Share-Based Compensation

6 Months Ended

Jun. 30, 2012

Share-Based Compensation

Share-Based Compensation

6.Share-Based Compensation

A summary of information with respect to stock-based compensation is as follows:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(in millions)	2012		2011		2012		2011
Total share-based compensation expense included in net income	$	4.2	$	4.1	$	8.5	$	7.4
Income tax benefit related to share-based compensation included in net income	$	1.2	$	1.4	$	2.6	$	2.5

Stock Options:

Under the Company’s stock incentive plan, stock options are granted at exercise prices that equal the market value of the underlying common stock on the date of grant.  The options have a 10-year term and are exercisable upon vesting, which occurs evenly over a three-year period from the date of the grant.  Compensation expense is recognized on a straight-line basis for all awards.

The Company granted non-qualified options to purchase 460 thousand shares of the Company’s common stock during the six months ended June 30, 2012 and 438 thousand shares for the six months ended June 30, 2011.

The fair value of each option grant was estimated using the Black-Scholes option pricing model with the following assumptions:

	For the Six Months Ended
	June 30, 2012		June 30, 2011
Expected life (in years)	5.8		5.8
Risk-free interest rate	1.07	%	2.76	%
Expected volatility	33.33	%	32.71	%
Expected dividend yield	1.18	%	1.17	%

The expected life of options represents the weighted-average period of time that options granted are expected to be outstanding giving consideration to vesting schedules and the Company’s historical exercise patterns.  The risk-free interest rate is based on the US Treasury yield curve in effect at the time of the grant for periods corresponding with the expected life of the options.  Expected volatility is based on historical volatilities of the Company’s common stock.  Dividend yields are based on historical dividend payments.

Stock option activity for the six months ended June 30, 2012 was as follows:

(dollars and shares in thousands)	Number of Options		Weighted Average Exercise Price		Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2011	4,030		$	30.29
Granted	460		55.96
Exercised	(467	)	26.35
Cancelled	(18	)	40.07
Outstanding at June 30, 2012	4,005		33.65		6.09	$	66,503
Exercisable at June 30, 2012	3,038		29.34		5.21	$	61,327

For the six months ended June 30, 2012, cash received from the exercise of stock options was $13 million and the excess tax benefit realized from the exercise of stock options was $1 million.  As of June 30, 2012, the total remaining unrecognized compensation cost related to stock options approximated $10 million, which will be amortized over the weighted-average period of approximately 1.5 years.

Additional information pertaining to stock option activity is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands, except per share)	2012		2011		2012		2011
Weighted average grant date fair value of stock options granted (per share)	$	16.56	$	16.65	$	16.16	$	15.17
Total intrinsic value of stock options exercised	$	3,058	$	9,521	$	14,055	$	15,181

Restricted Shares and Restricted Units of Common Stock:

The Company has granted shares of restricted common stock and restricted stock units to certain key employees.  The restricted shares and restricted units are subject to cliff vesting, generally after three to five years provided the employee remains in the service of the Company.  The fair value of the restricted stock and restricted units is determined based upon the number of shares granted and the quoted price of the Company’s stock at the date of the grant.  Expense recognized for restricted shares and restricted units for the three and six months ended June 30, 2012 aggregated $2 million and $3 million, respectively, as compared to $1 million and $2 million in the comparable prior year periods.

The following table summarizes restricted share and restricted stock unit activity for the six months ended June 30, 2012:

	Restricted Shares				Restricted Units
(in thousands except per share)	Number of Restricted Shares		Weighted Average Fair Value		Number of Restricted Units		Weighted Average Fair Value
Non-vested at December 31, 2011	136		$	30.69	235		$	44.24
Granted	—		—		162		55.96
Vested	(34	)	33.61		(9	)	36.77
Cancelled	(4	)	25.58		(6	)	46.60
Non-vested at June 30, 2012	98		29.87		382		49.56

As of June 30, 2012, the total remaining unrecognized compensation cost related to restricted stock was $1 million, which will be amortized on a weighted-average basis over approximately 1.4 years.  As of June 30, 2012, the total remaining unrecognized compensation cost related to restricted units was $13 million, which will be amortized on a weighted-average basis over approximately 2.2 years.