STOCK-BASED EMPLOYEE COMPENSATION

9 Months Ended

Sep. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED EMPLOYEE COMPENSATION

STOCK-BASED EMPLOYEE COMPENSATION

The Company has adopted stock compensation plans which provide for grants of share based compensation as incentives and rewards to encourage employees, officers, and directors to contribute towards the long-term success of the Company.  Stock-based compensation cost included in personnel expenses in the Unaudited Consolidated Statements of Operations was approximately $17.6 million and $13.3 million, and $51.7 million and $40.4 million for the three and nine months ended September 30, 2012 and 2011, respectively.

The cost of stock-based transactions is recognized in the financial statements based upon fair value. The fair value of restricted stock, performance share units and restricted stock units is determined based on the number of units or shares, as applicable, granted and the quoted price of the Company's common stock as of the grant date. Stock-based compensation related to performance share units reflects the estimated probable outcome at the end of the performance period. Fair value is recognized as expense on a straight line basis, net of estimated forfeitures, over the employee requisite service period.

During the nine months ended September 30, 2012, stock options were exercised for 124,687 shares of common stock with a weighted average exercise price per share of $21.29.  As of September 30, 2012, the aggregate number of stock options outstanding and exercisable was 72,551 shares, with a weighted average exercise price per share of $19.71 and a weighted average remaining term of 1.5 years.

The following table summarizes the activity of unvested restricted stock, restricted stock units and performance share units (“Share-Based Awards”) during the nine months ended September 30, 2012: 

Share-Based Awards	Shares		Weighted Average Grant Date Fair Value
Unvested at December 31, 2011	799,980		$	231.87
Granted	93,239		$	643.45
Vested	(347,378	)	$	105.17
Performance Share Units Adjustment	1,076		$	464.79
Forfeited	(6,122	)	$	407.22
Unvested at September 30, 2012	540,795		$	382.70

As of September 30, 2012, there was $98.6 million of total future compensation cost related to unvested share-based awards to be recognized over a weighted-average period of 1.5 years.

During the three months ended September 30, 2012, the Company made broad-based grants of 2,802 restricted stock units that generally vest after three years. The share-based awards had a total grant date fair value of $1.6 million based on the grant date fair value per share of $563.16. During the three months ended June 30, 2012, the Company made broad-based grants of 245 restricted stock units that generally vest after three years. The share-based awards had a total grant date fair value of $0.2 million based upon the grant date fair value per share of $675.39. During the three months ended March 31, 2012, the Company made broad-based grants of restricted stock units of 29,827 shares that generally vest after three years. The share-based awards granted had a total grant date fair value of $19.3 million based upon the grant date fair value per share of $645.86.

In addition, during the three months ended March 31, 2012, the Company granted 60,365 performance share units to certain executives.  The performance share units had a total grant date fair value of $39.0 million based upon the grant date fair value per share of $645.86.  The performance share units are payable in shares of the Company’s common stock upon vesting.  Subject to certain exceptions for terminations related to a change in control and terminations other than for “cause,” for “good reason” or on account of death or disability, the executives must continue their service through March 1, 2015 in order to receive any shares.  Stock-based compensation for performance share units is recorded based on the estimated probable outcome at the end of the performance period.  The actual number of shares to be issued on the vesting date will be determined upon completion of the performance period which ends December 31, 2014.  As of September 30, 2012, the estimated number of probable shares to be issued is a total of 60,210 shares.  If the maximum performance thresholds are met at the end of the performance period, a maximum number of 120,420 total shares could be issued.  If the minimum performance thresholds are not met, 38,456 shares would be issued at the end of the performance period.

2011 Performance Share Units

During the year ended December 31, 2011, the Company granted 77,144 performance share units with a grant date fair value of $35.9 million, based on a weighted average grant date fair value per share of $464.79. The actual number of shares will be determined upon completion of the performance period which ends December 31, 2013.

At September 30, 2012, there were 75,745 unvested performance share units outstanding, net of actual forfeitures and vesting. As of September 30, 2012, the number of shares estimated to be issued at the end of the performance period is a total of 152,831 shares. If the maximum thresholds are met at the end of the performance period, a maximum of 161,710 total shares could be issued.

2010 Performance Share Units

During the year ended December 31, 2010, the Company granted 110,430 performance share units with a grant date fair value of $26.0 million, based on a weighted average grant date fair value per share of $235.34.  The actual number of shares will be determined upon completion of the performance period which ends December 31, 2012.

At September 30, 2012, there were 85,105 unvested performance share units outstanding, net of actual forfeitures and vesting.  As of September 30, 2012, the number of shares estimated to be issued at the end of the performance period is a total of 201,967 shares.  If the maximum performance thresholds are met at the end of the performance period, a maximum of 201,967 total shares could be issued.