Stock Based Compensation Plans

12 Months Ended

Dec. 31, 2012

Stock-based Compensation Plans [Abstract]

Stock-based Compensation Plans

NOTE 11

Stock-based Compensation Plans

The Company maintains two incentive plans: (i) the Fisher Communications Incentive Plan of 2001 (the “2001 Plan”) and (ii) the Fisher Communications Amended and Restated 2008 Equity Incentive Plan (the “2008 Plan” and together with the 2001 Plan, the “Plans”). The 2001 Plan provided that up to 600,000 shares of the Company’s common stock could be issued to eligible key management employees or directors pursuant to awards, options and rights through April 2008. As of December 31, 2012, awards, options and rights for 295,067 shares, net of forfeitures, had been issued under the 2001 Plan. No further options and rights will be issued pursuant to the 2001 Plan. The 2008 Plan provides that up to 600,000 shares of the Company’s common stock may be issued to employees or directors pursuant to awards, options and rights through 2018. As of December 31, 2012, awards, options and rights for 423,789 shares had been issued, net of forfeitures, from the 2008 Plan.

Stock-based Compensation Expense

Stock-based compensation cost is measured at grant date, based on the fair value of the award, and recognized over the requisite service period. The Company applied the alternative transition (shortcut) method in calculating its pool of excess tax benefits.

Stock-based compensation expense related to stock-based awards during the years ended December 31, 2012, 2011 and 2010 totaled approximately $2.5 million, $1.6 million, and $1.3 million , respectively, which is included in selling, general and administrative expenses in the Company’s consolidated statements of operations.

In October 2012, in connection with the announcement of a $10.00 cash dividend and the initiation of a quarterly dividend policy, the Board of Directors and the Compensation Committee (the “Committee”) approved changes to both the 2001 Plan and the 2008 Plan. The changes permit: (1) the adjustment of outstanding awards in the event of a distribution of cash or other assets to shareholders other than a normal cash dividend and (2) the amendment of outstanding awards so that such awards are credited with normal cash dividends or dividend equivalents.

Effective on October 22, 2012, all of the Company’s outstanding stock options and performance awards and the restricted stock units issued from the 2001 and 2008 Plans were adjusted by reducing the exercise price and/or increasing the number of shares to preserve the intrinsic value of such awards after the decline in the Company’s stock price directly resulting from the cash dividend. The award adjustments affected 17 employees and eight non-employee directors and resulted in $702,000 of incremental stock compensation expense for the year ended December 31, 2012.

Stock options.    The Plans provide that eligible employees and directors may be granted options to purchase the Company’s common stock at the fair market value on the date the options are granted. The outstanding options generally vest over four or five years and generally expire ten years from the date of grant. Non-cash compensation expense of $875,000 ($550,000 after-tax), $387,000 ($252,000 after-tax) and $485,000 ($315,000 after-tax) related to the options was recorded during the years ended December 31, 2012, 2011 and 2010, respectively.

Restricted stock rights/units and performance awards.    The Plans also provide that eligible key management employees may be granted restricted stock rights/units and performance awards which entitle such employees to receive a stated number of shares of the Company’s common stock upon vesting of the rights/units and awards. The outstanding rights/units generally vest over four or five years and expire upon termination of employment. Non-cash compensation expense of $1.4 million ($879,000 after tax), $1.0 million ($681,000 after-tax), and $690,000 ($448,000 after-tax) related to the rights/units was recorded during the years ended December 31, 2012, 2011 and 2010, respectively. In 2012, the Company granted restricted stock unit awards to key management that included performance targets. The Company estimated the performance based component of the awards as probable of achievement and recorded the related expense of $142,000 ($89,000 after-tax) as of December 31, 2012, representing the estimated performance target period of one year.

Non-employee director stock awards.    The Company’s non-employee directors are permitted to elect to receive all or any portion of their annual retainers and meeting fees in the form of a fully vested stock award for the number of shares of the Company’s common stock determined by dividing the amount of cash compensation to be received in the form of a stock award by the fair market value of the Company’s common stock on the last trading date of each quarter. In addition, each non-employee director receives an annual restricted stock unit grant equal in market value to $45,000. Such restricted stock units generally vest after one year.

In 2012, 7,110 shares of common stock were issued to non-employee directors associated with compensation earned in 2012. In 2011, 7,517 shares of common stock were issued to non-employee directors associated with compensation earned in 2011. In 2010, 9,731 shares of common stock were issued to non-employee directors associated with compensation earned in 2010. Non-cash compensation expense of $82,000 ($51,000 after-tax), $145,000 ($94,000 after-tax), and $167,000 ($109,000 after-tax) related to the awards was recorded during the years ended December 31, 2012, 2011 and 2010, respectively.

