Equity

12 Months Ended

Dec. 31, 2012

Stockholders' Equity [Abstract]

Stockholders' Equity

H.   Equity

Voting Rights

The holders of Class A Stock and Class B Stock have identical rights except that (i) holders of Class A Stock are entitled to one vote per share, while holders of Class B Stock are entitled to ten votes per share on all matters to be voted on by shareholders in general, and (ii) holders of Class A Stock are not eligible to vote on matters relating exclusively to Class B Stock and vice versa.

Stock Award and Incentive Plan

The Company maintains two Plans approved by the shareholders, which are designed to provide incentives which will attract and retain individuals key to the success of GBL through direct or indirect ownership of our common stock.  Benefits under the Plans may be granted in any one or a combination of stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents and other stock or cash based awards.  A maximum of 1.5 million shares of Class A Stock have been reserved for issuance under each of the Plans by a committee of the Board of Directors responsible for administering the Plans ("Compensation Committee").  Under the Plans, the committee may grant RSAs and either incentive or nonqualified stock options with a term not to exceed ten years from the grant date and at an exercise price that the committee may determine.

During 2011, the Company issued 10,000 options at an exercise price of $45.77 having a grant date fair value of $18.66 per share.  These options vest 75% after three years and 100% after four years from the date of grant and expire after ten years.

During 2012, 2011 and 2010, the Company issued 105,300, 197,200 and 88,800 RSAs, respectively, at grant date fair values of $43.49, $48.80 and $40.64 per share, respectively.  As of December 31, 2011, there were 275,600 RSA shares outstanding that were issued at an average grant price of $45.56 per share.  All grants of RSAs were recommended by the Company's Chairman, who did not receive a RSA, and approved by the Compensation Committee of the Company's Board of Directors.  This expense, net of estimated forfeitures, is recognized over the vesting period for these awards which is 30% over three years from the date of grant and 70% over five years from the date of grant.  During the vesting period, dividends to RSA holders are held for them until the RSA vesting dates and are forfeited if the grantee is no longer employed by the Company on the vesting dates.  Dividends declared on these RSAs, less estimated forfeitures, are charged to retained earnings on the declaration date.

During 2012, the Board of Directors accelerated the lapsing of restrictions on all outstanding RSAs resulting in recognition of $10.1 million in stock compensation expense during 2012 that would have been recorded in 2013 through 2016.

During 2010, the Board of Directors of the Company approved the acceleration of the vesting of the 70% tranche of the RSAs granted in 2007 to December 7, 2010, resulting in recognition of $5.5 million in stock compensation expense during 2010 that would have been recorded in 2011 and 2012.  Additionally, the Board of Directors of the Company approved an offer to repurchase the newly vested RSAs from employees at fair value on one of two dates in December 2010.  As a result of this offer, 212,031 shares of the newly vested RSAs were repurchased for $10.1 million, or a weighted average of $47.80 per share.

A summary of the stock option and RSA activity for the years ended December 31, 2012 and 2011 is as follows:

	Options					RSAs
									Weighted Average
				Weighted Average					Grant Date
	Shares			Exercise Price		Shares			Fair Value
Outstanding at December 31, 2010		90,900		$	36.93		123,100		$	40.14
Granted		10,000			45.77		197,200			48.80
Forfeited		-			-		(44,700	)		44.90
Exercised / Vested		-			-		-			-
Outstanding at December 31, 2011		100,900			37.81		275,600			45.56
Granted		-			-		105,300			43.49
Forfeited		(500	)		28.95		(7,900	)		45.21
Exercised / Vested		(31,777	)		28.95		(373,000	)		44.99
Outstanding at December 31, 2012		68,623		$	41.79		-		$	-
Shares available for future issuance at
December 31, 2012		540,675

At December 31, 2012 and 2011, there were exercisable outstanding stock options of 59,623 and 89,400, respectively.  The weighted average exercise price of the exercisable outstanding stock options at December 31, 2012 and 2011 was $41.12 per share and $36.69 per share, respectively.

The table below represents for various prices, the weighted average characteristics of outstanding employee stock options at December 31, 2012.

