Share Based Compensation

6 Months Ended

Jun. 30, 2011

Share Based Compensation

Share Based Compensation

4. Share Based Compensation

The Company has Stock Incentive Plans (the Plans) pursuant to which the Company's board of directors may grant stock options or restricted stock to employees. The Company is authorized to issue grants of restricted stock and stock options to purchase up to 26,963,150 shares as of June 30, 2011 and December 31, 2010. There were 2,002,616 additional shares remaining available for grant under the Plans at June 30, 2011.

The table below summarizes the expense recognized related to share-based payments recognized for the three and six month periods ended June 30 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Stock options	$	2,594	$	885	$	5,054	$	1,738
Restricted stock		5,248		—		6,929		—
Stock-based compensation	$	7,842	$	885	$	11,983	$	1,738

The tax benefits recorded on stock based compensation were $3.4 million and $0.2 million for the three month periods ended June 30, 2011 and 2010, respectively. The tax benefits recorded on stock based compensation were $4.1 million and $0.4 million for the six month periods ended June 30, 2011 and 2010, respectively.

The following table summarizes the Company's total unrecognized compensation cost related to stock-based compensation as of June 30, 2011 (in thousands):

	Unrecognized Compensation Cost		Weighted Average Period of Expense Recognition (in Years)
Stock options	$	31,745		2.70
Restricted stock		20,629		1.60
Total	$	52,374

Stock Options

Stock options are granted with an exercise price estimated to be equal to the fair market value on the date of grant as authorized by the Company's board of directors. Options granted have vesting provisions ranging from one to six years. Stock option grants are generally subject to forfeiture if employment terminates prior to vesting.

The following summarizes the changes in the number of shares of common stock under option for the six month period ended June 30, 2011 (shares and aggregate intrinsic value in thousands):

	Shares			Weighted Average Exercise Price		Options Exercisable at End of Period		Weighted Average Exercise Price of Exercisable Options		Weighted Average Fair Value of Options Granted During the Period		Aggregate Intrinsic Value
Outstanding at December 31, 2010		10,229		$	12.79		5,168	$	6.06			$	128,472
Granted		373			31.64					$	10.51
Exercised		(349	)		3.73								9,036
Forfeited		(103	)		15.44
Outstanding at June 30, 2011		10,150		$	13.77		5,740	$	8.06			$	123,856
Expected to vest as of June 30, 2011		10,150		$	13.77

The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2010 was $1.5 million.

The fair value of stock option awards granted was estimated using the Black-Scholes option pricing model during the six months ended June 30, 2011 and 2010 with the following weighted-average assumptions for grants during the period.

	Six Months Ended June 30,
	2011			2010
Risk-free interest rate		1.78	%		2.46	%
Dividend yield		—			—
Expected volatility		39.27	%		31.14	%
Expected life (in years)		4.0			4.0

The Company considered the retirement and forfeiture provisions of the options and utilized its historical experience to estimate the expected life of the options.

The risk-free interest rate is based on the yield of a zero coupon U.S. Treasury security with a maturity equal to the expected life of the option from the date of the grant. The Company estimates the volatility of the share price of the Company's common stock by considering the historical volatility of the stock of similar public entities. In determining the appropriateness of the public entities included in the volatility assumption the Company considered a number of factors, including the entity's life cycle stage, size, financial leverage, and products offered.

The weighted-average remaining contractual life for options outstanding was 6.97 and 7.25 years as of June 30, 2011 and December 31, 2010, respectively.

Restricted Stock

Awards of restricted stock and restricted stock units are independent of stock option grants and are generally subject to forfeiture if employment terminates prior to vesting. Prior to the Company's initial public offering, the vesting of the shares granted in 2010 were contingent on the sale of the Company or a public offering of the Company's common stock, subject to certain other conditions. The vesting of the shares granted in 2011 and 2010 are generally based on the passage of time, performance or market conditions. Shares vesting based on the passage of time have vesting provisions ranging from one to six years.

The fair value of restricted stock shares based on market conditions was estimated using the Monte Carlo option pricing model with the following assumptions for the six months ended June 30, 2011.

	Six Months Ended June  30,
	2011
Risk-free interest rate		1.25	%
Dividend yield		—
Expected volatility		37.00	%
Expected life (in years)		0.63

The risk-free interest rate and volatility assumptions were calculated consistently with those applied in the Black-Scholes options pricing model utilized in determining the fair value of the stock option awards.

The following table summarizes the changes in the number of shares of restricted stock and restricted stock units for the six months ended June 30, 2011 (shares in thousands):

	Shares			Weighted Average Grant Date Fair Value
Unvested at December 31, 2010		1,250		$	21.93
Granted		262			31.08
Vested		(350	)		23.36
Unvested at June 30, 2011		1,162		$	23.56