Determining Fair Value

Valuation and Expense Recognition.    The Company estimates the fair value of stock option awards granted using the Black-Scholes option pricing model. The Company amortizes the fair value of all awards on a straight-line basis over the requisite service periods, which are generally the vesting periods.

Expected Life.    The expected life of awards granted represents the period of time that the awards are expected to be outstanding. The Company determines the expected life based primarily on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules, expected exercises and post-vesting forfeitures. Outstanding stock options granted by the Company generally vest 20% per year over five years or 25% per year over four years and have contractual lives of ten years.

Expected Volatility.    The Company estimates the volatility of its common stock at the date of grant based on the historical volatility of its common stock. The volatility factor the Company uses in the Black-Scholes option pricing model is based on its historical stock prices over the most recent period commensurate with the estimated expected life of the award.

Risk-Free Interest Rate.    The risk-free interest rates used in the Black-Scholes option pricing model are obtained from the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award.

Expected Dividend Yield.    The Company does not target a specific dividend yield for its dividend payments but is required to assume a dividend yield as an input to the Black-Scholes option pricing model. The dividend yield is based on the Company’s history and expectation of future dividend payouts and may be subject to change in the future.

Expected Forfeitures.    The Company primarily uses historical data to estimate pre-vesting option forfeitures. The Company records stock-based compensation only for those awards that are expected to vest.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. A summary of the weighted average assumptions and results for options granted during the periods presented is as follows:

	Year Ended December 31,
	2012			2011			2010
Assumptions:
Weighted average risk-free interest rate		0.99	%		2.11	%		2.22	%
Expected dividend yield		0.00	%		0.00	%		0.00	%
Expected volatility		62.70	%		59.37	%		56.43	%
Expected life of options		6.0 years			5.5 years			5.4 years
Weighted average fair value per share at date of grant	$	17.28		$	14.31		$	8.19

As of December 31, 2012 and 2011, the Company had approximately $3.6 million and $2.6 million, respectively, of total unrecognized compensation cost related to non-vested stock-based awards granted under all equity compensation plans. Total unrecognized compensation cost will be adjusted for any future changes in estimated forfeitures. The Company expects to recognize this cost over a weighted average period of approximately 1.9 years and 2.1 years for restricted stock rights and options, respectively.

Stock Award Activity

A summary of stock options and restricted stock rights/units for the Plans is as follows:

	Stock Options									Restricted Stock Rights
	Number of Shares			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value		Number of Shares			Weighted Average Grant- Date Fair Value
Outstanding at December 31, 2010		275,420			33.76		6.01		577,352		142,703			14.96
Options and stock rights granted		23,202			26.32						64,121			26.46
Options exercised/stock rights vested		(3,588	)		23.21						(44,255	)		26.73
Options expired		(36,885	)		48.17						—			—
Options and stock rights forfeited		(4,422	)		25.54						(6,221	)		23.96
Outstanding at December 31, 2011		253,727			31.27		5.95		1,058,206		156,348			18.97
Options and stock rights granted		285,510			22.28						72,038			27.97
Options exercised/stock rights vested		(6,090	)		13.68						(57,299	)		29.97
Options expired		(202,868	)		34.45						—			—
Options and stock rights forfeited		(76,963	)		24.19						(7,320	)		23.03
Outstanding at December 31, 2012		253,316		$	21.17		5.57	$	2,140,466		163,767		$	22.99
Exercisable at December 31, 2012		177,274		$	23.85		4.77	$	1,223,205		—		$	—

Included in the 2012 stock award activity, 256,941 options were cancelled and 266,349 new options were issued to employees in connection with the October 2012 option and award adjustments made in connection with the cash dividend.

The aggregate intrinsic value of options outstanding at December 31, 2012 is calculated as the difference between the aggregate exercise price of the underlying options and the fair value of our common stock for those options that have an exercise price below the $26.99 closing market price of the Company’s common stock at December 31, 2012.

During 2012, 6,090 options were exercised with a total fair value of $162,000. During 2011, 3,588 options were exercised with a total fair value of $105,000. During 2012, 57,299 restricted stock rights/units vested with a total fair value of $1.7 million. During 2011, 44,255 restricted stock rights/units vested with a total fair value of $1.2 million.