivating and retaining key employees, consultants, and outside directors, and providing such participants with a program for obtaining an ownership interest in the Company that links and aligns their personal interests with those of the Company's shareholders, and thus, enabling such participants to share in the long-term growth and success of the Company. To accomplish these goals, the 2005 Plan permits the granting of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, and other stock-based awards, some of which may require the satisfaction of performance-based criteria in order to be payable to participants. The Committee determines the terms and conditions of the awards, including, any vesting requirements and vesting restrictions or forfeitures that may occur. The Committee may grant awards under the 2005 Plan until December 31, 2014, unless terminated sooner by the Board of Directors.

Valuation and Expense Information
		Year Ended December 31,
		2012		2011		2010
Total cost of share-based payment plans	$	15,835	$	21,688	$	21,805
Amounts capitalized in fixed assets	$	5,079	$	7,769	$	8,861
Amounts charged against income, before
income tax benefit	$	10,756	$	13,919	$	12,944
Amount of related income tax benefit recognized
in income	$	4,463	$	4,997	$	4,595

Securities Authorized for Issuance Under Equity Compensation Plans

As of December 31, 2012, the Company had the following securities issuable pursuant to outstanding award agreements or reserved for issuance under the Company's previously approved stock incentive plans. Upon exercise, shares issued will be newly issued shares or shares issued from treasury.

			Number of Securities
			Remaining Available
	Number of		for Future Issuance
	Securities to	Weighted	Under Equity
	be Issued	Average	Compensation Plans
	Upon Exercise of	Exercise Price of	(Excluding Securities
	Outstanding	Outstanding	Reflected in the
Plan Category	Options	Options	First Column)
Equity compensation plans approved by
security holders	1,357	$49.03	3,075
Equity compensation plans not approved
by security holders	n/a	n/a	n/a
Total	1,357	$49.03	3,075

Changes in Stock Options and Stock Options Outstanding

The following table summarizes the changes in stock options for the three year period ended December 31, 2012:

		Weighted
		Average
	Number of	Exercise Price
	Options	(US$)
Balance, December 31, 2009	3,504	$ 1.49	to	$ 98.87
Forfeited	(68)	$ 51.60	to	$ 76.01
Exercised	(1,206)	$ 1.49	to	$ 45.95
Balance, December 31, 2010	2,230	$ 3.91	to	$ 98.87
Forfeited	(99)	$ 51.60	to	$ 75.18
Exercised	(672)	$ 3.91	to	$ 33.57
Balance, December 31, 2011	1,459	$ 16.97	to	$ 98.87
Forfeited	(68)	$ 25.08	to	$ 75.18
Exercised	(34)	$ 16.97	to	$ 19.18
Balance, December 31, 2012	1,357	$ 16.97	to	$ 98.87

The following table summarizes information about the stock options outstanding and exercisable at December 31, 2012:
					Options Outstanding and Exercisable
						Weighted	Weighted
						Average	Average	Aggregate
					Number	Remaining	Exercise	Intrinsic
Range of Exercise Price					Outstanding	Contractual Life	Price	Value
						(Years)
$	16.97	-	$	16.97	40	1.32	$ 16.97	$ 46
$	25.68	-	$	55.58	604	2.61	$ 39.21	$ -
$	46.05	-	$	65.04	166	3.53	$ 56.44	$ -
$	49.05	-	$	65.94	362	4.31	$ 54.66	$ -
$	51.14	-	$	98.87	185	5.42	$ 70.24	$ -

The aggregate intrinsic value in the preceding tables represents the total pre-tax intrinsic value, based on the Company's closing stock price of $18.13 on December 31, 2012, which would have been received by the option holders had all option holders exercised their options as of that date. The total number of in-the-money options exercisable as of December 31, 2012 was 40,000 options.

The following table summarizes information about the weighted-average grant-date fair value of share options:

		2012		2011		2010
Non-vested share options at beginning of year	$	-	$	30.72	$	26.28
Non-vested share options at end of year	$	-	$	-	$	30.72
Options vested during the year	$	-	$	30.73	$	23.86
Options forfeited during the year	$	27.05	$	25.80	$	28.36

The fair value of stock options that vested during the years ended December 31, 2011 and 2010 was $6.4 million and $9.8 million, respectively.As of December 31, 2011, all options fully vested; therefore, no options vested during the year ended December 31, 2012. The total intrinsic value of stock options exercised during the years ended December 31, 2012, 2011 and 2010 was $0.3 million, $21.5 million and $50.7 million, respectively.

At December 31, 2012, there was no unrecognized compensation cost related to non-vested, employee stock options as all options fully vested as of December 31, 2011.

PERFORMANCE SHARE PLANS:

Long Term Incentive Plans.  The Company offers a Long Term Incentive Plan (“LTIP”) in order to further align the interests of key employees with shareholders and to give key employees the opportunity to share in the long-term performance of the Company when specific corporate financial and operational goals are achieved. Each LTIP covers a performance period of three years. In 2010, 2011 and 2012, the Compensation Committee (the “Committee”) approved an award consisting of performance-based restricted stock units to be awarded to each participant.

For each LTIP award, the Committee establishes performance measures at the beginning of each performance period. Under each LTIP, the Committee establishes a percentage of base salary for each participant which is multiplied by the participant's base salary to derive a Long Term Incentive Value as a “target” value which corresponds to the number of shares of the Company's common stock the participant is eligible to receive if the target level for all performance measures is met. In addition, each participant is assigned threshold and maximum award levels in the event that actual performance is below or above target levels. For the 2010, 2011 and 2012 LTIP awards, the Committee established the following performance measures: return on equity, reserve replacement ratio, and production growth.

For the year ended December 31,2012, the Company recognized $7.9million in pre-tax compensation expense related to the 2010, 2011 and 2012 LTIP awards of restricted stock units. For the year ended December 31, 2011, the Company recognized $10.7 million in pre-tax compensation expense related to the 2009,2010and 2011 LTIP awards of restricted stock units. For the year ended December 31, 2010, the Company recognized $8.6 million in pre-tax compensation expense related to the 2008, 2009 and 2010 LTIP awards of restricted stock units. The amounts recognized during the year ended December 31, 2012 assumes that maximum performance objectives are attained under each plan. If the Company ultimately attains these performance objectives, the associated total compensation, estimated at December 31, 2012, for each of the three year performance periods is expected to be approximately $11.7 million, $11.9 million, and $12.1 million related to the 2010, 2011 and 2012 LTIP awards of restricted stock units, respectively. The 2009 LTIP Common Stock Award was paid in shares of the Company's stock to employees during the first quarter of 2012 and totaled $24.1 million ( 409,160 net shares).