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Employee compensation
 6 Months Ended
Jun. 30, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Compensation and Employee Benefit Plans [Text Block]
Employee compensation
In connection with the IPO, the Board of Directors of Laredo Holdings and its stockholders approved a Long-Term Incentive Plan (the “LTIP”), which provides for the granting of incentive awards in the form of restricted stock awards, stock options and other awards. The LTIP provides for the issuance of 10.0 million shares.
The Company recognizes the fair value of stock-based payments to employees and directors as a charge against earnings. The Company recognizes stock-based compensation expense over the requisite service period. Stock-based compensation is included in “General and administrative” in the unaudited consolidated statements of operations.
1.    Restricted stock awards
All restricted stock awards are treated as issued and outstanding in the accompanying unaudited consolidated financial statements. If an employee terminates employment prior to the restriction lapse date, the awarded shares are forfeited and canceled and are no longer considered issued and outstanding. Restricted stock awards converted in the Corporate Reorganization vested 20% at the grant date and then vest 20% annually thereafter. The restricted stock awards granted under the LTIP to management and employees generally vest 33%, 33% and 34% per year beginning on the first anniversary date of the grant. Restricted stock awards granted to non-employee directors vest fully on the anniversary date of the grant.
The following table reflects the outstanding restricted stock awards for the six months ended June 30, 2013:
(in thousands, except for weighted average grant date fair values)
 
Restricted
stock
awards
 
Weighted average
grant date
fair value
Outstanding at December 31, 2012
 
1,195

 
$
15.06

Granted
 
1,306

 
$
17.44

Forfeited
 
(138
)
 
$
15.34

Vested(1)
 
(365
)
 
$
16.19

Outstanding at June 30, 2013
 
1,998

 
$
16.39

______________________________________________________________________________
(1) The vesting of certain restricted stock grants could result in state and federal income tax expense or benefits related to the difference between the market price of the common stock at the date of vesting and the date of grant. The Company recognized income tax expense of $0.1 million and $0.4 million during the three and six months ended June 30, 2013, respectively, related to restricted stock, which were recorded as adjustments to deferred income taxes. There were no comparable amounts recorded in the three or six months ended June 30, 2012.
2.    Restricted stock option awards
Restricted stock options granted under the LTIP vest and are exercisable in four equal installments on each of the first four anniversaries of the date of the grant. The following table reflects the stock option award activity for the six months ended June 30, 2013:
(in thousands, except for weighted average exercise price and contractual term)
 
Restricted
stock option
awards
 
Weighted average
exercise price
(per option)
 
Weighted average
remaining contractual term
(years)
Outstanding at December 31, 2012
 
459

 
$
24.11

 
9.1

Granted
 
1,019

 
$
17.34

 
9.6

Expired or canceled
 
(8
)
 
$
24.11

 
8.6

Forfeited
 
(87
)
 
$
20.21

 
—

Outstanding at June 30, 2013
 
1,383

 
$
19.37

 
9.3

Vested and exercisable at end of period
 
106

 
$
24.11

 
8.6


The Company used the Black-Scholes option pricing model to determine the fair value of restricted stock options and is recognizing the associated expense on a straight-line basis over the four-year requisite service period of the awards. Determining the fair value of equity-based awards requires judgment, including estimating the expected term that stock options will be outstanding prior to exercise and the associated volatility.
    
The assumptions used to estimate the fair value of restricted stock options granted on February 15, 2013 are as follows:
Risk-free interest rate(1)
1.19
%
Expected option life(2)
6.3 years

Expected volatility(3)
58.89
%
Fair value per option
$
9.67

______________________________________________________________________________
(1)
U.S. Treasury yields as of the grant date were utilized for the risk-free interest rate assumption, matching the treasury yield terms to the expected life of the option.
(2)
As the Company has no historical exercise history, expected option life assumptions were developed using the simplified method.
(3)
The Company utilized a peer historical look-back, which was weighted with the Company’s own volatility since the IPO, in order to develop the expected volatility.
3.    Performance unit awards
The performance unit awards issued to management are subject to a combination of market and service vesting criteria. A Monte Carlo simulation prepared by an independent third party is utilized in order to determine the fair value of these awards at the date of grant and to re-measure the fair value at the end of each reporting period until settlement. Due to the relatively short trading history of the Company’s stock, the volatility criteria utilized in the Monte Carlo simulation is based on the volatilities of a group of peer companies that have been determined to be most representative of the Company’s expected volatility. These awards are accounted for as liability awards as they will be settled in cash at the end of the requisite service period based on the achievement of certain performance criteria. The liability and related compensation expense for each period for these awards is recognized by dividing the fair value of the total liability by the requisite service period and recording the pro rata share for the period for which service has already been provided. As there are inherent uncertainties related to the factors and the Company’s judgment in applying them to the fair value determinations, there is risk that the recorded performance unit compensation may not accurately reflect the amount ultimately earned by the members of management.
Compensation expense for these awards amounted to $2.1 million and $0.5 million in the three months ended June 30, 2013 and 2012, respectively, and $2.2 million and $1.0 million in the six months ended June 30, 2013 and 2012, respectively, and is recognized in “General and administrative” in the Company’s unaudited consolidated statements of operations, and the corresponding liability is included in “Other noncurrent liabilities” in the June 30, 2013 and December 31, 2012 unaudited consolidated balance sheets.
4.    Defined contribution plan
The Company sponsors a 401(k) defined contribution plan for the benefit of substantially all employees at the date of hire. The plan allows eligible employees to make pre-tax and after-tax contributions up to 100% of their annual compensation, not to exceed annual limits established by the federal government. The Company makes matching contributions of up to 6% of an employee’s compensation and may make additional discretionary contributions for eligible employees. Employees are 100% vested in the employer contributions upon receipt.
The following table presents total employer contributions to the plans for the periods presented:
 
 
Three months ended June 30,
 
Six months ended June 30,
(in thousands)
 
2013
 
2012
 
2013
 
2012
Contributions
 
$
422

 
$
325

 
$
881

 
$
642