Equity-based Incentive Plans

12 Months Ended

Dec. 31, 2011

Equity-based Incentive Plans

Equity-based Incentive Plans

Note 5. Equity-based Incentive Plans

2006 Equity Incentive Plan (2006 Plan)

        The company's stockholders approved the 2006 Plan at the company's annual meeting of stockholders held May 18, 2006. The company reserved 16.0 million shares of common stock for issuance upon exercise of options or other equity grants under the 2006 Plan. At December 31, 2011, there were 1.0 million shares still available for issuance. The 2006 Plan was designed to attract, motivate and retain qualified persons that are able to make important contributions to the company's success. To accomplish these objectives, the 2006 Plan provides for awards of equity-based incentives through option grants, restricted stock awards, unrestricted stock awards, stock appreciation rights, performance awards, and deferred stock units. Pursuant to the 2006 Plan, the company awarded 42,000 deferred stock units in 2011; issued 249,000 shares, 43,300 shares, and 157,000 shares of restricted stock during 2011, 2010, and 2009, respectively, and granted 2.7 million, 2.5 million and 1.6 million options during 2011, 2010, and 2009, respectively. No other equity-based incentives were issued pursuant to the 2006 Plan during the three year period ended December 31, 2011.

        The company satisfies stock options with newly issued shares, and satisfies restricted stock awards, and deferred stock units with treasury shares. Substantially all of the company's employees are eligible for the stock option element of the 2006 Plan, pursuant to which the options vest 100% six months after the date of grant, with a maximum term of five years. Options are granted each May and November at an exercise price of 100% of the fair market value of the company's common stock on the date of grant.

        The estimated weighted-average fair value of the individual options granted on the date of grant was $5.36, $5.81, and $5.14 during 2011, 2010, and 2009, respectively. The aggregate intrinsic value of options exercised was $7.4 million, $11.6 million, and $26.2 million for the years ended December 31, 2011, 2010, and 2009, respectively. The aggregate intrinsic value of options which were exercisable as of December 31, 2011 was $12.1 million. The aggregate intrinsic value of options that are currently outstanding and that are expected to be exercised is $ 13.1 million. Total unrecognized stock option compensation expense, which will be recognized through May 2012, is $5.7 million at December 31, 2011. The disclosures related to the effect of equity-based compensation expense for the year ended December 31, 2011, 2010, and 2009, are based on the fair value of stock option awards estimated on the date of grant using the Black-Scholes option valuation model with the following assumptions:

	2011			2010			2009
Volatility(1)		65.1 - 66.3	%		66.4 - 67.0	%		67.2 - 67.4	%
Risk-free interest rate(2)		0.4 - 1.4	%		0.8 - 2.0	%		2.1 - 2.2	%
Dividend yield(3)		2.3 - 2.5	%		2.0 - 2.2	%		1.7 - 2.0	%
Expected life (years)(4)		2.8 - 4.1			2.8 - 4.1			2.2 - 3.9

(1)

The volatility is based on the historical volatility of the company's stock.

(2)

The risk-free interest rate is based on the U.S. Treasury strip rate for the expected life of the option.

(3)

The expected dividend yield is based on the company's latest annualized dividend rate and recent historical market prices of the underlying common stock at the date of grant.

(4)

The expected life in years is determined primarily from historical stock option exercise data.

        Dividends are not paid to holders of unexercised options. The company's stock option activity is as follows:

	Options			Weighted Average Exercise Price		Weighted Average Fair Value
Outstanding options as of January 1, 2009		7,986,681		$	10.86	$	3.40
Granted		1,637,107			15.04		5.14
Exercised		(2,807,898	)		5.81		2.57
Forfeited		(326,519	)		15.83		5.92
As of December 31, 2009		6,489,371			13.69		5.09
Granted		2,545,932			14.73		5.81
Exercised		(1,414,153	)		8.11		2.89
Forfeited		(214,757	)		20.35		6.33
As of December 31, 2010		7,406,393			14.91		5.14
Granted		2,742,904			14.34		5.36
Exercised		(1,047,297	)		11.37		4.28
Forfeited		(499,718	)		16.61		6.15
As of December 31, 2011		8,602,282			15.06		5.25

        The following table summarizes certain information concerning the company's outstanding options as of December 31, 2011.

Range of Exercise Price	Outstanding Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price Outstanding Options		Exercisable Options		Weighted Average Exercise Price Exercisable Options
$0 to $10		1,530,294		1.9	$	5.23		1,530,294	$	5.23
$10 to $15		3,094,843		4.0		13.13		1,498,555		13.76
$15 to $20		2,781,396		3.9		16.39		2,781,396		16.39
$20 to $30		741,037		0.7		24.50		741,037		24.50
$30 to $40		454,712		1.4		37.84		454,712		37.84

2008 Executive Incentive Compensation Plan (Executive Plan)

        Pursuant to the company's Executive Plan, certain officers and other senior management members of the company are eligible to receive cash bonuses based on predetermined formulas. In the event the cash portion of the bonus exceeds the predetermined maximum cash payout, the excess bonus is distributed as common stock of the company, which vests over a three-year period. A total of 2.5 million shares have been reserved under this plan, which was amended, and approved by stockholders, during 2008. At December 31, 2011, 1.9 million shares under the Executive Plan remained available for issuance. Pursuant to the Executive Plan, shares were awarded with a market value of approximately $4.0 million for the award year 2011 and $208,000 for the award year 2010. No shares were awarded for the award year 2009.

2004 Employee Stock Purchase Plan

        The 2004 Employee Stock Purchase Plan allows eligible employees, at their election, to purchase shares of the company's stock on the open market at fair market value with a designated broker through payroll deductions. The maximum allowable payroll deduction for the plan, excluding company matching contributions, is $10,400 in any calendar year. The company provides matching contributions of 10% of employees' payroll deductions. The company's total expense for the plan was $328,000, $299,000, and $304,000 for the years ended December 31, 2011, 2010, and 2009, respectively.