Share-Based Compensation

12 Months Ended

Dec. 31, 2011

Share-Based Compensation

Share-Based Compensation

13.   Share-Based Compensation

        The Company has three stock-based compensation plans: the Company 1998 Stock Incentive Plan, as amended and restated (the "SI Plan"), the Company 1998 Executive Stock Award Plan, as amended and restated (the "ESA Plan") and the Company 1998 Non-Employee Director Stock Award Plan, as amended and restated (the "NED Plan") (collectively, the "Stock Plans").

        The SI Plan allows us to grant equity compensation awards, including, among other awards, non-qualified stock options and nonvested stock as part of our overall compensation program to attract and retain key personnel and encourage a greater personal financial investment in the Company. All of the Stock Plans also allow us to grant non-qualified stock options and/or nonvested stock to promote the long-term growth of the Company. A maximum of 30.0 million shares of common stock are authorized for issuance under the SI Plan. A maximum of 3.75 million and 1.2 million shares of common stock are authorized for issuance under the ESA Plan and NED Plan, respectively. In total, 9,873,142 shares of common stock are available for issuance as of December 31, 2011 under these plans. In addition, we make incentive payments under the Company 2003 Executive Incentive Plan, as amended and restated (the "EIP") in the form of cash, stock options, nonvested stock or a combination thereof. Incentive awards paid under the EIP in the form of stock options or nonvested stock, or granted following the conversion of cash bonus amounts into stock options and/or nonvested stock, are issued out of shares reserved for issuance under the SI and ESA Plans. Generally, shares of common stock covered by terminated, surrendered or cancelled options, by forfeited nonvested stock, or by the forfeiture of other awards that do not result in issuance of shares of common stock are again available for awards under the plan from which they were terminated, surrendered, cancelled or forfeited.

        Under our Stock Plans, the exercise price of a stock option is equal to the closing market price of Company common stock on the date of grant. The maximum term of non-qualified options granted under the SI Plan is ten years and two days and the options generally vest in 33¹/3% increments on the second, third and fourth anniversaries of the grant date. The maximum term of non-qualified options granted under the ESA Plan and NED Plan is 11 years and the options generally vest 10% each year, beginning on the first anniversary of the grant date. Our Stock Plans include a Stock Option Restoration Program feature (the "SORP") that allows, on the first trading day of August, a holder to pay the exercise price on vested in-the-money options by surrendering common stock of the Company that has been owned for at least six months. This feature also permits a holder exercising an option to be granted new options in an amount equal to the number of common shares used to satisfy both the exercise price and withholding taxes due upon exercise. New options are granted with an expiration date equal to that of the original option and vest six months after the grant date. The SORP results in a net issuance of shares of common stock and fewer stock options outstanding. We receive a current income tax benefit for stock option exercises.

        Nonvested stock awards are valued on the date of grant, have no purchase price and generally vest over four years in 33¹/3% increments on the second, third and fourth anniversaries of the grant date. The Company also issues nonvested stock awards to our financial advisors (our sales force) who are independent contractors. These awards have the same terms as awards issued to employees; however, changes in the Company's share price result in variable compensation expense over the vesting period. Under the Stock Plans, nonvested shares are forfeited upon the termination of employment with or service to the Company, as applicable, or service on the Board of Directors, dependent upon the circumstances of termination. Except for restrictions placed on the transferability of nonvested stock, holders of nonvested stock have full stockholders' rights during the term of restriction, including voting rights and the rights to receive cash dividends.

(a)

Stock Options

        A summary of stock option activity and related information for the year ended December 31, 2011 is presented in the table below. All options outstanding expire prior to December 31, 2013.

	Options		Weighted average exercise price		Weighted average remaining contractual term (in years)
Outstanding at December 31, 2010		298,295	$	29.98		0.69
Granted		—		—
Exercised		(165,721)		30.65
Terminated/Canceled		(104,979)		29.26
Outstanding at December 31, 2011		27,595	$	28.64		0.62
Exercisable at December 31, 2011		27,595	$	28.64		0.62

        The aggregate intrinsic value of outstanding options and exercisable options as of December 31, 2011 was $42 thousand. The total intrinsic value (on date of exercise) of options exercised during the years ended December 31, 2011, 2010 and 2009 was $1.4 million, $2.0 million and $7.3 million, respectively. The related income tax benefit recognized was $0.5 million, $0.6 million and $2.5 million for the years ended December 31, 2011, 2010 and 2009, respectively.

        SORP options with vesting periods of six months were the only options granted during 2009. There were no options granted in 2010 or 2011. Compensation expense related to options issued under the SORP of $9 thousand and $90 thousand was recorded for the years ended December 31, 2010 and 2009, respectively.

        The weighted average fair value of options granted during the year ended December 31, 2009 was $8.68. The grant date fair value of options granted was calculated using a Black-Scholes option-pricing model with assumptions as follows:

Dividend yield	2.71%
Risk-free interest rate	0.88%
Expected volatility	64.90%
Expected life (in years)	1.79

(b)

Nonvested Stock

        A summary of nonvested share activity and related fair value for the year ended December 31, 2011 follows:

	Nonvested Stock Shares		Weighted Average Grant Date Fair Value
Nonvested at December 31, 2010		4,697,209	$	27.86
Granted		1,632,699		36.19
Vested		(1,427,409)		24.83
Forfeited		(34,482)		30.42
Nonvested at December 31, 2011		4,868,017	$	31.52

        For the years ended December 31, 2011, 2010 and 2009, compensation expense related to nonvested stock totaled $46.5 million, $40.3 million and $30.5 million, respectively. In 2009, we also recognized compensation expense of $400 thousand related to nonvested stock that was immediately vested for employees in connection with the divestiture of our investment in ACF. These costs are included in general and administrative expenses in the consolidated statement of income.

The related income tax benefit was $17.1 million, $14.9 million and $11.2 million for the years ended December 31, 2011, 2010 and 2009, respectively, which may be recognized upon vesting. As of December 31, 2011, the remaining unamortized expense of $101.9 million is expected to be recognized over a weighted average period of 2.3 years.

        The total fair value of shares vested (at vest date) during the years ended December 31, 2011, 2010 and 2009 was $52.5 million, $46.5 million and $23.3 million, respectively. The Company permits employees the right to tender a portion of their vested shares to the Company to satisfy the minimum tax withholding obligations of the Company with respect to vesting of the shares. During 2012, we expect to repurchase approximately 575 thousand shares from employees who elect to tender shares to cover their minimum tax withholdings.