Stock-Based Compensation

6 Months Ended

Jun. 30, 2012

Stock-Based Compensation

7. Stock-Based Compensation

Under the Westlake Chemical Corporation 2004 Omnibus Incentive Plan (the “2004 Plan”), all employees and nonemployee directors of the Company, as well as certain individuals who have agreed to become the Company’s employees, are eligible for awards. Shares of common stock may be issued as authorized in the 2004 Plan. At the discretion of the administrator of the 2004 Plan, employees and nonemployee directors may be granted awards in the form of stock options, stock appreciation rights, stock awards or cash awards (any of which may be a performance award). Total stock-based compensation expense related to the 2004 Plan was $1,475 and $1,623 for the three months ended June 30, 2012 and 2011, respectively, and $3,125 and $3,127 for the six months ended June 30, 2012 and 2011, respectively.

Option activity and changes during the six months ended June 30, 2012 were as follows:

	Options			Weighted Average Exercise Price		Weighted Average Remaining Term (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2011		1,133,147		$	23.26
Granted		115,340			60.09
Exercised		(223,044	)		20.21
Cancelled		(1,278	)		43.92
Outstanding at June 30, 2012		1,024,165		$	28.05		6.5	$	25,693
Exercisable at June 30, 2012		648,698		$	20.92		5.9	$	20,331

For options outstanding at June 30, 2012, the options had the following range of exercise prices:

Range of Prices	Options Outstanding		Weighted Average Remaining Contractual Life (Years)
$14.24—$19.29		368,405		5.7
$20.53—$27.24		235,712		7.0
$30.07—$36.10		210,454		4.6
$45.83—$60.11		209,594		9.2

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the quarter and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on June 30, 2012. This amount changes based on the fair market value of the Company’s common stock. The total intrinsic value of options exercised was $7,432 and $943 for the three months ended June 30, 2012 and 2011, respectively, and $8,109 and $8,147 for the six months ended June 30, 2012 and 2011, respectively.

As of June 30, 2012, $4,280 of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 2.0 years. Income tax benefit realized from the exercise of stock options was $1,977 and $286 for the three months ended June 30, 2012 and 2011, respectively, and $2,124 and $2,148 for the six months ended June 30, 2012 and 2011, respectively.

The Company uses the Black-Scholes option pricing model to value its options. The table below presents the weighted average value and assumptions used in determining the fair value for each option granted during the six months ended June 30, 2012 and 2011. Volatility was calculated using historical trends of the Company’s common stock price. There were no options granted during the three months ended June 30, 2012 and 2011.

	Stock Option Grants
	Six Months Ended June 30,
	2012		2011
Weighted average fair value	$	23.39	$	19.22
Risk-free interest rate		1.0%		2.8%
Expected life in years		5		6
Expected volatility		45.7%		41.9%
Expected dividend yield		0.5%		0.5%

Non-vested restricted stock awards as of June 30, 2012 and changes during the six months ended June 30, 2012 were as follows:

	Number of Shares			Weighted Average Grant Date Fair Value
Non-vested at December 31, 2011		582,013		$	23.43
Granted		68,715			60.11
Vested		(298,763	)		17.53
Forfeited		(2,957	)		30.13
Non-vested at June 30, 2012		349,008		$	35.66

As of June 30, 2012, there was $6,655 of unrecognized stock-based compensation expense related to non-vested restricted stock awards. This cost is expected to be recognized over a weighted-average period of 1.8 years. The total fair value of shares of restricted stock that vested was $38 and $35 for the three months ended June 30, 2012 and 2011, respectively, and $17,730 and $5,840 for the six months ended June 30, 2012 and 2011, respectively.