SHARE-BASED COMPENSATION PLANS

The Company has an annual incentive plan and a long-term incentive plan. The Company’s shareholders approved the Amended and Restated 2003 Long-Term Incentive Plan of Coeur d’Alene Mines Corporation at the 2010 annual shareholders meeting.The compensation expense recognized in the Company’s consolidated financial statements for the years ended December 31, 2012, 2011, and 2010 under these plans was $12.1 million, $11.9 million, and $10.6 million, respectively.

Stock options and Stock Appreciation Rights (SARs) granted under the Company’s incentive plans vest over three years and are exercisable over a period not to exceed ten years from the grant date. The exercise price of the stock options and SARs is equal to the greater of the par value of the shares or the fair market value of the shares on the date of the grant. The value of each stock option award and SAR is estimated on the date of grant using the Black-Scholes option pricing model. Stock options are accounted for as equity-based awards and SARs are accounted for as liability-based awards. The value of the SARs is remeasured at each reporting date. SARs, when vested, provide the participant the right to receive cash equal to the excess of the market price of the shares over the exercise price when exercised. Cash used to settle stock options and SARs for the years ended December 31, 2012, 2011 and 2010 was $0.4 million, $1.9 million and $0.1 million, respectively.

Restricted stock and restricted stock units granted under the Company’s incentive plans are accounted for based on the market value of the underlying shares on the date of grant and vest in equal installments annually over three years. Restricted stock awards are accounted for as equity-based awards and restricted stock unit awards are accounted for as liability-based awards. Restricted stock units are remeasured at each reporting date. Restricted stock units are settled in cash based on the number of vested restricted stock units multiplied by the current market price of the common shares when vested. Holders of the restricted stock are entitled to vote the shares and to receive any dividends declared on the shares. Cash used to settle restricted stock units for the years ended December 31, 2012, 2011, and 2010 was $0.9 million, $2.2 million, and $0.3 million, respectively.

Performance shares and performance units granted under the Company’s incentive plans are accounted for at fair value. Performance share awards are accounted for as equity-based awards and performance units are accounted for as liability-based awards. Performance shares and performance units are valued using a Monte Carlo simulation valuation model on the date of grant. The value of the performance units is remeasured each reporting date. Vesting is contingent on meeting certain market conditions based on relative total shareholder return. The performance shares and units vest at the end of the three-year service period if the market conditions are met and the employee remains an employee of the Company. The existence of a market condition requires recognition of compensation cost for the performance share awards over the requisite period regardless of whether the market condition is ever satisfied. Performance units are cash-based awards and are settled in cash based on the current market price of the common shares when vested. Cash used to settle performance units for the years ended December 31, 2012, 2011, and 2010 was $2.1 million, $1.4 million, and nil respectively.

The compensation expense recognized in the Company’s consolidated financial statements for the year ended December 31, 2012, 2011 and 2010 for stock based compensation awards was $7.5 million, $8.1 million and $7.2 million, respectively. The SAR’s, restricted stock units and performance units are liability-based awards and are required to be remeasured at the end of each reporting period with corresponding adjustments to previously recognized and future stock-based compensation expense. As of December 31, 2012, there was $4.9 million of total unrecognized compensation cost (net of estimated forfeitures) related to unvested stock options, SARs, restricted stock, restricted stock units, performance shares and performance units which is expected to be recognized over a weighted-average remaining vesting period of 1.6 years.

The following table sets forth the weighted average fair value of stock options on the date of grant and the weighted average fair value of the SARs at December 31, 2012. The assumptions used to estimate the fair value of the stock options and SARs using the Black-Scholes option valuation model are as follows:



	Date of Grant						As of December 31, 2012
	Stock Options 2012			Stock Options 2011			SARs 2010
Weighted average fair value of stock options granted and SARs outstanding	$	15.77		$	17.85		$	13.73
Expected volatility	70.56		%	72.56		%	51.57		%
Expected life	5.5 years			6 years			2.7 years
Risk-free interest rate	0.89		%	2.30		%	0.34		%
Expected dividend yield	—			—			—

The expected volatility is determined using historical volatilities based on historical stock prices. The Company estimated the expected life of the options and SARs granted using the midpoint between the vesting date and the original contractual term. The risk free rate was determined using the yield available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life of the option or SAR. The Company has not paid dividends on its common stock since 1996.

