Stock-Based Compensation

6 Months Ended

Jun. 30, 2011

Stock-Based Compensation [Abstract]

Stock-Based Compensation

2. Stock-Based Compensation

We measure share-based compensation expense at the grant date, based on the fair value of the award, and the expense is recognized over the requisite employee service period (the vesting period) for awards expected to vest (considering estimated forfeitures).

The Company has an amended and restated Long-Term Incentive Plan that was adopted in conjunction with our initial public offering. On April 22, 2008, our shareholders approved an amendment to our Long-Term Incentive Plan that increased the maximum number of shares of common stock available for awards under the Long-Term Incentive Plan from 2,000,000 to 2,175,000 and extended the Plan’s termination date. The Plan now terminates twenty years from the date of such approval, or April 22, 2028. Forfeited and expired options under the Plan become generally available for reissuance. At June 30, 2011, 121,493 shares remained available for award under the Plan.

Stock Options and Grants

We use the Black-Scholes option pricing model to estimate the fair value of each option grant as of the date of grant. The volatilities are based on the 90-day historical volatility of our common stock as of the grant date. The risk free interest rate is based on zero-coupon U.S. government issues with a remaining term equal to the expected life of the option. For options granted prior to 2008, the expected life for options was calculated using the simplified method. The simplified method was calculated as the vesting term plus the contractual term divided by two.

There were no options granted during the six months ended June 30, 2011 and 2010.

The Company recognized no stock-based compensation expense related to stock options for the six months ended June 30, 2011 and 2010 as all options previously granted were fully vested. As of June 30, 2011, there were no unrecognized compensation costs related to unvested options.

On April 29, 2011, we authorized vested stock grants to certain directors totaling 14,009 shares. The total value of the grant was $245 and is included in general and administrative expenses.

Restricted Stock Units

In March 2008, the Company’s Compensation Committee and the Board of Directors authorized a one-time grant of 750,000 restricted stock units that subsequently were awarded to members of our senior management team on July 1, 2008. In November 2008, an additional 5,000 restricted stock units were awarded. The restricted stock units vest primarily in one-third installments on each of the tenth, eleventh and twelfth anniversaries of the grant date. The restricted stock unit agreements provide for accelerated vesting upon the recipient reaching their retirement age.

The fair value of restricted stock units is determined using the fair value of our common stock on the date of the grant, and compensation expense is recognized over the vesting period. In accordance with the guidance related to share-based payments, we estimated forfeitures at the time of the grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We use historical data to estimate pre-vesting forfeitures and record stock-based compensation expense only for those awards that are expected to vest.

During the first six months of 2011, 68,400 restricted stock units vested and 17,600 restricted stock units were forfeited. The forfeited units were returned to the pool of shares generally available for future use under the Long-Term Incentive Plan as of June 30, 2011.

The Company recognized $572 and $1,068 of stock-based compensation expense related to the restricted stock units for the three and six months ended June 30, 2011, respectively, which is included in general and administrative expenses. The Company recognized $509 and $1,017 of stock based compensation expense related to the restricted stock units for the three and six months ended June 30, 2010, respectively, which is included in general and administrative expenses. As of June 30, 2011, there was $6,567 of unrecognized stock-based compensation costs, net of estimated forfeitures, related to the restricted stock units that are expected to be recognized over a weighted average remaining period of approximately 6.8 years.