Note 5. Equity-based Incentive Plans

2006 Amended and Restated 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, at which time the company reserved 16.0 million shares of common stock for issuance upon exercise of options or other equity grants under the 2006 Plan. An additional 15.5 million shares of the company's common stock were reserved for issuance under the 2006 Plan at the company's annual meeting of shareholders held May 17, 2012. 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 granting of stock options, restricted stock units (RSU's), deferred stock units (DSU's), restricted stock awards, unrestricted stock awards, stock appreciation rights, and performance awards. The 2006 Plan uses a fungible share concept under which any awards that are not a full-value award, such as stock options and stock appreciation rights, will be counted against the share limit as one share for each share of common stock, and awards that are full-value awards, such as RSU's, DSU's, restricted and unrestricted stock awards, and performance awards, will be counted against the share limit as 2.09 shares for each one share of common stock. At December 31, 2012, there were 14.5 million shares in the fungible share reserve still available for issuance.

In November 2012, the company began to grant substantially all of the company's employees restricted stock units, rather than stock options. The RSUs, which are granted at no cost to employees, vest 100% over the shorter of two years from grant date or upon the recipient reaching retirement eligible age (59¹/2 years), and are issued to employees upon vesting. Prior to 2012, substantially all of the company's employees were eligible for the stock option element of the 2006 Plan, pursuant to which the options vested 100% six months after the date of grant, with a maximum term of five years. Options were granted each May and November (through 2011) at an exercise price of 100% of the fair market value of the company's common stock on the date of grant. The company satisfies stock options and restricted stock units with newly issued shares, and satisfies restricted stock awards, and deferred stock units with treasury shares.

In addition to the RSUs and stock options granted during the three year period ended December 31, 2012, presented below, the company awarded 79,000 and 42,000 DSUs in 2012 and 2011, respectively; and issued 160,000 and 43,300 shares of restricted stock in 2011 and 2010, respectively. No other equity-based incentives were issued pursuant to the 2006 Plan during the three year period ended December 31, 2012.

Restricted Stock Units

A summary of the company's RSU activity during 2012 and outstanding RSU's as of December 31, 2012 are presented below (dollars in thousands except grant date fair value):

			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value		Unrecognized Compensation

Outstanding RSU's as of January 1, 2012	—		$	—
RSU's granted	1,422,448			11.95
RSU's vested	(143,666	)		12.65
RSU's forfeited	(9,475	)		11.92

Outstanding RSU's as of December 31, 2012 (nonvested)	1,269,307		$	11.87	$	17,428	$	12,318

The weighted average remaining life before vesting of the outstanding RSUs as of December 31, 2012, is 1.9 years. The fair value of RSUs vesting during 2012 was $1.8 million, and was net-share settled such that the company withheld shares with value equivalent to the employees' minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The total shares withheld in 2012 were approximately 49,000 shares, and were based on the value of the RSUs on their vesting dates as determined by the company's closing stock price.

Stock Options

A summary of the company's stock option activity and certain information concerning the company's outstanding options as of December 31, 2012 are presented below:

			Weighted Average Exercise Price		Weighted Average Fair Value

Outstanding options as of January 1, 2010	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
Granted	—			—		—
Exercised	(451,135	)		6.70		2.67
Forfeited	(1,077,438	)		21.85		6.04

As of December 31, 2012	7,073,709			14.56		5.30

Range of Exercise Price			Weighted Average Exercise Price of Exercisable Outstanding Options

$5 to $10	1,153,760	0.9	$	5.23
$10 to $15	2,869,366	2.9		13.14
$15 to $20	2,617,981	2.8		16.39
$35 to $40	432,602	0.4		37.84

The aggregate intrinsic value of options exercised was $3.1 million, $7.4 million, and $11.6 million for the years ended December 31, 2012, 2011, and 2010, respectively. The aggregate intrinsic value of options which were outstanding and exercisable as of December 31, 2012 was $11.7 million, and there is no unrecognized stock option compensation expense at December 31, 2012.

The disclosures related to the effect of equity-based compensation expense for stock options granted during the years ended December 31, 2011, and 2010 (no stock options granted in 2012), 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:



Volatility(1)	65.1 - 66.3	%	66.4 - 67.0	%
Risk-free interest rate(2)	0.4 - 1.4	%	0.8 - 2.0	%
Dividend yield(3)	2.3 - 2.5	%	2.0 - 2.2	%
Expected life (years)(4)	2.8 - 4.1		2.8 - 4.1

(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.

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, 2012, 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 $135,000 for the award year 2012, $4.0 million for the award year 2011 and $208,000 for the award year 2010.

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 $354,000, $328,000, and $299,000 for the years ended December 31, 2012, 2011, and 2010, respectively.