Exercise		Options		Weighted average remaining		Options currently		Exercise price of options
price		outstanding		contractual life		exercisable		currently exercisable
$	28.95		3,623		0.17		3,623	$	28.95
	39.55		10,000		3.33		10,000		39.55
	39.65		20,000		1.42		20,000		39.65
	39.90		10,000		4.08		10,000		39.90
	44.90		10,000		2.83		10,000		44.90
	45.77		10,000		8.08		-		N/A
$	51.74		6,000		5.33		6,000	$	51.74

The weighted average estimated fair value of the options granted at their grant date using the Black-Scholes option-pricing model was as follows:

	2011
Weighted average fair value of options granted:	$	18.66
Assumptions made:
Expected volatility		49	%
Risk free interest rate		0.15	%
Expected life	5 years
Dividend yield		0.26	%

The Company did not grant any options in 2012 or 2010.

The expected volatility reflects the volatility of GBL stock over a period of approximately four years, prior to each respective grant date, based on month-end prices.  The expected life reflected an estimate of the length of time the employees are expected to hold the options, including the vesting period, and is based, in part, on actual experience with other grants.  The dividend yield for the grants reflected the assumption of a $0.03 per share quarterly dividend.  The weighted average remaining contractual life of the outstanding options at December 31, 2012 was 3.51 years.

The total compensation costs related to non-vested awards not yet recognized is approximately $75,000 as of December 31, 2012.  This will be recognized as expense in the following periods (in thousands):

2013		2014		2015
$	58	$	16	$	1

For the years ended December 31, 2012, 2011 and 2010, the Company recorded approximately $13.6 million, $2.6 million and $10.6 million, respectively, in stock based compensation expense which resulted in the recognition of tax benefits of approximately $5.0 million, $843,000 and $3.6 million, respectively.  The $13.6 million for the year ended December 31, 2012, includes $10.1 million in stock compensation expense as a result of accelerating all outstanding RSAs.  The $10.6 million for the year ended December 31, 2010 is net of a $0.5 million reversal of expense recorded for the forfeiture of a single grant and includes $5.5 million in stock compensation expense as a result of the acceleration of the 70% tranche of the RSAs granted in 2007.  There were no comparable reversals or acceleration in the year ended December 31, 2011.  

There were no stock options exercised for the year ended December 31, 2011.  For the years ended December 31, 2012 and 2010, the Company received approximately $920,000 and $1.6 million, respectively, from the exercise of stock options which resulted in tax benefits of $105,000 and $216,000, respectively.

Stock Repurchase Program

In 1999, the Board of Directors established the Stock Repurchase Program through which the Company has been authorized to purchase up to $9 million of Class A Stock.  During 2010, the Board of Directors authorized additional repurchases of 500,000 shares in May.  In May 2011, the Board of Directors authorized an additional 500,000 shares.  In November 2012, the Board of Directors authorized the purchase of up to 800,000 shares of Class A Stock through a modified "Dutch Auction" tender.  717,389 shares of this authorization were used when the tender concluded in December 2012.  The remaining 82,611 shares under this authorization lapsed upon the conclusion of the tender.  In 2012, 2011 and 2010, we repurchased 1,138,313 shares, 450,966 shares and 684,003 shares, respectively, at an average price of $48.25 per share, $45.24 per share and $44.15 per share, respectively.  There remain 152,443 shares available under this program at December 31, 2012.  Under the program, the Company has repurchased 8,482,365 shares at an average price of $41.65 per share and an aggregate cost of $353.3 million through December 31, 2012.

Dividends

During 2012, the Company paid dividends of $2.88 per share to class A and class B shareholders totaling $76.4 million.  During 2011, the Company paid dividends of $1.15 per share to class A and class B shareholders totaling $30.8 million.  During 2010, the Company paid cash dividends of $1.82 per share to class A and class B shareholders totaling $49.4 million and paid $3.20 of principal value per share in the form of a five-year, zero coupon subordinated debenture due December 31, 2015.  For dividend accounting purposes the debenture was valued at $2.21 per share.  Under the terms of the RSA agreements, we accrue dividends, less estimated forfeitures, for RSA grantees from the date of grant but these dividends are held for grantees who are not entitled to receive dividends until their awards vest and only if they are still employed by the Company at those dates. As of December 31, 2011, dividends accrued on RSAs not yet vested were approximately $452,000.  There were no dividends accrued at December 31, 2012 as there were no unvested RSAs outstanding.

Shelf Registration

In May 2012, the SEC declared effective the Company's "shelf" registration statement on Form S-3 giving the Company the flexibility to sell any combination of senior and subordinate debt securities, convertible debt securities and equity securities (including common and preferred securities) up to a total amount of $400 million.  The shelf is available through May 30, 2015, at which time it may be renewed.