Stock Plans

12 Months Ended

Dec. 31, 2011

Stock Plans [Abstract]

Stock Plans

9. Stock Plans

The Company’s 2006 Omnibus Incentive Plan (the “Plan”) permits the grant of stock options, restricted stock, and restricted stock units to its directors and employees for up to 2,690,000 shares of common stock. The Plan also provides that no more than 1,350,000 of those shares may be granted for awards other than options or stock appreciation rights.

Stock option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant and generally expire ten years after the date of grant. Generally, stock options granted to non-employee directors are exercisable after one year from the date of grant, while options granted to employees are exercisable one to four years from the date of grant. The Company records compensation expense equal to the fair value of each stock option award granted on a straight line basis over the option’s vesting period unless the option award contains a market provision, in which case the Company records compensation expense equal to the fair value of each award on a straight-line basis over the requisite service period for each separately vesting portion of the award. The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing formula that uses the assumptions noted in the following table. Because the Black-Scholes-Merton option pricing formula incorporates ranges of assumptions for inputs, those ranges are disclosed. Expected volatilities are based on the historical volatility of the Company’s stock. The Company uses historical data to estimate expected option exercise and employee termination patterns within the valuation model. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The weighted average for key assumptions used in determining the fair value of options granted in the period ended December 31 are as follows:

	2011	2010	2009
Expected volatility	68.2% - 68.2%	67.1% - 68.1%	54.6% - 64.5%
Weighted-average expected volatility	68.2%	67.1%	56.2%
Expected dividends	—	—	—
Expected term (in years)	5.1 - 5.1	4.9 - 5.1	5.0 - 5.1
Risk-free rate	2.1% - 2.1%	1.3% - 2.6%	1.9% - 2.7%

A summary of stock option activity under the Company’s equity incentive plans as of December 31, 2011 and changes during the year ended December 31, 2011 is presented below:

				Weighted
				Average
	Number of			Exercise
Stock Options	Shares			Price
Outstanding at January 1, 2011		2,661,299		$	27.73
Granted		204,600			34.30
Exercised		(198,034	)		22.48
Canceled		(135,381	)		41.85
Outstanding at December 31, 2011		2,532,484			27.92
Exercisable at December 31, 2011		1,765,521			30.19

The weighted average remaining contractual term of options outstanding and exercisable as of December 31, 2011 was 4.7 and 3.2 years, respectively. The aggregate intrinsic value of options outstanding and exercisable as of December 31, 2011 was $7.1 million and $3.5 million, respectively. The weighted-average grant-date fair value of options granted during 2011, 2010, and 2009 was $19.94, $11.56, and $5.38, respectively. The total intrinsic value of options exercised during 2011, 2010, and 2009 was $2.4 million, $7.5 million, and $0.01 million, respectively.

The Plan also provides for the award of restricted stock and restricted stock units (“Restricted Stock Awards”). Restricted Stock Awards granted to employees vest one to four years from the date of grant, and Restricted Stock Awards granted to non-employee directors vest after one year from the date of grant. The fair value of Restricted Stock Awards is determined based on the market price of the Company’s stock at the date of grant. The Company generally records compensation expense equal to the fair value of each Restricted Stock Award granted over the vesting period. The weighted-average grant-date fair value of Restricted Stock Awards granted during 2011, 2010, and 2009 was $33.26, $21.97, and $11.73, respectively. Additionally, the Company granted 67,400 Restricted Stock Awards to certain members of its management team which may vest in 2014. The number of awards that will ultimately vest will be based on Company performance relative to the annual budgets approved by the Company’s board of directors. The Company will not begin recognizing compensation cost for these awards until the fourth quarter of 2012 when the 2013 budget is approved and the key terms and conditions of the awards will be deemed to be established and a grant date will have occurred. A summary of the status of the Company’s Restricted Stock Awards as of December 31, 2011 and changes during the year ended December 31, 2011, is presented below:

				Weighted
				Average
				Grant-Date
Restricted Stock Awards	Shares			Fair Value
Nonvested shares at January 1, 2011		471,894		$	18.92
Granted		281,780			33.26
Vested		(100,149	)		19.81
Canceled		(19,878	)		28.96
Nonvested shares at December 31, 2011		633,647			25.15

The fair value of all Restricted Stock Awards that vested during 2011, 2010 and 2009 was $3.3 million, $2.5 million and $0.8 million, respectively.

