Stock Based Compensation

3 Months Ended

Mar. 31, 2012

Stock Based Compensation [Abstract]

STOCK BASED COMPENSATION

NOTE 10 — STOCK BASED COMPENSATION

We issue stock-based awards in the form of stock options for certain employees and officers. We recorded stock compensation expense of $(0.2) million and $0.8 million for the three months ended March 31, 2012 and 2011, respectively. The amount in 2012 includes the reversal of $0.8 million of stock compensation expense related to the departure of an Executive Officer in March 2012.

Outstanding equity based compensation currently consists only of stock option grants that are a combination of service-based and market-based options.

Service-based Options. These options are granted at fair market value on the date of grant. The options generally vest over four years with equal annual cliff-vesting and expire on the earlier of 10 years after the date of grant or following termination of service. A total of 0.9 million service-based awards were outstanding at March 31, 2012.

Market-based Options. These option grants have two components each of which vest only upon the achievement of certain criteria. The first component, which we refer to internally as “ordinary performance” grants, consists of two-thirds of the market-based grant and begins to vest if the stock price realizes a compounded annual gain of at least 20% over the exercise price, so long as the stock price is at least double the exercise price. The remaining third of the market-based options, which we refer to internally as “extraordinary performance” grants, begins to vest if the stock price realizes a compounded annual gain of at least 25% over the exercise price, so long as it is at least triple the exercise price. The vesting schedule for all market-based awards is 25% upon achievement of the criteria and the remaining 75% in three equal annual installments. A total of 2.1 million market-based awards were outstanding at March 31, 2012.

The Company granted 0.2 million stock options (at an average exercise price of $63.32 per share) and 0.1 million stock options (at an average exercise price of $29.14 per share) during the three months ended March 31, 2012 and 2011, respectively.

The fair value of the service-based options was determined using the Black-Scholes options pricing model while a lattice (binomial) model was used to determine the fair value of the market-based options using the following assumptions as of the grant date:

	March 31, 2012				March 31, 2011
	Black-Scholes		Binominal		Black-Scholes		Binominal
Risk-free interest rate		1.16% and 1.17%		0.09%– 2.04%		2.38%		0.06%–3.36%
Expected stock price volatility		34.62%—34.65%		34.50%—34.60%		48%		56%
Expected dividend yield		—		—		—		—
Expected option life (in years)		6.25		—		6.25		—
Contractual life (in years)		—		14		—		14
Fair value	$	22.74 and $22.80	$	11.65—$17.27	$	14.18 and $14.82	$	15.41—$16.76

The following table summarizes the weighted-average fair value of stock options granted, and the total intrinsic value of stock options exercised:

	March 31,
(in thousands, except per share amounts)	2012		2011
Weighted-average fair value at date of grant per share	$	17.23	$	15.60
Intrinsic value of options exercised	$	8,242	$	1,804
Fair value of options vested	$	275	$	304

Stock-based compensation expense is recorded net of estimated forfeiture rates ranging from 1% to 10%.

As of March 31, 2012, estimated unrecognized compensation costs related to share-based payments amounted to $5.5 million which we expect to recognize over a weighted-average remaining requisite service period of approximately 3.3 years.

The following table summarizes activity of our stock options:

	Number of options			Weighted average exercise price		Weighted average contractual term (in years)		Aggregate intrinsic value (in thousands)
Outstanding at December 31, 2011		3,243,958		$	14.19		6.7	$	116,755
Granted		168,500			63.32
Exercised		(175,514	)		12.75
Forfeited		(159,095	)		23.75
Outstanding at March 31, 2012		3,077,849		$	16.37		6.7	$	136,669
Exercisable at March 31, 2012		1,635,441		$	10.89		6.0	$	81,359

Stock Repurchase Authorization

On May 19, 2010, our shareholders authorized us to purchase up to 3.8 million shares of our common stock in the open market. From authorization through March 31, 2012, we have purchased 2.5 million shares of our common stock on the open market at an average price of $37.49 per share (with 0.3 million shares of common stock purchased during the first quarter ended March 31, 2012 at an average price of $63.25 per share), leaving 1.2 million shares still available for purchase under the program. On March 9, 2012, our Board of Directors approved a new share repurchase plan which will be presented for approval to our shareholders at the Annual Shareholder Meeting scheduled for May 16, 2012. If our shareholders approve that plan, shares will be eligible for purchase at a minimum price of $1.00 per share and a maximum price of $125.00 per share; and the maximum number of shares authorized to be repurchased will be up to 15% of shares outstanding as of the date of the shareholder approval.