The following table summarizes stock option and SARs activity for the years ended December 31, 2012, 2011 and 2010:



	Stock Options				SARs
	Shares		Weighted Average Exercise		Shares		Weighted Average Exercise
Stock options outstanding at December 31, 2009	392,678		$	23.48	112,471		$	10.00
Granted	4,089		15.30		151,287		15.40
Exercised	(29,104	)	9.81		(16,639	)	10.00
Canceled/Forfeited	(36,823	)	23.31		(16,556	)	11.17
Stock options outstanding at December 31, 2010	330,840		24.60		230,563		13.46
Granted	139,916		27.39		—		—
Exercised	(129,785	)	11.41		(119,801	)	13.10
Canceled/forfeited	(19,364	)	40.16		(3,123	)	14.46
Stock options outstanding at December 31, 2011	321,607		30.20		107,639		13.83
Granted	151,102		26.97		—		—
Exercised	(40,173	)	11.84		(34,385	)	12.73
Canceled/forfeited/expired	(62,536	)	29.22		(4,389	)	15.40
Stock options outstanding at December 31, 2012	370,000		$	31.04	68,865		$	14.27

Options to purchase 218,369 shares were exercisable at December 31, 2012 at a weighted average exercise price of $34.00.



	Options Outstanding				Options Exercisable
Range of Exercise Price	Number Outstanding	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Number Exercisable	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
$ 0.00-$10.00	27,853	$	10.00	6.09	27,853	$	10.00	6.09
$10.00-$20.00	15,892	$	18.06	8.89	2,726	$	15.30	7.59
$20.00-$30.00	227,154	$	27.28	6.60	90,397	$	27.00	3.31
$30.00-$40.00	49,673	$	39.12	2.39	47,965	$	39.28	2.18
$40.00-$50.00	20,464	$	48.50	2.91	20,464	$	48.50	2.91
$50.00-$60.00	12,937	$	51.40	2.23	12,937	$	51.40	2.23
$60.00-$70.00	3,219	$	66.60	1.02	3,219	$	66.60	1.02
$70.00-$80.00	12,808	$	70.90	1.14	12,808	$	70.90	1.14

As of December 31, 2012, there was $0.8 million of unrecognized compensation cost related to non-vested stock options and SARs to be recognized over a weighted average period of 1.4 years.

The following table summarizes restricted stock and restricted stock units activity for the years ended December 31, 2012, 2011 and 2010:



	Restricted Stock				Restricted Stock Units
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Units		Weighted Average Fair Value
Outstanding at December 31, 2009	134,389		$	15.95	67,485		$	18.06
Granted	2,363		15.30		91,378		15.40
Vested	(57,926	)	21.90		(22,500	)	15.24
Cancelled/Forfeited	(14,203	)	12.43		(9,947	)	15.76
Outstanding at December 31, 2010	64,623		11.37		126,416		27.32
Granted	205,463		27.37		—		—
Vested	(85,323	)	19.36		(79,014	)	27.87
Cancelled/Forfeited	(11,254	)	26.89		(1,884	)	25.03
Outstanding at December 31, 2011	173,509		25.38		45,518		24.14
Granted	230,096		26.40		—		—
Vested	(95,336	)	23.15		(31,456	)	25.92
Cancelled/Forfeited	(68,571	)	27.43		(2,651	)	24.60
Outstanding at December 31, 2012	239,698		$	26.65	11,411		$	24.60

As of December 31, 2012, there was $2.1 million of total unrecognized compensation cost related to restricted stock and restricted stock unit awards to be recognized over a weighted-average period of 1.4 years.

The following table summarizes performance shares and performance units’ activity for the years-ended December 31, 2012, 2011, and 2010:



	Performance Shares				Performance Units
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Units		Weighted Average Fair Value
Outstanding at December 31, 2009	136,298		$	16.59	67,485		$	27.53
Granted	2,363		18.65		91,378		19.94
Vested	—		—		—		—
Cancelled/Forfeited	(37,833	)	17.53		(13,840	)	20.12
Outstanding at December 31, 2010	100,828		16.29		145,023		35.41
Granted	81,489		42.72		—		—
Vested	(56,830	)	23.24		(57,948	)	24.68
Cancelled/Forfeited	(19,558	)	48.62		(2,536	)	25.03
Outstanding at December 31, 2011	105,929		26.92		84,539		39.78
Granted	145,508		25.78		32,498		—
Vested	(111,703	)	7.96		(74,845	)	31.17
Cancelled/Forfeited	(30,575	)	42.11		(7,953	)	49.20
Outstanding at December 31, 2012	109,159		$	40.55	34,239		$	49.20

As of December 31, 2012, there was $2.0 million of total unrecognized compensation cost related to performance shares and performance units to be recognized over a weighted average period of 1.8 years.