Under its long term incentive plan for key executives (“LTIP”) pursuant to the Plan, in February 2008, the Company granted selected executives and other key employees 449,500 restricted stock units (“LTIP Restricted Stock Units”) and 650,000 stock options (“LTIP Stock Options”). The LTIP Restricted Stock Units initially vested to the extent performance criteria were satisfied at the end of their four-year term. On September 3, 2010, the Company and certain executives entered into amendments to certain of the LTIP Restricted Stock Unit award agreements. As amended, the LTIP Restricted Stock Units will vest as follows: 25% of the LTIP Restricted Stock Units vested on the date of amendment; some, all or none of the remaining 75% of the LTIP Restricted Stock Units will vest on February 4, 2012 based on the extent to which the performance criteria specified in the original award agreement are satisfied (consistent with the original terms of the award agreements); and 25% of the LTIP Restricted Stock Units will vest on December 31, 2012 provided that the recipient remains employed by the Company on such date (unless vested earlier on February 4, 2012 to the extent performance criteria are satisfied). The number of LTIP Restricted Stock Units that ultimately vest will be determined based on the achievement of various company-wide performance goals. Based on current projections, the Company expects that portions of the performance goals will be achieved and, when coupled with the time-based portion of the awards, all of the LTIP Restricted Stock Units granted will vest. As a result of the amendments to the LTIP Restricted Stock Unit award agreements during 2010, the Company recorded additional compensation cost of $2.8 million. The Company is currently recording compensation expense equal to the fair value of all of the LTIP Restricted Stock Units granted on a straight-line basis over the requisite service period for each separately vesting portion of the awards. If there are changes in the expected achievement of the performance goals, the Company will adjust compensation expense accordingly. The fair value of the LTIP Restricted Stock Units was determined based on the market price of the Company’s stock at the date of grant for the performance-based awards and based on the market price of the Company’s stock at the date of the amendments for the time-based awards. The LTIP Stock Options, which vested two to four years from the date of grant and had a term of ten years, were granted with an exercise price of $38.00, while the market price of the Company’s common stock on the grant date was $31.02. As a result of this market condition, prior to August 6, 2009, the Company was recording compensation expense equal to the fair value of each LTIP Stock Option granted on a straight-line basis over the requisite service period for each separately vesting portion of the award.

On August 6, 2009, the Company entered into Stock Option Cancellation Agreements with certain members of its management team, pursuant to which such individuals surrendered and cancelled 510,000 LTIP Stock Options with an exercise price of $38.00 per share, as well as 472,200 stock options with exercise prices ranging from $40.22 to $56.14 per share, to purchase shares of the Company’s common stock (the “Cancelled Stock Options”), in order to make additional shares available under the Plan for future equity grants to Company personnel. Pursuant to the terms of the Stock Option Cancellation Agreements, these individuals and the Company acknowledged and agreed that the surrender and cancellation of the Cancelled Stock Options was without any expectation to receive, and was without any obligation on the Company to pay or grant, any cash payment, equity awards or other consideration presently or in the future in regard to the cancellation of the Cancelled Stock Options. The Company determined that because the Cancelled Stock Options were cancelled without a concurrent grant of a replacement award, the cancellation should be accounted for as a settlement for no consideration. Therefore, the Company recorded the previously unrecognized compensation cost related to the Cancelled Stock Options of $3.0 million during 2009.

Summaries of the status of the Company’s LTIP Restricted Stock Units and LTIP Stock Options as of December 31, 2011 and changes during the year ended December 31, 2011, are presented below:

			Weighted
			Average
			Grant-Date
LTIP Restricted Stock Units	Shares		Fair Value
Nonvested shares at January 1, 2011		281,500	$	30.48
Granted		—		—
Vested		—		—
Canceled		—		—
Nonvested shares at December 31, 2011		281,500		30.48

				Weighted
				Average
	Number of			Exercise
LTIP Stock Options	Shares			Price
Outstanding at January 1, 2011		76,666		$	38.00
Granted		—			—
Exercised		—			—
Canceled		(76,666	)		38.00
Outstanding at December 31, 2011		—			—
Exercisable at December 31, 2011		—			—

As of December 31, 2011, there was $18.7 million of total unrecognized compensation cost related to stock options, restricted stock and restricted stock units granted under the Company’s equity incentive plans. That cost is expected to be recognized over a weighted-average period of 2.3 years.

Under its Performance Accelerated Restricted Stock Unit Program (“PARSUP”) pursuant to the Plan, the Company granted certain executives and other key employees restricted stock units, the vesting of which occurred upon the earlier of February 2008 or the achievement of various company-wide performance goals. The fair value of PARSUP awards was determined based on the market price of the Company’s stock at the date of grant. The Company recorded compensation expense equal to the fair value of each PARSUP award granted on a straight line basis over a period beginning on the grant date and ending February 2008. No PARSUP awards were granted during 2011, 2010 or 2009. All PARSUP awards vested in February 2008, but certain recipients elected to defer receipt of their vested PARSUP awards.

The compensation cost that has been charged against pre-tax income for all of the Company’s stock-based compensation plans, including the additional compensation cost related to the amendments of the LTIP Restricted Stock Unit award agreements and the previously unrecognized compensation cost related to the Cancelled Stock Options described above, was $10.2 million, $10.1 million, and $10.0 million for 2011, 2010, and 2009, respectively. The total income tax benefit recognized in the accompanying consolidated statements of operations for all of the Company’s stock-based employee compensation plans was $3.7 million, $3.6 million, and $3.6 million for 2011, 2010, and 2009, respectively.

Cash received from option exercises under all stock-based employee compensation arrangements for 2011, 2010, and 2009 was $4.5 million, $25.7 million, and $0.1 million, respectively. The actual tax expense (benefit) realized from exercise, vesting or cancellation of the stock-based employee compensation arrangements during 2011, 2010, and 2009 totaled $(0.7) million, $(2.3) million, and $3.1 million, respectively, and is reflected as an adjustment to either additional paid-in capital in the accompanying consolidated statements of stockholders’ equity or deferred tax asset.

The Company also has an employee stock purchase plan whereby substantially all employees are eligible to participate in the purchase of designated shares of the Company’s common stock. Participants in the plan purchase these shares at a price equal to 95% of the closing price at the end of each quarterly stock purchase period. The Company issued 15,098, 13,044, and 33,172 shares of common stock at an average price per share of $24.41, $27.16, and $12.48 during 2011, 2010, and 2009 respectively.